International trade disputes: mediation, arbitration, courts
A dispute with a foreign counterparty can be resolved in four ways: direct negotiation, mediation with a neutral mediator, arbitration before an arbitral tribunal, or litigation in a state court. The choice is largely made when the contract is signed, because the dispute resolution clause decides where you can go and whether the result can be enforced in the debtor's country. This guide covers each route and the evidence habits that help whichever route you take.
By Hiram Trade Editorial Desk
- Published
6 min read
First: what the contract says
Before sending a demand letter, check the contract for:
- governing law and whether the Vienna Convention (CISG) applies,
- claim deadlines: whether you notified defects on time and in the required form,
- the dispute clause: which country's courts or which arbitral institution, the seat, the language,
- a negotiation or mediation step required before proceedings (a multi-tier clause); skipping it can delay the case.
If there was no contract, only emails and a proforma invoice, establishing the governing law and competent forum can be difficult and expensive. That is the strongest argument for signing a sales contract with the key clauses before the first shipment.
Negotiation
Most commercial disputes end in a settlement. What helps:
- a factual letter describing the problem, with evidence and a concrete request (price reduction, replacement, refund),
- separating the dispute from the relationship: a counterparty expecting future orders has an interest in agreement,
- a practical proposal: a discount on the next shipment, an extra inspection, a jointly appointed surveyor,
- a deadline for a reply and a clear statement of the next step.
Record any settlement in writing, with the amount, deadline and a waiver of further claims within the agreed scope. For negotiation technique see negotiating B2B quotes.
Mediation
In mediation a neutral mediator helps the parties reach agreement but decides nothing. It is faster and cheaper than arbitration, confidential, and often saves the business relationship. ICC administers mediation under its 2014 Mediation Rules and publishes model clauses ranging from a simple reminder that mediation is available to an obligation to mediate before arbitration. National centres, for example at chambers of commerce, also offer mediation.
Mediation makes sense when both sides want to keep working together and the dispute is about interpretation or valuation, not fraud.
Arbitration
Arbitration is a proceeding before a tribunal chosen by the parties. The award is binding, and its main advantage in international trade is enforceability: according to UNCITRAL, the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards has 172 states parties. Poland and the Philippines are both parties, and both declared that they apply the Convention to awards made in other contracting states and to disputes considered commercial.
ICC and the 2026 Rules
The International Chamber of Commerce (ICC) introduced new Arbitration Rules that entered into force on 1 June 2026 and apply to arbitrations commenced from that date. Changes include:
- no mandatory Terms of Reference in standard cases,
- electronic communication with the Secretariat by default,
- a higher expedited procedure threshold: for arbitration agreements concluded on or after 1 June 2026, the expedited procedure applies automatically to disputes up to USD 4 million unless the parties opt out (for agreements concluded from 2021 until 31 May 2026 the threshold is USD 3 million),
- Highly Expedited Arbitration Provisions (HEAP), available only if all parties agree, with a sole arbitrator and an award within three months of the initial case management conference.
The standard ICC clause reads: "All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules." ICC suggests adding the seat, language, number of arbitrators and governing law.
Other institutions
Besides ICC, options include the Court of Arbitration at the Polish Chamber of Commerce in Warsaw, the Vienna International Arbitral Centre (VIAC), the Singapore International Arbitration Centre (SIAC) and the Philippine Dispute Resolution Center (PDRC). When choosing, compare fee schedules, availability of arbitrators who know your industry, language and a seat that is neutral for both sides. Arbitration costs depend on the amount in dispute and are published in each institution's schedule; for small claims they can exceed the benefit.
State courts
Courts can be cheaper, but enforcement is the problem. Within the EU, a judgment from one Member State is enforced in the others under the Brussels I bis Regulation. Outside the EU, for example in the Philippines, enforcing a Polish judgment depends on local law and needs a separate procedure; check this with a lawyer who knows both systems before choosing courts. That is why arbitration is more common in contracts with non-EU counterparties.
Comparing the routes
| Route | Who decides | Binding outcome | Enforcement abroad | Confidential |
|---|---|---|---|---|
| Negotiation | The parties | Settlement only | As a contract | Yes |
| Mediation | Parties with a mediator | Settlement only | As a contract, depending on law | Yes |
| Arbitration | Arbitrators | Yes | Broad, via the New York Convention | Not automatic: depends on rules, seat and agreement (tribunal may order it on request) |
| State court | Judge | Yes | Easier within the EU, country-dependent outside | Usually public |
Evidence: what to keep from day one
Whatever the route, the party that can prove its case wins. Keep:
- the signed contract, orders, confirmations and every change of terms,
- correspondence in original form (emails with headers, not only screenshots),
- transport documents, packing lists, certificates and other shipping documents,
- pre-shipment and arrival inspection reports, dated and with photos,
- claim records and proof that the defect notice was delivered,
- payment confirmations and bank statements.
Decide who in your company archives each deal's documents and for how long. In a dispute, chronology matters, and rebuilding it a year later from scattered mailboxes can be impossible.
When you suspect fraud
If the counterparty does not exist, bank details were swapped or goods were never shipped, this is not a commercial dispute but a possible crime. Contact your bank immediately and report to law enforcement; see B2B trade fraud warning signs.
On Hiram, negotiation history is kept in versioned rounds and the deal room records the course of the deal and shipment, which makes it easier to reconstruct what was agreed. Hiram is not a party to the transaction and does not decide disputes between counterparties. You can start running deals after registration.
This article is informational and is not legal advice. For a specific dispute, consult a lawyer.
Sources
- ICC, 2026 Arbitration Rules: https://iccwbo.org/dispute-resolution/dispute-resolution-services/arbitration/rules-procedure/2026-arbitration-rules/ (opens in a new tab)
- ICC, Standard arbitration clause: https://iccwbo.org/dispute-resolution/dispute-resolution-services/arbitration/rules-procedure/arbitration-clause/ (opens in a new tab)
- ICC, Mediation Rules: https://iccwbo.org/dispute-resolution/dispute-resolution-services/adr/mediation/mediation-rules/ (opens in a new tab)
- ICC, Mediation Clauses: https://iccwbo.org/dispute-resolution/dispute-resolution-services/adr/mediation/mediations-clauses/ (opens in a new tab)
- Aceris Law, Key Changes in the 2026 ICC Arbitration Rules (expedited thresholds): https://www.acerislaw.com/key-changes-in-the-2026-icc-arbitration-rules/ (opens in a new tab)
- UNCITRAL, Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958), status: https://uncitral.un.org/en/texts/arbitration/conventions/foreign_arbitral_awards/status2 (opens in a new tab)
- EUR-Lex, Regulation (EU) No 1215/2012 (Brussels I bis): https://eur-lex.europa.eu/eli/reg/2012/1215/oj (opens in a new tab)
- ICC, Arbitration Rules 2026 (in force 1 June 2026): see ICC dispute resolution services above
This article is for information only and is not legal, tax or customs advice. Rules and rates change: check the current official sources or consult an adviser before you decide.