Disputes

• Author: David Dixon
• Pages: 233-258

233

Chapter 12

Disputes

David Dixon

I. Introduction

This chapter discusses several forms of dispute resolution commonly available to non-US

prime and subcontractors under US government contracts, as well as to US prime and

subcontractors performing contracts outside of the United States. It first discusses alternative

dispute resolution processes, and primarily international arbitration. Next, it provides a general

roadmap for choosing the correct US court or administrative forum for resolving government

contract-related disputes in the United States legal system. The chapter also provides some

additional guidance regarding litigation outside the United States.

II. Alternative Dispute Resolution

Alternative dispute resolution (ADR) processes, such as arbitration or mediation, are

frequently used to resolve international contract disputes. This is generally so because of three

primary considerations: (1) the judicial process is expensive, time consuming, and unpredictable,

(2) there is a perception of bias in resolving contract disputes in the judicial system of a country

where one contract party is a national and the other is a foreigner, and (3) international

arbitration awards are enforceable in the local courts of 156 counties that are party to the New

York Convention on the Recognition and Enforceability of Arbitration Awards. Other

advantages to ADR include confidentiality of the proceedings (ADR proceedings are typically

private, whereas the judicial process is generally public), expertise of the decision maker (in

ADR, the parties can choose the decision maker and can use experts typically unavailable in the

234

judicial process), and finality of the decision (e.g., binding arbitration decisions cannot be

appealed and can be challenged onl y under very limited circumstances).

The two most common forms of ADR are arbitration and mediation. Both are voluntary

processes designed for quick and efficient dispute resolution, which employ neutral third parties

to oversee the process. Mediations are typically conducted with a single mediator who helps to

facilitate discussion and eventual resolution of the dispute through negotiation. Determinations

made by the mediator typically are not written and are non-binding. On the other hand,

arbitration is generally conducted with a panel of arbitrators. The most common procedure is for

each contract party to select an arbitrator, and those two arbitrators then select a third arbitrator.

The contract parties present the dispute to the three chosen arbitrators similar to how a trial is

conducted in a judicial process. The arbiters make decisions about evidence by majority vote and

give written opinions. Although arbitration can be non-binding, it is more common for the parties

agree to binding arbitration.

Because arbitration is the most common form of ADR for international contract disputes

and has the most procedural considerations and formalities, this section will focus on

international contract dispute resolution through the use of arbitration.

A. Key Contract Considerations

There are several key contract considerations that must be made prior to arbitrating an

international contract dispute. First, the parties must enter into an agreement to arbitrate the

dispute. This is most efficiently done in an arbitration clause during the initial contract

negotiation, but an arbitration agreement can also be made after the dispute arises. During the

negotiation of the arbitration agreement, the parties must determine, among other things, the

country in which to hold the arbitration and whether the law of that country prohibits arbitration