How to settle dispute in International Business of Import and Export

Posted on 10 April 2023 Category : For Beginners

The information provided here is part of Online export import training guide

DISPUTE SETTLEMENT IN EXPORTS AND IMPORTS BUSINESS

Litigations and Arbitration in Export and Import Business.

I hope this article helps all traders in a business especially those who are in to Import Export business - how to handle disputes in import and export trade?

I sell goods to you, you buy them, you pay bill, you use my goods. Simple. Both are happy. Right? But is it that much simple in an international trade? I will say ‘YES’ depends up on how fast you are untying the knot. In other words, I will say, ‘Removing hindrances with least time and least money is business’ . Am I right?

Let me discuss firstly about causes for disputes under export import business. What are the reasons for Disputes in international business?

Reasons for disputes in international trade between exporter and importer can be many.

As per my experience in import export trade for the past 25 years, the primary reason for disputes is quality of the goods exported. Under contractual terms in many export contracts, importer gets the opportunity to inspect the quality of goods only when the consignment reaches him. In many cases, by that time, the exporter would have got money. Even if the consignment is sent on collection basis, importer can check the quality only after retiring the documents. Other reasons for the disputes can be delayed shipment or non-shipment due to change in government regulations or market conditions, restricting exports, etc.

What are the methods of settling dispute?

In any business there are two basic methods for dispute settlement - Litigation and arbitration.

Litigation is highly suitable due to the proverbial delayed process, prohibition costs and uncertainty of decision.

But what are the basic Limitations of Litigation? How fast a litigation can be in export import business? Is it easy to educate and convince on judgments with proper documentary proof? How convenient to both exporter and importer under Litigation in international business? Will it effect both importer and exporter on their business due to bad image among public? How to effect trade relationship for both seller and buyer under litigation? Are international laws and procedures simple to handle? Let me discuss these area also here:

Slow Process: As you know, almost all civil process of litigation is slow. Court process proverbially takes huge time consuming and formalistic.

Avoidable Necessity of Export Witness and other Evidence: In international contracts, practices, procedures and customs are different. A judge however well versed may be, in law, can not be expected to know all these intricate matters. So, in courts, to educate the judge about these practices, witnesses who are experts and having knowledge in the field have to be produced to prove the practices, even before the evidence is established.

Inconvenience to the Parties: Court timing and date of hearings may not be convenient to litigants. Most of the time, cases are postponed and in that process months drag on even for completion of one witness. Even after day’s long waiting for hearing, one may know, at the end of the day, that the case is adjourned for two months due to non availability of the other advocate!

Adverse Public Image: Court proceedings are never secret. Media always covers the developments in important cases. Even the superior court judgments are published. Matters, which have been confidential till the case is brought to a court of law, become topics for public discussion that may bring notoriety, loss of goodwill and long-standing reputation.

Bitterness and Disruption of Trade Relationships: When a matter goes to a court of law, it is immaterial which party may win as the age old established relationship, after the case is brought to litigation in a court, comes to an end with only acrimony ad bitterness.

Different Laws and Procedures: International trade laws and procedures are more complicated. Litigation in foreign courts is more expensive and difficult in comparison to the domestic courts.

OK, Now let us discuss about Arbitration under Imports and Exports. How does arbitration helps exporters and importers if dispute arises? How fast arbitration can take place under a dispute between buyer and seller in export import business? How expensive compared to litigation under export import dispute between seller and buyer? How does an arbitration under international business effect Goodwill of both exporter and importer? What about the confidentiality about the dispute between importer and exporter in an international trade?

What are the basic Advantages of Arbitration under a dispute between seller and buyer in export import business of international trade?

Let me explain basic advantages of arbitration in Export Import dispute compared to Litigation:

Quickness: Definitely, arbitration is quicker than litigation. Process of arbitration can be completed as fast as the concerned parties desire. Under Arbitration Act, the arbitrators have to make the award within four months from the date of completion of all proceedings. Usually, arbitration is settled within a period of four months to one year.

Inexpensiveness: Total incidental expenditure in arbitration is always much lower than litigation. Arbitration fees is around 2% of the claim value or less in institutional arbitration.

