Gift Importers Ltd. has a contract with a Philippine government exporting agency for the purchase of numerous handmade artifacts. Since neither party was comfortable having the courts of the other party's country adjudicate any disputes between them, the contract contains a clause which identifies the procedure by which a third party acceptable to both would settle any disputes. In order to protect itself from an after-the-fact application of Philippine law, which, for example, would remove or alter some of the protections for Gift Importers in the contract, Gift Importers should insist on a clause by which the third party who is to resolve disputes would operate in a country other than Canada or the Philippines and under internationally recognized rules.

Question

Quizplus · Accepted Answer

Including a clause that specifies a neutral third party and internationally recognized rules for dispute resolution can help ensure that neither party is subject to the potentially biased or unfavorable legal system of the other party's country. This approach is common in international contracts to provide a fair and predictable legal framework for resolving disputes.