Case
SwissSolar AG, a company based in Zug, Switzerland, sells solar panels to BrightSun Ltd., based in London, UK. The contract between the parties contains the following clause: «All disputes shall be finally settled by arbitration under the Rules of the Swiss Arbitration Association. Place of arbitration: Zürich. Applicable law: Swiss law.»
After delivery, BrightSun claims that part of the panels are defective. SwissSolar denies this and demands full payment. BrightSun threatens to file a lawsuit in London, arguing that arbitration in Switzerland would be too expensive. SwissSolar, however, wants to start arbitration proceedings in Zürich.
Both companies would like to continue their business relationship and are considering whether mediation could help them reach a settlement without going to court.
Tasks
Briefly explain what is meant by international litigation, mediation, and arbitration, and how they differ.
What is the legal effect of the arbitration clause on a potential lawsuit before a London court?
Compare the main advantages and disadvantages of arbitration in Zürich with ordinary court proceedings.
From an economic perspective, why could mediation be an attractive option?
As a manager of SwissSolar, which path would you recommend – litigation, arbitration, or mediation – and why?