Prevention and resolution of disputes in international trade

We are currently in an economic stage of globalization and the internationalization of trade relations. Within this period, the increasing complexity of transactions and the current economic crisis are contributing factors to a greater proliferation of international commercial disputes.

At the same time, the presence of international organizations has increased and been legitimized by the approval of Protocols and Conventions, as well as the creation of new organizations or the strengthening of ones that are already in existence.

In this sphere, the work of the United Nations Commission on International Trade Law (www.uncitral.org), whose purpose is to promote the harmonization and unification of international commercial law, has been most influential. Among its many projects are: the Legislative Guide on Secured Transactions, the Convention on the Assignment of Receivables in International Trade, the Convention on the Use of Electronic Communications in International Contracts, the Practice Guide on Cross-Border Insolvency Cooperation, and the Legislative Guide on Privately Financed Infrastructure Projects. This organization has published the Model Law on International Commercial Arbitration, as well as the Model Law on International Commercial Conciliation, as legal frameworks for companies to include in their contracts.

Additionally, other organizations that serve to strengthen the application of the law have an increasingly strong presence. To regulate the financing of exports, the International Chamber of Commerce (www.iccwbo.org) has created the Documentary Credit Dispute Resolution Expertise (DOC-DEX) as an organization that mediates disputes related to documentary credits.

Forms of Prevention

Before executing a commercial transaction, it is highly recommended each of the following measures be taken:

• Study the company or companies with which you will be working. To do so, you may request solvency and risk reports from a specialized company.
• Confer with an expert on the subject matter who can aid in producing a complete contract that is tailored to the transaction at hand and contemplates potential impasses. In any case, you should at least be aware of the applicable laws and competent tribunals.
• Warranty coverage or documentary credits with prime entities, as well as the corresponding insurance policy coverage.

Dispute Resolution Mechanisms

If a conflict arises even though these precautionary measures have been taken, the following procedures are recommended:

• Resort to an international organization that provides mediation services. This enables you to submit your dispute to a neutral third party who is independent and a specialist in the field. Eighty-five per cent of disputes submitted to conciliation or mediation are successfully resolved. This is a fast and flexible method that is generally more cost-effective than other means. Parties must voluntarily submit themselves, and the decisions of mediators are not binding. There are multiple mediation bodies. Most international arbitration organizations have a mediation service. For disputes within specific subject matters, there are specialized organizations, such as WIPO Mediation Services (www.wipo.org) for intellectual property issues. In addition, the International Chamber of Commerce offers various dispute resolution procedures, among which companies can choose their ideal means.
• International Arbitration. If a matter cannot be successfully resolved by conciliation, arbitration is the next recommended mechanism. Similar to conciliation, it provides a more efficient and flexible alternative to ordinary jurisdiction. Its members are specialized and experienced in matters of international commerce. Unlike the decision of a mediator, arbitral awards render the same effects as a judicial decision, yet to execute awards, judicial intervention is necessary. Nevertheless, even the execution of an award can provide greater advantages than a judgment rendered by an ordinary tribunal, as more countries have ratified the principal conventions on the recognition and enforcement of arbitral awards (New York Convention of 10 June 1958 and Geneva Convention of 21 April 1961) than those that have signed conventions for the recognition and enforcement of foreign judicial decisions. The principal international arbitral tribunals are the International Chamber of Commerce, the International Center for the Settlement of Investment Disputes (which hears cases between investors and sovereign nations), the International Center for Dispute Resolution of the American Arbitration Association, the London Court of International Arbitration, and in Spain, the Court of Arbitration of Madrid and Barcelona.
• In the absence of agreement between the parties to submit the dispute to arbitration, and assuming the matter is not one foreseen under the contract, the option remains to take the dispute to the courts of a country. In theory, the most attractive forum is where the opposing party is domiciled or where its assets are located, as that would facilitate the execution of the judgment. However, it is important to first look at existing rules of international law to determine whether the tribunal of interest is competent.

Conclusion

As a means to prevent litigation, we recommend preparing a comprehensive contract that provides for potential eventualities in commercial transactions, as well as insurance against such occurrences through warranties and/or policies.

It is best to include a clause in the contract in which the parties agree to submit their dispute to a particular commercial mediation organization and, alternatively, to an international arbitration tribunal. In addition, the rules applicable to these proceedings and for the solution of potential disputes should be included.

Notwithstanding all of these options, it is recommended to try to ensure the execution of future judgments or awards by adopting provisional measures, if possible under the applicable laws.

For additional information regarding dispute resolution in Spain,