Even when two businesses at odds share the same language, culture and country, litigation can pose complex problems. In addition to how time-consuming it can be to go to court, the process can easily chip away at a company’s revenue. As far as international disputes are concerned, litigation in a foreign country often means comparing at least two different sets of laws. Further, enforcing any subsequent judgments can be difficult.
Keeping that in mind, the American Bar Association points out that arbitrating a dispute is often the preferred method. No matter the parties involved, arbitration provides the following:
- A quicker turnaround time
- More control for the parties involved
- Greater flexibility regarding where and when a hearing will take place
- Confidentiality, as everything is done in a private setting
Arbitration will also tie up loose ends so that decisions are considered final.
A report from the Graziado Business Review notes that on an international level, arbitration is most widely accepted as an alternative to litigation. In fact, many companies that do business globally make sure there is an arbitration clause included in all contracts. The article notes that any such clauses should include which country’s laws will govern the process, how many arbitrators may be involved, what language the process will take place in and how arbitrators will be appointed.
International companies’ leadership should keep in mind that when arbitration clauses are not clear, the process can quickly become muddied. For example, the laws of discovery may differ from arbitrator to arbitrator, which emphasizes the importance of determining ahead of time which laws will be considered. Having an attorney-reviewed clause in any international contract can provide a company with protection in the event a dispute arises.