Dispute resolution in international trade

Despite best efforts, disputes can arise — over product quality, delivery delays, payment terms, or documentation errors. Knowing your options before a problem occurs is essential.

Prevention First

• Use clear, written contracts with specific terms for quality, delivery, payment, and Incoterms.
• Include a dispute resolution clause specifying the method, governing law, and jurisdiction.
• Conduct pre-shipment inspections to catch quality issues before goods leave the factory.

Resolution Methods

1. Negotiation — Direct discussion between the parties. Always the first step. Most trade disputes are resolved amicably.
2. Mediation — A neutral third party facilitates a settlement. Non-binding but faster and cheaper than arbitration.
3. Arbitration — A binding decision by an independent arbitrator or tribunal. Common institutions: ICC International Court of Arbitration, LCIA, and regional chambers. Arbitration awards are enforceable in 170+ countries under the New York Convention.
4. Litigation — Filing a lawsuit in a national court. Usually the last resort due to cost, time, and enforceability challenges across borders.

On Faktorist

All deals on Faktorist include a default dispute resolution clause referencing ICC arbitration. You can customize this in the deal terms before finalizing. The platform also offers a messaging system with timestamped records that serve as evidence if a dispute arises.