How does arbitration help settle disputes between countries?

Arbitration serves as a nonjudicial legal technique for resolving disputes between sovereign states by referring them to a neutral third party for a binding decision, known as an award. When diplomatic negotiations or conciliation fail, states may agree to submit their controversies to an arbitral tribunal.12

The process typically functions as follows:

• Submission: States agree to arbitration through multilateral treaties, bilateral conventions, or specific contractual arrangements. They often define the scope, procedures, and applicable law in a submission agreement called a compromis.3
• Selection: Disputant states choose their own judges or arbitrators, often from established panels like the Permanent Court of Arbitration.4
• Binding Resolution: Unlike mediation, which offers nonbinding recommendations, arbitration results in a decision that the parties are committed to follow in good faith.142
• Compliance: Because states generally only submit to arbitration if they are prepared to accept the outcome, such awards are customarily complied with.3

This method has been used historically to settle boundary disputes, pecuniary claims, and issues arising from international treaties.34