DISPUTES LEADING TO ARBITRATION
Arbitration is a method of Alternative Dispute Resolution (ADR) in which disputing parties agree to submit their conflict to one or more impartial individuals, known as arbitrators, for a binding decision instead of litigating the matter in court. It is a private, consensual, and structured process governed by principles of party autonomy, where the parties determine the procedure, seat, language, and applicable law.
Arbitration may be ad hoc, where parties design their own rules, or institutional, where the process is administered by bodies like the ICC, SIAC, LCIA, or ICA. With the growing complexity of commercial transactions, arbitration has emerged as a preferred dispute resolution mechanism in sectors such as construction, international trade, intellectual property, and investment law.
TYPES OF DISPUTES
- COMMERCIAL CONTRACT DISPUTES
Commercial contract disputes arise when parties to a business agreement fail to perform their obligations or disagree over the interpretation of terms. Arbitration is preferred in such disputes due to its confidentiality, neutrality, and expertise.
Supply Agreement Disputes typically involve non-delivery, delayed delivery, defective goods, or disputes over price, quality specifications, and warranty obligations.
Distribution Agreement Disputes arise when manufacturers or suppliers and distributors clash over territorial exclusivity, performance targets, marketing obligations, or termination of distribution rights.
Franchise Agreement Disputes often concern the franchisee’s adherence to brand standards, payment of franchise fees, or exclusivity violations, as well as the franchisor’s obligations related to training and support.
Licensing and IP Agreement Disputes deal with issues such as royalty calculations, improper use of intellectual property, breach of exclusivity, and questions about ownership over innovations developed during the license term.
- CONSTRUCTION AND INFRASTRUCTURE DISPUTES
Construction disputes arise from the complexity of large-scale projects involving multiple stakeholders and technical deliverables. Arbitration offers a suitable forum for resolving such disputes with speed and sector-specific expertise.
Contractor-Developer Disputes involve allegations of non-compliance with project specifications, cost overruns, or failure to meet timelines.
Subcontractor-Vendor Disputes arise when subcontractors or suppliers allege underpayment, wrongful termination, or non-performance by main contractors.
Government Infrastructure Project Disputes occur due to delays in clearances, cost escalations, changes in government policies, or ambiguity in tender terms.
- SHAREHOLDER AND JOINT VENTURE DISPUTES
Disputes among shareholders and joint venture partners often stem from breakdowns in corporate governance, conflicting visions, or allegations of breach of trust. Arbitration helps maintain confidentiality while addressing these complex issues.
Mismanagement or Oppression Claims involve allegations by minority shareholders that majority stakeholders are misusing company resources or making prejudicial decisions. Deadlock in Decision-Making occurs in joint ventures where equal partners fail to reach consensus, stalling operations.
Exit and Valuation Disputes emerge when disagreements arise over share valuation, tag-along or drag-along rights, or exit timelines.
- INTERNATIONAL TRADE AND CROSS-BORDER TRANSACTIONS
These disputes are inherently international, frequently involving multiple jurisdictions, making arbitration a neutral and effective mode of resolution. International Sale of Goods Disputes arise from disagreements on product quality, late shipments, breach of INCOTERMS, or non-payment issues.
Customs and Regulatory Disputes relate to disagreements over import-export classification, duty calculations, or customs detentions. Shipping and Logistics Disputes involve cargo damage, delayed shipments, detention charges, or breaches of freight terms.
- INVESTMENT DISPUTES (INVESTOR-STATE ARBITRATION)
Investment disputes involve claims by foreign investors against host governments under Bilateral Investment Treaties (BITs) or multilateral instruments, protecting investors from discriminatory or arbitrary state actions.
Expropriation Claims arise when a government nationalizes or seizes foreign investments without fair compensation or due process. Fair and Equitable Treatment (FET) Breaches occur when governments act arbitrarily or shift regulatory policies without justification, undermining investor expectations. Denial of Justice Claims arise when domestic courts fail to provide fair redress to foreign investors.
- EMPLOYMENT AND LABOUR DISPUTES
While often governed by statutory mechanisms, arbitration is used in private employment contracts, particularly at senior executive levels, where confidentiality is paramount. Executive Compensation Disputes arise from challenges over non-payment of bonuses, stock options, or severance packages.
Wrongful Termination Disputes involve claims that a termination violated contractual protections or was conducted in bad faith. Non-Compete and Confidentiality Breaches surface when former employees join rivals or misuse proprietary data.
- REAL ESTATE AND PROPERTY DISPUTES
Arbitration is increasingly adopted in property transactions due to the complexity and financial value involved. Lease and License Agreement Disputes involve disagreements over rent, maintenance duties, lock-in periods, or eviction clauses.
Development Agreement Disputes arise when developers and landowners disagree over project timelines, profit-sharing, or title clearance. Brokerage Commission Disputes occur when agents are denied agreed commissions.
- MARITIME AND SHIPPING DISPUTES
Given the international and high-value nature of maritime commerce, arbitration is the preferred method to resolve disputes efficiently. Demurrage Claims involve compensation for delays in loading or unloading beyond the agreed time.
Freight Payment Disputes arise when shipowners allege non-payment or underpayment by charterers. Cargo Damage or Loss Claims are filed when goods arrive damaged or are missing.
- BANKING AND FINANCE DISPUTES
Arbitration is increasingly used in complex financial arrangements, especially in cross-border deals where confidentiality and technical expertise are valued. Loan Default Disputes occur when borrowers fail to repay loans or violate financial covenants.
Structured Finance Disputes involve defaults or misrepresentation in transactions like derivatives or securitizations. Guarantee and Indemnity Enforcement Disputes arise when banks seek to enforce guarantees that are resisted on grounds of fraud or duress.
- TECHNOLOGY AND INTELLECTUAL PROPERTY DISPUTES
Arbitration is preferred for its confidentiality and ability to use expert panels in disputes involving technology collaborations, software, and IP licensing. R&D and Joint Innovation Disputes arise when co-developers clash over ownership or licensing rights.
Software Licensing Disputes involve conflicts over the scope of use, unauthorized copying, or user limitations. Breach of Confidentiality and Data Use Claims occur when sensitive data is misused in violation of NDAs.
- INSURANCE AND REINSURANCE DISPUTES
These disputes concern liability, claim interpretation, and payout obligations under insurance policies, with arbitration often chosen to appoint experts in the field. Policy Coverage Disputes arise when insurers deny claims based on policy exclusions or lapses.
Reinsurance Contribution Disputes involve disagreements over payout obligations in multi-layered coverage structures. Claims Handling and Settlement Disputes concern delays or alleged bad faith in processing claims.
CONCLUSION
Arbitration has established itself as a vital tool for resolving disputes across diverse domains, offering confidentiality, neutrality, and flexibility. Its ability to adapt to the specific needs of parties, coupled with expert decision-making, makes it a preferred alternative to traditional litigation. From commercial contracts to investment and intellectual property disputes, arbitration ensures faster resolutions, preserving relationships and commercial interests.
As global trade and business transactions grow increasingly complex, arbitration stands poised to meet the evolving demands of modern dispute resolution, fostering trust and efficiency in the global legal landscape.
