How Australian exporters can resolve disputes with foreign trade partners

Here's how Australian SME exporters can best handle international disputes.

Do you know what to do if you get in a dispute with a foreign trade partner? With international trade changing regularly, exporters must be proactive in assessing potential disputes and how to deal with them.

For example, last year a UN dispute tribunal was put together to deliver verdict on Beijing's claim to owning the South China Sea. Of course, there are many other countries who believed this claim was a violation of international treaties which would impact their fishing and exploration rights, as well as $5 trillion worth of trade.

While your company might not get caught up in something so large, it is disputes like these that could impact the way your business trades with others. 

But the question remains – what is the protocol when SME exporters in Australia get into a dispute with their foreign trade partners? 

Who do SMEs call for dispute resolution?

Legal and financial experts. At first, you might think it's most appropriate to contact the Australian Trade and Investment Commission (AusTrade), as it is their job to help Australian businesses succeed in trade in business. But it ends at that – they don't actually get involved in commercial disputes between Australian companies and overseas entities. However, they can provide referrals to legal service providers should you not know who to turn to next. 

Rather, SME dispute resolution requires legal and financial aid. Once a dispute arises, businesses are better suited to contact international law committees, like The Law Society of New South Wales, who practise, study and, of course, facilitate your interactions.

International arbitrators act as your resource for professional advice and counsel for businesses in an international dispute.

The role of international arbitration bodies

International arbitrators act as your resource for professional advice and counsel for businesses in an international dispute. One of the biggest roles of international arbitrators is to keep companies out of local courts, and devise a contract that ultimately resolves the dispute at hand, keeping future issues from ever arising. 

For many, arbitration is the most popular way of settling disputes as it is one of the more flexible offerings to businesses, allowing them to tailor the procedure to suit them, making it a cost effective option for SMEs as well. Though flexibility is just one of the many benefits. Working with an international arbitrator, you also get neutrality, a binding resolution that is not open to appeal. Essentially, it is their job to take the complexity out of international interactions, making sure both parties are able to manage business relationships by settling their specific needs. 

Australian business owners can contact Australian Disputes Centre International to submit a claim.

Financial protection

One of the biggest risks companies face doing business overseas is the threat of not being paid. In fact, during a dispute, payments are typically the first thing to be stopped. But an unpaid invoice could spell danger for Australian companies as a quarter of them fail when they fall victim to unpaid debts.

In the instance of disputed debt, businesses who have trade credit insurance may be legible to claim under the "Disputed Debt Option" of the policy. This helps ensure your cashflow and general business isn't impacted by the dispute with one buyer. TradeLiner Credit Insurance also helps exporters manage credit risk by identifying the risky buyers, collect unpaid invoices and ultimately make a claim payment should collection not be possible. Proactive protection like this insurance helps keep businesses safe during disputes before a resolution is even decided upon. 

While there are many paths to dispute resolution, the safest step is often a proactive one. Talk to the team at Coface for more information on risk management.