How to settle an International Dispute
Conflict is challenging at the best of times but what happens when disputes cross international borders? Settling an international dispute starts with prevention but there are also non-adversarial cures for disagreements
Avoid getting into a dispute to begin with by contracting clearly, equitably and unambiguously, getting legal advice early and conducting due diligence. “That’s the first thing anyone can do to protect themselves. Due diligence can be done through Austrade offices overseas, and with the assistance of your accountant and law firms here and overseas,” explains Andrew Hudson, partner at law firm Hunt & Hunt.
“You will need to ensure that they can provide assistance here and overseas in the jurisdiction in which you are going to trade. Local information is vital.”
Ask for legal, commercial and financial references, make sure you check them and keep accurate documentation of your due diligence process. “I often hear, ‘I found them on the internet so they should be all right’. People can’t be bothered with due diligence and it’s always those ones who are back within a week saying they have a problem,” says Hudson.
When contracting, ensure the agreement is properly drafted in English and legally effective. You can have versions in English and in another language, but the agreement must reflect that the English version takes precedence. Performance reviews should also be stated, accompanied by clear benchmarks.
Don’t forget to be explicit regarding intellectual property (IP). “Regarding intellectual property, the most important thing you can do is ensure you’ve registered your IP in all the relevant jurisdictions. This gives you a better ability to enforce your rights,” says Hudson.
Also ensure the agreement includes a proper dispute resolution clause covering cost, jurisdiction and enforcement.
“One popular option is a cascade process based on alternative dispute resolution given that there can be difficulties in using court systems overseas,” says Hudson. “In the event of a dispute, the first step is to have nominated representatives meet to negotiate in good faith. Should that fail, the parties have mediation, and failing that, they then, perhaps with the ICC rules. If no success with mediation, then they have arbitration to an agreed set of rules.
“Parties can elect to adopt the rules set to resolve disputes by the International Chamber of Commerce, the United Nations or , for instancethose of the Australian Commercial Disputes Centre for Dispute Resolution. However, before proceeding it is important to understanding the content of the which arbitration rules you are to adopt willing to submit to is critical as well; don’t just rely on the ‘brand’, actually check the rules before referencing them in the agreement.”
He adds: “You also need to reserve your right to urgent interlocutory action, for instance, to get an urgent court order to stop the other party behaving badly by breaching non –- competition, or confidentiality obligations or your IP rights.”
Make sure the governing law is Australian and the governing language is English for dispute resolution, even if you’re arguing the dispute overseas. Also, if you have to go to mediation or arbitration, “you’d like to make sure that it is accordance with Australian jurisdiction ideally. Or Singapore, Hong Kong or London,” he suggests.
Be aware that if you are selling particular commodities, they may already be governed by standard forms of agreement and arbitration. For instance if you sell grain, there are grain trader forms and processes already in place.