Various disputes among parties involved in futures trading are unavoidable. Investors should actively settle disputes through any possible way and channel. The process of settling disputes by investors is also the process of protecting lawful rights and interests.
Direct negotiation between both parties of dispute, the most convenient and direct way of right protection, should be based on the principles of equality and voluntariness. On the premise of following compulsory stipulations of laws, parties concerned may dispose of their own rights. The agreement reached upon negotiation has the validity of contract and is binding on both parties. The agreement, however, doesn’t have the direct force of compulsory execution and needs to be fulfilled by parties involved voluntarily. If the agreement is violated, the party concerned shall assume civil legal liability for breach of contract.
Another way to settle disputes is mediation by a third party other than both parties of dispute. The precondition of mediation is that both parties of dispute should voluntarily accept mediation and that any party may withdraw from mediation at any time during mediation. The agreement reached upon mediation has the same effect as that of the agreement reached between both parties upon direct negotiation. Likewise, the agreement doesn’t have the direct force of compulsory execution and needs to be fulfilled by parties involved voluntarily. Negotiation and mediation, however, have their own strengths. These two ways of dispute settlement are advantageous for convenient and flexible procedures and low costs. Besides, they are beneficial for the maintenance of both parties’ cooperative relationship and the protection of commercial secrets. As the content of an agreement is stipulated by both parties voluntarily, the agreement can usually be fulfilled voluntarily under a good credit mechanism.
Arbitration is a quasi-judicial procedure. Though an arbitration agreement signed by both parties voluntarily is the premise of arbitration, the arbitration procedures have compulsory force towards both parties concerned as long as the arbitration agreement goes into effect. Arbitration procedures must be followed once they are launched. The arbitration award made by an arbitration agency is final. Though mandatory execution is not allowed for an arbitration agency, a party may apply to a court for compulsory execution of the arbitration award if the other party doesn’t fulfill the award voluntarily.
Litigation refers to hearing and settlement of disputes between parties involved by judicial authority (court) specially set up by the state, with final and compulsory rulings made. Litigation is characterized by strict procedures, and courts’ rulings have direct force of compulsory execution.
