There is no doubt that international arbitration has become one of the most favoured dispute resolution mechanisms in national and international transactions. International arbitration has evolved into a credible alternative replacement for traditional litigation. International arbitration as a private neutral forum is gaining overwhelming recognition in the world. The extent of this popularity varies in different commercial fields and this dispute settlement mechanism is treated differently in various sectors around the globe. For instance, in international construction contracts, arbitration clauses are an integral part of the contract whereas in an international syndicated loan agreement, incorporating an arbitration clause may seem rather unusual. This trend is now changing and banking industry’s traditional loyalty towards litigation and court jurisdictions is changing. According to statistics and market practice, in the past recent years, popularity of arbitration has been growing in banking and finance sector for various reasons. Among the reasons are the unique characteristics that international arbitration has to offer, characteristics such as global enforceability and worldwide recognition of arbitral awards, which have contributed to this paradigm shift. Moreover, the possibility of using knowledgeable finance and banking experts as arbitrators to resolve disputes and conflicts in the banking and financial sector is another appealing feature of arbitration. All the perceived advantages of international arbitration, which are claimed to be the drive force of this change of trend, are scrutinised in this research. This research analyses the historical hesitation and reluctance to use arbitration in the banking and financial sector, and elaborate the change of trend in this area and reasons for this change of attitude. The focus is on arbitrability of banking and financial disputes in the international sphere. The practical benefits of incorporating an arbitration clause in banking and financial transactions are considered in this research. At the end it is recommended that the banking and finance sector will benefit from a wider use of international arbitration in cross-border transactions and the wider use of this neutral independent mechanism 3 can led to a harmonised use of international arbitration in the aforementioned sectors. This research underpins the use of international arbitration as a sensible dispute resolution mechanism in international banking and financial transactions