INTRODUCTION

Most international commercial disputes are able to be resolved by the parties themselves. This is by far the least expensive and most satisfactory outcome. However, for the very small percentage of disputes that cannot be resolved amicably, it is necessary to seek the intervention of a third party. The three options canvassed in this chapter are litigation, arbitration and mediation. Most standard international contracts of sale contain a clause that sets out which option the parties will use if the dispute cannot be resolved by negotiation and also, most importantly, the particular institution and place where any dispute resolution will take place. As noted in Chapter 2, those entering into international contracts are also advised to select the law that any dispute resolution body will use in resolving the dispute.

Litigation, arbitration and mediation each have their strengths and weaknesses as methods for resolving international disputes. Litigation is the most formal method, with strict rules of court procedure governing the conduct of disputes. However, because courts have the power to enforce their decisions, it is often seen as the best method for providing a final resolution of the matter. In addition, the parties can usually be confident of a well-reasoned decision and, if such is not the case, the option exists for appeal to a higher court. In most developed countries, the independence of the judiciary from the other arms of government and the business community promotes impartial decision making. On the other hand, litigation has many disadvantages.