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Resolution of Commercial Disputes - Coggle Diagram
Resolution of Commercial Disputes
Avoiding Business Disputes:
"Hope for the best and plan for the worst."
The contract
is the basis of any bargain and its importance cannot be overstated. Terms of the contract determine basis for the dispute resolution
Cultural factors will influence a party's attitude towards how disputes are settled
Americans view the negotiation process as something to be quickly completed so the deal can be closed.
People from many other cultures might see the negotiation process as a time to build relationships.
Amicable solutions are the best outcome and best hope to salvage business relationships
Alternative Dispute Resolution (ADR)
ADR
usually offers a faster, cheaper and more efficient alternative to resolving international commercial disputes than litigation
Unlike litigation, parties must submit voluntarily to the process
Forms of ADR
Mediation:
A voluntary, non-binding, conciliation process. Parties agree on an impartial mediator who helps them reach a solution amicable
Arbitration
- More formalized process resulting in and binding award that can be enforced by a court of law in many countries.
Advantages:
Pretrial discovery is faster and more limited than that available in the U.S. resulting in less expense and delay,
The process is private and records of proceedings are not publicly available as are court records,
Arbitration and attorney fees are far less than similar fees in a court of law,
The rules for evidence admissibility are more flexible than in many national courts,
Parties right to appeal is more limited
Disadvantages
Dispite its reputation for being less costly than litigation, arbitration is not cheap,
The losing party in an arbitration has a limited right to appeal the decision,
Discovery is limited in arbitration proceedings,
Relaxed procedural rules may permit the admission of evidence that would otherwise be excluded from consideration in a court of law,
An unwary party who has not carefully read the agreement may have limitations off their right to initiate litigation,
Less sophisticated parties may also be at a disadvantage in such circumstances due to limited experience in the selection of an arbitrator,
There is no precedential value to an arbitrator's decision meaning that it cannot be relied upon in future proceedings to the same extent as judicial opinions
Parties must agree to arbitration and once they do, they cannot withdraw
Parties are generally free to choose a location for arbitration that is mutually convenient
Arbitrator chosen from roster of impartial imdustry experts or distinquished lawyers who may also be from a third country
Arbitration rules are the rules of the arbitral tribunals that addresses issues such as:
qualification and appointment of arbitrators,
conduct of proceedings,
procedures for finding the facts and applying the law,
making of awards.
These rules are often published in multiple languages.
National Arbitral Laws:
Most commercial nations today have laws permitting arbitration and specifying the effect of an arbitral award
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Litigation:
A case (called suit or lawsuit) is brought before a court of law suitably empowered (having the jurisdiction) to hear the case, by the parties involved (the litigants) for resolution (the judgement)
Jurisdiction:
Power of a court to hear and decide a case. A court that has jurisdiction is said to be a "competent" court.
Jurisdiction vs Venue:
Venue refers to the geographical location of a court of competent jurisdiction where a case can be heard
Jurisdiction has different meanings depending on how it is used
For example:
Territorial Jurisdiction
refers to the power of criminal courts to hear cases involving crimes committed within their industry,
In rem Jurisdiction
refers to a court's power over property within its geographical boundaries,
Subject matter
Jurisdiction refers to the court's authority to hear a certain type of legal matter, such as tort cases or breach of contract,
In personam Jurisdiction
refers to the court's power over a certain individual or corporation. That basic concept is that one should not be "hauled into court" in some distant state or country unless that person has some connection to that place
Jurisdiction in the European Union:
The general rule is that jurisdiction is determined by the domicile of the defendant, specifically, his or her habitual or ordinary residence. Corporations are domiciled in the Member State where they are incorporated
Exceptions to the general rule:
Cases involving commercial contracts for sale of goods within EU will be heard in the country where the goods were or should have been sold,
Cases involving commercial contracts for services within the EU will be heard where the services were or should have been provided (other than insurance and employment),
Tort cases will be heard before the courts in the country where the wrong occurred,
In consumer contract cases, a consumer may bring an action against the other party in the contract either in the country in which that party is domiciled or in the country where the consumer is domiciled,
An employer may sue its employee or former employee only in the employee's place of domicile,
Where at least one of the parties is domiciled in the EU, by agreement specifying the courts of a certain EU country, provided that the agreement is in written or electronic form..
