The environment in which businesses operate is very complex and dynamic. Thus, more often than not, disputes between businesses and parties usually arise. The most common type of conflict or dispute in the corporate world is usually on contracts. This may be manifested in parties reneging on the terms and conditions of the contract signed after discussion and agreement. In their bid to maximize profits which is usually the main purpose of them being set up, businesses across the continental divide usually enter into contracts with other parties. These parties may include individuals, group of individuals or other businesses. In most countries, such as the United States of America, United Kingdom and United Arab Emirates (UAE) among others, there are laws which give clear guidelines on the signing of contracts between parties. Moreover, these laws also give guidelines regarding the resolution of conflicts that may arise from signing of such contracts. While some of these countries such as the United States and the United Kingdom recognize contracts under specially formulated contract laws and also under the common laws or jurisdictions, others like United Arab Emirates recognize contracts under some chapters of their laws, penal codes and the contractual laws of other foreign countries. The contractual conflicts arising in the corporate world are usually solved in a variety of ways with the most common being courts of law, mediation, direct negation between the conflicting parties and arbitration.
Conflict resolution is an integral part of the corporate world aimed at resolving differences, commonly referred to as disputes, between parties. Disputes arising are usually resolved by the method stipulated in the clauses touching on conflict resolution in the contract agreement. Thus, it is imperative that parties in any contract read, discuss, and understand and agree on the conflict resolution clauses in the contract agreements. This is because this can be the difference between winning or losing in any contractual conflict that might arise. Conventionally, many people go for courts of law. However, over the past years the use of arbitration has gained popularity in the corporate world and other parts of the society where conflicts are common phenomena. This can be mainly attributed to the numerous advantages that come with arbitration as avenue for conflict resolution. Being an alternative dispute resolution avenue, arbitration uses third parties whose decisions which are commonly referred to as award, are legally binding to both parties in the conflict. Even though carried outside law courts, the neutral arbiters arrive at their decisions using evidence deduced from expert analysis of the terms and conditions of the contract stipulation in dispute. These advantages far much outweigh the disadvantages and the use of courts of law. In my current position, I would always encourage my company to choose arbitration over courts of law solve any conflict that may arise.
Since commercial transactions especially those of international nature are of complex nature, there is need for solving the disputes that may arise in a manner which is convenient for all the parties involved. The convenience in terms of time during which the arbitration can be carried out and the final decision made. This is because the arbiters are not grappling with numerous cases to deliver judgment on like in the case of courts. Moreover, the parties have the convenience of choosing their arbiters with the third being chosen by the arbiters themselves. Though the decisions made are legally binding to all parties involved in the conflict, the language to be used during the arbitration process is chosen by both parties. The parties also have the opportunity to present their grievances in a more open manner compared to the court system where formality is usually overemphasized. The convenience also extends to the venue in which the arbitration process is to be carried out. This is unlike in the court system where the hearing is always done in the court where the case was filed which in most cases may be inconvenient for many business especially international businesses. However, the language to be used, composition of the arbitration tribunal, time of arbitration and location of the arbitration proceedings should clearly stipulated in the clauses of the contract agreement. These are usually contained under the clause titled “Dispute Resolution” or simply “Term and termination”.
The evidence provided before the arbitration tribunal is usually presented by experts who are usually neutral. This coupled with the expertise and professionalism of the arbiters, ensures that the decisions or awards delivered by the tribunal is usually accepted. The decisions are also legally recognized, enforced and protected by the “New York Convention” of 1958. Some of the institutionalized arbiters used in solving international commercial disputes include Stockholm Chamber of Commerce’s Arbitration Institute, World Trade Organization (WTO), ICC International Court of Arbitration and International Chamber of Commerce. Together with other arbiters, their proceedings can be sped up thereby leading to shorter time solving the dispute. This is unlike in the courts where everything has to be done according to the books hence take a longer time to reach at the same decision. The shorter period for resolving the dispute usually helps in cutting the costs of the conflict resolution process. Moreover, the use of such institutions with judicial powers helps in reducing chances of the parties going to the courts to seek legal redress of the dispute. Moreover, since most of the business transactions and contracts are of private nature, the use of arbiters usually offers a confidentiality level that is rarely or hardly found in the judicial system. Unlike the publicity that is usually associated with judicial systems, the privacy of the arbitrational proceedings gives the parties to talk openly in a more informal manner hence providing evidence without holding back any important detail.
While choosing the kind of arbitrator in any dispute, it is important to first determine the nature of the dispute. However, it is important to choose an arbiter whose credibility is not questionable and has local and international understanding of laws governing contracts and general laws with specialty in the law governing businesses. Due to the international nature of most business disputes due to the globalization of the business environment, I would prefer an international arbiter. Such an arbiter with global view of issues would argue my case effectively from an international perspective. This will also help in eliminating the chances of the arbiter having any personal ulterior motives while presenting my case. An international arbiter has high chances of being neutrality of viewpoint while reviewing my case. If arbitration fails, there is always the option of using mediation and direct negotiations which do not the courts of law. Moreover, courts of law can also help in resolving disputes.