Arbitration is a centuries-old process for resolving disputes in a binding manner without going to court. Arbitration has become particularly popular in international disputes, in which neither party trusts the other’s courts to be fair to them. Because of a 1958 Treaty known as the New York Convention (which 170 countries have signed, including Malaysia in 1985), arbitrations in one member country are accepted in other member countries.

Arbitration requires that both parties be invited to present their case, but it does not require that both parties show up. Of course, you fail to show up at your peril. This is what occurred in an arbitration between the Philippines and China concerning territory in the South China Sea; China declined to participate, but the arbitration went ahead.

Arbitration comes in many flavors, but the most common is so-called commercial arbitration. Those are usually disputes over money owed under contracts. The contract itself will specify that a dispute should go to arbitration rather than to a court. The contract usually will also provide some information about how the arbitration should work – how many arbitrators should hear the case (usually one or three), where it will be held, and what rules might apply.

The Malaysian government claims that the 1878 Agreement has no arbitration clause. They say that the word “arbitration” doesn’t appear. Actually, there is a clause which agrees how any dispute between the parties would be arbitrated. The Spanish and French judges agree on this, just as they agree that this Agreement was a lease concession. Shouting repeatedly in the domestic press that there is no arbitration clause or that this was a one-off transfer may be good politics for ministers. It just happens not to be true.