Ans.
MAJOR ISSUES
IN SETTLEMENT OF INTERNATIONAL TRADE DISPUTES
Applicable Substantive Law
Most national legal systems permit the parties to an export
transaction or contract to choose the law .
which will govern their contractual relationship and disputes. The
"principle of party autonomy" allows the parties to select the law
which is most appropriate to their contract. The chosen law may be the
exporter's country or importer's country or that of a third (may be a neutral)
country law. The chosen law, as already mentioned is subject to certain
limitations like it should be bonafide and legal etc. In the absence of a
choice of law clause in the contract and in case the intention of the parties
regarding applicable law cannot be ascertained, the conflict of laws principles
are applied to determine the applicable law. In this process, the law of the
country with which the transaction is most closely connected was identified as
the applicable law. Ultimately the closely connecting factor was found to be
the place of intended performance of the contract which was later refined to
the principal place of business of the exporter whose performance is the
characteristic of the contract. Based on this, the exporter's country law was
determined as the applicable or proper law of the contract.
Jurisdiction or the Forum
You have learnt that there is no international court of justice
common to all nations where the parties can litigate their disputes. In the
absence of an arbitration agreement, the plaintiff (the aggrieved party) will
be obliged to take legal action against the defendant before the state courts.
In this context, the 'forum question that arise is whether the courts in
plaintiffs country or defendant's country are competent to hear the case. As a
general rule, and unless the parties have expressly agreed upon the place of
jurisdiction, only the courts at defendants' place of business are competent to
hear and try the case. The plaintiff will normally have to sue in the court of
the defendant which is in a foreign country where the defendant has assets. If
the defendant does not have assets in his country, the plaintiff may sue in a
third country where the defendant has assets. Although, inconvenient and costly
the plaintiff has no other alternative and in the interest of the plaintiff, it
is advantageous to file a suit in the court of a place or country where the defendant
has assets.
Venue of Arbitration
Regarding the venue for arbitration, the parties have the freedom
to agree and incorporate in the contract or arbitration agreement or clause the
country in which the arbitration has to be conducted and name the specific
arbitral tribunal or institution which will arbitrate the dispute taking into
account the cost, convenience etc. This depends on the negotiating ability of
the parties. If the arbitration agreement or the arbitration clause in a
contract is silent on the choice of venue for arbitration, the arbitration
tribunal shall determine the venue or place of arbitration having regard to the
circumstances of the case and the convenience of the parties.
Applicable Procedural Law
The governing or applicable
law as discussed earlier relates to the substantive law, which, as we have
seen, is selected by the parties to govern their contractual rights and duties
including the disputes. In the absence of an express or implied choice, the law
of the principal place of business of the exporter is the applicable
substantive law or the proper law of the contract.
Recognition and Enforcement of Foreign Judgements and Arbitral
Awards
If the defendant against whom ajudgement has been rendered does
not have assets which can be seized in the country of jurisdiction, it is
essential to have the judgement recognized and enforced in the defendant's home
country or in any third country where the defendant has assets. Foreign
Judgements are not automatically enforced in another country, unless a
bilateral or multilateral convention or agreement exists or national law
permits enforcement on the basis of reciprocity. Any judgement given in the
country of a party against the other party will have to be recognized and
enforced in the country of that other party or in any third country where the
other party has his assets. Otherwise, the whole litigation will be only a
futile exercise.
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