It is very important to arrange contracts
properly in international trade. In commercial relations, even if the parties
make every effort and act meticulously to fulfill their commitments, it is
inevitable that disputes will arise due to various reasons. These reasons may
arise from the faults of the parties, as well as outside the control of the
parties, such as customs procedures, labor laws and practices, translation
errors or deficiencies. Although it is essential to resolve the problems
between the parties, it is possible to resolve them with outside assistance.
What are International Trade Disputes?
International trade disputes arise when two or more parties
involved in cross-border commercial activities face disagreements regarding the
terms of their trade relationship. These disputes may involve issues such as:
- Contract interpretation or performance
- Breaches of trade agreements
- Customs valuation disagreements
- Intellectual property rights violations
- Anti-dumping or countervailing duty measures
Mechanisms for Resolving Disputes
Dispute resolution in international trade requires a structured approach.
Below are some common mechanisms used to address such disputes:
1. World Trade Organization (WTO)
The WTO plays a pivotal role in resolving trade
disputes among member countries. The WTO’s dispute settlement mechanism ensures
that trade flows smoothly by providing a platform where governments can resolve
conflicts based on agreed-upon trade rules. The process includes consultation,
mediation, panel adjudication and, if necessary, appellate review.
2. Bilateral and Regional Agreements
Bilateral and regional trade agreements often
include specific dispute resolution international mechanisms tailored to
the agreement’s scope. These mechanisms provide a framework for resolving
disputes between the parties involved, ensuring compliance with the agreed
terms.
3. Arbitration and Mediation
3. 1. Mediation
The most common amicable resolution of
disputes is mediation. Unlike negotiation, mediation uses a neutral third
party to assist the parties in reaching an agreement. The purpose of mediation
is to reach an agreement that the parties can mutually agree to. The mediator
agreed by the parties should first explain the procedure to be followed,
emphasizing that he/she is an impartial person. Then, he/she should get
information from the parties, determine the issues that form the basis of the
dispute, listen to the parties and ask questions, observe them and discuss the
solution options with the parties and encourage them to come to an agreement.
If the negotiations are successful, the mediator should assist the parties in
drafting the agreement that will resolve the dispute. A properly prepared
agreement will have resolved the dispute, as it can be enforced when necessary.
In addition, notary publics participating in the documentation process can be
used as mediators in the international trade dispute resolution. The
independent and impartial position of notaries will enable them to gain the
trust of the parties, if they are appointed as mediators, so that international
dispute resolution negotiations will take place in a more moderate and
productive environment.
3.2. Arbitration
Arbitration is the most common solution method
used for disputes in international commercial transactions. Arbitration is the
agreement between the two parties who have fallen into dispute, leaving the
resolution of this dispute to private individuals and the dispute being
examined and resolved by these persons. These special persons, whose resolution
of the dispute is left to them, are called "arbitrators". Arbitrators
have no official capacity to resolve the dispute submitted to them. However, by
transferring the resolution of the dispute to them, the parties’ consent to the
decision of the arbitrators. In this way, the arbitrators become a court in
terms of the case they are dealing with. For this reason, arbitration is also
called an “arbitral tribunal”.
If the parties consider resorting to
arbitration in international commercial disputes, they must first choose one of
the two ways of arbitration. These are ad hoc arbitration or institutional
arbitration.
3.2.1. Ad Hoc Arbitration
It is a type of arbitration where an
institution is not involved and the transaction is organized by the parties.
The parties determine the basis of arbitration, including the selection of
arbitrators, applicable law, determination of the arbitration rules and the
powers of the arbitrators. This type of arbitration gives the parties complete
freedom to determine the appropriate procedures to resolve the dispute.
Provided the parties approach the arbitration
with cooperation, ad hoc proceedings have the potential to be more flexible,
faster and cheaper than institutional proceedings. The absence of
administrative fees alone provides an excellent incentive to use the ad hoc
procedure.
Ad hoc proceedings need not be kept entirely
separate from institutional arbitration. Often, appointing a qualified
arbitrator can lead to the parties agreeing to designate an institutional
provider as the appointing authority. Additionally, the parties may decide to
engage an institutional provider to administer the arbitration at any time.