Promotes Goodwill: As the arbitrator is chosen by both the parties, based on their faith and his competence, arbitration becomes a normal process of goodwill. Arbitration proceedings and its outcome do not disturb the existing friendly relations between the exporter and importer.

Choice of Appropriate Arbitrator: As the arbitrator is chosen by both the parties and name incorporated in contract, who has the knowledge of customs and procedures of international trade, so separate expert witness for educating the judge does not arise.

Privacy: Arbitration proceedings are not open to public. Arbitrator’s award is not published in any newspapers. This preserves privacy of the parties. So, trade secrets as well as disputes arising from the contracts do not become public.

In next article, I will explain about HOW TO RESOLVE AND SETTLE DISPUTES BETWEEN EXPORTER AND IMPORTER UNDER INTERNATIONAL BUSINESS.

In this article, I have explained about Litigation and Arbitration under dispute between Exporter and Importer in an International Business. Had you experienced Litigation and Arbitration under dispute between you and your customer? Would you like to add more information about dispute between importer and exporter in International Business? Share below your experience in handling dispute between you and your customer in Export Import Business.

Comment below your thoughts about this article – Dispute settlement in Imports and Export business, Litigation and Arbitration.

The above information is a part of Import Export course online

How does Wire transfer work in international business?

Packing of export goods - How important in International business?

Political Risks, one of the threats in International Business

Terms used in international trade business such as Counterpurchase,Countervailing duty,Country of origin ,Country risk,Court of international trade, Cover note

Terms used in international trade business such as Negotiation,Net Weight,Net Cost,Non Tariff Barriers,Non-negotiable,NON-TARIFF BARRIERS

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Running account facilities for bank export finance
Excise and Customs - Click here to read complete notification under Budget 2014
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What are the risks and solutions in Export Business?
What happens, if cargo not cleared by importer
What happens, if HAWB number marks wrongly
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Click here to know HS code of other product/commodity

Types of export containers
Measurement of export containers
Export Import Policy of India 2015-20
MEIS, Merchandise Exports from India Scheme
SEIS, Service Exports from India Scheme
Merge your Commercial Invoice and Packing List for all your future exports
Export procedures and documentation

How to amend number of packages in Import General Manifest (IGM)

How to amend quantity of goods in Import General Manifest (IGM)

How to amend shipper name in Import General Manifest (IGM)

How to amend spelling error in IGM. in India

How to avoid delay in receiving OBL Original Bill of Lading?

How to avoid two import DO charges at destination

Transferability of Bill of Lading

Transhipment - A redefinition

Travelers to India under import duty exemption, Frequently Asked Questions Part 2

Triangular export

Types of Insurance Documents.

What is LC Letter of Credit in export import business

What is legalization of documents by embassy?

Comments

pranita: On 25 July 2014 Dear sir , Need help how i apply for iec code how i start export business need good ides of international marketing i want to intro my product in international coutry

yousaf: On 23 August 2014 If a buyer pay advance against a PO from usa and the seller does not sends shipment . How the importer should proceed. How much time it will take? Please answer.

Vikram Shah: On 25 September 2014 Where to report when you become the victim of fraud. Recently i posted my buy requirement on one of the leading websites. And a supplier in UK approached me. As value of my goods was not very high and the quantity ordered was 25 tonnes. We had to agree on supplier terms which was 80% as TT and balance 20% payment once shipment reaches the destination port. Else for L/C we need to order a minimum of 50 tonnes and in that too 50% TT and balance 50% as Letter Of Credit. Finally after receiving the payment the supplier has been asking for more money than the agreed 80% and not sticking to the terms of contract. Is asking for double the agreed value of the contract. But we have realized the supplier is fraud. We have taken up the matter to our bankers. who are taking hell of the processing time. And i have also reported the matter to Cyber Crime from whom we received no reply. Last and final thing left is to take the matter to UK Embassy. Please share some valuable information how do we go about the same. Regards Vikram Shah

M.M.GULATI: On 17 October 2014 17.10.2014 - Arrange to waive the condition of completing annual average export performance under epcg scheme and relaxation may also be given to exporters against old cases of epcg where matter is now totally beyond the control of exporters because of one reason or the other.It is very very important to see the issue because many exporters are suffering due to above condition and no any govt. authority is listening which is truth and hard fact.

