Considering some facts regarding disputes in the International Trade arena. Most of the time parties in international trade develop all kind of businesses without primary concern of a potential conflict between them.
Some of these parties do business with the other for a first time; others have a long time relationship. Types of businesses are diverse: international sale of goods, agency, transportation, financing, and other types of contracts, in which more than one country is involved, and conflict of laws can arise. Agreements can provide some solution to this situation.
When one of the parties has a claim against the other, the aggravated party will consider filing a lawsuit, and if there is no previous agreement between them, the claimant will decide the forum where to file such claim. The defendant has the right to contest the claim.
If the contracting parties in an international trade business have not previously agreed on the law to apply and the jurisdiction to submit a conflict when it arises, it is possible that it may lead to favorable situations for one party and not so favorable for the other party. The claimant has the ability to decide which the best jurisdiction to file the complaint is. As an example, if a claim for damages is to be filed regarding an international contract on sale which involves England, Ecuador and the United States, the claimant would prefer to file his claim before a court in the United States, rather than England and Ecuador, taking in consideration the U.S. case law granting large damages awards including punitive damages.
According to Bowman and Brooke LLP managing partner Paul G. Cereghini “There is no place that offers the opportunities to the plaintiff’s side that the U.S. does, “Suing in the United States is an option for large awards and continues to be a trend. Forum Shopping is a pejorative description of the abuse by courts and lawyers in their exercise of the choice of jurisdiction. While Lord Denning, in The Atlantic Star, commented that “England is a good place to shop in, both for the quality of the goods and the speed of service.”
The defendant has the option to challenge jurisdiction and raise a motion of dismissal alleging forum non conveniens (a common law principle), which may be granted if the judge is convinced that there is a most convenient place where the trial can be conducted (i.e. where the alleged damages occurred). The defendant can also try the Anti Suit Injunction to restrain a party subject to English court jurisdiction to continue the proceedings in such foreign jurisdiction. Anyway, English Courts will use this option in a very cautious manner, due that in practice this common law resource appears to be an intromission to other jurisdictions. The defendant’s desire may be to bring the case to a jurisdiction more slow and costly for the claimant. This is the scenario of a “civilized war” as named by Roy Goode, examples of strategic steps from attorneys in order to find the best place to handle their client’s pretensions. This is also to persuade the opponent for a settlement before a sentence is issued.
It is always possible that parties in international trade agree parameters to manage their conflict. These parameters can be to submit their contractual relation to certain law and their possible conflicts to certain jurisdiction, to agree Arbitration and also ADR, before filing a formal claim, or during the proceedings.
The consensual submission for a certain jurisdiction or arbitration appears to be an adequate “agreed parameter”, which is also enforceable in practice. Where it is shown that one party is in breach of an agreed Jurisdiction or Arbitration clause, English Courts tend to grant the Anti Suit Injunction based on the grounds that this is a contractual right. There may be a good reason in order not to grant an injunction.
Millet LJ in The Angelic Grace Case stated, “where an injunction is sought to restrain a party from proceeding in a foreign Court in breach of an arbitration agreement governed by English law, the English Court need feel no diffidence in granting the injunction.”
The Ivan Zagubanski confirms the test to be applied in this kind of cases: “The injunction may be granted if the claimant can prove the existence of an arbitration clause and (ii) there are no exceptional circumstances inviting a refusal of the relief.”
Therefore, in order to reduce the possibility of forum shopping a valid option is that parties agree an exclusive Jurisdiction Clause, also known as forum-selection clause. (they can also execute a separate Jurisdiction Agreement) Parties may also include a choice-of-law provision in order to decide which law is to be applied. It is now very common to agree arbitration in the same contract.
Some laws may not consider valid a clause to waive jurisdiction, as the Australian Carriage of Goods by Sea Act 1991. The People’s Republic of China enforces these clauses but subject to reciprocity. The Andean Community International Multimodal Transportation regulations (Community Law for Ecuador, Colombia, Peru and Bolivia) offer the complainant some choices for forum shopping, including, but not limited, to the jurisdiction previously agreed in the transportation contract or waybill. These regulations also consider the possibility to agree arbitration between the parties, but Arbitrators are compelled to apply the Community regulations. It is also stated in general that any agreement between parties that goes in breach of The Regulations is considered void and without effect.
The consensual selection of an exclusive forum to solve disputes has to be taken in consideration of its advantages and disadvantages. If parties agree in English law to govern their contractual relationship the case will go for litigation, if no arbitration clause is included, unless parties agree in it once the conflict arises, which is less probable, due to the possibly not equal bargaining power of every party involved. Litigation process is determined by the Civil Procedure Rules. In the case of arbitration, the parties has the option of appointing the Arbitration Center, and also the possibility to appoint the arbitrators, according to the Arbitration clause. It is also mentioned that arbitration results a less expensive option than litigation. This is possibly not so exact, with an international trade conflict.
One of the advantages of arbitration is that every procedure is considered confidential. Parties are generally not entitled to disclosure the materials discussed in the arbitration procedure.
While in litigation is not possible, Arbitrators can award compound interest, according to Section 49(3) of the Arbitration Act 1996.
Arbitration seems to be a quicker method of conflict resolution. Appeals are very restricted to the agreement of all the parties to the proceedings, or with the leave of the court, which is granted only on a question of law, according to section 70(2) and (3) of the Arbitration Act 1996.
Roy Goode, Commercial Law. Third Edition
Sir Anthony Clarke MR., The differing approach to commercial litigation in the
European Court of Justice and the courts of England & Wales I. Article taken from a lecture give to the Society for Advance Legal Studies on February 23, 2006.
Emil Petrossian, In Pursuit of the Perfect Forum: Transnational Forum Shopping in the United States and England. Loyola of Los Angeles Law Review. Vol. 40:1257
J.G. Collier, Conflict of Laws, third edition, Cambridge University Press
Lloydâ€™s Law Reports.  Vol. 1 Page 106-126
Donald C. Dowling, Jr., Forum Shopping and Other Reflections on Litigation Involving
U.S. and European Businesses. Pace University. DigitalCommons@Pace .Pace International Law Review School of Law. 1-1-1995
Dan Jerker B. Svantesson, In Defence of the Doctrine of Forum Non Conveniens. Bond University, ePublications@bond. Law papers Faculty of Law 1-1-2005
Prof. William Tetley, Q.C. Jurisdiction Clauses and Forum non conveniens in the carriage of goods by sea. http://www.mcgill.ca/files/maritimelaw/jurisdiction.pdf