More companies and small businesses are entering into partnerships with international investors or investing in businesses in other countries. This has been made possible with the improvements in technology in transport and communication. Distances that were once difficult to cross have been shortened because of the advancements in communication and transport technology. Businesses are therefore able to form partnerships with businesses in other countries quite easily.
Although this has opened up trade and allowed businesses to grow into multinational corporations, there has been an increase in the occurrences of as a result. Resolving amongst commercial entities with the involvement of legal systems can be difficult. This is especially true where the laws in the two countries differ a great deal.
In the past few years, companies experiencing Washington are turning to arbitration for the resolving of their conflicts. There are many benefits to using arbitration as opposed to using a formal legal system to resolve conflicts.
Using arbitration will ensure that the awards are readily enforced. Most countries are 1958 New York Convention signatories. This convention facilitates the enforcement of arbitral awards. This is unlike a court judgment. Although the courts may rule for an award, the award may not be enforced as some countries such as the US may not have laws that stipulate that court rulings made in their courts should be enforced internationally.
Deciding can be very difficult mostly because laws in different countries differ. It is even worse when the legal systems differ a great deal. Corporations agreeing to have their disputes settled in foreign courts often find that they are giving away the home ground advantage. These disputes are often settled in favor of the home country.
However, arbitration ensures that Washington are decided under neutral terms. The arbitrator may be selected by either party but with the agreement of both parties. No legal systems from either of the countries of the companies are applied to the case. The arbitrator will only consider the terms of the contract and other evidence provide by both parties.
The ruling of the arbitrator in the case is final and must be applied by the parties. It is therefore important for the companies to ensure that the arbitrator is neutral and can therefore make an impartial judgment.
Resolving using arbitration allows both parties to have more control over the process. They will also have a better opportunity to hear each other out. Arbitration is a more amicable way of resolving disputes. Many companies are able to continue with their business relationship even after a dispute. Involving legal systems often ends up terminating the partnerships.
