Be careful when handling international business deals!

Alfredo Zuloaga is a lawyer who specializes in international business law and business arbitration matters. He is a member of the Spanish Arbitration Club (CEA for its acronym in Spanish), and is an arbitrator at the Arbitration Center of the Chamber of Commerce in Caracas, Venezuela. He spoke to us about this subject in a special interview for weLanguages.

When one is doing business and signing an agreement or a contract with a company abroad, it is very important to determine the jurisdiction (or country) where the contract will be enforced, so that in case of any disputes, the contract has an arbitration clause that indicates that the dispute would be resolved in an independent jurisdiction, which is different from the jurisdiction of the respective civil courts.

An international business arbitration is the mechanism most commonly used to resolve private disputes regarding business matters due to its broad scope, its flexibility, and promptness in resolving disputes. It is a matter of particular interest for business people: it creates more confidence in the markets, and it provides greater certainty in the legal frameworks and judicial systems regarding the standards that regulate international business arbitration.

Several countries in the Americas have moved forward consolidating attractive investment environments and international commerce by revising their arbitration laws.

-          Is arbitration optional?

AZ: Yes, it is. International business arbitration as an alternative to an ordinary judicial process is voluntarily chosen by the parties (companies with a contractual agreement), and must therefore be expressly established in the respective contract (arbitration clause) or be subsequently agreed upon when a business  dispute arises.

For those cases where the contract does not contain an arbitration clause, if a conflict or controversy arises, it is still possible to resolve it. In this case, both parties must come to an agreement and establish an arbitration agreement “a posteriori.” It can also be done without before any disputes arise: when the parties want to “ex-post” the original contract.

There are several entities that carry out arbitration processes, including: the United Nations Commission on International Trade Law, the Inter-American Commercial Arbitration Commission, the International Chamber of Commerce (ICC) , International Investment Dispute Settlement Institution (ICSID), and the London Court of International Arbitration (LCIA). However, Zuloaga explains that “the parties that uphold an international business contract can decide to be ruled by an institutional international arbitration even though the countries where they come from are not signatories.”

-          The arbitration process begins once the negotiationphase between the parties has failed.

-          The arbitration process carried out by the International Chamber of Commerce (ICC) has several phases.

-          The arbitrators are chosen by the parties at the time of a controversy and the Court President is chosen by mutual agreement between them.

-          After paying for the cost: the Court arbitrator receives the file and the arbitration proceedings process begins by a “Missions Act;” a document where the task is defined and which must be signed by the parties and submitted to the arbitration Court within a two-month period. Likewise, it defines for the Court, the interim calendar it intends to follow.

-          How are the costs established?

AZ: “It will depend on the institutional structure and the fees of the chosen arbitrators. Generally, these costs and fees will have a percentage relationship with the amount or estimate of the arbitration lawsuit and are included in the Guidelines of the different arbitration institutions in order to have an approximate cost for a specific arbitration process. The cost will be shared equally among the parties in conflict.”

Since an international business arbitration deals with controversies among parties domiciled, or with residence in different countries, the language chosen and the translation of legal documents that will be presented during the arbitration process, are very important for the parties. Therefore, choosing translation professionals or companies with specific knowledge of legal matters and arbitration processes is a very important step for the work of attorneys and firms dedicated to this specialty, as well as for transnational companies. At weLanguages we have vast experience with legal translations: therefore,  we consider ourselves your ally in these processes.