Chapter 1 focus on the basic requirements of arbitration. Arbitration is a private system of dispute resolution that allows parties to resolve their disputes outside of the judicial system. This chapter discusses the advantages and disadvantages of arbitration. International commercial arbitration has become the standard for resolving disputes in international business transactions due to its benefits. The defining characteristics of arbitration include the requirement of consent of the parties, the use of arbitrators, and the issuance of a final and binding award. Arbitration awards are generally enforceable, and the losing party may challenge them only on narrow grounds. Enforcement of awards is facilitated by the New York Convention, which ensures recognition and enforcement in numerous countries. The regulatory framework of arbitration includes the arbitration agreement, chosen arbitration rules, national laws, international arbitration practices, and relevant international treaties.

The chapter examines the nature and the main characteristics of arbitral institutions and describes the main features of institutional arbitration. It then illustrates several categories of institutions, distinguishing them on the basis of various criteria. The chapter further describes the functions performed by arbitral institutions with respect to the specific cases submitted to them, their contribution to the making of arbitration law and their role in promoting the knowledge and culture of arbitration. The chapter further examines the notion of "mandatory institutional rules", i.e. rules that institutions do not accept derogations from, and illustrates the conditions for institutions' liability vis à vis the parties and the scope of their immunity in relation to acts and omissions in the performance of their functions under the rules The author concludes that, despite the importance of the functions carried out by institutions, their role does not entail any involvement in adjudicating disputes. The impact of institutions’ decisions on the outcome of cases is indirect, limited to procedural issues or limited to recommendations to arbitrators.