More and more businesses, large and small, move some operations offshore to save money. Unfortunately, many of these businesses find out the hard way that all justice systems are not created equally.
The Philippines is a good example. This Pacific nation is a popular outsourcing destination. Labor is cheap and the population has a very high English proficiency. But not all the news is good. The World Justice Project recently ranked the Philippine justice system 88th out of about 110 nations surveyed. Other popular overseas markets, like China (75th) and Vietnam (74th) aren’t much better.
So, your international business agreement probably needs to contain some Alternative Dispute Resolution provisions. Two of the more popular ones are explored below.
Arbitration
This litigation alternative is quite popular because it is the closest thing to a trial without actually going to court. The arbiter presides over hearings like a judge, while attorneys introduce evidence and make legal arguments. Sometimes the arbiter’s decision is binding, and sometimes it is nonbinding.
Additionally, in many cases, the arbiter controls pre-arbitration proceedings as well. That includes matters like summary judgement motions and discovery disputes. Furthermore, the rules of evidence are plainly laid out.
Unfortunately, not all countries are like the United States. In America, the Federal Arbitration Act essentially encourages contractual parties to submit disputes to arbitration whenever possible. But that’s not true in many other countries. So, it’s always important to work with an experienced international business attorney.
Mediation
If arbitration is unavailable for whatever reason, mediation may be the next best thing. Like arbitration, mediation is a private affair. Unlike arbitration, mediators lack broad powers and there are no established procedural or evidentiary rules.
Mediation works best when both parties agree to use it. In these cases, the success rate is about 75 percent. Typically, a mediator hears opening arguments from each side and then works to facilitate a settlement. That usually means conveying settlement offers and counter-offers between the parties.
There are some significant benefits to mediation instead of litigation. Mediation is much cheaper and faster than litigation. Furthermore, mediation gives the parties more control over the outcome. That’s especially important if the dispute is in a country with a suspect justice system.