Sidestepping Foreign Controls
from July/August 2007
Sometimes counting on a foreign country's legal system to yield a fair and impartial judgement is dicey. One way to avoid this risk is to insist that overseas contracts specify that disputes will be settled not by the local courts but by a neutral institution, such as the International Chamber of Commerce's International Court of Arbitration. The ICC is headquartered in Paris but also has offices in New York City, London, Kuala Lumpur, Tunisia, and Panama. The results of its arbitration are enforceable in more than 140 countries, by virtue of their participation in a United Nations-sponsored treaty.
Many multilateral and bilateral trade agreements among countries also offer companies access to international arbitration if they feel their business activities abroad are being unfairly penalized by a host nation employing abusive tax, regulatory, or business policies. Says attorney Abby Cohen Smutny, a partner with White & Case in Washington, D.C.: "To the extent a U.S. company suffers consequences, these treaties may give it the right to present a claim against the host state for losses suffered." Frequently that claim will be argued before the World Bank's International Center for Settlement of Investment Disputes.
