This is the second in a series of bulletins highlighting
practical strategies for dealing with common issues in
international business transactions and disputes. This bulletin is
about choice of contractual dispute resolution mechanism –
another key risk management tool.
The Key Message Here?
In the contract governing the international relationship or
transaction choose a dispute resolution mechanism. That's it.
Just choose a dispute resolution mechanism.
Because the default dispute resolution mechanism in any country
in which you'd want to be doing business is litigation. That
means that if you don't choose some other mechanism, you are,
by default, choosing to resolve all disputes arising out of your
international business transaction by litigation. There's
usually a better mechanism available.
It's actually worse than that, because you're not just
choosing to resolve all disputes by litigation. You're choosing
to do so in any jurisdiction in which any party to the dispute can
persuade the local court to exercise jurisdiction over the dispute.
That's probably a risk you don't want to run. Think about
where you do business for a minute. Do you want to resolve disputes
arising out of that business in those local courts?
What Are The Alternatives?
International commercial arbitration is one. There are some
strongly held views about arbitration. Perhaps they're best
summarized by saying that arbitration seems to be preferable to
litigation in theory, but in practice it sometimes turns out to be
worse. In my experience, as counsel and arbitrator, arbitration has
significant potential advantages over litigation: confidentiality,
customizable procedure and so cost effectiveness, access to
experienced decision makers with specific expertise if desired, and
ease of enforcement of the resulting awards, to name some. The key
thing to understand is that those benefits are all
potential. They don't just drop into your lap
when you include the magic word "arbitration" in your
contract. You have to work for them. To realize them you need
specialized arbitration expertise, in your counsel, drafting the
arbitration agreement and conducting the arbitration, and in your
arbitrator. But, with that expertise, it can indeed be done.
Litigation is rarely the best dispute resolution option. But if
that is your choice, the next key message is to choose an
exclusive jurisdiction in which to litigate.
Again, if you don't choose some jurisdiction you are, by
default, choosing to litigate anywhere in the world any party can
persuade the local court to exercise jurisdiction. But just
choosing a non-exclusive jurisdiction doesn't eliminate that
risk. All that means is that you can't complain if you're
sued in the chosen jurisdiction and the other party can't
complain if you sue them there. It doesn't prevent either of
you trying to sue somewhere else. You still have that uncertainty.
If you choose an exclusive jurisdiction, you know where you're
going to sue and be sued. That uncertainty is resolved, that risk
A Couple of Closing Points
Just choose one dispute resolution mechanism.
It's not uncommon to see sophisticated contracts which provide
that all disputes arising under them will be resolved by both
arbitration and (often in the "boilerplate") litigation.
That's not a choice of dispute resolution mechanism. That's
a choice to spend a year or two litigating (in public) what the
required dispute resolution mechanism is, before getting to the
merits of the dispute. (There may be exceptions to this point,
where you want to choose different dispute resolution mechanisms
for different kinds of disputes arising under the same contract.
That can be done, with care.)
It's common for relationships or transactions to be governed
by more than one contract. If so, choose the same
dispute resolution mechanism for all of them. (Again, there may be
exceptions, drafted with care.)
Paying attention to these basic practical points can go a long
way to managing the risk of international business transactions, by
reducing the uncertainty about how disputes arising in them will be
It's not often that our little blog intersects with such titanic struggles as the U.S. presidential race – and by using the term "titanic" I certainly don't mean to suggest that anything disastrous is in the future.
J.J. v. C.C., is an interesting case in which the court held that an automotive garage owes a duty to minor children to secure the vehicles on the premises by locking the cars and safely storing the car keys...
In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
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