Generally, the exporter is likely to face two types of disputes with the buyer: either the buyer refuses to pay (to prevent this case a letter of credit should always be used) or the buyer protests regarding the quality of the goods. To prevent this case, the exporter should look for a certificate of quality before shipping the goods.
It must be emphasized that once the goods have been shipped and the appropriate documents are given to the bank under the letter of credit L/C, the payment will be made. In any international sale the exporter should make sure the proper documentation is complete which allows the claiming of the payment at the issuing bank without any problems.
In most cases of disagreement, it will be for the buyer to sue for reimbursement. In this respect, it is recommended that the contract provides for either a jurisdiction clause or an arbitration clause. The party may agree that in case of dispute, the case will be brought to a court in the country of the buyer or the exporter.
If the parties agree that the dispute shall not be solved by a national court of justice they will provide for an arbitration procedure. International arbitration is recognized in most countries, although small exporters should be aware that the costs of such arbitration procedures can sometimes be high. As opposed to court proceedings, arbitration provides an economic and expedient settlement of commercial disputes with the added benefit of privacy. The arbitrator is usually an expert in the subject matter of the dispute.
Arbitration can be arranged by the parties involved in the dispute on ad-hoc basis or according to the rules of an arbitral institution. Standard arbitration clauses are available at the ICC and at the London Court of International Arbitration (LCIA).
Once an arbitration award has been received, the decision must be enforced in a country where the condemned party has assets.
reference:
TRADE
The Export Answer Book
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