Jurisdiction in China:
Chinese courts may not exercise jurisdiction over non-resident defendants who are merely present in China. Rather the non-resident defendant must have a meaningful connection to China which provides a "sufficient ground" warranting the exercise of the court's power.
Jurisdiction in the Internet Age:
Just as the meaning of "minimum contacts" adapted to the rise of interstate commerce in the Unnited States over 70 years ago, it is now adapting to the rise of the Internet Age
Jurisdiction by Service of Process:
Personal jurisdiction is obtained through lawful service of process. Without proper service, any judgment that might be taken will not be enforceable
A formal request for service can be made through a
letter rogatory
(letter of request) which result in personal service on the defendant by the courts of the country in which he or she is found
Forum Non Convenience (inconvenient forum):
Is the discretionary power of a court to refuse to hear a case, even though jurisdiction and venue are otherwise proper, because a court in another jurisdiction or location would be more convenient and justice would be better served.
Forum Shopping:
Counsel may be looking for laws that are more favorable to their cases or for juries that might be more sympathetic to their sides and as a result "shop around" for a better legal deal.
Forum Selection Clauses:
A provision in a contract that fixes in advance the jurisdiction in which any disputes will be arbitrated or litigated
Conflict of Laws:
Rules by which courts determine which jurisdiction's laws apply to a particular case and how to reconsile differences between laws
Choice of law clauses:
Contract provisions that stipulate the country or jurisdiction whose law will apply in interpreting the contract or enforcing its terms. Often used in conjunction with forum selection agreement.
Enforcement of foreign judgements
In the US, judgement taken against a party by a court of competent jurisdiction in one state will be enforced by all other states by the
Full Faith and Credit Clause
of the U.S. Constitution
Does not apply to the recognition of judgements of foreign countries. Recognition of a foreign judgement is governed by state law
European Union Regulations 1215/2012
requires mutual recognition of court judgements among EU member countries, without any special procedures
The
Code of Civil Procedure
, adopted in 1908, when India was a British colony, governs some foreign judgements in India
Uniform Foreign Money Claims Act:
This statue gives state courts the authority to issue judgement in a foreign currency
Commercial disputes with nations
Sovereign Immunity:
Protects governments from suit when they are acting as political entities and courts cannot involve themselves in the internal affairs of a foreign country
Exception:
When foreign governments operate businesses with an intention to make a profit, they may be sued in court as a corporation. When agencies of government buy and sell goods or services, they become liable for damages for breach of contract
In the U.S., the
Foreign Sovereign Immunities Act of 1976
defines jurisdiction of U.S. courts over foreign nations
Abstention doctrines
Act of State:
Principal of domestic law that prohibits the courts of one country from inquiring into the validity of the legislative or executive acts of another country.
Political Question:
Consider 6 factors before dismissing a lawsuit on political questions grounds.
constitutional commitment of the question to the executive or legislative branch,
lack of judicially manageable and discoverable standards for resolving the question,
impossibility of resolving the question without making a policy determination of a kind clearly for nonjudicial determination,
the determination of question will result in the expression of lack of judicial respect for the executive or legislative brances,
the need for adherence to a previously made political decision,
the potential for embarrassment of the U.S. government by differing pronouncements of policy by multiple brances of government
Comity:
The willingness of one court or department of government to respect the rules or decisions of antoher or to grant it some privilege or favor.
Restatement (Second) of the Conflict of Laws:
Drafted in 1971explains different rules for different jurisdictions
General rule:
Courts apply the law of the state, country or jurisdiction that has the closest relationship to the action before them
Addresses different types of actions, including actions for breach of contract and actions for tort
Contracts
Application to torts/delicts:
Place where injury occurred,
place where conduct causing the injury occurred,
the domicile, residence, nationality, place of incorporation and place of business of the parties,
place where realtionship between the parties centered
Application to Contracts:
Place of contracting,
place where contract was negotiated,
place where if will be performed,
location of the subject matter,
the domicile, residence, nationality, place of incorporation and place of business of the parties
Application of foreign law in American Courts:
Courts are free to determine as a matter of law what the foreign law is. The federal courts will follow the
Federal rules of Civil Procedure.
References:
Schaffer, R. Agusti, F. & Dhooge, L (2019). Principles of Business 1.2.Great Britian: Ashford Colour Press