Parties to the growing number of cross-border transactions should anticipate the inevitable cross-border disputes and specify the methods for dispute resolution in advance.
International arbitration offers two key advantages compared to litigation for resolving cross-border disputes — enforcement and neutrality. First, international arbitration awards are more readily enforced. 148 countries are signatories to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, known as the New York Convention, which provides for the recognition and enforcement of arbitral awards, with limited grounds for challenge. In contrast, court judgments are not easily recognized beyond their jurisdictions and thus may result in a pyrrhic victory if they cannot be enforced. The United States is not a party to any treaty providing for the enforcement of US court judgments abroad.
The second advantage to international arbitration is neutrality. Most companies do not want to submit their disputes to foreign courts. International arbitration allows the parties to resolve their disputes in a neutral forum — one acceptable to parties from different countries or with different legal and cultural backgrounds.
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