Finding a Middle Ground with Overseas Buyers

Panic is the natural reaction when an overseas buyer disputes a transaction. But fear not. You can help prevent a dispute, or at least minimize its impact, by establishing resolution protocols beforehand.

One way to resolve disputes is through arbitration (sometimes called alternative dispute resolution). Consider including an arbitration clause in your credit applications or sales contracts with overseas buyers. By signing an arbitration clause, both parties agree that any disputes will be heard not by a court, but by a neutral individual or panel (which you should designate). The arbitrator should be in the seller's country, not the buyer's.

Arbitration awards are final and binding, and can only be challenged in very exceptional circumstances. Even if one party wants to go to court, the courts will normally refuse to hear the case. Arbitration is also usually faster and less expensive than litigation.

For more on arbitration, visit the American Arbitration Association and the Association for International Arbitration.

Laurel Delaney. runs GlobeTrade.com and LaurelDelaney.com, Chicago-based firms that specialize in international entrepreneurship.

This article was originally published in the August 2007 print edition of Entrepreneur with the headline: Middle Ground.