An Empirical Study of Dispute Resolution Clauses in International Supply Contracts

55 Pages Posted: 11 Jul 2018 Last revised: 3 Sep 2018

See all articles by John F. Coyle

John F. Coyle

University of North Carolina School of Law

Christopher R. Drahozal

University of Kansas School of Law

Date Written: July 2, 2018

Abstract

International transactions present unique legal risks. When a contract touches several different nations, a party may not know where it will be called upon to defend a lawsuit or, alternatively, which nation’s law will be applied to resolve that dispute. To mitigate these risks, parties will often write dispute resolution provisions into their contracts. Arbitration clauses and forum selection clauses help to reduce uncertainty relating to forum. Choice-of-law clauses help to reduce uncertainty as to governing law. Over the past few decades, such provisions have become commonplace in international contracting. And yet there exist vanishingly few empirical studies exploring the use of these provisions in international commercial agreements.

This Article aspires to help fill this gap. Drawing upon a hand-collected dataset of 157 international supply agreements, it describes the ways in which large corporations seek to mitigate their risk in international transactions via dispute resolution clauses. The Article first provides a thick descriptive account of choice-of-law clauses in these agreements to illustrate the myriad ways these clauses do (and do not) mitigate legal risk. It then undertakes the same project with respect to arbitration clauses and forum selection clauses, paying careful attention to the ways in which actual practice deviates from the model forms promulgated by arbitration groups, to show how these clauses mitigate forum risk.

While the primary object of the Article is descriptive rather than normative — it seeks to describe the contents of agreements that have heretofore been largely ignored by legal scholars — it also discusses the normative implications of its descriptive account for three groups. First, legal scholars may draw upon this account to better understand how contract boilerplate evolves and changes over time. Second, judges called upon to interpret a contract may utilize this account to determine whether a phrase is typically included in clauses of a given type. Third, and finally, contract drafters may glean useful insights into how to craft dispute resolution provisions that maximize the reduction in uncertainty in international contracting.

Keywords: arbitration, choice-of-law, forum selection, empirical, contract, international supply agreement

Suggested Citation

Coyle, John F. and Drahozal, Christopher R., An Empirical Study of Dispute Resolution Clauses in International Supply Contracts (July 2, 2018). Vanderbilt Journal of Transnational Law, Forthcoming; UNC Legal Studies Research Paper. Available at SSRN: https://ssrn.com/abstract=3206695 or http://dx.doi.org/10.2139/ssrn.3206695

John F. Coyle (Contact Author)

University of North Carolina School of Law ( email )

Van Hecke-Wettach Hall, 160 Ridge Road
CB #3380
Chapel Hill, NC 27599-3380
United States
919-843-9634 (Phone)

HOME PAGE: http://www.law.unc.edu/faculty/directory/coylejohnf/

Christopher R. Drahozal

University of Kansas School of Law ( email )

Green Hall
1535 W. 15th Street
Lawrence, KS 66045-7577
United States
785-864-9239 (Phone)
785-864-5054 (Fax)

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