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Resolving International Business Disputes by Alternative Dispute Resolution
Conducting international business presents its own unique challenges. As you cross borders, you must navigate different customs, laws, and business practices in order to be successful. So, when business disputes occur between parties in different countries, determining how to resolve these issues that result in the best outcome possible may seem difficult if not impossible. However, Alternative dispute resolution (ADR) is an ideal solution for international business disputes. It is more flexible in terms of procedure and is often easier to enforce certain ADR awards, such as those achieved through arbitration services. Here, we discuss the nature of international business disputes and the dispute resolution options available.
Causes of international business conflicts
As soon as your business extends beyond your home borders, you will have to face certain factors that can cause conflicts. This applies whether you are importing or exporting goods, or providing services in another country. Whatever your business model, once your involvement is more than one jurisdiction, you may find yourself having to deal with an international business conflict. These are some common causes of international business conflicts:
Languages barriers
Doing business in another country almost always requires communication in more than one language. If there is a misunderstanding due to translation issues, you may find yourself in conflict, even if you choose an “official” language for your business transactions. You need to make sure to use clear terms that are understood by all parties, but even then, conflict could occur.
Rights, rules, and regulations
Along with language issues, there may be differences between laws and regulations that rule the different parties involved across multiple countries. What is understood to be legal or an inherent right in one country may not apply in another country. Assuming that your cross-border business partner, customer, or supplier has to comply with the same laws as you do may lead to business disputes.
Documentation errors
Much like language barriers, there can be errors in documentation as you cross from one regulatory regime to another. When dealing in the same country, there is always a chance of documentation errors – when you delve into dealings in other jurisdictions, this risk increases. From small issues as formatting to larger considerations such as authorizations and government fees, you need to be aware of what documentation is required and accepted in the various countries you are doing business in.
Foreign currency issues
You may prefer dealing in one currency while your foreign partner prefers another. Or all parties may agree on a third currency. No matter how it works out, once more than one currency is involved in a business deal, the potential for conflict increases. This is because exchange rates fluctuate, and you most likely will have very little control over the increases and decreases in the value of the currencies you and your partners are using. This can become even more tenuous when you consider payment and other financial terms that you have agreed upon. Interest rates tied to fluctuating indicators such as LIBOR can also become problematic, as well as payment terms over an extended period, raising the risk of impacts from exchange rates over time.
Delivery problems
Once all the language and terms are handled, you may have to deal with issues in delivery. Supply chains can be intricate and complicated, especially when having to deal with transportation, border crossings, customs, etc. Issues with the quality of delivered products or services, unforeseen delays in executing contracts, alterations to products or services that were not agreed upon, geopolitical or natural events delaying or blocking entry – these are just a few of the problems that could cause an international business dispute.
How to resolve international business disputes?
Despite your best efforts, there are so many possibilities for international business disputes that you should be familiar with the various options for resolving cross-border business conflicts. The main three methods for resolving international business disputes are:
- International litigation: This is probably the most costly and complicated. Selecting under which jurisdiction to pursue litigation can be difficult as there may be issues with conflicts of law between the home countries of each party. Obtaining and submitting evidence and statements from foreign entities may also present obstacles for a timely resolution. Then, if a judgment is handed down, enforcing that decision in another country may also be problematic as some countries do not recognize decisions outside their own courts.
- International mediation: This is an alternative dispute resolution method that is the most informal. Nevertheless, if the parties are amenable to discussion and they select an experienced mediator from a reputable dispute resolution center, those involved may be able to come to an agreed remedy for any dispute without having to go through a formal process.
- International arbitration: Arbitration is generally the most preferred method for resolving international business disputes. This is a private process that is similar to a court proceeding, but with more flexibility, as an appointed arbitrator considers arguments and evidence and decides a resolution. Most countries have signed the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards (NY Convention), so any decision from an arbitration carries more force than meditation.
Is arbitration most suitable to resolve disputes?
As mentioned above, arbitration is the most suitable method for resolving international business disputes. While it may seem like litigation, it is less formal and more flexible than court proceedings. Most contracts and agreements will have an arbitration clause that sets out the rules and procedures, as well as appoints arbitrators so that all involved will know what to expect. Arbitrators conduct private hearings so that any evidence or testimony is confidential, and arbitration is usually much less costly in terms of time and money than court proceedings as you will not have to deal with scheduling, motions, legal fees, and other details of litigation. Furthermore, it is important to emphasize again that arbitral awards are recognized by most jurisdictions through the NY Convention while enforcing court decisions can be difficult in another country.
How to Find Arbitration in Thailand
Arbitration in Thailand is a well-accepted method of alternative dispute resolution. If you find yourself in need of arbitration services in Thailand, you can find experienced arbitrators and state-of-the-art facilities at the Thailand Arbitration Center (THAC). THAC has the capacity and the international standing to handle cross-border business disputes effectively and efficiently.
About THAC
Thailand Arbitration Center is a dispute resolution center providing mediation and arbitration services at international standards. THAC’s facilities are equipped to handle in-person and remote mediation and arbitration hearings, and THAC offers access to a wide range of arbitrators and mediators well-versed and highly experienced across an array of specialties to ensure the best results possible for all parties involved.
