Are you doing business with suppliers outside of Australia? Does your agreement cover a “dispute resolution” clause, that’s to say how any dispute between the parties should be dealt with if one arises? Why does this even matter?
Well, if you have to sue if there is a relationship break down, then you may be able to bring the claim in a court in Australia. However, the court papers have to be served out of Australia which depending on the country is a process that can take 6-18 months. Yikes!
If the court papers are served, and you get a judgment, then if the other party has no assets in Australia you then have to go and get your judgment recognised in that foreign country to recover what is owed to you. This is less than optimal!
If the other party lives in a country that is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, having an agreement where the parties agree to “arbitrate” (that is a private court proceeding) can be a much better option. If the parties agree to binding arbitration, then there is no service issue and the recognition of the arbitral award (akin to a judgment) can be a lot easier to enforce (i.e. recover the monies owing) in the foreign country.
Many businesses in Australia have suppliers in Asian countries and no effective way of resolving a dispute if one arises. This is an essential way to future-proof your business against any dispute. If you are unclear on your options, give Rankin Business Lawyers a no-obligation call to discuss your options.
Sofia Garcia Ladera, Consultant (Admitted in England and Wales; not admitted in Australia)
