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International dispute settlement

What happens if there is a breach of commercial contract? 

Although you hope it will never happen to your contract, knowing how to settle a dispute in international trade and investment and knowing which law will determine the dispute may help to anticipate future problems or plan a dispute resolution strategy, or at least manage the costs involved in obtaining and enforcing a judicial judgment or arbitral award. 

When a breach of an international contract occurs, the parties encounter issues such as: what type of case it is; where to bring it; and which law will be used to decide it. It is important to agree on a dispute resolution mechanism and the law applicable to the contract, either before or after the dispute has arisen. 

In terms of dispute resolution, you can choose the forum where a dispute would be heard and settled. Your choice may depend on the mode of resolution you choose to adopt, i.e., judicial proceedings (litigation) or an alternative dispute resolution mechanism, such as arbitration or mediation. 

While choosing the mode of resolution, another factor to consider is where and whether the ensuing judgment or arbitral award will be recognised and enforced. It would not be helpful if, for example, the judgment or the arbitral award rendered in your favour cannot be recognised and/or enforced in another State where your other contractual party has assets. 

Some international Conventions facilitate the circulation of foreign judgments and foreign arbitral awards. See, for instance, the New York Convention for arbitral awards (1958 New York Convention), the HCCH 2005 Choice of Court Convention (2005 Choice of Court Convention) and the HCCH 2019 Judgments Convention for judgments (2019 Judgments Convention).

For the law applicable to the contract, it will be applied to settle the dispute arising from the negotiation, conclusion, performance, interpretation, or execution of the contractual terms.