RESOLVING INTERNATIONAL BUSINESS DISPUTES THROUGH

JURISDICTIONAL PROCESSES

Arbitration
When you hear disputes concerning importing and exporting of international commodities,
you often hear arbitration being the preferred method of resolution since it is faster and less
costly. It is also not as divisive as, say, a court action or litigation taken between two parties
in conflict.

In other words, instead of going into trial, parties may opt to undergo arbitration instead.

When two parties in dispute agree to go into arbitration, both agree to be bound by the ruling
or decision of the arbitrator, who is the one who will hand down the decision on how to
settle or resolve the dispute. He hands down his decision, and the dispute is resolved. In short,
he acts as a judge, which means that sometimes his decision may also be contested.

There could be a single arbitrator, or there could be a panel composed of several arbitrators,
acting as a single entity.

There are two types of arbitration:

 Institutional arbitration: These days, there are now a lot of arbitral institutions in place, all
with the objective of providing arbitral services or administering arbitrations that are related
to international business and commercial disputes. They play an active role in an institutional
type of arbitration.

 Ad hoc arbitration: This type of arbitration is carried out without an institution or specialist

administering the proceedings. The parties are the ones to organize the proceedings, including
the selection of the arbitrator or arbitrators.

Court litigation
Most businesses try to avoid litigation as much as possible. After all, as mentioned earlier,
they can be far costlier, and definitely more stressful. Compared to arbitration, litigation
usually takes more time. Litigation, then, is seen as the last resort when arbitration, mediation
and conciliation are unsuccessful.

In this method, the disputes are submitted to the court which has the jurisdiction over it – it
may be the country of the one who is making the claim, or that of the respondent. There may
be another dispute on which tribunal or court should have jurisdiction (which is another
reason why businesses want to avoid going to court unless they have to).

There are also other considerations to be factored in, such as the applicable laws and the
language and culture of the territories.
 RESOLVING INTERNATIONAL BUSINESS DISPUTES THROUGH NON-
JURISDICTIONAL PROCESSES

Conciliation
Another alternate dispute resolution scheme that stays away from jurisdictional process is
conciliation, which is currently governed by the Conciliation Rules adopted by the United
Nations Commission on International Trade Law (UNCITRAL).

In conciliation, the parties involved are:

 The parties in dispute; and

 The conciliator, or a third party to settle the dispute. The conciliator must have been chosen
by the two parties in dispute. He or she is the one who decides how to go about resolving the
dispute, depending on his or her judgment. She may want to hear out the parties separately, or
together.
Just like arbitration, there are two types of conciliation proceedings that may be conducted by
the conciliator:

 Institutional conciliation: The proceedings are organized and managed by an institution that

specializes in administering arbitrations.

 Ad hoc conciliation: The conciliation is organized, managed and carried out by the parties,
without the participation or assistance of an arbitral specialist or arbitration institution.
As the word implies, conciliation requires the full agreement or consent of all the disagreeing
parties. After the proceedings, the conciliator will present his proposals or recommendations.
If the parties agree, the conciliation is a success. If not, they can try other methods, such as
mediation or arbitration. However, the conciliator will no longer qualify as an arbitrator.

Mediation
In an analogy made by Daniel Q. Posin, he likened the resolution of an international business
dispute to a simple case of a rear-end SUV collision. The parties involved undergo mediation
in order to avoid the “risks, expense, delay and the stress of litigation” that are likely to result
if the dispute is not resolved. In short, there is not much difference between international
business mediation and domestic mediation; it’s just the scope and the scale that is different,
but the concepts are basically the same.

Mediation and conciliation are also similar in many ways. However, the third party is known
as the “mediator”. He will examine the claims of the disagreeing parties and, after evaluation,
presents possible solutions to resolve the problem.

His role is to present all sides of the story to the parties, without trying to influence them to
decide on one thing. He does not propose a way to resolve a problem, he just presents
possible solutions. The final decision on whether to choose any of these possible solutions
remains in the hands of the parties. In other words, the mediator also acts as a guide and a
moderator.

Again, mediation also has two types: ad hoc and institutionalized.

Mini-trials
The name may deceive you into thinking that it is a judicial process. In a way, it looks like
one, but it is not. It is, for all intents and purposes, a shorter and non-juridical version of a
court trial. Currently, this method is used in the United States, and its main objective is to get
disagreeing parties to reach an agreement and an amicable settlement without going to a full
trial.

Both parties will choose their own legal counsels or representation, and the mini-trial
conducted in front of senior executives of the parties, in the presence of advisers or observers
who will take a neutral stance throughout the proceedings. In the proceedings, they will be
giving advice when asked, and the senior executives are there to come up with an amicable
settlement or solution, and not to decide on who will win the dispute.