tushar: On 23 October 2014 Dear sir, I am in export business of perishable goods from india to gulf countries. Our business runs on commitment an less documents. Now I have supplied goods to one of my customer and its been two years he is delaying our payments willingly. We have been requesting them to make the payment but no replies from there side. Is there any way we can take legal action and recover our payments. Please advice. Regards. Tushar

Mayank Shukla: On 15 December 2014 I want to Import goods from Japan and sell to somebody in India, My customer (In India) wants to do the customs clearance itself but I do not want to disclose shippers details to my end customer. Is there any option to import it and sell it my customer without showing details of Japan shipper ? please help

Aditya : On 09 January 2015 Its been over six months since I exported the material to a buyer in Guyana. Over these months he kept assuring me of the transfer but he has failed to send the funds. Is there any legal help I can seek?

ashfaq ahmed: On 13 January 2015 Our company has received advance against exports from the foreign buyer. When the material got ready. The foreign buyer could not lift the material from our company. How the advance payments can be written off / adjusted as per RBI Rules hence the finished material is of unique type and could not be sold in India.Please advise us.

Ringoo: On 26 January 2015 Hi, I am Ringoo. I have left the software industry recently because I am not able to make any significant amount of money. I am planning to start one export - import business. I am mostly looking at doing trade between Indian and Far Eastern countries, like Japan, South Korea, Taiwan, China, etc. Can you please me that what kind of goods are traded between India and these countries? Also, I am having total savings of Rs. 1.5 lakhs only at this time. Will this be sufficient to start this business? If not, what are the sources of funds that I can approach? Thanks in advance for your valuable advice Ringoo

Admin: On 26 January 2015 Hi Ringoo, There are many ways of sourcing fund for export import trade. Approach a good export import consultant near your area to get proper information on finance for exports imports.

Jjyaja: On 06 February 2015 Hi Admin, I am Jiyaja what happened if i import from china to india and due to dispute i dont want to make payment to exporter. Is any formalities attracted as per indian FEMA & FERA or others. Plz guide me.

Admin: On 07 February 2015 Hi Jjvaja, You can reject goods before completing import customs clearance. If you suspicious on quality of goods, arrange a first check procedures under import customs clearance. If found not satisfactory, you can reject goods. Consult an import export professional for further details.

kavitha: On 13 March 2015 what is meaning of master bill of lading and house bill of lading.difference between HBL & MBL

ramkesh: On 06 April 2015 i want to the documents about related to shipping and what types of documents required in import and export.

sandeep: On 22 April 2015 if i get an export order for empty hard gelatin capsules which have to be printed with specific word. i get 50% advance for the order, i start manufacturing .the shipment is ready. the understanding is buyer will send balance 50% before shipment & after that BL copy is to be sent to buyer directly. now for some reason buyer is not paying 50% balance what to do. the consignment cannot be sold to others since specific printing is done on capsules. pl advice.

Amit: On 11 June 2015 Hi All, Ive shipped cushion covers to a UK buyer and the buyer which was otherwise ok in payments is now holding on the payment for over a year. I can smell some bad intentions and want to seek some legal remedies. Over the email, buyer has agreed that so n so amount is outstanding and is willing to pay but not now. this is going on for almost one and a half year now. which authority helps in such cases. Is there a way by which such buyers with unethical practices can be banned, or their shipments held up till they pay other vendors.

MANISH: On 13 July 2015 dear sir, i m manish n i m working in line (carier) so please inform me when im release do so how to check document & when i m release the export bl so how to check document and then after release same, please inform me all roles in bl like shipper or consignee notify party etc

shivang dixit: On 04 August 2015 Hello hey admin this is shivang , plz tell me how to knw that the 3rd party(foreign buyer) is fake or not? how to know that?

