How can trade customs affect a commercial arbitration award?

In commercial arbitration, trade customs significantly influence the resolution of disputes and the resulting award. Because arbitrators are often selected for their expert knowledge of the specific customs and usages of a particular trade, they can apply this specialized understanding to the facts of a case.12

This expertise offers several practical effects on the arbitration process:

• Efficiency: An arbitrator’s familiarity with industry practices often makes extensive testimony or documentation unnecessary, which helps streamline proceedings and reduce costs.1
• Decision-Making: When determining the law to be applied to a dispute, arbitrators are required to take into consideration both the terms of the contract and the usage of the specific trade.3
• Expertise: Organizations such as trade associations, produce exchanges, and chambers of commerce maintain panels of expert arbitrators specifically to ensure that those presiding over a dispute possess the necessary background to interpret industry-standard practices accurately.3

By leveraging these customs, arbitrators can resolve controversies based on the practical realities of the business community rather than relying solely on formal court procedures.1