DISPUTE RESOLUTION FROM A MULTI-JURISDICTIONAL PERSPECTIVE

A clear and unambiguous contract/agreement document is the foundation for minimization

of conflicts and disputes. In fact, drafting of

the contract/agreement is the first foundation

step for “dispute management”. In that regard,

the dispute resolution clause usually incorporates the

process of amicable negotiation/settlement before setting

the “dispute resolution” process in motion. If potentially

contentious issues are governed by predictable rules and

effective dispute resolution mechanisms, there is a far

greater possibility of avoiding litigation or arbitration, and

achieving reasonable and cost-efficient results.

A, a company incorporated under German law, enters into a

Master Umbrella Agreement with B, a company incorporated under Indian law, and C, a company incorporated

under US law. The transaction also includes entering

into various supplementary Agreements between A, B

and C in which they govern the German documents by

German Law, US documents by New York law, and

Indian transaction documents by Indian law, with

the courts of Chennai having jurisdiction in the event

of a dispute. Evidently there are complex manifold

transactions, and thus arises the need for a well-constructed,

enforceable Dispute Resolution Clause. A contract or

agreement entered into between parties in relation to

a transaction, reflects intention of the parties towards

discharging their respective obligations for enabling

respective parties claim their respective consideration

agreed upon under the contract.

In the event of any conflict of interest between the parties

in the matter of discharge of respective obligations or in

relation to consideration being looked for by them, the

parties may devise ways to manage their dispute, which

may either be provided for in the contract or which the

parties may agree upon subsequently towards mutual

settlement of their interest and thereby manage their

conflict of interests. However, in cases where parties fail

to reach a point of settlement of their mutual interest and

thereby fail to manage their conflicts, their disputes then

look towards necessity of resolution by seeking involvement

of a third party. Therefore, precisely it is the unmanaged

or rather mismanaged disputes which look for a resolution

process.

Elements of dispute resolution in multi-

jurisdictional perspective

In a multi-jurisdictional perspective, the parties involved are

required to be alert to many aspects of dispute resolution. A

few such aspects are as follows:

1. Jurisdiction:

   Parties belonging to two different

   jurisdictions in a contract may mutually settle for a

   neutral jurisdiction in order to avoid raising allegations

   of partiality on the part of the dispute resolving process.

2. Ad hoc v institutional mechanism of dispute

   resolution:

   Parties may tend to instill more faith in the

   institutional resolution process than ad-hoc process,

   and in that perspective, they may look towards a

   jurisdiction having credible institutional mechanism of

   dispute resolution process. Further, depending upon the

   process of institution being cost-effective, the parties may choose an institution suitable to their transaction,

   jurisdiction, etc.

3. Cost of dispute resolution:

   This is an important factor

   for consideration. At first glance, the institutional

   resolution process may appear to be costlier than

   the ad-hoc system of dispute resolution. However,

   experience over a period of time has shown that the

   institutional resolution process is more cost-effective

   and efficient than the ad-hoc process, when seen

   from the perspective of time consumption, quality of

   resolution, sustainability of resolution, etc.

4. Prevailing law:

   Choosing the applicable law, while

   entering into a contract, is of wide implication. The

   choice of law would be on two counts, (i) law applicable

   to merits of the dispute and (ii) law applicable to the

   process of dispute resolution, i.e. substantive law

   and procedural law. In this regard, parties need be

   vigilant as to the law which secures their interests in

   a proper manner. Absence of a contract spelling out the

   applicable law, will invite other methods of ascertaining

   such applicable laws, which may prolong the resolution

   process.

5. Seat v Venue of Arbitration:

   In the perspective of

   arbitration being chosen as the mode of dispute

   resolution, the “seat” of arbitration has special

   significance, as settled by a plethora of judicial

   pronouncements. The nexus between the “seat” or the

   “place” of arbitration vis-à-vis procedural law i.e. the

   lex arbitri is well settled by judicial pronouncements.

   Supreme Court has in Enercon (India) Ltd. v

   Enercon Gmbh taken note of observation of Court of

   Appeal in England as made in the case A v B [38] to the

   effect that
   
   

   “.....an agreement as to the seat of an arbitration is

   analogous to an exclusive jurisdiction clause. Any claim

   for a remedy......as to the validity of an existing interim

   or final award is agreed to be made only in the courts of

   the place designated as the seat of arbitration.”
   
   

   It stands categorically settled that “venue” of

   arbitration must not be confused with the “seat” of

   arbitration. While “venue” may be more than one places

   where arbitration proceedings may be held having

   regard to the convenience for such proceedings, the

   “seat” of arbitration is the one which is the epicenter

   of the arbitration. The laws prevailing at the “seat”

   of arbitration are the ones which will apply to the

   proceedings being conducted at a “venue” even away

   from such “seat”.