Parmar Tulsi: On 02 March 2016 hi.hello sir may i am Tulsi consignee is two company 1 for earth then 2 for nilkamal then first payment are earth then raise of payment are nilkamal so this condition are bank is not allowed for Bl....please tell me sir...solution for problem....

santosh: On 26 March 2016 i want import some metal material from thiland and singapore. some traders of those country sell their goods very low prise compare with others. how we reliable on suppliers.?? can its necessary to visit those country?? how we sure about our payment in case of import those goods..? because one container is not less then a million rupees.. give me guide..thanks

kuldeep kumar: On 25 May 2016 I make 100% advance payment against there PO to china seller, after that he not send me material , I make thousand of phone call and send him thousand of email , but he is not replying. please guide me what legal action I can take against him for recover my amount from him. thanks kuldeep kumar

Shrey: On 17 June 2016 Hi! We released 100% Payment to exporter but they are not releasing OBL saying we do not get payment. We also have proof of payment but exporter also stop replying. We have following questions. 1. Can we get goods delivery from shipping company without submitting OBL? 2. Are we liable to pay shipping and concor detention / demurrage charges if we do no get OBL from exporter ? 3. We already paid custom duty on based of copy of documents. We contact custom department and they says you can not get refund of custom duty because container is out of charge. Is it like so ? We believe there must be provision to get refund of custom duty. Pl inform. Thanks in advance.

Ranjith kumar Reddy: On 05 August 2016 First of all I should appreciate you for creating http://howtoexportimport.com/. It was really byfar the most helpful information on import and export. Thank you very much for creating the website. I need your advise on exporting and hence this mail. Let me first tell you what I'm thinking. I want to sell a disposable plates (manufactured in India) in amazon (in U.S). Amazon provides a service called "Fulfillment By Amazon (FBA)" where the seller can send large quantities of the product to amazon warehouse and amazon stores the product in their warehouses and handles the delivery/returns of the product. I'm sure that the seller can be from any country and don't need to setup any company in U.S to do this as they are many people(not from India but from other countries) who are already doing it. So, importing in US is not a problem. My problem is with the export leg "how to export from India if there is not already a buyer". How can I myself export the goods when I want to sell it retial in other countries? The problem arises because there is no definite importer before hand. Can you please help me with your expertise. It would be very very helpful to me.

AmirBi: On 03 October 2016 Sir, i am small exporter, i export spices,unaware that the the payments should be received in USD for export . MY BUYER USED TO send me payments in INR. is this a problem. what are the remedies Please advise

Moeenul: On 23 October 2016 If I release goods from port which imported by LC, but after releasing the goods found is bad quality,Bank bill not accepted. but goods released by bank documents.then what is our doing from importer's bank.

BIPIN PATEL : On 31 October 2016 We are base in Gujarat State, recently I have imported one product requiring cold chain (Antibody Protein for animal use) from South Korea, Cargo stuck down in EMS (POST) for more then 1 month and ultimately material was spoiled due to storage in room temperature. Now exporter is ready to give me free replacement, what procedure / documentations I should require to do for import of free replacement???? Amount of custom duty was Rs.15000/- , Should I require to Pay it again????

hashim: On 03 November 2016 good

sunil wadhwani: On 10 December 2016 I make 30% advance payment against there PO to Delhi seller, after that he not send me material , I make thousand of phone call and send him thousand of email , but he is not replying. please guide me what legal action I can take against him for recover my amount from him. thanks sunil wadhwani

Vishnu Sharma: On 17 December 2016 I purchased some material on HSS agrement under 4 BL. paid custom duty, lifted material of one BL. But material under other 3 BL found substandard.Have made part payment.Bill of entry is in my name. seller does not agree with us. I am not interested in lifting this material.What should I do? Vishnu Sharma

dinesh wadhwani: On 17 January 2017 OUR COMPANY PURCHASE A4 COPY PAPER FROM UK ON 30%ADV PAYMENT(TT)METHOD BUT STILL WE R NOT GETTING OUR MATERIALS AND NOT RECEIVING ANY MESSAGE FROM RAM ONLINE SERVICE LIMITED IN UK. SO PLS HELP US TO RECOVER MONEY FROM THAT COMPANY. THANK YOU

sainath: On 29 March 2017 Dear Sir,We received advance from South Korea for manufacturing & selling of material to South korea. Now we need to get one material from another korean vendor to supply the material directly to my customer whom given advance to us. And then that transaction need to be set of against the advance in India. Please help me how to do? and wat document i need to submit to banker for settling the advance.

