An alternative to litigating international contract disputes is arbitration. Arbitration, a form of alternative dispute resolution (ADR), is a legal technique for the resolution of disputes outside of the courts. During the arbitration process, one or more persons review the case and issue a binding decision to settle the dispute. Arbitration is often used in the context of international commercial transactions, including international debt collection and may be voluntary or mandatory.
Advantages of International Arbitration
There are a variety of advantages to settling international commercial transaction disputes through the arbitration process.
One of the challenges of doing business globally is the potential for lawsuits and conflict of law issues to arise between forum countries. Arbitration alleviates some of these issues because parties to the dispute can choose a neutral arbiter and reduce the perception that one country’s courts may be biased in the matter.
The expenses of litigating a case internationally can be high, especially if there is a conflict of laws issue that requires litigation in multiple courts around the world. International arbitration minimizes the cost that litigation might impose on one or both parties. Additionally, the time it takes to settle a dispute is typically reduced as the procedural steps, including the discovery process, involved in a legal arbitration are streamlined.
Business relationships are also well served by arbitration versus litigation which is certainly a more adversarial process. For those parties that have long-standing relationships that they may wish to preserve, international arbitration may be ideal.
Incorporating International Arbitration in Contracts
The subject of international arbitration may arise during contract negotiations or after a dispute occurs. Ideally, an arbitration clause will be negotiated, agreed upon and incorporated into the documents governing the commercial transaction.
Model clauses for international arbitration have been recommended by the United Nations Commission on International Trade (UNCITRAL), the International Chamber of Commerce (ICC), and NAFTA’s Advisory Committee on Private Commercial Disputes.
The international business law firm of GRP Rainer LLP typically incorporate the following elements into an international arbitration agreement:
About GRP Rainer LLP
GRP Rainer LLP is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices in Cologne, Berlin, Bonn and Düsseldorf, Germany.
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