Eastern Mediterranean University BANK406 Corporate Banking Law and Practice CHP 8

Disputes In International Transactions The Conflict of Laws; Problems that arise in international trade concern the applicability of the laws of different countries. Two question arise; - Which court has jurisdiction to hear a case? -Which law is going to be applied? The Proper Law of Contract; a) Parties may express the law they intend to govern in their agreement b)In most cases they do not do so. In such cases the court has to decide the proper law. The court will try to determine which law were they going to chose if they had thought about this when they made the contract.

The Parties Choice Of Law; Parties are free to determine they system of law in their contract that is going to be applied to it. Parties frequently choose laws that do not have any connection with the contract because of different reasons. Such choice is valid but it will not be effective if it were made to avoid some provisions of the law that would normally apply to the contract. Inferring the Proper Law; If parties did not express or clearly imply their intention about the law that is going to be applied, the court will determine by considering the contract and other circumstances connected with it. The proper law of the contract as a principle is the system of law by reference to which the contract was made or that with which the transaction had its closest and most real connection.

Proceedings and Jurisdiction; A person can be made a party to an action if he is within the jurisdiction of the court or if he has submitted to it. A defendant outside the jurisdiction will be held to have submitted to the jurisdiction if he is party to a contract on which the action is based and which contains a clause giving the court jurisdiction. A court may have right to exercise jurisdiction over a case; - when the defendant is domiciled or ordinarily resident in the jurisdiction -when the action concerns a contract which has made within the jurisdiction -where the action concerns a breach of a contract which occurred within the jurisdiction. -where a tort has been committed within the jurisdiction.

Sovereign Immunity Foreign governments are immune from jurisdiction in other countries. But with growth of commercial activities by states and state bodies the rule started to lose its importance. Today states engage in commercial activities. That is why it is replaced by a doctrine of restrictive immunity. This gives immunity to acts of a governmental nature but no immunity to acts of commercial nature. Arbitration Parties to international sale agreements and associated transactions frequently arrange that any dispute arising shall be submitted to arbitration. Arbitration is quicker and cheaper, it is possible for the parties to entrust the resolution of their dispute to a person or persons of their own choice who will be familiar with workings of their trade and arbitrator’s decision can be final.

Appointment of Arbitrators; Parties may appoint a single arbitrator Appointment of Arbitrators; Parties may appoint a single arbitrator.. Parties may agree on a person or body to appoint the arbitrator. In this case if such person does not do so or if the parties can not agree, the court can appoint the arbitrator. In some cases each party appoints an arbitrator and usually these arbitrators appoint the third. If one of them appointed and the other did not, the single arbitrator solves the problem. If the arbitrators chose the mode of appointment, they are opting for an ‘ad hoc’ arbitration. *The arbitrator decides on procedure, subject only to general legal rules and to limits set for him by the parties. If they chose and institutional arbitrator, all the rules and procedure will be determined by that institution. ( e.g. ICC Court of Arbitration)

Arbitration Agreements; They may put an arbitration clause to the original contract or they can make a separate arbitration agreement. Such agreement must be in written form. Arbitrators Powers; Limits of arbitrators powers are determined by the parties in the agreement. The process is similar to that of the court. Appeals from Arbitration; Appeal may be made to the High Court by the consent of the parties or by leave of the court. Appeals are way of judicial review on questions of law arising out of the award. It should be noted that it is possible for the parties to exclude this way. ICC Court of Arbitration; Parties may agree in their contract that chamber’s rules of conciliation and arbitration will be applied. They may choose conciliation. If this fails or parties did not prefer the issue goes to arbitration. Court of arbitration is appointed from a specific list of arbitrators. Arbitrators will not have same nationality with one of the parties. The arbitrator’s decision is final.

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