A. Starting point: dispute resolution and enforcement through the
public courts
This first example describes the traditional court-focused approach to enforcement,
in which an unpaid debt is collected with the help of the national courts.
Helsinki-based artist Violetta has bought a used hi-fi amplifier from Bob’s
company Sound Waves, which is located in Berlin, Germany. However, after
receiving the item Violetta has refused to pay the agreed price of €1,000.
According to Violetta, there is a scratch on the amplifier that she was not aware
of at the time of purchase. As they are unable to reach a settlement among
themselves, Bob files a claim on behalf of his company at the district court in
Helsinki. The court assesses that the relatively small scratch does not affect the
price and in its enforceable judgment obligates Violetta to make a full payment
plus interest to Bob. As Violetta refuses to comply, Bob contacts the Finnish
enforcement authorities that collect the debt from Violetta’s salary and transfer
the whole sum to Bob.
In this simple example Bob relies on the public court system to enforce his
legal position. The procedure has two elements: the adjudicative process that
ends when the judgment is rendered, and the additional debt recovery procedure.
As both phases take place within the same public system, the transition from
adjudication to enforcement is straightforward. Also, both parties may trust the
court to follow the due process criteria set in the national legislation.
The downside is that in the worst-case scenario Bob might have to wait for
years to finally receive the payment, and, depending on Violetta’s contesting the
judgment, the adjudicative process may be expensive due to court fees and the
legal costs of using a lawyer. In addition, Bob has taken the matter to a foreign
court at Violetta’s place of residence, which adds to the complexity of the matter
on Bob’s side. In reality, these obstacles may cause Bob to re-evaluate his
situation or even decide not to continue to pursue the matter.
20 On the other
hand, the well-functioning interface between the adjudication and the enforcement might increase the desirability of the public courts. Further, the implementation of technology in different stages of adjudication and debt recovery might
reduce the overall expenses of money and time.
B. Private arbitration and public enforcement through the courts
In this second example the well-established system of international arbitration is used
to resolve the dispute, after which enforcement is sought through the court system.
The experience with Violetta still fresh in his mind, Bob agrees to install a
complete sound system to club owner Jacqueline’s newest club The Peekaboo in
Barcelona. A price of €100,000 is agreed upon and on Jacqueline’s insistence an
arbitration clause is included in the contract between her and Bob’s companies.
There is, however, a problem with the installation and the sound system does not
match the technical specifications agreed upon in the contract. Bob refuses to
compensate the fault and Jacqueline takes the matter to an arbitration procedure
Introduction 9
public courts
This first example describes the traditional court-focused approach to enforcement,
in which an unpaid debt is collected with the help of the national courts.
Helsinki-based artist Violetta has bought a used hi-fi amplifier from Bob’s
company Sound Waves, which is located in Berlin, Germany. However, after
receiving the item Violetta has refused to pay the agreed price of €1,000.
According to Violetta, there is a scratch on the amplifier that she was not aware
of at the time of purchase. As they are unable to reach a settlement among
themselves, Bob files a claim on behalf of his company at the district court in
Helsinki. The court assesses that the relatively small scratch does not affect the
price and in its enforceable judgment obligates Violetta to make a full payment
plus interest to Bob. As Violetta refuses to comply, Bob contacts the Finnish
enforcement authorities that collect the debt from Violetta’s salary and transfer
the whole sum to Bob.
In this simple example Bob relies on the public court system to enforce his
legal position. The procedure has two elements: the adjudicative process that
ends when the judgment is rendered, and the additional debt recovery procedure.
As both phases take place within the same public system, the transition from
adjudication to enforcement is straightforward. Also, both parties may trust the
court to follow the due process criteria set in the national legislation.
The downside is that in the worst-case scenario Bob might have to wait for
years to finally receive the payment, and, depending on Violetta’s contesting the
judgment, the adjudicative process may be expensive due to court fees and the
legal costs of using a lawyer. In addition, Bob has taken the matter to a foreign
court at Violetta’s place of residence, which adds to the complexity of the matter
on Bob’s side. In reality, these obstacles may cause Bob to re-evaluate his
situation or even decide not to continue to pursue the matter.
20 On the other
hand, the well-functioning interface between the adjudication and the enforcement might increase the desirability of the public courts. Further, the implementation of technology in different stages of adjudication and debt recovery might
reduce the overall expenses of money and time.
B. Private arbitration and public enforcement through the courts
In this second example the well-established system of international arbitration is used
to resolve the dispute, after which enforcement is sought through the court system.
The experience with Violetta still fresh in his mind, Bob agrees to install a
complete sound system to club owner Jacqueline’s newest club The Peekaboo in
Barcelona. A price of €100,000 is agreed upon and on Jacqueline’s insistence an
arbitration clause is included in the contract between her and Bob’s companies.
There is, however, a problem with the installation and the sound system does not
match the technical specifications agreed upon in the contract. Bob refuses to
compensate the fault and Jacqueline takes the matter to an arbitration procedure
Introduction 9