Samples Business Settlement of Disputes in International Business Transactions

Settlement of Disputes in International Business Transactions

906 words 4 page(s)

As business is transacted between two different countries, disputes are bound to arise due to different laws that govern the settlement of such disputes within their countries. While trade is encouraged between different countries, there are restrictions and boundaries to conducting business in foreign countries as opposed to business in home country. Each country has its own rules and if one has to do business, there has to be an agreement detailing how business is to be conducted, areas of operation, rules governing such kind of business and how one is to conduct himself in that foreign country in which he is doing business. The countries of interest in this case are the United States and China. One such case where dispute arose between the two countries is in the electronics area in the year 2010 concerning electronic payment services. Many such cases take place and various methods are used in solving the disputes.

Benefits of utilizing the negotiation process
Negotiation as compared to litigation has several advantages and benefits. Engaging in negotiation, a country solves her problems privately and confidentially without any other country knowing about it which can be embarrassing and sometimes hurt a country’s business opportunities elsewhere. Parties involved in the negotiation engage directly without involving third parties which takes a short period. The parties involved can explore other alternatives of solving their problems not just the current ones but avoiding similar instances in the future. Countries or parties involved in the dispute save legal costs since in negotiations legal fee is not involved. There can be very creative solutions to some needs that may have been overlooked and this can be part of the settlement options. As this is a process involving only the parties concerned, there may be no public record of what is taking place in the negotiations. As opposed to litigation, in depth searching of issues is reduced as negotiation is more informal than formal as is the case in litigation and again, procedures are also avoided. In negotiation, the situation is friendlier than other methods and in this way; business is more likely to continue in the future.

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WTO involvement in the Negotiation Process
In trade or business disputes, the World Trade Organization (WTO) is a body that was created to deal with unfulfilled or broken promises between member nations. The organization works on the principles of equitability, effectiveness, mutual acceptance and fast process in solving disputes. There are laid down procedures and regulations governing how the organization runs and its involvement in disputes (Sornarajah, 2000). Disputes come about as a result of a country does something that is contrary to member countries to the WTO and as such, they consider such an action to be against the agreements or a country may fail to meet expectations of other member countries. Initially, WTO follows the laid down procedures on solving issues and disputes and this has to be prompt. It is sort of a court or a tribunal and all member countries are involved. When a country is considered to have gone against the rules and regulations set the agreement, or two countries are in dispute, then all member countries apply to be enjoined in the case and are considered to be having interest hence they are allowed to take part. The countries in dispute are allowed to consult among themselves to come to a conclusion without involvement of the others but if they fail, then the WTO appoints a panel to deal with the dispute and helps in the solution of the disputes. Therefore the WTO is involved in the cases of the member countries and has power to make or influence decisions and outcomes (Roe, 2011).

Implications of choosing private law to seek Ratification
Private Law is that law which seeks to establish courts of a country that have power and authority to deal with foreign elements and also to determine which laws of a country can be used to govern foreign elements, that is to deal with disputes or problems that do not originate in that particular country. Choosing private law to seek ratification means that one does not trust laws of its own country. Private law will overlook some elements of the laws of a country as they are complex and differ from one country to another. Therefore, there may or may not be much harmonization in the laws ratified. When foreign law is sought in ratification, many foreign elements may be incorporated which may not be in the interest of the parties concerned. Sometimes this law has led to extreme measures that have been found to be difficult to implement by the concerned parties and has complicated things further. Foreign law is not understood by those who seek it as much as governing law may be understood by people of a country. It may need expert interpretation if anything has to be implemented (Sornarajah, 2004).

Ramifications of choosing Governing Law
Ramification refers to consequences and effects of a decision which are not obvious at first. They may be consequences that are overlooked or not taken serious as to be having serious effects. When dealing with disputes, applying governing law may be unfair to the foreigner involved and such law may not be applicable in his country. Governing laws may have unseen consequences that will only be felt during its application and in this case, it is important to draft a clause that will encompass all areas.