Comment Arbitration can be dangerous as well (Score 2) 116
TLDR; Arbitration is legally binding across countries, so unless the contract specifies your country as where conflicts will be handled, there are significant risks in terms of fees (in my case $150000) and risk (all my personal assets). The other country may not share your country's view of limited liability, and madman clients may make claims that do not make any sense in your part of the world that you are forced to defend yourself against.
Just a friendly warning to people throwing out arbitration as the solution to many problems. Sometimes arbitration makes matter worse, because they are legally binding across countries. In my case an idiot client went broke, and when he stopped paying I stopped working. The contract had an arbitration clause in it, which would be handled under US law. My client had various issues and excuses for late payments, and eventually I stopped working. I was willing to take a loss of a hundred thousand USD, but my idiot client had another agenda; he wanted me to work for free, until he managed to make money off my product. So despite the fact that he had stopped paying and breached the contract, he said the only settlement he was willing to enter into to avoid suing me in the arbitration courts was if I was willing to work for free until the product made enough money that he could pay me according to our contract. He was in the US, I was in Norway, and the arbitration clause in the contract was under US law (big mistake). I got a legal opinion in Norway about just ignoring the case (it was ridiculous after all), and then defend me when/if he won a claim and came to collect in the Norway. Well, the legal opinion was "you should win the case in the US". Under arbitration law, if I lost in the US, they could collect in Norway. Even worse, in Norway, the goverment actually go a really long way of enforcing such collections, so I could stand to lose my house, car etc. So risking a default judgement (for not showing up) in the US was out of the question. The idiot client sued me, initially for a million USD, although this was later adjusted down. To have any hope of collecting anything in return, I had to counter sue. After spending $150000 in legal fees, I won and was awarded just below $600000 for his breach of contract. But differently from Norway, the US will not help me collect what I won, so I would have to sue him again in his state to collect. And since my claim is against his company, and the fact that he is a fraud, the odds are he would bankrupt his company, stealing any and all assets, and continue as before. So I would have to sue him again personally (with stricter burdens of proof) to demonstrate actual fraud from his side, and hope he has personal assets I could collect. The fraudsters name is Gregory Spear, and his prime vehicles of fraud are companies named Independent Investor, Spear Financial, Spear Publications and more.
If you want to read the whole sad story, I've put it up on http://aboutspearreport.wordpress.com/ .
