Discuss the major issues involved in settlement of international trade disputes.
List of Key Issues involved in Settlement of International Trade Disputes:
Applicable Substantive Law:
Applicable substantive law is the proper law applicable to contractual disputes. Substantive law deals with the content of law. Every contract has to be governed by some substantive law.
Applicable substantive law May or may not be the relevant national laws (of the exporter) depending upon the presence or absence of a choice of law clause in the contract.
If the choice of law clause exists in the contract, the substantive law will be the law expressively or impliedly selected and agreed by the parties. In the absence of a choice of law clause in the contract, the intention of the parties has to be normally ascertained.
If their intention cannot be ascertained, conflict of laws principles will be applied to determine applicable substantive law.
According to refined theory, the law of principal place of business of the party (exporter) whose performance is the characteristic of the contract should be the applicable law.
Also read | The Rights of an Unpaid Seller.
Jurisdiction or Forum:
After deciding the applicable substantive law, the next issue relates to the jurisdiction on or competence of the courts to hear the case. In the absence of an arbitration agreement, only the courts at defendants place of business are competent to hear and try the case.
It is in the interest of the plaintiff that he should file a suit in the court of a place or country where defendant has assets.
The best alternative is that export sales contract should have a choice of forum clause incorporating the court of the country which will be competent to hear the case and decide the dispute.
Venue of Arbitration:
The parties are free to agree on the place of arbitration. Failing any such agreement, the place of arbitration has to be determined by the Arbitral Tribunal having regard to the convenience of the parties and circumstances of the case.
Applicable Procedural Law:
Procedural law deals with how the substantive law is to be implemented. In the case NTPC versus Singer Company of USA, the Supreme Court has observed that arbitration proceedings have to be conducted in accordance with the procedural law of the country in which the arbitration is held unless the parties have agreed otherwise.
It is the interest of the parties to provide in their contract the agreed applicable procedural law to govern the arbitration or litigation.
But the procedural law should not be contrary to the public policy and the law of the country where arbitration or litigation is held.
Recognition and Enforcement of Foreign Judgements and Arbitral Awards:
Foreign judgements and arbitral awards can be enforced only when there is bilateral or multilateral convention or agreement exits or national law permits enforcement.
Enforcement involves access to the machinery of the state in which enforcement proceedings are to be taken. Arbitral awards in India are enforceable in the same manner in foreign countries which are parties to New York Convention or Geneva Convention.
Also read | Explain Major Commodities Agreements.
The new Arbitration and Conciliation Act provides that the foreign awards are deemed to be decree of the court and enforceable in India.