Lecture 10Lecture 10

Dispute SettlementDispute Settlement

• 6• The ship is liable. A bill of lading is conclusive

evidence of the description contained on its face once it has been negotiated to an innocent third party. Even if the recipient of the bill of lading admits to a fault, the information on the bill of lading cannot be challenged.

• Chapter 7

• Under The Hague Rules and The Hague-Visby Rules, a ship is exempt from losses due to acts of war unless reasonable precautions are not taken.

• Let us assume piracy does not enjoy the same status as war, and the facts mention that the force majeure clause does not mention piracy. Captain Ishmael and the Hispaniola can invoke the Himalaya Clause which would limit their liability. However, following Case 11-5 Croft & Scully Co. V. M/V Skulptor Vuchetich et al., though brought before U.S. courts, what constitutes a container freight unit would be a contentious issue as both the vases and statues were packed together and all of the crates stolen. Starbuck is not party to the carriage-of-goods contract and hence has no contractual right to claim liability limits for his negligence and can be sued under tort law without the convention-imposed cap.

A. THE SETTLEMENT OF DISPUTES

• Disputes may be settled

– By diplomacy (ADR)

– By litigation

– By arbitration

B. SETTLEMENT OF DISPUTES THROUGH DIPLOMACY

• Diplomacy: The process of reconciling the parties to a disagreement by negotiation, mediation, or inquiry.

– Negotiation: The process of reaching an agreement by discussion.

B. SETTLEMENT OF DISPUTES THROUGH DIPLOMACY

– Mediation:

The use of a third party who transmits and interprets the proposals of the principal parties, and sometimes, advances independence proposal.

– Inquiry:

The determination of a disputed fact or facts by an independent third party.

ADR

• a. Formally applies only to disputes between states.

• b. Informally applies to disputes involving institutions and individuals (where it is commonly called “alternative dispute resolution”).

• C. An amicable method thorough voluntary consultation, but not legally binding

Arbitration

• Arbitration : parties agree to submit a dispute for settlement to private persons ,which result in a binding award that will be enforced by the court.

• Commonly, the parties agree in advance to resolve their disputes using existing guidelines set up by one of several international arbitration organizations.– a) China International Economic and Trade

Arbitration Commission – b) London Court of Arbitration.– c) International Chamber of Commerce.

Advantages

• Being informal

• Being speedy

• Being professional

• Being confidential

• Being neutral

disadvantages

• Cost

• Judicial confirmation

Abitration Clause

• The Clause Excludes the Jurisdiction of the Court– Intention of the parties to summit – Disputes covered – Selection of the institution

• Form of Arbitration Clause– Written contract, letters, telexes, telefaxes, eData,

email• Validity of the Clause

– Consistent with law– Full competent – Reached not through duress

C. THE SETTLEMENT OF DISPUTES BY LITIGATION

• Litigation– States or IGOs v. states or IGOs – cases

are heard in:

• International courts (such as International Court of Justice)

• International arbitration tribunals

• Municipal courts (rarely)

– Private persons v. private persons, states, or inter-governmental organizations – cases are heard in:• International arbitration tribunals (such as

International Center for the Settlement of Investment Disputes tribunals)

• Municipal courts

C. THE SETTLEMENT OF DISPUTES BY LITIGATION

D. W T O

• The World Trade Organization (WTO) implements and enforces international agreements regulating international trade.

– Regulatory agreements include:

• General Agreements on Tariffs and Trade

• General Agreement on Trade in Services

• Agreement on Trade-Related Aspects of Intellectual Property Rights

E. ICSID

• International Center for the Settlement of Investment Disputes (ICSID)

– Established in 1965 by the World Bank sponsored Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the Washington Convention)

E. ICSID

– Purpose of Washington Convention: To encourage private investment in underdeveloped countries by providing a reliable mechanism for impartially resolving disputes between an investor and the country of investment.

F. ICSID

• ICSID Awards – ICSID awards are binding and

contracting states agree to comply with them. • Any review of the award by the courts of

the state party to a particular dispute is considered to be in noncompliance with the award.

F. ICSID

– Review: The tribunal itself can review an award either to interpret it or to revise it.

– Appeal: Appeal is allowed to an ad hoc committee which has the power to annul an award.

G. DISPUTE SETTLEMENT INMUNICIPAL COURTS

• Introduction – Jurisdiction: the competence of a municipal

(or national) court to exercise the power to try a case.

– Immunity: The ability of a party (usually a state) to escape the jurisdiction of a court - such as:

• Sovereign Immunity • Act of State

G. DISPUTE SETTLEMENT INMUNICIPAL COURTS

• Jurisdiction in Civil Cases

–Jurisdiction over Persons • In personam jurisdiction exists when a natural or juridical person is physically present within the forum state.

G. DISPUTE SETTLEMENT INMUNICIPAL COURTS

– Consent to Jurisdiction• Expressly by:

–Appearing in court after a suit has commenced.

–Appointing an agent within a state to receive service of process on him.

–Agreeing to the personal jurisdiction of a particular court in a forum selection clause contained in a contract.

G. DISPUTE SETTLEMENT INMUNICIPAL COURTS

• Impliedly by having “minimum contacts” with the forum state.

