The Examination of Legal Nature of Arbitration Institution

Arbitration is fundamentally an agreement to create private justice by non-state tribunal. In relation to the nature of arbitration, there is no consensus and the nature of this institution has been for a long-time subject to challenge and arguments for and against it. In this respect, there are four theories, contractual, jurisdictional, hybrid and independent natures. Each of these theories may have effects and different consequences on arbitration. Since the attitude of national courts towards international commercial arbitration affects arbitration proceedings, it is intended to deal with this question: As far as nature of arbitration is concerned, which of these four theories can be justified? The evaluation of four theories will be considered with respect to the nature and scope of arbitrators’ power, arbitration awards and choice of law. This article shows that arbitration has both contractual and judicial natures, which is a reflection of parties’ agreement and applicability of the law of the place in which the arbitration takes place. In this Theory, the contractual and jurisdictional elements are incorporated in each other.