Dispute settlement for

international transactions

BUSINESS AND ECONOMICS DEPARTMENT

 The majority of international transactions are carried through
without any dispute arising
Different processes for settling commercial disputes whether
domestic or involving an international dimension
Methods of dispute resolution

From informal processes to highly regulated lawsuits

Alternative dispute resolution procedures
At National and International Level

https://www.adr.org/aaa/faces/home/
EU directive N.52/2008
http
://ec.europa.eu/consumers/solving_consumer_dispu
tes/non-judicial_redress/adr-odr/index_en.htm
Mediation:

http://www.adrcenter.com/international/cms/portfol
io_item/specific-programme-civil-justice-2007-2013
-making-information-sessions-on-the-use-of-mediati
on-easily-available-throughout-the-eu/
voluntary, nonbinding, conciliation process.
A 3rd party attempts to find common ground between
the disputing parties.
Parties are free to determine how the mediation
process should process
Parties may choose to specify in their contract that
mediation should be conducted according to a
predetermined set of rules International Chamber
of Commerce
Arbitration

Form of dispute resolution in which the parties agree

to submit their differences to a 3rd party for a
binding decision
Self-directed
Arbitration

Institutional : established framework of a national or

international organization
the London Court of Arbitration http://www.lcia.org/
the ICC International Court of Arbitration in Paris
http://www.iccwbo.org/
the International Center for the settlement of investment
disputes (World Bank)
https://icsid.worldbank.org/apps/ICSIDWEB/Pages/defa
ult.aspx

The New York convention on the recognition and

enforcement of foreign arbitral awards (1958)
Advantages

Advantages when compared with litigation:

maintain a relationship with the other side once the dispute is over.
to stay in control of the process and not hand it over to the judge.
be reassured about the costs or the delay in waiting for a trial.
keep the dispute and settlement to be confidential.
achieve an outcome that can be agreed which a judge could not award.
look for a settlement rather than take the risk of a judge finding against
them.
use a system that is voluntary
use a system that encourages early settlement of disputes
use a system that is less stressful than going to Court
use a system that is less formal than a trial by judge.

Can ADR go wrong ?

When winning is the only thing that matters

If the other sides continues its strategy of coping, Im going to
continue this strategy of suing.
When it is only one alternative, not the method of
choice
When the procedure is allowed to become a litigation
look-alike and turns into litigation in disguise.
Few companies consider ADR when they are
convinced they are right
EU euro barometer on ADR (2012)

Only 11% of all EU companies have ever used an ADR

scheme, while 18% have used a court. Mediation style
ADR schemes have been used by 9% of all EU
companies while arbitration style ADR schemes have
been used by 4% of all EU companies.
Out of those companies that have encountered a
disagreement/dispute with another company, 28%
have used at least one ADR scheme, while 47% have
used a court.
Mediation style ADR schemes (23%) have been more
widely used than arbitration style schemes (10%).
EU euro barometer on ADR (2012)

Companies are more satisfied with ADR procedures

than they are with court procedures, in particular
when it comes to the duration (51% vs. 21%), the ease
(58% vs. 30%) and the costs (50% vs. 24%) of the
procedure.
Companies are also significantly more likely to be
"very satisfied" with ADR procedures than they are
with court procedures
The main reason for not using ADR is a lack of
awareness
Litigation

Submission of a dispute to a court of law

Problems associate with international litigation:
Jurisdiction
Which law governs the contract
Enforcement of judgment
Jurisdiction

To which court of which country

Every court has rules to determine which cases it will
hear private international law
Forum shopping
In the EU the jurisdiction is governed by the
Brussels Regulations (2000)
The law governing the contract

Unless the question is raised the judge will apply the local law
(lex fori)
When the issue is raised the judge will refer to international
private law rules are not the same in all countries but
similarity in the approach
Choice of law clause in the contract?
An implied choice?
hypothetical intention? Weight is given to the domicile of the parties,
the nationality, the place where the contract was made, the place of
performance
In the EU: the Rome convention on the law applicable to contractual
obligations
http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3Al33109
The law governing the contract

When the proper law is identified it will be applied

by the judge even if it is not the local law
http://www.coe.int/en/web/conventions/full-list/-/
conventions/treaty/062
Attempts of harmonization
ICSG
Enforcement of court judgments

Recognition of foreign judgments

Bilateral and multilateral agreements
Brussels Regulations a judgment of the court of
any member state must be recognized and given
effects to by the courts of any other EU member state