A problem that occasionally faces all exporters, and not only companies just beginning to export, is what to do when your foreign partner or buyer is not adhering to an established agreement. Parties entering an international contract can consider alternative methods of resolving disputes outside of the courtroom. These methods, which are generally known as Alternative Dispute Resolution (ADR), offer neutral mechanisms for resolving disputes that may arise and can include arbitration, conciliation and mediation.
Arbitration is a primary form of ADR by which the parties agree to submit their disputes to an arbitrator or a panel of arbitrators. Arbitrators have binding authority to render awards that are enforceable in the courts of most countries. Arbitration is often less costly, less litigious, and less time-consuming, and offers more privacy to the parties than litigation.
The parties agree to arbitration in the event of a dispute in the contracting stage by including an arbitration clause in their contract. Depending on what the parties have agreed to, either the parties will choose their own arbitrators and procedures (ad hoc arbitration) or submit their dispute to an arbitral institution.
There are many different arbitral institutions to which parties may turn in the event of a dispute. A number of regional institutions as well as additional information on arbitration may be found on the Office of the General Counsel’s homepage.
Mediation and Conciliation
Mediation, also known as conciliation, is a process in which parties to a dispute appoint a neutral third party to assist them in resolving their disputes. Unlike a judge or an arbitrator, the mediator does not have the power to compel the parties to accept a recommended solution. The goal of mediation is a voluntary negotiated settlement.