Disputes arising between parties to an international business transaction are usually sorted out by informal means. Failing that, the parties can hire an external mediator to help them resolve the dispute. If this does not succeed, the parties might have to resort to time-consuming and expensive arbitration or litigation. Apart from the time and expense involved, this can also do irreparable damage to an otherwise successful business relationship.

International arbitration and litigation can be fraught with difficulties because of the different legal regimes that potentially apply to the legal relations between the parties. There are, however, a number of strategies that can be adopted to reduce the risks and expenses of international dispute resolution. If the business dealings are likely to be ongoing, one of the best strategies is for the parties to develop good communications and make arrangements to meet informally as often as reasonably possible. Other strategies minimise the risk of non-payment for the delivery of goods and services. As we mentioned in Chapter 4, letters of credit are one way of ensuring payment. Other risk strategies should also be employed that are appropriate to the particular business arrangement that exists.

On some occasions even the adoption of a range of risk strategies will not avoid the loss of considerable sums of money without pursuing legal action.