Cross-border contract disputes set to increase

Gurjit Degun
19 February 2014

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19 February 2014 | Gurjit Degun

The number of cross-border legal disputes are expected to grow in the coming years, a survey of lawyers across the world has found.

The 2013/12 Global Currents: Trends in Complex Cross-Border Disputes study found half of the 146 respondents expect an increase in such cases over the next two years. Some 30 per cent of respondents’ caseloads consisted of cross-border disputes.

The study by Hogan Lovells found customers and suppliers were the main sources of cross-border disputes - most often over commercial, contractual or intellectual property issues. A quarter of businesses clashed with regulators. The lawyers said they have spent anywhere from $2.3 million (£1.3 million) to $6.5 million (£3.8 million) on disputes involving between two and five different countries.

The most common markets for such disputes are China, England, France, Germany and the US. And the lawyers said China, India, Brazil and the US have the most challenging legal systems. Respondents said their greatest challenge is locating quality local counsel in these difficult regions. Other factors include complying with unfamiliar overseas rules; managing differences in legal systems; long distances; and adapting to differences in time zones, cultures and languages.

The study found respondents are using new methods to control spend and time spent on managing cross-border litigation. Some are turning to a single legal firm with a global network of offices; and many are implementing new measures such as early case evaluation for settling disputes.

“Companies are taking a more proactive approach, writing efficient and effective arbitration procedures into contracts or selecting friendlier governing law jurisdictions,” the report explained.

“Others have increased their internal cross-border expertise, bringing in lawyers with technical experience or especially strong project or case management skills. A number of companies are building stronger relationships with international law firms. And many are focusing on resolving disputes more quickly – even if it means settling instead of fighting to the bitter end.”

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