DISPUTE AGREEMENT IN EXPORTS AND IMPORTS BUSINESS
Litigations and Arbitration in Import and Export Business.
I hope this article helps all dealers, particularly those who are in the Export-Import business - how to handle disputes in export and import trade.
I sell goods to you, you buy them, you pay the bill, and you use my interests. Simple. Both are happy. Right? But is it that simple in foreign trade? I'll say YES depends on how quickly you're untying the knot. In other terms, I'll say, ‘ taking off hindrances with the least time and least money is business ’. Am I right?
Let me discuss primarily the reasons for disputes in the export-import business. What are the reasons for Disputes in foreign business?
Reasons for disputes in foreign trade between exporters and importers can be numerous.
As per my experience in import-export trade for the once 25 years, the primary reason for disputes is the quality of the goods exported. Under contractual terms in numerous export contracts, the importer gets the opportunity to check the quality of goods only when the consignment reaches him. In numerous cases, by that time, the exporter would have gotten money. Indeed if the consignment is transferred on a collection basis, the importer can check the quality only after retiring the documents. Other reasons for the disputes can be delayed shipment or non-shipment due to changes in government regulations or market conditions, restricting exports, etc.
What are the strategies for settling disputes?
In any business, there are two essential strategies for dispute agreement- Litigation and arbitration.
Litigation is largely suitable due to the proverbial belated process, prohibition costs, and query of decision.
But what are the essential Limitations of Litigation? How fast litigation can be in the import-export business? Is it easy to educate and convince on judgments with proper documentary evidence? How accessible to both importers and exporters under Litigation in foreign business? Will it affect both exporters and importers in their business due to a bad image among the public? How to affect the trade relationship for both dealers and buyers under litigation? Are foreign laws and procedures simple to handle? Let me talk about this area also here
Slow procedure: As you know, nearly all civil process of litigation is slow. The court procedure proverbially takes huge time consuming and formalistic.
Avoidable Necessity of Export evidence and another witness: In foreign contracts, practices, procedures, and customs are different. A judge however well-versed may be, in law, can't be expected to know all these intricate matters. So, in courts, to educate the judge about these practices, witnesses who are experts and have knowledge in the field have to be produced to prove the practices, even before the witness is established.
Inconvenience to the Parties: Court timing and date of hearings may not be accessible to litigants. utmost of the time, cases are delayed and in that procedure, months drag on even for the completion of one witness. Even after a day’s long staying for a hearing, one may know, at the end of the day, that the case is adjourned for two months due to the non-availableness of the other advocate!
Adverse Public Image: Court proceedings are noway secret. The media always covers the developments in important cases. Even the superior court judgments are published. Matters, which have been private till the case is brought to a court of law, become subjects for public discussion that may bring notoriety, loss of goodwill, and long-standing character.
Bitterness and Disruption of Trade connections: When a matter goes to a court of law, it's immaterial which party may win as the age-old established relationship after the case is brought to litigation in a court, comes to an end with only acrimony advertisement bitterness.
Different Laws and Procedures: Foreign trade laws and procedures are more complicated. Litigation in foreign courts is more precious and delicate in comparison to domestic courts.
OK, Now let us discuss Arbitration under Imports and Exports. How does arbitration help exporters and importers if a dispute arises? How fast arbitration can take place under a dispute between a buyer and dealer in the export-import business? How precious compared to litigation under export import dispute between dealer and buyer? How does an arbitration under foreign business affect the Goodwill of both exporter and importer? What about the confidentiality of the dispute between importer and exporter in foreign trade?
What are the basic Advantages of Arbitration under a dispute between dealer and buyer in the export-import business of foreign trade?
Let me explain the essential advantages of arbitration in Export Import disputes compared to Litigation
Quickness: Definitely, arbitration is quicker than litigation. The procedure of arbitration can be finished as fast as the concerned parties desire. Under Arbitration Act, the arbitrators have to make the award within four months from the date of completion of all proceedings. generally, arbitration is settled within a period of four months to one year.
Inexpensiveness: Total incidental expenditure in arbitration is always much lower than in litigation. Arbitration fees are around 2 of the claim value or lower in institutional arbitration.
Promotes Goodwill: As the arbitrator is chosen by both parties, based on their faith and capability, arbitration becomes a normal process of goodwill. Arbitration proceedings and their outcome don't disturb the friendly relations between the exporter and importer.
Choice of Appropriate Arbitrator: As the arbitrator is chosen by both the parties and the name incorporated in the contract, who has the knowledge of customs and procedures of foreign trade, so separate expert evidence for instructing the judge doesn't arise.
Privacy: Arbitration proceedings aren't open to the public. The arbitrator’s award isn't published in any journals. This preserves the privacy of the parties. So, trade secrets as well as disagreements arising from the contracts don't come public.
Conclusion:
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