Globalization of business and trade creates opportunity but oftentimes opportunity breads challenges. From shipping vessels blocking the Suez Canal to delays in work product as entire offices shut down, many business owners with international business dealings became all too familiar with the issues during the pandemic.

Even without the added stress of a global pandemic, most of today’s business owners will face issues which cross borders and generate multi-layered disruptions during the life cycle of their company. And, global disasters aren’t the only impetus for a business dispute. From minor disagreements to major breaches of contract, a business should always be prepared to mitigate risks and having a solid dispute resolution plan must be at the forefront.

You may be saying, “Domestic disputes also vary in size and scope so why do I need a separate game plan when dealing with international business relationships?” Let’s dig in.

Why do contracts between multinational companies require additional considerations?

Any contract between foreign countries instantaneously raises the question of which country’s laws apply to the contract and the resolution, which country has court jurisdiction, and how will the court’s judgement be enforced. Additional obstacles to consider when disputing an issue in a foreign court are their customs, traditions, prejudices and corruption. As well as the education of the final decision maker, most often a judge, who may have little to no understanding of your particular industry or technology and may not grasp the issues being presented.

These problems can typically be addressed by the inclusion of international arbitration as the dispute resolution method of choice stated in the business contract upon its signing. An experienced international arbitration counselor can advise on the specifics of an arbitration clause in a multinational contract and should always be consulted.

Do you need a contract reviewed? Schedule a call with our team.

If arbitration wasn’t added to the initial contract and a dispute has already arisen, it is not too late. Both parties may still opt for arbitration. Again, an experienced counselor can provide guidance on how best to proceed

Why is arbitration one of the best options for solving an international business dispute?

As stated, arbitration allows multi-jurisdictional disputes to be resolved without involving the courts of the different countries. Arbitrators are also neutral parties chosen by the individuals involved in the dispute therefore they can be as experienced and knowledgeable about the specific industry, circumstances, legal issue or other variables as you’d like.

Litigation can also be costly and lengthy, a fact hated by most busy business owners. On the other hand, the general costs and length of time an arbitration may take are laid out ahead of time and agreed upon by the parties involved.

Additionally, arbitrations are for the most part private whereas a court case could be made public. This is particularly important to businesses who are afraid trade secrets could be revealed as a result of the dispute.

Still wondering what an arbitration is? For more information, view our Arbitration Espresso video.

Arbitration Espresso

How does arbitration reduce the costs of an international business dispute?

Arbitration is typically less expensive than going to court, however, there are still costs associated to settling your international business dispute. The main international arbitration costs are administrative fees, arbitrator compensation, case preparation fees and expert witnesses.

Top four tips to keep the cost of an international arbitration down include:

  1. Requesting your lawyer to choose cost-effective expert witnesses. A knowledgeable and experience professional can certainly help your case but there may be no need to hire the globally renowned expert when a perfectly suitable one may be available and require much less compensation.

  2. Request a limitation document production and hard copies. It’s not uncommon to see voluminous legal submissions for international arbitrations. But, most often it’s not necessary and creates more back and forth between sides as each attorney feels the need to respond to the other. It seems simple but a small request that attorneys keep documents to a modest number and that most documents be shared electronically can have a significant impact.

  3. Ask for short and realistic time periods. Timelines ensure all parties are being efficient and productive. They also allow you to have peace of mind and allow for planning.

  4. Select an experienced international arbitrator. An international arbitrator must follow all procedures with extreme diligence so the final award can not be overturned. Additionally, an experienced arbitrator will be able to more easily navigate the process, understands their role and is capable of bringing your dispute to a resolution in a timely fashion.

For all of these reasons, companies doing business across borders should retain legal counselors experienced in international contracts and international arbitration prior to and post contract negotiations or as soon as an issue arises.

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