Middle Ground

Like marriage, overseas business relationships can go sour. Communication can save both--if you agree on how to disagree.

A professional, neutral third party (versus a lawyer) is key. Arbitration and mediation can save time and money by resolving international business disputes out of court.

Unfortunately, says Claudia Ray, an arbitration expert at New York City law firm O'Melveny &Myers LLP, few entrepreneurs consider the outcome of bad transactions. So when something goes wrong, they're often forced to take up matters in a foreign court system. Smart businesses agree to rules established by groups like the American Arbitration Association in New York City.

Using these rules, you can arbitrate a settlement (have a third party make a decision) or mediate (have a third party broker a decision). "Everybody [can] state their case without the hostility of litigation," says Ray, "and it doesn't give an advantage to either party."

Arbitration paid off for Roberta Moore, 40, president of Qualitative Marketing in San Jose, California. When a Canadian client didn't pay a $10,000 bill, Moore turned to the American Arbitration Association.

"The process was smooth," says Moore. "Arbitration prevented me from having to go through a foreign court system, and it did what a collections agency couldn't--get money from a company outside the U.S."

For more information, visit the American Arbitration Association Web site at http://www.adr.org

Christopher D. Lancette is a journalist in Atlanta who covers international topics for Hispanic Business and other publications.

This article was originally published in the January 1999 print edition of Entrepreneur with the headline: Middle Ground.