ACCA Applied Skills · Corporate and Business Law (Global) · Alternative dispute resolution mechanisms
Two companies in different countries are in dispute over a supply contract. They want the dispute resolved privately, with a final and binding decision made by an independent person chosen by them, and they want the decision to be enforceable internationally. Which method best meets these needs?
Arbitration is the best fit. It is private, the parties select the arbitrator, the award is final and binding, and it can be enforced across many countries under the New York Convention. Mediation and negotiation depend on voluntary agreement and do not impose a binding decision.
- AMediation
- BArbitrationCorrect
- CNegotiation between the managers
Explanation
Arbitration is private, the parties choose the arbitrator, and the award is binding. Awards are widely enforceable internationally under the New York Convention. Mediation produces a binding result only if the parties agree to a settlement, so it does not give a decision imposed on them.
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