An industrial pump company signs a supply agreement with an
overseas supplier, receives eight million dollars' worth of
defective goods, and does what seems logical: it sues in the
supplier's home court. Five years later, it has spent more on
legal fees than the amount in dispute. It has a judgment. It has no
money. The supplier's assets are in three other countries, and
enforcing that foreign judgment means starting fresh proceedings in
each one.
This was not a naive company. It learned the hard way that it
picked the wrong dispute resolution mechanism.
In an international contract, dispute resolution is not
boilerplate. It may be the most important clause in the deal.
International commercial arbitration has become the default for
serious cross-border contracts for one reason: it produces a
decision you can enforce where the assets sit, without
re-litigating the case in multiple jurisdictions.
