Monarch Associates, a U.S. computer parts manufacturer, entered into a joint venture with a Russian computer technology company, Vladir Unlimited. The joint venture agreement was signed by both parties but created by Vladir and had an arbitration clause that called for all legal and nonlegal disputes, to be arbitrated in Russia. Vladir could also choose arbitrators from a panel maintained by the Russia Arbitration Institution. The panel members live in Russia.

Monarch now contends that a legal dispute with Vladir should be handled in the United States. Vladir insists that the dispute should be handled in Russia.

What laws govern arbitration in the U.S.? In Russia?

In your opinion, in which country should the dispute be handled?

What are the advantages and disadvantages for Monarch Associates under the arbitration arrangement?

If you were Monarch Associates’ in-house counsel, what advice would you give them on negotiating future joint ventures with Russian businesses?

What other considerations should Monarch Associates keep in mind in the formation of any future contracts with foreign companies?