Distribution Agreement Arbitration

Specialized arbitrators from different countries and legal cultures have been appointed by a selection committee that verifies their experience in one or more areas of distribution law. Therefore, the parties can have confidence that the arbitrator has concrete skills in the cases with a thorough understanding of the issues at issue. This is not a general knowledge of commercial law, but a concrete knowledge of distribution, which has been expressly verified by the Committee. The parties can even look at some examples of cases involving each arbitrator. Finally, distribution agreements should include provisions on dispute settlement. Regardless of the quality of the relationship between the supplier and the distributor, there is always a risk of litigation. In the past, legal commentators have largely interpreted these provisions and concluded that disputes based on distribution agreements (generally considered commercial agent, distributor and franchise agreements) could not be subject to effective arbitration. Therefore, an arbitration clause contained in a distribution agreement is not, according to a widely held view, invalid and does not exclude the jurisdiction of the Kuwaiti courts. If your company is considering entering into an international distribution agreement, it is important that you consult professionally.

On 13 February 2018, Kuwait`s Court of Cassation ruled on a case based on typical facts: the client, an international company, re-established its medical device distribution contract with a Kuwaiti distributor. Aggrieved by the termination, the distributor brought an action for damages against the client. And here`s the essential question: why would a manufacturer/franchisee or distributor/agent/franchisee choose specialized arbitration for their agreements rather than a more general, or even judicial, procedure? The answer seems clear: an arbitrator who has knowledge not only of procedural matters, but also of substantive matters, will be able to better understand the conflict between the parties and thus make a better arbitral award. Let us take into consideration the fact that, for example, in my country, Spain, a judge of first instance may deal on the same day with a distribution contract, a construction case, a conflict between heirs and a discussion within a co-ownership. All this requires the analysis of various facts and totally different laws, and it is true that specific trade problems usually do not have experts in international trade. But how to choose a good specialized referee? And how to choose arbitration and institution in terms of organization, neutrality, cost and time? Some international distribution agreements contain exclusivity clauses. While not all of these agreements are exclusive, they are a topic that should be addressed in contract negotiations. The starting point of international distribution agreements will usually be the detail of the specific products and the specific area covered by the contract. As explained by the Internal Revenue Service (IRS), Form 5472 should be used to provide the information required under Sections 6038A and 6038C when reportable transactions occur in the relevant tax year of a reporting business with a foreign related party or a foreign business operating in a trade or activity in the United States. Needless to say, the official IRS statement of this form is not very clear.

IRS Form 5472 is difficult to complete and submit, and if not executed correctly, it can cause serious problems. In this article, I explain what IRS Form 5472 is, why you need to submit it, and how to fill it out….

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