Arbitration is a procedure for settlement of dispute that works in the same way to arbitration in Pakistan. In arbitration, disputes are resolved by a specific procedure that includes an arbitrator. The object of arbitration is to provide a neutral forum for settlement of disputes for parties engaged in international business transactions.
The parties are able to preserve confidentiality which is imperative especially when they wish to protect their trade secrets and commercial interests. These factors are vital when dealing with cross border transactions involving foreign investment where neutrality in terms of place, the law and the arbitrators are considered prime by the parties in settling their disputes. The neutrality ensures that the arbitral tribunal deciding the matter at hand is separated from any direct national influence therefore giving loyalty mainly to the parties.
In today's world, the most imperative area of arbitration is foreign investment. The use of arbitration for resolving foreign investment disputes provides a safe haven especially for foreign investors involved in global economy due to its trusted, credible and workable system in place.