3.2.2. Institutional Arbitration
An institutional arbitration is one in which a
specialized institution intervenes and takes on the role of administering the
arbitration process. Each institution has its own set of rules which provide a
framework for the arbitration, and its own form of administration to assist in
the process.
Often the contract between two parties will
contain an arbitration clause which will designate a particular institution as
the arbitration administrator. If institutional administrative charges are not
a concern for the parties, this approach is usually preferred to less formal
'ad hoc' methods of arbitration.
The parties' choice of arbitration in the
resolution of commercial disputes provides the following benefits:
1. While it may take many years for a case to
be concluded in the general jurisdiction, disputes can be resolved in a much
shorter time through arbitration.
2. Arbitration provides absolute privacy to the
parties as correspondence and hearings in arbitration are not public and
decisions are not announced unless expressly approved by the parties.
3. International commercial disputes are
generally very complex issues and require specific knowledge and expertise. For
this reason, the parties want their disputes to be resolved by arbitrators who
are experts in the relevant fields.
4. Considering the fact that the cases
involving money claims last for years in general courts and the depreciation of
the money is taken into account, it can be said that the arbitration is less
costly because it is concluded in a short time.
4. Retaliation and Negotiation
4. 1. Negotiation
Negotiation is the least formal of the ways to
resolve disputes. The negotiation method is a voluntary method, and it may also
have some legal consequences. Negotiations are carried out when the parties
decide to resolve the dispute themselves. Although it is not mandatory to have
a lawyer or representative in negotiations, it is very useful to have them.
4.2. Retaliation
In international trade, retaliation refers to a
legally sanctioned measure taken by a country when another country fails to
comply with international trade rules or a dispute settlement ruling. Under the
WTO framework, if a country is found to have violated trade rules and does not
comply within the given timeframe, the affected country can seek authorization
to impose retaliatory measures. This typically involves suspending trade
benefits or imposing additional tariffs on the violating country’s exports. The
primary goal is to pressure the non-compliant country to adhere to the rules
and compensate the affected country for its economic losses.
Trade Disputes Examples: 5 International Trade Issues
Below are trade disputes examples of 5
international trade issues:
Customs Disputes: Disagreements over customs valuation and
classification often lead to disputes between importers and customs
authorities.
Anti-Dumping Measures: Exporters may face disputes over
allegations of selling goods below market value.
Intellectual Property Rights Violations: Unauthorized use of patented or
trademarked products frequently leads to conflicts.
Sanitary and Phytosanitary Standards: Disputes arise when countries
impose stringent regulations on imports based on health or safety concerns.
Market Access Restrictions: Issues occur when countries impose
tariffs, quotas or non-tariff barriers.
Current Trade Disputes Examples
Here are some of the biggest current trade
disputes and recent trade disputes:
US - China Trade War: Ongoing tariffs and countermeasures
between the two largest economies have disrupted global trade.
EU vs. US on Aircraft Subsidies: Disputes over subsidies provided to
Boeing and Airbus have led to retaliatory tariffs.
India’s Agricultural Restrictions: India faces WTO challenges for its
export restrictions on certain agricultural products.
Brexit-Related Trade Issues: Disagreements between the UK and EU
on post-Brexit trade arrangements continue to arise.
Global Steel and Aluminum Tariffs: The imposition of tariffs by the US
on steel and aluminum has led to countermeasures by affected countries.
Enhancing Global Dispute Resolution with TradeAtlas
TradeAtlas offers tools and insights to help
businesses navigate complex world trade problems and their resolutions.
By providing access to detailed trade data, analytics and trends, TradeAtlas
equips companies with the information needed to prevent and resolve disputes
effectively. Whether you are dealing with customs issues, contractual
disagreements or compliance challenges, TradeAtlas is your trusted partner in
global trade for global dispute resolution.
For
detailed information on the subject of documents used in foreign trade, you can
review the content “What Are The Documents Used in Foreign Trade?”.
