INTERNATIONAL TRANSACTIONS: –
International transactions involve settlement or transfer of goods between two persons residing in two different countries. There are many reasons due to which dispute may arise between an exporter and importer such as quality issues, failure to ship on time, refusal to ship because of changes in market conditions or government regulations. Under most contract terms, the importer will have an opportunity to inspect goods only when the consignment reaches him. By that time, he may have already paid the value of goods to the exporter. If on inspection, the goods are found to be defective or not as per contract terms, then he will reject the consignment and sue for damages.
There are two main methods of dispute settlement: – a) Litigation, b) Arbitration.
Arbitration is considered to be more suitable than litigation due to following reasons: –
- Arbitration is a more Quicker process than litigation. It can be completed as quickly as the parties want it, depending on the circumstances and nature of the particular case.
- Arbitration is less expensive than litigation. The arbitration fees are around 2 percent of the claim value or less in institutional arbitration.
- Arbitration helps in promoting friendly relations between the parties as the arbitrator is the person chosen by the parties themselves on the basis of their faith and confidence in him.
- In arbitration, it is possible to choose a person having knowledge and experience in the particular line of trade. This helps in avoiding the necessity of expert witnesses for educating the judge or for providing trade customs and practices.
- Arbitration proceedings and arbitrator’s decisions are not published in law reports like the court decisions. Therefore, arbitration preserves the privacy and trade secrets of parties.
In the case of international transactions, arbitration can take place either in exporter’s country or importer’s country. It is, therefore, necessary to have a legal system for the recognition and enforcement of arbitral award given in another country. The international “New york Convention” on recognition and enforcement of foreign arbitral awards 1957 has been ratified by 40 countries which recognise and enforce arbitral awards given in the countries which are signatories to his convention.
At CAKART www.cakart.in you will get everything that you need to be successful in your CA CS CMA exam – India’s best faculty video classes (online or in pen drive) most popular books of best authors (ebooks hard copies) best scanners and all exam related information and notifications.Visit www.cakart.in and chat with our counsellors any time. We are happy to help you make successful in your exams.
Click Here to download FREE CA CS CMA Text Books.