Order Arbitration

Order Arbitration refers to a dispute resolution method in international trade where the buyer and seller agree in the order (contract) that if a dispute arises from the performance of the order, it shall not be resolved through court litigation but submitted to an arbitration institution or arbitrator designated by both parties for adjudication. Its typical use scenarios include: when the order amount is large, cross-border enforcement is involved, and both parties wish to resolve disputes confidentially and efficiently. Precautions include: the arbitration clause must clearly specify the arbitration institution, place of arbitration, arbitration rules, language of arbitration, and effect of the award; arbitral awards are generally final and binding on both parties and can be recognized and enforced in most countries under the New York Convention. Compared with litigation, arbitration is more flexible, confidential, and professional, but the costs may be higher; compared with mediation, arbitration has enforceable force. Foreign trade practitioners should properly include an arbitration clause in the order to avoid invalidity of the clause due to unclear provisions.