Is Arbitration the best dispute resolution method for Intellectual Property matters in an international contract?

Author avatarSheerin Kalia ·Oct 16, 2023

For the most part, yes. Arbitration is often the chosen dispute resolution method in international contracts because it’s faster and less costly than litigation, the parties can choose the governing law and procedural rules for the arbitration, and they can choose the arbitrator or a panel of arbitrators. Unlike a court case, which is public and can be appealed, arbitration is private and the parties can choose to accept the outcome as final. Privacy and confidentiality are particularly helpful when the subject matter is sensitive or something the parties want to protect, like intellectual property (“IP”).

Arbitration of IP disputes is also helpful for the following reasons:

  1. Since IP infringement issues may arise in multiple jurisdictions under an international contract, pursuing litigation could result in multiple actions being taken in different jurisdictions simultaneously. Those cases may result in different or even conflicting results. If arbitration is chosen, the parties can submit one case to international arbitration and implement one result.
  2. The parties can choose an arbitrator(s) with expertise in IP and even in their industry. Expert arbitrators can also be provided by alternative dispute resolution (“ADR”) institutions like the WIPO Arbitration and Mediation Center, the Hong Kong International Arbitration Centre, the Singapore International Arbitration Centre, and the International Institute for Conflict Prevention & Resolution. 
  3. Most ADR institutes have rules that allow arbitrators to grant injunctive relief, which is not available through courts in many jurisdictions.
  4. ADR institutes allow parties to request virtual hearings, and agree on procedures and deadlines, which can be very helpful when time is of the essence. 
  5. The arbitration decision will be enforceable in 172 States under The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (a.k.a. the "New York Convention"), unless the matter is not arbitrable under the laws of the jurisdiction at the seat of arbitration or in which enforcement is sought.

Parties can name any method of dispute resolution in their contract, including mediation, arbitration, litigation, or any combination thereof. The ADR institutes named above provide sample clauses that can be altered to suit any situation. 

A popular dispute resolution method is Med-Arb which allows for Mediation as a first step, failing which the matter is referred for Arbitration. Mediation is helpful when the parties can work together to find a solution they are both comfortable with. That belief is usually the product of familiarity between the parties because of a long-term relationship or because of the nature of the contract, which would only lend itself to a short list of possible solutions. If mediation fails, one or both parties can submit the matter to arbitration, in accordance with the terms of the contract.

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