International Commercial & Trade Dispute Resolution & ADR

Long term business relations are generally the most profitable ones if based on trust. Dispute resolution is costly, time consuming and mentally exhausting for all parties.   Americans approach different and they start commercial negotiation including attorney as a member of the negotiating team while Japanese see it unnecessary and bad omen that disagreement is inevitable. 

The attitudes differ throughout the world and from country to country regarding prevention and resolution of commercial disputes. Cross border trade dispute resolution is complex and requires thorough information and expertise. With the passage of time, various options regarding international trade and commercial disputes have been introduced at national and international level. In international arena the Alternate Dispute Resolution (ADR) offers a faster, cost effective, convenient and efficient solution compared to conventional civil litigation. 

ADR mechanism is becoming preferred option and popular as there are following benefits. 

The ADR offers various modes and forums for resolution of trade disputes. The modes include but not limited to ombudsing, early neutral evaluation, negotiations, consultation, referral to experts, appointment of dispute board, mediation, conciliation, arbitration, private judging, using good offices, sanctions and even war.  

Still many studies, surveys and research paper reveals that almost 80% of the Commercial & Trade Disputes are resolved through alternate dispute resolution mechanism. 

Amongst the leading forums include UN Commission on International trade law (UNCITRAL), China International economic and trade arbitration commission, American arbitration association, International court of Arbitration of the International Chamber of Commerce (ICC), London Court of Arbitration, Arbitration institute of the Stockholm Chamber of Commerce, St. Petersburg International Commercial Arbitration Court, Hong Kong International Arbitration Centre & The HK Mediation Centre, Singapore International Arbitration Centre, Japan Commercial Arbitration Association,  International Centre for Settlement of Investment disputes (ICSID, A body of World Bank) and The Permanent Court of Arbitration at the Hague and Centre for Effective Dispute Resolution (CEDR) and SAARC Arbitration Council. 

In Pakistan, ADR is emerging as a preferred mode of resolution of trade & commercial disputes and since last decade various forums including Apex body namely Trade Dispute Resolution Organization under Ministry of Commerce, Karachi Center For Dispute Resolution (KCDR), National Centre for Dispute Resolution (NCDR), LCCI Mediation Centre (at Lahore Chamber), ADR Committees in WAPDA, SNGPL, FBR and other Public Sector organizations. Trade Development Authority of Pakistan (TDAP) assist in international Trade Dispute Resolution under Imports & Exports Control Act 1950 and if disputes are not resolved then it refers for adjudication to the Commercial Courts presently in Karachi and Lahore. 

The introduction of Section 89-A in the Civil Procedure Code of Pakistan whereby parties at any stage of litigation may resort to Mediation which is a way forward in promoting mediation and ADR mechanism in Pakistan. 

Arbitration Act 1940 provides for arbitration clause in trade commercial contracts to allow out of court resolution of differences and disputes. The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention has been ratified and implemented by Pakistan and legislation made “Recognition & Enforcement of (Arbitration Agreements & Foreign Arbitral Awards) Act 2011.  This will reinstate the trust and confidence of investors which was disturbed in the famous cases of HUBCO, REKO-DIQ and SGS-Cotecna. 

Trade and Commercial Disputes may be prevented in the first place and amicably resolved through various measures:

1. Inclusion of mediation and arbitration standard clauses in all trade and commercial agreements;
2. Choice of Law and Choice of Forum must be included in each agreement;
3. Training and development of qualified mediators and arbitrators;
4. Harmonization of Trade & Commercial laws with concerned trading partner countries;
5. Awareness and availability of up to date laws, rules and regulations of trading partner countries;
6. Provision of mandatory and free services of legal experts for professional vetting of all agreements/contracts value above Rs. 1 million;
7. Centralized data management of disputes and parties and issuing public alerts through Chambers and Associations;
8. List of defaulters may be placed on TDRO website;
9. Verification and Credibility checks of parties where confidence, trust and relations are not strong enough;
10. ADR proceedings may be given legal status at par with civil courts; 
11. All trade and commercial laws may be harmonized including sales of goods, contract act, marine laws, competition laws, International property rights laws, etc. with the international trading countries. 
12. It may be made mandatory for Federation, Chambers and Associations to provide forum for ADR or Standing Committee on ADR.