Overview

It is inevitable that the many contractual relationships between seller and buyer, seller and issuing bank, buyer and issuing bank, and seller and shipowner that arise in the course of an international sales transaction will become sources of dispute. At some stage, the parties need to decide on the means of resolving the dispute. Should they go to the courts – the mechanism provided by the state

– to settle the issue? Or should they look to other methods, such as arbitration or conciliation? The decision is one to be made in the light of the advantages and disadvantages of the different methods, their suitability for the particular business relationship, and the legal, economic and commercial backgrounds of the parties to the dispute. Litigation operating around well-settled legal rules and principles, procedural rules, and the abundance of precedents is the obvious choice. Acrimony created during the course of litigation, however, may not suit parties intending to consolidate or maintain a long-term commercial relationship. In an international commercial context, uncertainties about procedural rules and substantive laws of different states may also make it unattractive.

Unification of law relating to international sales and transportation of cargo has been achieved to a limited extent through international conventions such as the Vienna Convention, the HagueVisby Rules, the Hamburg Rules, and rules such as the International Rules for the Interpretation of Trade Terms (INCOTERMS) and the Uniform Customs and Practice for Documentary Credits 500 (UCP), devised by international organisations. However, such harmonisation is piecemeal, since not all states have adopted the international conventions, or promote the use of standardised rules. Protection against nasty surprises may be sought by inserting clauses on jurisdiction (the forum for instituting proceedings) and choice of law (the law applicable to the contract; for example, English law or French law). But the insertion of choice of jurisdiction and choice of law clauses is not always effective in achieving the parties’ wishes. It is possible that the forum might take the view that it is not the appropriate forum, or it may not apply the law chosen by the parties on grounds of public policy. In an uncertain climate, other forms of dispute resolution, such as arbitration, which impart a greater degree of control to the parties over procedural rules and legal principles – for example, law merchant (lex mercatoria) or equitable principles (ex aequo et bono), to be used for deciding the issue – may be attractive. The decision, at the end of the day, is a pragmatic one. It depends on the circumstances of the case, what the parties perceive as offering the best solution in the light of the merits and demerits of the different methods available, and which method best serves their needs.

The chapters in this Part deal with the different forms of dispute resolution: litigation, arbitration and mediation. Chapter 16 addresses the civil jurisdiction of the English courts, now governed primarily by EC Regulation 44/2001. Chapter 17 deals with the rules applicable by English courts for determining the substantive law applicable to a contract, now contained in EC Regulation 593/2008, which has replaced the Rome Convention 1980 and applies to contracts concluded after 17 December 2009. Chapter 18 considers the recognition in England of foreign judgments – both European judgments under Regulation 44/2001 and other judgments under the common law, the Administration of Justice Act 1920 and the Foreign Judgments (Reciprocal Enforcement) Act 1933. Lastly, Chapters 19 and 20 consider arbitration and mediation as alternative forms of dispute resolution.

Arbitration, as a form of dispute resolution, became popular after the Second World War. Chapter 19 considers the advantages and disadvantages of arbitration, and examines the various rules for international arbitration, the (English) Arbitration Act 1996 inspired by the United Nations Commission on International Trade Law (UNCITRAL)’s Model Law on Arbitration, and the recognition and enforcement of foreign arbitral awards under the New York Convention 1958.

The last decade of the 20th century saw the emergence of mediation as an effective medium for resolving commercial disputes. Chapter 20 examines some of its features, along with the associated issues of this new technique.