International Business Law Ch 3


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International Business Law Ch 3

  1. 1. Resolving InternationalCommercial Disputes<br />Chapter Three<br />
  2. 2. This Lesson Will Discuss<br />How international commercial disputes are resolved through judicial and non-judicial means (alternate dispute resolution or ADR).<br />How national attitudes differ with respect to making contracts and resolving disputes.<br />Problems associated with international litigation.<br />
  3. 3. Different Cultural Attitudes<br />High Context Cultures – seek to establish long-term business relationships based on trust. Most of the non-English speaking world operates this way.<br />Low Context Cultures – the deal is the thing, often predicated on the lowest bid philosophy. The contract is the key, not trust.<br />
  4. 4. ADR in International Contracts<br />Arbitration – has been around a long time (i.e. the Federal Arbitration Act of 1925, The British Arbitration Act of 1996, or the 1985 Model Law on International Commercial Arbitration from UNCITRAL). It must be agreed to in the contract or after the dispute arises. The dispute is decided by an impartial person or body. Generally no (or very limited) court review.<br />Mediation – uses an impartial mediator who listens to the arguments and offers a suggested solution, which is not binding.<br />Conciliation – the impartial conciliator seeks to help the parties resolve their own dispute on their own.<br />There are a multitude of international ADR bodies.<br />
  5. 5. Sample Arbitration Clause:<br />The London Court of International Arbitration: <br />&quot;Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under the LCIA Rules, which Rules are deemed to be incorporated by reference into this clause. <br />The number of arbitrators shall be [one/three]. <br />The seat, or legal place, of arbitration shall be [insert city or country]. <br />The language to be used in the arbitral proceedings shall be [insert language]. <br />The governing law of the contract shall be the substantive law of [insert governing law].“ <br />Source:<br />
  6. 6. The ICC – The International Court of Arbitration of the International Chamber of Commerce<br />See:<br />
  7. 7. The Arbitration Chamber of Paris<br />“The Arbitration Chamber of Paris is a non-profit organization with general competence, the mission of which is to provide companies of all sizes with the means to resolve disputes through arbitration or conciliation.”<br />“Founded in 1926, it is today the oldest arbitration centre in existence in France. Almost 30,000 disputes, linked to commercial and industrial activities, have been settled thanks to arbitration, which is why it is an organization used as a reference, and it enjoys an international reputation.”<br /><br />
  8. 8. Introduction to International Litigation<br />The Old Bailey, London, England<br />
  9. 9. BARAGONA v. KUWAIT GULF LINK TRANSPORT Co.<br />“The district court found that the Baragonas had established a prima facie case that the court had personal jurisdiction and awarded the Baragonas a default judgment of $4,907,048. KGL then elected to make an appearance in this action by filing a motion to set aside the judgment under Federal Rule of Civil Procedure 60(b)(4). After a hearing, the district court determined that KGL lacked minimum contacts with Georgia sufficient to support the exercise of personal jurisdiction under Georgia’s long-arm statute and granted KGL’s motion to vacate the default judgment. The Baragonas appeal.”<br /><br />
  10. 10. Jurisdiction & U.S. Due Process<br />The U.S. Supreme Court has held that before a company can be hauled into court in a foreign jurisdiction there must be certain minimum contacts between it and that jurisdiction. The case is International Shoe Co. v. Washington.<br />The test is somewhat nebulous : the assertion of jurisdiction must “not offend traditional notions of fair play and substantial justice.”<br />Once you leave the U.S. the standards are even murkier.<br />Doing business over the Internet makes things even more confusing.<br />
  11. 11. Obtaining Service of Process<br />In the U.S., personally serving the Defendant (D) is usually effective; doing it by mail, less so.<br />75 countries have signed the Hague Convention on the Service Abroad of Judicial and Extra-Judicial Documents in Civil and Commercial Matters, but there is still confusion and different rules even among the 75.<br />The safest (but slowest) approach is through the use of letters rogatory, which involves personal service through diplomatic channels.<br />
  12. 12. Venue<br />When several different courts have jurisdiction, which one should here the case?<br />Forum non conveniens is a judicial doctrine where the most appropriate court to hear the case is an inconvenient one for one of the parties (personal factors) or less convenient for the presentation of the case (public factors, such as location of the witnesses).<br />Venue arguments often involve forum shopping considerations.<br />Contracts often specify where venue attach, but there should be some reasonable connection to the case.<br />
  13. 13. Which Law Applies?<br />Depends of whether it involves a contract or tort case generally.<br />Is there a specific contract clause spelling it out?<br />Consider the domestic case of Texaco v. Pennzoil. <br />See Fed. Rule of Civil Proc. 44.1 on page 105 – foreign law is a matter of law, not fact in federal court. See the Finnish Fur co. case on pages 106-07 (apply a foreign law that applies, unless it is “inherently vicious, wicked, or immoral, and shocking to the prevailing moral sense.”<br />What is an antisuit injunction?<br />
  14. 14. Enforcing Judgments<br />So you have a judgment, how do you collect it?<br />About 30 U.S. states follow the Uniform Recognition of Foreign Money Judgments Act.<br />Whose currency should the judgment be paid in? About 25 U.S. states have adopted the Uniform Foreign Money Claims Act (see Manches & Co. v. Gilby case on page 109).<br />