International Dispute Resolution Section
One Clause can Prevent Many Problems
by S. George Alfonso
The Law Offices of S. George Alfonso, PLLC
Worldwide – World Class
Companies large and small which deal in international commercial commerce, learn all too often the serious ramifications of what the absence of a clear, concise and well drafted “Dispute Resolution Sectcion” can mean only after a serious dispute has already arisen. This belated realization can severely damage or even destroy the specific business venture, as well as the client’s business itself.
A well drafted commercial contract (both in the U.S. and internationally), is like a road map – it should establish a clear, well defined and agreed-upon path by which the parties jointly acknowledge, understand and agree how they will proceed from point A to point B in achieving their mutual objectives under the agreement.
When the agreement is between two or more businesses of different nationalities, additional issues arise as to how to resolve disputes. Issues which can and should be addressed regarding disputes between international parties to a commercial contract can include the following:
Required Mediation Before Litigation: Do the parties agree to a cooling off period in order to mediate – either informally or formally before commencing litigation?;
Venue: In what nation(s) may a lawsuit be brought under the agreement?;
Is there an agreed-upon neutral third party nation in which to conduct arbitration?
Only one designated nation or are there multiple options of nations for litigation?
Arbitration/Litigation or Both: Do the parties agree to conduct arbitration exclusively rather than litigate or may the parties undertake to litigate or arbitrate?
If Yes: Under what arbitral entity and rules?
Arbitration must be agreed to by the parties;
Confidentiality: The parties may agree to confidential arbitration;
Choice of Law: Which nation’s(s’) laws are to/may be applied and control?;
Substantive Law: Controlling law regarding the claims/defenses/damages;
Procedural Law: Controlling law regarding the process of how litigation occurs;
Service: Have the parties agreed to what will be valid service upon one another, which is required in order to commence litigation or arbitration; and how such service may be perfected upon each party?
Without a party being validly served, litigation or arbitration may not commence or if commenced any subsequent judgment or award may be challenged by the judgment debtor/respondent due to a failure of valid service;
Certification of Arbitral Award or Foreign Civil Judgment: Have the parties agreed on how a court judgment or arbitral award may be executed in a jurisdiction other than where said judgment or award was issued?
The absence of one or more of these terms can effectively render a party unreachable or unaccountable based upon its extra-jurisdictional location. Absent an effective international dispute resolution clause, a defendant/respondent may choose to:
1.
Ignore a lawsuit or arbitration filed by the plaintiff/complainant in the plaintiff/complainant’s home jurisdiction;
2.
Challenge the venue (location) of any such filed lawsuit/arbitration in an attempt to relocate to the litigation/arbitration to the defendant/respondent’s nation;
or,
3.
Enter into litigation or arbitration with no intent to pay any judgment or arbitral award.
The absence of such critical terms can effectively render a valid contractual claim as wholly ineffective or completely worthless to pursue. Such a reality may not be based on the absence of breach by the offending party, but by the reality of the situation in that due to the absence of the necessary terms, the offending party is literally beyond the shores of justice. Such a reality can be avoided by retaining experienced international counsel to draft a clear, well defined and effective road map to address any dispute which may arise between the parties.
S. George Alfonso
The Law Offices of S. George Alfonso, PLLC
SGeorge@WorldWideCounsel.Net