Resolution of Disputes in International Trade and Arbitration

Resolution of Disputes in International Trade and Arbitration


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. In order to resolve disputes quickly and cost-effectively, some solutions are suggested. These solutions are as follows;



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.



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 resolution of disputes. 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 dispute resolution negotiations will take place in a more moderate and productive environment.



The most familiar type of dispute resolution, civil litigation typically involves a defendant facing off against a plaintiff before either a judge or a judge and jury.


The judge or the jury is responsible for weighing the evidence and making a ruling. The information conveyed in hearings and trials usually enters, and stays on the public record.

Lawyers typically dominate litigation, which often ends in a settlement agreement during the pretrial period of discovery and preparation.




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.


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.


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.


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