Local firms should settle international trade disputes through ADR

Local firms should settle any international trade dispute related to a letter of credit (LC) by using Alternative Dispute Resolution (ADR) methods, especially amid the ongoing Covid-19 pandemic, according to experts.

"To mitigate the risk for businesses, ADR processes could be of immense help, particularly for LC related international trade disputes," said Shams Mahmud, president of the Dhaka Chamber of Commerce and Industry (DCCI)

ADR is a collective term for processes such as mediation, arbitration, and expert determination that enable parties to resolve their disputes without the need for litigation.

Mahmud also emphasised on how LCs play an essential role in boosting a country's international trade competency standard.

The DCCI chief made these comments during a webinar styled, 'Settlement of Letters of Credit-Related International Trade Disputes through ADR', jointly organised by the DCCI and Bangladesh International Arbitration Centre (BIAC) on Saturday.

The webinar aimed at bringing greater transparency on how ADR processes could provide relatively inexpensive and quick solutions for disputes that arise from LCs, particularly in developing nations.

Mahmud, also the managing director of Shasha Denim and Shasha Garments, lauded the BIAC's role as a trendsetter and pioneer in bringing businesses, banks, ADR facilitators and government agencies together to institutionalise ADR practices.

The BIAC is the country's first registered ADR institution.

"As only licensed ADR centre in Bangladesh, the BIAC is focused on promoting ADR methods for dispute resolution," said Muhammad A Ali, chief executive officer of the BIAC.

Further cooperation from the DCCI will be required to resolve commercial disputes in both domestic and international trade, he added.

Ali then urged business leaders, lawyers, mediators and ADR advocates to join the BIAC's efforts to find quick and cost-effective solutions for dispute resolution.

He also stressed on the need for a provision of an ADR clause in commercial contracts and synchronising LCs with Pro Forma Invoices so that the bank's interests and all other parties involved in a transaction are well protected.

During the webinar, an expert panel of speakers comprised of eminent business leaders, bankers, lawyers and ADR specialists from home and abroad addressed the issues and impacts of LC related international trade disputes and the way forward through ADR mechanisms.

Khaled Aziz, managing director and chief operating officer of Standard Chartered Bangladesh, said the BIAC could play an important role by establishing guidelines on how to resolve LC related disputes.

The existing LC-related discrepancies that arise during international trade usually involve a breach of commercial contracts, which should not be resolved through a judicial process in the first place, according to MS Siddiqui, convenor of the DCCI's special committee on SDG Affairs.

Therefore, ADR methods could be an alternative way to resolve such disputes, he added.

Vincent O'Brien, director of the International Chamber of Commerce-UAE (ICC), said he is satisfied with the BIAC's contributions and continuous effort to facilitate ADR norms.

O'Brien, also a member of the ICC Banking Commission's executive board, went on to say that Bangladesh has the highest level of compliance with ICC rules in regards to settling LC related international trade disputes.

For most businesses, 'time is money and so to save both, ADR methods could be the best way to resolve such disputes, he added.

Md Ahsan-uz Zaman, managing director and chief executive officer of Midland Bank; Sameer Sattar, an advocate of the Supreme Court and former DCCI director; Shahedul Azam, also an advocate of the Supreme Court and DCCI member; Rubaiya Ehsan Karishma, counsel of the BIAC, and MA Akmall Hossain Azad, director of the BIAC, also spoke at the webinar.