ASHISH KUMAR: On 30 June 2017 Dear Sir, We are manufacturer in Taiwan and I am their authorized representative in India. We have Send Goods to our Indian Distributor, he has made partial payment . now for balance payment he is blackmailing us and not making payment to us asking undue advantage . when we denied he is not making payment to .............. what we can do with him legal in india or we have to file case against him in our country .

Darshankumar: On 02 December 2017 Hi My name is darshankumar from India. I was dill with one of the supplier from Thailand. Our condition of shipment CIF.Total cost of the shipment is 2500$.I was paid 20% advance payment agains of proforma invoice & contract paper. And now supplier asking more money for DESTINATION FEE.(1589$) now they are saying give us first DESTINATION FEE and after we are going to shipment.and after the shipment we have to pay remaining balance 80% agains of copy of B/L. I have our contract paper from them.and there is a no mention about DESTINATION FEE. So please let us suggest, what should I do legally action to get our money back. Please, Thanks

Anil: On 23 June 2018 sir i have export but payment steal not receive last 2 year and bank send me notice please give me solution

Dinesh M: On 14 October 2018 Sir we have done a trade to oman for perishable goods (onion). Our business was more on trust rather than papers. We did the trade on march 2018 and till date we are yet to receive money. We have all the papers related to the trade right from purcahse order to goods delivery receipt. What is the legal action that can be taken. Pls advise

Muhammad Yaseen: On 10 December 2018 I am export disputes experts, please refer any questions

suri: On 14 February 2019 A good post about dispute solutions in international business

S.Dhanalekshmi: On 07 March 2019 Dear Sir, I was exported to one of DUbai imported company to vegetables. He has to pay me more than 12lac rupees. Initial shipments he was sending INR money. Then he stopped to send money and he was threatening me to send continiously shipment otherwise our customer will not pay. I was sending continuously shipments once crossed 12lac i stopped and i got heavy loss and i stopped entire businees due to this cheated guy. Please advise that how can i get recover of payment from this cheated guy. If i contacts him he is not responding now. Thanks S. Dhanalekshmi

vivek patel: On 11 March 2019 dear sir directly come to the point i would say that we exported such food items in between 2012 to 2016 and recveived the DBK but due to relation we did not received the amount as exported as per invoice of none now we received the notice from the RBI to return the whole DBK amount + interest to them so give us the solution so resolve the problem

Abhishek Jain: On 13 March 2019 Dear Sir, Please suggest how to close the import payment standing in IDPMS system in case of non import and payment not refunded from exporter.

Nagendra Kumar: On 26 March 2019 Dear Sir, I recently imported cut to size granite (for flooring and kitchen purpose) from one of the exported in India to Germany. Before placing the order I had made sure that they export it on time, which they also accepted. But after placing the order, and paying initial 50% of the money, the company started delaying the order. They took more than 3 months to finish the order and ready to ship them. After paying the remaining 50%, they shipped the items. After receiving the granite in germany, I noticed that the quality was really bad. The specified size was not maintained. Most of the granite tiles had uneven cuttings, edges damaged, and the thickness was not uniform. This is useless to be used for flooring purpose. When I informed this to the exported, he was not ready to accept it. He said he will check with their quality team and will get back. But he never replied back after that. Could you please let me know how and where I can complain or lodge a complaint against such exporter. Can I get atleast some of the money back. Thanks in advance for the reply.

dilip sakhpara: On 30 June 2019 i have suffered due to export to Russia. Now the Russian company is not paying the balance amount. Unfortunatelty the contract also mentions arbitration in Russia, whioch I assume will not be of much help. As we are an MSME, does the government of India help?

mukul: On 24 August 2019 DEAR SIRS I HAVE EXPORTED MIXERS TO SRILANKAN IMPORTER SINCE LAST ONE YEAR HE IS GIVING LETTER THAT TO MY BANK THAT ON BEHALF OF ALL MY DIRECTORS AND ON MY PERSONAL GURANTTES THE AMOUNT SHALL BE TRANSFERED TO YOUR CUSTOMERS ACCOUNT ON THIS DAT BUT PAYMENT IS NOT EFFECTED NOW WHAT TO DO

