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ACCA Applied Skills · Corporate and Business Law (Global) · Alternative dispute resolution mechanisms

Gamma Co wants to resolve a dispute quickly but needs a decision that can be enforced against Delta Co's assets in a country where neither a court judgment of Gamma's home state nor any reciprocal arrangement is recognised. Both states are parties to the New York Convention. Which choice is most sensible?

Arbitration is the sensible choice. Both states are parties to the New York Convention, so an arbitral award should be recognised and enforced there, while a foreign court judgment may not be, and mediation or negotiation give no binding award.

  1. ACourt litigation in Gamma's home state, relying on the judgment being recognised abroad
  2. BArbitration, because an award is more likely to be enforceable under the ConventionCorrect
  3. CMediation, because the settlement is automatically enforceable as a court judgment
  4. DNegotiation, because it produces a legally binding award

Explanation

The New York Convention requires contracting states to recognise and enforce arbitral awards, so arbitration offers cross-border enforceability where court judgments may not be recognised. A mediated settlement is only contractual unless separately converted, and negotiation yields no award.

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