Dr. Sanjeev KumarDirector (Corporate & Legal Affairs)

Bajaj Hindusthan Limited

International business Transactions involve business ventures that span across the national borders of a country.

These transactions are sensitive in nature as different cultures and ideals are brought together in the name of business enterprise.

Joint ventures Strategic alliancesTechnology transfersCollaborationsFranchisingForeign investmentsEPC contractsTrade transactions

A joint venture takes place when two parties come together to take on one project. In a joint venture, both parties are equally invested in the project in terms of money, time, and effort to build on the original concept. A joint venture can ensure the success of smaller projects for those that are just starting in the business world or for established corporations.

Collaboration is working with each other to do a task.[

Collaborations aim to achieve addition to resources by bringing in generally resourceful party from a foreign country.Collaboration may be :

Financial CollaborationTechnological CollaborationMarketing Collaboration

The parties involved in international business transactions may be:

States, International bodies, Multinational companies, and Individuals.

Scope and StakesFund transferManagementTechnologyRoyaltiesPerformanceTimePaymentQualityDamages

The international transactions give rise two jurisdictions, in general course:

National jurisdiction(within India)International (in the country of the other party)

By mutual agreement parties may determine any third jurisdiction as well.By mutual agreement parties may also pre-determine one jurisdiction for resolution of disputeParties must clearly stipulate the jurisdiction of Courts by which they intend to be governed in case of dispute

The applicable law regulating these business transaction can be:

Of IndiaOf the country of the other partyOf an independent country mutually agreed uponInternational law applicable on such transactions

The parties to the agreement must clearly stipulate the law by which they agree to be governed.

Litigation

Alternate Dispute ResolutionMediation and ConciliationArbitration

Disputes related to International Business are of Civil Nature and can be dealt with through the civil courts of competent jurisdiction.It should be noted that jurisdiction and the law to apply in case of disputes should be clearly stipulated in the agreement. In case it is not stipulated in the agreement option to pursue the same at either jurisdiction remains open.Where civil litigation is pursued in India, enforcement of award in the country of other party may create issues.The cost of pursuing a litigation in a foreign country is costly and cumbersome.

Mediation is an informal dispute settlement process run by a mediator, who by intervention between conflicting parties attempts to promote reconciliation, settlement, or compromise.Conciliation is a process whereby the parties to a dispute use a conciliator, who meets with the parties separately in an attempt to resolve their differences by lowering tensions, improving communications, interpreting issues, providing technical assistance, exploring potential solutions and bringing about a negotiated settlement. Conciliation differs from mediation in that the main goal is to conciliate, most of the time by seeking concessions. In mediation, the mediator tries to guide the discussion in a way that optimizes parties needs, takes feelings into account and reframes representations.

A short Clause to be included in the contract providing for mediation may be as follows;

“if a dispute arises out of or relates to this contract or the breach thereof and if the dispute cannot be settled through negotiation, the parties agree first to try in good faith to settle the dispute by mediation administered by (name of Mediator) under the (Mediation rules) before resorting to arbitration, litigation or some other dispute resolution procedure.”

Arbitration is a technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons (the "arbitrators", "arbiters" or "arbitral tribunal"), by whose decision (the "award") they agree to be bound. It is a resolution technique in which arbitrator reviews the evidence in the case and imposes a decision that is legally binding for both sides and enforceable.

The arbitration and conciliation in India is governed by the Arbitration and Conciliation Act 1996.The Act is based on UN Commission on International Trade Law (UNICITRAL)’s Model Law on International Commercial Arbitration (1985) and UNICITRAL Conciliation Rules 1980.The Act encompasses Four Parts:

Part-I on ArbitrationPart-II on Enforcement of certain Foreign AwardsPart-III on Conciliation Part-IV on Supplementary provisions on powers of High Court etc.

International arbitration is a leading method for resolving disputes arising from international commercial agreements and other international relationships. For instance in our case:

Joint Venture Agreements,Collaboration Agreements,Shareholders’ Agreements,Technology Transfer Agreements, Franchisee Agreements andMarketing Agreements etc.

When drafting arbitration clause consideration must be given to;

Choice of Forum,Choice of Law (Arbitration rules)Selection of arbitrators (number & qualifications)Language of proceedingsDiscovery rights an obligationsRemediesInterim reliefCost of arbitration

Choice of Forum is important:To fix the location of venue,To ensure proper arbitration procedure,To predetermine arbitral rules to avoid conflict between arbitrators and parties,To ensure consonance of arbitration rules with country’s substantive law, To ensure accessibility of witnesses and records at ease and at low costs.To ensure enforcement of Awards,To keep cost of arbitration and associated costs of evidences, witnesses well in control,

International Chamber of Commerce (ICC), ParisInternational Court of Arbitration (ICA), GenevaLondon Court of International Arbitration (LCIA), LondonSingapore International Arbitration Centre (SIAC), SingaporeHong Kong International Arbitration Centre (HIAC), Hong KongChina International Economic and Trade Commission (CIETAC)Indian Council of Arbitration (ICA), New DelhiAmerican Arbitration Association’s International Centre for Dispute Resolution (ICDR), New YorkWorld Banks’ International Centre for Settlement of Investment Disputes (ICSID), Washington DCWorld Intellectual Property Organisation (WIPO), genevaInternet Corporation for Assigned Names and Numbers (ICANN) . Los Angles

The parties to a contract may choose their law under which they agree t be governed.The parties may also choose the arbitral rules by which their arbitration procedure may be governed:Generally accepted rules of arbitration are:

UNICITRAL Rules of ArbitrationICC Rules of ArbitrationWIPO Rules of ArbitrationLCC Rules of ArbitrationSCIA Rules of Arbitration, etc.

Parties can agree upon :No of arbitratorsInstitutions to select arbitratorsTheir qualifications and backgroundTheir feesLimitation of time or sittings

In case of small disputes one arbitrator may be enough, but in case of large sums of money involved, a panel should be preferred

If parties speak different language, it may be difficult situation. Therefore a common language for arbitration proceedings must be selected.If this is not done, cost of communication itself my be prohibitiveBased on language, location and arbitrators familiarity with the selected language are pre requisite for smooth and economic arbitration proceedings

The discovery of rights and obligations in a proceedings shall be governed by the law and/or the rules of arbitration accepted by the partiesA preliminary meeting should be conducted to determine the extent of discovery of evidence and types of evidence that could be accepted, interrogatories, witnesses and cross-examination of witnesses etc.For example, LCC Rules provide extensively for discovery and such rules may help limiting time, cots and scope evidence discovery in arbitration.

The types of remedies that an arbitrator can grant me be included in the arbitration clause.The parties may limit exposure to only compensatory damages.Alternatively, it may be provided that ”the arbitrator shall have power to adopt any appropriate remedy.”Interim relief is also a remedy needed during pendency of proceedingsCost of Arbitration should also be pre agreed to limit heavy burden