International Commercial Arbitration vs. U.S. Commercial Litigation – Key Differences

Introduction

Companies doing business internationally often insert arbitration clauses in their contracts. They do so for good reasons. One is to ensure that future disputes will be resolved in a neutral forum, not in the home court of the counterparty. Another is to maximize the chances that the decision will be enforceable where the counterparty's assets are located. Indeed, foreign courts are generally under no obligation to recognize and enforce U.S. court judgments. By contrast, under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the "New York Convention"—a treaty in force in over 160 countries—decisions rendered by arbitrators (known as "arbitral awards") benefit from a favorable enforcement regime.