International Arbitration Provisions Allow State Court Litigation on International Agreements to be Moved to U.S. Federal Courts

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Companies increasingly enter into license agreements that are international in nature. While this expanding global marketplace brings new opportunities, it also raises significant legal issues, such as how to resolve disputes arising out of these agreements. In an international deal, the parties may have some aversion to agreeing to litigate disputes in the country of the other party. For example, many foreign entities view the prospect of U.S. litigation with some trepidation due to the expansive discovery rules in U.S. litigation.

The most common alternative to litigating disputes is the use of some form of alternative dispute resolution, such as arbitration. In an arbitration, the parties can agree in advance on the location of the trial, the rules and language that will apply, and how a decision will be rendered. This often allows the parties to choose a forum and mechanism that both parties agree is somewhat neutral. Agreeing to arbitrate disputes, however, is only one of the hurdles in international dispute resolution. Another is the ability to go to a court and enforce an award made by an arbitrator.

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