14. How do parties determine the rules, location, and method of resolving a dispute under an international agreement?
Parties to an international agreement generally employ various provisions to reduce uncertainty in the relationship and add a degree of confidence that a party will be able to enforce her rights. Below are three common clauses:
• Choice-of-Law Clause – A choice-of-law clause indicates the law that will govern the contractual relationship and any disputes arising thereunder. These clauses may identify the substantive and procedural law of a particular country, international treaty, or model law.
• Forum Selection Clause – These clauses indicate the appropriate venue for adjudicating disputes arising under the contract or business arrangement. It may also indicate a particular judicial body or geographic location.
• Arbitration Clauses – These clauses are extremely common in international agreements. They will generally require arbitration, indicate the rules that will apply, and designate the individuals or body to decide the dispute. Most countries in the world recognize and enforce arbitrations carried out in accordance with the requirements of the New York Convention. Numerous nations are members of treaties with other countries that provide further recognition and enforcement procedures for arbitration awards.
• Discussion: Why do you think the resolution of these terms of an international agreement are particularly important? If you were entering into an international agreement with a foreign party, how would you seek to address these provisions? Can you think of any other aspects of the agreement that should be fully addressed?
• Practice Question: Derek and Damien are negotiating a contract to export textiles from Haiti for sale in the United States. Explain the primary dispute resolution clauses that the parties should consider in their negotiations.