Settlement of International

Disputes
Chapter 11
 Key to Contracting
Be very clear on who has responsibility for
what, and when it has to be done
 Key Issues to Resolve When Negotiating a
Contract with respect to dispute settlement

1/ which laws should apply

2/ which courts/jurisdiction should apply
3/ will judgments be enforced
4/ which method of dispute resolution to
choose
 Which Laws Should Apply?
- can choose any law but must not evade laws
of country where contract performed
- “the conclusion, formalities and performance of this
contract will be governed by the laws of..”
- in federal jurisdictions specify prov./state law
- if using foreign law: - common law court -
you must provide legal expertise,
- civil law courts - they provide the expertise
 Proper Law of Contract
-Which law applies if not specified in contract?
- different laws may be applicable to different
aspects of same transaction
- in common law - legal system with closest
connection to transaction

e.g. -what is in contract

-where contract signed
-where contract performed
-place of business of parties
- in civil law (Europe) - place of business of
performing party
 Which Courts/Jurisdictions
Should Apply?
- can choose any forum but must not
evade laws where contract performed
and choice can’t be too inconvenient
for one of parties
- “parties submit to jurisdiction of the
courts of …”
- court chosen may not hear the case if
there is no significant connection to
contract (e.g. Todd Bertuzzi case)
 Who Can Sue and Be Sued in
Canadian Courts?
Best bet when suing someone:
- sue in the jurisdiction where defendants assets located
- BUT – if the dispute has foreign elements (law specified in contract or contract performed in foreign country),
court may not hear case
Ontario Courts will assume jurisdiction if:
1/ defendant was served in Ontario
2/ defendant served outside Ontario BUT there is a connection to Ontario
e.g. - contract made in Ontario
- contract says Ontario law or courts apply
- breach of contract committed in Ontario
- damage was sustained in Ontario as a result of breach wherever committed
If above applies, plaintiff can seek “leave” (permission) of court to start legal action
BUT,
1/ foreign defendant can object to jurisdiction of Ontario and request that action be stayed or dismissed
because:
- case did not fall within rules for service without leave
- if permission was granted, defendant can argue that permission to serve outside jurisdiction should not have
been granted
- court is not a convenient forum
- forum non conveniens – where court decides that although it could have jurisdiction, it believes a better
court should be used
2/ foreign defendant can seek an anti-suit injunction where he asks court to prevent plaintiffs resident in
court’s jurisdiction from proceeding with foreign action against foreign defendant
Will Judgments Be Enforced?
- success in winning a law suit is collecting
- some jurisdictions will not recognize judgments from other
jurisdictions
- best to take court action where defendant has assets against which a
judgment can be enforced
- no international convention to enforce court judgments but
- Act of Comity - respect for legitimate actions taken by other states
within their territories
- some reciprocal enforcement agreements e.g.
Canada/UK
- increasingly courts in major countries are enforcing foreign judgments
e.g. Canada, U.S., E.U.
- if - a respected court
- court had proper jurisdiction
- judgment not fraudulent, not contrary to public policy or
natural justice
 Which Dispute Settlement
System?
Conciliation - voluntary, amicable dispute
resolution
Mediation - informal, voluntary use of neutral
third party to resolve - non-binding
Arbitration - formal, voluntary, neutral third
Party to decide – binding
Litigation - courts settle dispute - binding
 Best Option?
It Depends!

Get Advice for your particular situation

 Arbitration
- better business judgments
- less expensive and time consuming but more variation in judgments
- more confidential
- more flexible - can choose:
- arbitrators
- form of arbitration
- language
- rules
- place
- admissibility of evidence
- less adversarial
- awards more easily enforced
- limited right of appeal
BUT – parties should not choose if:
- can’t agree on arbitration terms or arbitrator
- where there are multiple parties
- if case is very complex
- if you want better discovery of evidence (other party must make all information relevant to
dispute available to you)
 How the System of Arbitration Works
Systems:
- national arbitration rules and procedures:
e.g. - EU - European Convention on International Commercial
Arbitration
- U.S. - American Arbitration Association
- U.K. - London Court of International Arbitration
- many others
- international rules:
- ICC - International Court of Arbitration, Paris, 1923
- ICC - International Rules of Conciliation and
Arbitration
- UNCITRAL - Rules of Conciliation and
Arbitration, 1976 - voluntary guidelines for
contracts
UNCITRAL - Model Law on International
Commercial Arbitration - guidelines for
national arbitration law
 Enforcement
- UN Convention on the Resolution and
Enforcement of Foreign Arbitral Awards,
1958 (New York Convention)
- 120 countries
- rules for recognition of awards
- enforced by law, with limitations
(e.g. in conflict with public policy, arbitration
court beyond jurisdiction of local law)
 Putting Arbitration In your
Contract
- clause - “all disputes arising out of or in
connection with the present contract
shall be finally settled under the Rules
of Arbitration of the ICC by one or more
arbitrators appointed in accordance
with these rules”.
- ensure place of arbitration is signatory
of New York Convention