In our modern, globally interconnected world companies from different nations frequently enter into business agreements with one another. While such joint ventures can create exciting opportunities, they can also run into challenges, or sour altogether. Thus, it is important to consider dispute resolution mechanisms at the outset of a contract or joint venture between international partners. International arbitration is the dispute mechanism best suited to resolving cross-border disputes. As the following five reasons show, international arbitration should be selected as the dispute resolution method between international partners for virtually any international contract:
In the United States, the Federal Arbitration Act ("FAA") provides the rules that govern most arbitrations, and is binding on both state and federal courts. See 9 U.S.C. § 1 et seq. But the FAA is "something of an anomaly" in federal legislation as it "bestow[s] no federal jurisdiction." Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 582 (2008). So motions to compel arbitration or enforcement proceedings must be brought in state courts unless there is some independent basis to assert jurisdiction (such as federal diversity jurisdiction).
The Court of Appeals for the Eleventh Circuit will be the next body to weigh in on a dispute between Del Monte International GmbH ("Del Monte") and Inversions y Procesadora Tropical INPROTSA, S.A. ("INPROTSA") over an exclusive sales agreement for pineapples. The case has been appealed to the Eleventh Circuit, and the appeal raises issues of the finality of international arbitration awards.
The International Bar Association is the world's foremost organization of lawyers, bar associations, law firms and law societies. Its membership includes more than 55,000 lawyers from over 160 countries, in addition to nearly 200 bar associations and legal societies.
Finnish company Nokia Oyj recently commenced what could be a protracted battle to enforce an international arbitration award won last month against Blackberry-maker Research in Motion Ltd. ("RIM"). In late November, Nokia sued RIM in federal court in California to enforce the Swedish arbitrator's decision, which stated that Nokia is entitled to receive royalties on RIM's sale of WLAN-compliant mobile devices. "Wireless local access network systems" or "WLAN" technology allows mobile devices to connect to WiFi networks.
The litigation of international disputes in U.S. Courts is often disfavored for the simple reason that the enforcement of judgments abroad is notoriously difficult. International arbitration is the preferred alternative to litigation because the United States, along with 145 other countries, is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, (commonly referred to as the New York Convention), a treaty that provides for the recognition and enforcement of international arbitral awards. Within the next year, the United States is expected to begin implementing a new treaty that will eliminate major obstacles to the enforcement of judgments abroad as to certain civil matters. The implementation of the treaty will give parties to international commercial agreements more flexibility in choosing their preferred method of dispute resolution.
Arbitration clauses international contracts have become increasingly common. Many global companies include arbitration provisions in their standard, pre-printed documents, such as estimates, purchase orders, and invoices. Are these arbitration clauses effective international commerce? The answer, surprisingly, is "probably not."