While international trade provides opportunities for companies that are otherwise unavailable, it also brings with it additional problems when there are disputes between parties. Contracts, which can be cumbersome enough for domestic situations, can be awkward when parties from different countries are involved. Because of this, careful consideration must be given to key aspects of international contracts at the time they are drawn up. In the case of Mitsubishi Motors Corporation v. Soler Chrysler Plymouth, a Swiss subsidiary of an American company found itself in a dispute with a Japanese manufacturer over sales in Puerto Rico. At issue was whether a clause in the contract between the two parties which required arbitration was appropriate to resolve disputes between the contracting parties. The underlying problem is that of determining what is the best alternative for conflict resolution when parties from various countries are involved. In this case, arbitration was written into the contract, but Soler later decided that this was not the optimal solution alternative for its interests.
Justification for Problem Definition
The problem of determining what is the best alternative for resolving international disputes is one that managers in global organizations face regardless of what country they are located in. In fact, the issue of how disputes among domestic contracting parties are to be resolved is also a key aspect of many contracts that involve parties located within the United States, so it is not surprising that the issue takes on special importance when a global dimension is added to the situation.
Different types of resolution techniques have different advantages and disadvantages for the participants, and even the location of where the dispute resolution takes place can affect the outcome of the conflict. However, since neither contracting party knows ahead of time what type of conflict will arise, it is difficu...