Resolving International Commercial Disputes
Litigation
Final alternative
Mediation
Parties reserve all legal rights to resort to binding arbitration or litigation
Final decision to settle rests with the parties
Voluntary, nonbinding, conciliation process
The parties agree on an impartial mediator
Private, no public court records or glaring articles
Conflict of laws
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Arbitration
Parties must agree to arbitration and cannot withdraw
Used in international business
Levels the playing field
Parties free to choose a location for arbitration that is mutually convenient
Permits the resolution of the case in a third “neutral” country, rather than in the country of one of the parties
case may be resolved using the impartial and straightforward rules
Arbitration rules
rules of arbitral tribunals that address issues such as the qualification and appointment of arbitrators etc
Published in multiple languages
Advantages:
process is private
records of proceedings are not publicly available as are court records
Pretrial discovery is faster and more limited
Neutral
Arbitration and attorney fees are less than similar fees in a court of law
rules for evidence admissibility are more flexible than in many national courts
a party’s right to appeal is more limited.
Disadvantages:
Losing party in an arbitration has a limited right to appeal the decision
Discovery is limited in arbitration proceedings
Less sophisticated parties
There is no precedential value to an arbitrator’s decision
Formalized process resulting in a binding award
Used more frequently
Jurisdiction
the power of a court to hear and decide a case
A court that has it is competent
Types
Territorial jurisdiction
Rem jurisdiction
power of criminal courts to hear cases involving crimes committed within their territory
court’s power over property within its geographical boundaries
Subject matter jurisdiction
the court’s authority to hear a certain type of legal matter
Diversity jurisdiction
Federal courts power to hear lawsuits that do not involve a federal question
Definition
Laws by which courts determine which laws to apply to a case
Factors to consider
How to reconcile differences
between laws
Place of contracting
Place
where the contract was negotiated
Place of contract performance
Location of the subject
matter and the domicile, residence, nationality, place of incorporation etc
Choice of law clauses
Contract provisions that stipulate the country or
jurisdiction whose law will apply in interpreting the contract or enforcing its terms
Is upheld as long as there is a reasonable relationship
between the transaction and the jurisdiction chosen
used
in conjunction with a forum selection agreement
To ensure that the selection
forum is consistent with the selected law
Enforcement of foreign judgements
recognised and enforced in another jurisdiction if there is a bilateral
treaty between these countries
Commercial disputes with nations
governments are players in commercial transactions
Expensive
Arbitration clauses
clauses requiring a dispute be submitted to arbitration
Enforcement of arbitration awards
arbitration award made in one country be honoured and enforced by the courts
of another country where both parties are parties to the Convention
Avoiding business disputes and ADR
when a dispute becomes hostile
Is costly
Time consuming
physically and mentally exhausting for all parties
Alternative dispute resolution
offers a faster, cheaper and more efficient alternative
discussed below as mediation, litigation, arbitration
arbitrator is selected by the parties
international when the parties’ facts or the legal matter extend
beyond the single jurisdiction
Makes binding decision
Advantages
parties are free to select the place of the arbitration
arbitrator is a neutral,
independent and impartial party which means an unbiased dispute resolution
proceedings are conducted in private and confidential manner
arbitration
award is final with no right of appeal
cross-border acceptance of an arbitration
award is supported by international treaties
Disadvantages
arbitrations technical nature can lead to delays and uncertain results
The arbitrator’s
power is limited
The arbitration confidentiality causes a lack of transparency
finality of the arbitration award means that a wrong decision cannot be corrected nor
appealed.
Biased
Expensive
not suitable where there are several parties to a dispute
like in projects and construction claims