I am a traditional trial lawyer based in the United States and primarily engaged in general business litigation. A sub-specialty of our firm is sales representative law. Many of our cases involve contract interpretation and performance issues, including customer/supplier warranty disputes. I was in practice a long time before international law and the international arbitration of disputes became important to our clientele. With globalization in the ever-shrinking world, however, our clients’ dealings with companies from around the world have increased rapidly and, as would be logical, disputes with these companies became as statistically common as with domestic companies.
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As part of the evolutionary process and in anticipation of inevitable disputes, the desire, if not the requirement, of at least some foreign parties to agreements is to have a method of dispute resolution with which they are familiar, usually in the jurisdiction in which they reside. Thus, some of the proposed or executed contracts our clients present to our firm for review and counsel contain provisions for dispute resolution under foreign laws and in various foreign courts or by international arbitration. These contract terms are often antagonistic to our clients’ and, for that matter, many lawyers’ way of thinking and past experiences. While some of the terms are reasonable, others are obviously slanted toward one party’s agenda.
On more than one occasion a client (without consulting us or any other knowledgeable lawyer) has signed an agreement which, because of the specified law and/or forum (sometimes specifying international arbitration), leaves no practical recourse in the event of breach. And, of course, the client did not realize what was done until seeking to enforce what the client thought were its rights under the agreement. This is why, in drafting or examining foreign law and venue provisions, including arbitration clauses, it is imperative to understand not only the client’s objective, but also the procedures of the applicable court or arbitration association. In drafting contracts that provide for arbitration, provisions can be included that set out the terms of the arbitration process, which will constitute a part of the contract for arbitration.
Various Procedures
International arbitrations and the rules of the various international arbitration associations have a number of differences in procedures relating to the submission of evidence and other procedural aspects that are not typically involved in U.S. trial courts and domestic arbitration. It is imperative to be well aware of all the distinctions and there are a number of arbitration associations that should be avoided. Plus, foreign arbitrations are costly, including arbitrator and arbitration association fees and other miscellaneous expenses.
The role played by reputable and impartial international arbitration associations can be critical in developing a sense of neutrality and trust between parties from different countries and cultures. While not always the case, one peripheral potential benefit is often a less acrimonious dispute resolution process.
The value of international arbitration of disputes between state governments and between investors and states utilizing investment treaties, and other high stake and high profile cases, has a long history and will continue to play a significant role in international arbitration settings. The growth potential, however, for the more mundane commercial disputes between citizens of different countries and cultures will evolve and increase in the years to come. And, in many circumstances, dispute resolution utilizing the neutrality of international arbitration associations provides a reasonable and, often cost-effective, means to achieve the objective of international dispute resolution. This is particularly so where the rules of arbitration utilized provide that the parties will carry out any award promptly and that they waive their right to any form of recourse to the extent that such a waiver can validly be made. While not a guaranty that an appeal of an award will not take place, this type of agreement goes a long way toward a successful judicial confirmation of an award in the courts should such action be necessary.
There are, however, a number of countries that attempt to unfairly protect their citizens and will try to frustrate the enforcement of an award by refusing to honor it, thereby making collection of a money award almost impossible. This means there must be careful consideration of the risks and rewards relating to dealing with certain parties and/or countries when contemplating a business decision.
Of course, as an old-fashioned trial lawyer who does the usual type of commercial litigation, I still favor the U.S. court system. But, as an advocate and counselor for my clients, I must keep their best interests in mind, and as I said, in these global times, often international arbitration is a realistic option.