–Minimum contact depends on:»Whether the defendant engaged in acts that

relate to the forum state»Whether the suit is based on those acts, and»Whether the defendant has indicated by its

conduct that it intended to rely on the benefits (such as doing business) of the forum state

G. DISPUTE SETTLEMENT INMUNICIPAL COURTS

– Jurisdiction over Property

• In rem jurisdiction: The power of a municipal court to determine the ownership rights of persons as to property located within the territory of the forum state.

I. CHOOSING THE GOVERNING LAW

• Municipal courts apply the laws of other states when that is the fair thing to do. – Rationale: To have a court in another country

apply different laws would discourage international exchanges of all kinds.

I. CHOOSING THE GOVERNING LAW

• Rules for Choosing the Governing Law

– Courts use choice of law or conflict of law rules to determine if they should apply their own laws or the laws of another state in settling disputes.

I. CHOOSING THE GOVERNING LAW

• Procedure: – Step One: If the parties to a dispute have

agreed to the application of the laws of a particular country, the court will apply those laws.• The agreement of the Parties may appear in:

–A choice of law clause. –Statements made to the court.

I. CHOOSING THE GOVERNING LAW

– Step Two: If the parties have not agreed as to which laws should apply (either expressly or impliedly), then the court (depending on the state it is located in) will determine for itself which laws it should apply by:

• Following statutory dictates, • Using the most significant relationship test.• Using the governmental interest test.

I. CHOOSING THE GOVERNING LAW

• Statutory Choice of Law Provisions – Commonly found in civil law countries in:

• Statutory codes (usually).• International treaties (occasionally).

– Common basis of these provisions:• Vesting of Rights Doctrine: A court is to apply the

law of the state where the rights of the parties to a suit vested (i.e., where they legally became effective).

I. CHOOSING THE GOVERNING LAW

– Rules for determining vesting. • The general case: The law of the place where the

act occurred shall govern the dispute.• The particular case: Depends on the type of

dispute.– For example: for a dispute involving the

interpretation of a contract: » The law of the place where the contract was

made governs questions of validity.» The law of the place where the contract was

to be performed governs questions of performence.

I. CHOOSING THE GOVERNING LAW

• Most Significant Relationship Test– A court is to apply the law of the state which has the

most contacts with the parties and their transaction. • General factors that a court will consider in all cases

are (in essence): – Which law best promotes the needs of the

international system?– Which state's law will be furthered the most by

applying it to the case at hand?– Which law will best promote the underlying

policies of the legal subject-matter area involved?• Specific factors that a court considers depends on

the kind of case that is before it.

• 2) “Specific” factors that a court considers depends on the kind of case that is before it.

• a) Tort cases:• 1] The place of injury.• 2] The place of the act.• 3] The nationality, domicile, residence, or place of incorporation of the

parties.• 4] The place where the relationship between the parties was

centered.• b) Personal property cases:• 1] The location of the property.• 2] The nationality, domicile, residence, or place of incorporation of the

parties.• c) Real property cases: The location of the property.• d) Contract cases:• 1] The place of contracting.• 2] The place of negotiation.• 3] The place of performance.• 4] The location of the subject matter.• 5] The nationality, domicile, residence, or place of incorporation of the

parties.

I. CHOOSING THE GOVERNING LAW

• Governmental Interest Test– If asked to make a choice of law, a court using this

test will look to see which state has a legitimate interest in determining the outcome of the dispute.

• If only the forum state has an interest: the court will apply the forum state's law.

• If the forum state and another state/states have an interest: the latter should be applied, as the court obviously understands those interests better.

I. CHOOSING THE GOVERNING LAW

• If only one state other than the forum has an interest: the court will apply that state's law.

• If two states other than the forum state have interests: the court may –

– Dismiss the case if the state in which the court is located can use the doctrine of forum non conveniens (discussed later).

– Apply whichever law it feels is the sounder.– Apply the law that is most like that of the forum

state .

J. REFUSAL TO EXERCISE JURISDICTION

• Forum Non Conveniens– Doctrine: a court may refuse to exercise its

power to hear a case when it believes that it would be fairer and more convenient for the case to be decided elsewhere.

• Factors that courts consider: – Private interests of the parties (e.g., the ease and cost

of access to documents and witnesses).– Public interest factors (e.g., the interests of the forum

state, the burden on the courts, and the notion of judicial comity).

L. RECOGNITION and ENFORCEMENT OF FOREIGN JUDGMENTS

• Recognition of Foreign Court's Judgment– Hearing will be held by a court asked to

convert a foreign judgment into a local judgment.

• Common consideration: Did the foreign court have JURISDICTION before handing down its judgment?

• Other considerations depend on the country.

L. RECOGNITION and Enforcement OF FOREIGN JUDGMENTS

• Recognition of Foreign Arbitral Awards – Treated like domestic judgments in courts in

states that are parties to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

– Otherwise, must be converted into a foreign judgment in the state where the arbitration takes place, and then that judgment is treated like any other foreign court judgment.

Civil Procedure Law

• Legally effective judgment or written order

• Apply to Intermediate Court

• Review

not contradict to and principles of the laws nor violates the state sovereignty, security and public interests

NEW YORK CONVENTION(173.nt301)

• Foreign arbitral judgment

• Recognition and enforcement of judgment

• Procedure

• Refusal of recognition and enforcement

• Public policy