Before Contracting
- Detailed specifications (drawings, materials, standards: CE/ROHS/FCC, DPI/PSI inspection plan)
- Appropriate Incoterms (FCA/FOB instead of EXW when needed)
- Secure payment (irrevocable L/C with precise documentary conditions, or staged payments)
- Governing law and arbitration forum clearly specified
- Intellectual property protection (NDA/NCA and mold ownership transfer)
- Supplier audit (visits, credit reports, approved samples Gold Sample)
During Production and Execution
- Document all communication and final sample approvals
- Independent third-party inspection before shipping
- Manage specification changes with written contractual addendums
- Appropriate insurance according to agreed Incoterm
When Dispute Arises
- Short, defined negotiation period (7-14 days) with alternatives: partial refund/reproduction/discount/alternative shipment
- Rely on neutral inspection reports or accredited tests
- Try rapid institutional mediation before arbitration
Arbitration and Enforcement (When Needed)
- Choose appropriate institution (CIETAC/HKIAC/ICC/SIAC) according to dispute suitability
- Specify venue, language, number of arbitrators, and procedural rules
- Plan enforcement through 1958 New York Convention and track other party’s assets
Ready Templates
1) Balanced Arbitration Clause
“Any disputes arising from or relating to this contract shall be referred to arbitration at [Institution] under its current rules. The arbitration venue shall be [City], the language of proceedings shall be [Language], and the governing law of this contract shall be the law of [Country]. The arbitral tribunal shall consist of [Number] arbitrators.”
2) Inspection and Quality Clause
“During Production Inspection (DPI) and Pre-Shipment Inspection (PSI) shall be conducted by an accredited third party. Successful inspection constitutes a prerequisite for payment release.”
3) Specification Changes Clause
“No modification to specifications or schedules shall be valid except by written contractual addendum signed by both parties, and purchase price shall be updated according to the agreed formula.”
Measurable Success Indicators
- Percentage of disputes closed amicably ≥ 70%
- Dispute settlement time ≤ 45 days
- First inspection compliance rate ≥ 95%