6. Preliminary relief / emergency arbitrator:

   With respect to availing immediate interim relief securing the subject matter of arbitration, the parties may look up for

   some measure of securing their interest in the subject

   matter of dispute. Availability of relevant mechanism

   with the institution being looked upon by the parties,

   for providing such immediate relief, would become very

   significant. At the same time, the implementation of

   such interim relief requires the parties to be vigilant

   about availability of effective lawful mechanism in the

   chosen jurisdiction, for enforcement of such interim

   relief.

“Drafting of the CONTRACT/AGREEMENT is the first foundation step for “DISPUTE MANAGEMENT”
7. Choice of language:

   Chosen language rules across

   every process of the dispute resolution, i.e. orders in

   the proceedings, presentation of written pleadings/

   testimonies, leading of oral depositions, leading of oral

   arguments, etc. as the rules governing the resolution

   process may provide for. Depending upon comfort of the

   chosen language, for presenting the case of the parties

   in the best manner, the choice of language may be opted

   for by the parties. Availability of equipped resources

   with the institution dealing in the chosen language, is

   also a factor, the parties need be vigilant about.

8. Deposition / oral testimony:

   The facility enabling parties

   to lead oral testimony would demand cost. It is why,

   dispute resolution institutions across the globe favor a

   document-only arbitration, while avoiding requirement

   of oral testimonies or leading of oral arguments. This in

   turn shortens the time consumed and the cost involved

   in the process of dispute resolution. Rules of dispute

   resolution institutions may often provide for additional

   cost for leading of oral testimonies inter-alia for making

   proper arrangement of recording of testimonies, cross-

   examination, leading arguments, etc. Parties need to

   be vigilant about cost-effective facilities in that regard,

   while choosing the institution.

9. Document discovery:

   The law relating to “discovery

   of documents” has varied implications across various

   jurisdictions. While there are jurisdictions where parties

   may not be required to produce any document adverse

   to it, there are other jurisdiction where parties may be required to produce such documents and non-production

   thereof invites adverse inference against such party.

   This apart, the dispute resolution institutions dealing

   with international commercial disputes have adopted

   strict regulations for use of discovery, to check adverse

   consequences as well as abuse of such process.

10. Public policy:

    The issue of “public policy” has attracted

    much debate, and jurists across the globe have concurred

    that the concept of “public policy” is incapable of precise

    definition. While Lord Justice Burrough ¹ in Richardson

    vs. Mellish (1824-34) All E.R. 258 gave “public policy” the impression of
    
    

    “a high and unruly horse”

    , however,

    Lord Denning

    ²

    , in Enderyby Town Football Club Ltd. v.

    Football Association Ltd., [1971] Ch. 591, 606, observed

    that

    “With a good man in the saddle, the unruly horse

    can be kept in control. It can jump over obstacles.”
    

    
    Further, in the context of a multi-jurisdictional approach,

    “public policy” may be understood in the sense that

    parties in a jurisdiction may be free to contract to those

    out of jurisdiction, however, at the time of enforcement

    of award in the said jurisdiction, the courts of that

    jurisdiction will check that the award is not opposed

    to any law of that jurisdiction. In such context, one

    must be concerned as to how much faith of litigants,

    the judiciary of the given jurisdiction enjoys. Further,

    time involved in disposal of judicial proceedings in such

    jurisdiction would remain a key factor for parties to

    consider in this regard.

11. Dispute resolution clause:

    Drafting of the contract/

    agreement is the first foundation step for “dispute

    management”. In that regard, the dispute resolution

    clause usually incorporates the process of amicable

    negotiation/settlement before setting the “dispute

    resolution” process in motion; i.e. the clause governing

    resolution/management of dispute between parties,

    stipulate muti-tier approach, whereby parties are

    initially required to resort to an amicable recourse to

    resolution by negotiation or discussion at one or more

    level, within stipulated time at each level. In case the

    dispute remains unresolved despite efforts being put at

    each level of negotiation/discussion, recourse is then

    taken to approaching the dispute resolution forum/

    institution, i.e. court process or arbitration.

So far the “dispute resolution” clause is concerned, it

has been experienced over the years that much resources

and time of the litigating parties has gone only into

interpretation of uncertain terms in the “dispute resolution”

clause, be it on the aspect of existence of arbitration

agreement, jurisdiction or the like. It is, therefore, essential

to account for such uncertainties at the time of framing of

the foundation document itself. Accordingly, the “dispute

resolution” clause needs to clearly identify the jurisdiction,

dispute resolution forum, applicable laws, applicable

language, seat of dispute resolution, and the like.

Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.