Pradeep subasinghe: On 28 August 2019 Dear sir, I ordered pu foam scrap container from Thailand. I paid full payment within one and half month. Later the shipping line and insurance company got money time to time . finally the insurance company sent court decision requesting USD 5950 for insurance charges. This is the big amount for me . the shipping line do not release my goods . what am I do now

Tushar Kute: On 21 September 2019 Hiiii I am Tushar I have a transferred money against PO now seller is not sending the goods to me..he's not responding now to me..please suggest what to do now??where should i go and solve this issue and how i will get my money back????please help

Tarsem Garg: On 26 September 2019 Sir, we have given a advance 0f 29200 usd to milestone resources ltd whoes head office is in Hongkong & scrap yard in Usa, Milestone resources ltd is not supply any material & not returning our advance, how we can proceed

Raju pavan: On 04 November 2019 Are there any solutions for the problems mentioned in this forum (or) Is it just the problems in this forum?

manish chang : On 29 November 2019 HOW DO I RAISE INVOICE AND SETTLE GST IN ZERO EXPORT COLUMN WHEN GOODS ARE NOT IMPORTED OR EXPORTED BUT PAYMENT IS RECEIVED IN INDIA AND I HAVE RAISED INVOICVE TO CLIENT FOR GOODS

RAJENDRA JADHAV: On 04 July 2020 Sir, I import one item from UK but they supply us fake makerial cost is $ 24500.00 now they are not refund the money .what is the complaint procedure against him

Javed Khan: On 20 July 2020 Sir I want a help against UIG Dedector iNTSABUL (TURKEY) BECAUSE I MAKE A PAYMENT AGAINST PROFORMA INVOICE NO. 48857 / 13-12-2019 $2500 USD PAYMENT SETTLED BY INDIAN OVERSEAS BANK BHOPAL. PARTY HAD NOT SENT THE MATERIAL MENTIONED IN SUCH PROFORMA INVOICE.

Ash: On 28 November 2020 I have imported goods from India to uk and there is a 100% quality issue and We spent about £10563 including goods vat. Customs duties and door to door shopping and other sales and marketing cost so how we can claim legally from supplier in India ? Regards

manoj kumar: On 15 December 2020 Dear Sir, We have remite good amount to our supplier in China for some products ( 30 % advance and balance befor eshipment ) .We have also pay his balance payment but now they want more money for another item which we have cancel & he also agree but nowe he is blackmailing to us.Please advice us how we will handle this matter? Regds, Manoj

Intikhab Hussain: On 20 December 2020 Your article is good for the beginners. I would add that sometimes ADR (Alternate Dispute Resolution) which is mostly through Chamber of Commerce of that Country works good but if the importer do not wants to pay, they will make excuses in anycase. Litigation has to be initiated against that kind of Buyer. Regards,

suresh tiwari: On 19 August 2021 Dear sir, I am in export business of perishable goods from india to gulf countries. Now I have supplied goods to one of my customer and its been two years he is delaying our payments willingly. We have been requesting them to make the payment but no replies from there side. Is there any way we can take legal action and recover our payments. Please advice. suresh

junaid: On 01 July 2022 We are importer in Jan 2020 we got shipment from India on dp sight at sight due to some issue of our company with bank, our account are freeze and we are unable to retirement documents of import and supplier is waiting for his payment. The original document includes OBL is submitted to our bank by exporter, now he request us to do custom clearance and handover cargo to their other party in Pakistan but shipping line is not issuing us DO Could it possible if supplier do msg to destination agent to realse shipment to us. Even no original bl. Even supplier has submitted the original Obl to our bank and BL Is in the name of bank. Can our bank return supplier documents back to our exporter for surrender THE OBL to loading port agent so shipment can we release at destination.

Shashi: On 27 April 2023 Hi Am small Exporter In India as have manufactured garments for German Client but unfortunately he's not taking the goods and neither reply on single messages , Could you let me know how will recover the money which had invested in order to make the goods and have complete documents in my records . We have already sent two shipments before and got the money but for last orders hold the goods since 9 months and don't know what happened so could you please help me how to recover in this situation.

How to settle dispute in International Business of Import and Export

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