State courts and arbitration are the two options for the judicial settlement of disputes arising from international commercial transactions. In practice, arbitration is preferred over the state courts. One of the features that make arbitration more popular is that it serves as a “private” kind of dispute resolution mechanism based on the autonomy of the parties. In accordance with this autonomy, parties to an arbitration agreement have the ability to influence the adjudication process by agreeing on several procedural and substantive issues.

State courts are structured to serve domestic disputes rather than international. They strictly follow the national procedural rules and generally lack the necessary expertise to solve international commercial disputes, therefore causing delays and increased costs. Nevertheless, particularly in the last five years, some states have established state courts that are structured and functioning to resolve international commercial disputes. These “international commercial courts” are becoming strong competitors to arbitration.  

International commercial courts are domestic courts specifically established and dedicated to resolve commercial disputes including foreign element. Examples of international commercial courts are found in Dubai, Qatar, France, Singapore, Abu Dhabi, Germany, China, the Netherlands, and Kazakhstan. 

The primary reasons for the establishment of state courts specialized in international commercial disputes are: A) to attract foreign investment by creating a sound and reliable dispute resolution climate; and B) to generate income from providing adjudication services for international commercial disputes.

International commercial courts seem to be the result of an endeavor to create a dispute resolution mechanism by combining the advantages of both the arbitration and the state courts. For this reason, there is a high degree of commonality among international commercial courts established in different states. Therefore, the legal regime of the Netherlands Commercial Court, used as a model within this analysis, provides a general idea about the operations in other international commercial courts. 

Legislation establishing the Netherlands Commercial Court entered into force on 1 January 2019. It enabled courts to give judgments in English and regulated court fees for the Netherlands Commercial Court. There are two chambers of the Netherlands Commercial Court, the NCC District Court and the NCC Court of Appeal. Both chambers function as specialized courts for the settlement of international commercial disputes.  

Although the proceedings in the Netherlands Commercial Court are conducted in accordance with the Dutch Code of Civil Procedure, a set of specifically designed procedural rules (i.e., NCC Rules) are also applied. 

For a case to be heard in the Netherlands Commercial Court, the parties should have expressly agreed in writing for proceedings to be before the NCC District Court in English and the dispute must contain a foreign element. There are many factors that satisfy the internationality criteria, including but not limited to residence of the parties, location of establishment, place of transaction, applicable law, language of the contract, place of business, area where the consolidated turnover is realized, and marketplace of the securities. 

Based on the model of the Netherlands Commercial Court, international commercial courts have advantages and disadvantages when compared to arbitration. On the one hand, enforceability of awards, flexibility, right to choose the arbitrators and language of the proceedings, representation by foreign counsel and confidentiality are characteristics that may make arbitration more advantageous than international commercial courts. On the other hand, the high cost of arbitration proceedings, issues of arbitrability, sanctioning power on the counsels, obligatory witness testimony, the use of state power to enforce interim measures, power in relation to third parties, inclusion of third parties to the proceedings, consolidation of cases, duration of proceedings, and developing jurisprudence may be features that make international commercial courts more advantageous to arbitration. However, with respect to features such as dedicated judge, flexibility in the amendment of claim and defense, and waiver of appeal, international commercial courts and arbitration are quite similar. International commercial courts provide a more advantageous system than other state courts with respect to resolution of international commercial disputes. 

In consideration of all the advantages and disadvantages, international commercial courts may weaken to a certain extent the dominant status of arbitration in the resolution of international commercial disputes. As they are relatively new institutions, we will have to wait to see whether these courts will be successful. However, it is certain that, the issue of enforceability is the biggest challenge ahead for international commercial courts in their pursuit to become strong competitors to arbitration. Easy and widespread enforceability of awards is considered the most important reason why arbitration is preferred in practice, and, at least for now, judgments of international commercial courts lack this feature.