International Arbitration vs. Domestic Arbitration: Similar, but not the same

Arbitration is often seen as a quicker, more efficient alternative to court litigation. But that may depend on whether the dispute is domestic or international. At first glance, both look about the same: private decision-makers, flexible procedures, and an award that looks like a judgment. But once borders are crossed, things get more complicated. Maybe not as complicated as international litigation, but still more complicated than domestic arbitration.  You will be much better able to plan and navigate international arbitration if you know how it differs from domestic arbitration. 

The Importance of the Seat (Venue)

One of the most critical differences lies in the selection of the arbitration’s “seat” or venue. The seat is not just a place where hearings might occur; it is the legal home of the arbitration. Courts in that jurisdiction have supervisory authority, and their laws govern key procedural questions.

In domestic arbitration, this usually doesn’t cause much concern. If you’re arbitrating in Minnesota under the Federal Arbitration Act (FAA), you know what rules and courts you’ll deal with. International arbitration is different. Imagine a U.S. company and a European company agree to arbitrate in Paris. That choice means French arbitration law governs procedural issues, and French courts have primary supervisory authority. If the award later faces a challenge, French courts are likely to be the first stop.

Picking the right seat is critical because it affects how friendly the jurisdiction is to arbitration, what grounds exist for challenging an award, and how smoothly enforcement is likely to be.

Discovery and Evidence Likely to Be More Limited

Another major distinction concerns evidence and discovery. In U.S. domestic arbitration, discovery can resemble litigation: depositions, document requests, and even e-discovery. Parties expect relatively broad pre-hearing disclosure.  It may not be as broad as in U.S litigation, which often seems to become a discovery war of attrition.  But a fair amount of discovery is often expected and allowed in larger matters.

International arbitration takes a different path. Influenced by both civil law and common law traditions, it often follows the International Bar Association’s Rules on the Taking of Evidence. These rules emphasize efficiency: limited document production, rare depositions, and a heavier reliance on written witness statements and expert reports.

For parties used to U.S. litigation, this can feel like flying blind. For civil law parties, U.S. discovery feels like a big fishing expedition. The compromise approach of international arbitration is something between the two.  That can lead to culture clashes, and both sides may be dissatisfied.  But the process is designed to keep costs and delays under control.

Enforcement Challenges and the New York Convention

In domestic arbitration, enforcement is relatively straightforward. The winning party takes its award to a court, and unless there’s a clear procedural defect, it will generally be confirmed under Chapter 1 of the FAA.[1]

International enforcement, though, raises the stakes. Here the New York Convention of 1958 comes into play.[2] Over 170 countries have signed on, obligating their courts to recognize and enforce foreign arbitral awards, subject to limited defenses. This treaty is the backbone of international arbitration’s success.  Awards can be enforced almost anywhere more easily than foreign court judgments.  But you still need to have done your homework on the front end.  Not all jurisdictions are signed on to the New York Convention or have the same approach to interpretation of its provisions.

Enforcement is not automatic. Defenses, such as lack of proper notice, arbitrators exceeding their authority, or violations of public policy, may apply. [3] U.S. courts, applying Chapter 2 of the FAA,[4] generally construe these defenses narrowly. Some foreign courts may not. 

For example, I learned through research years ago that Vietnam may refuse to enforce an award if  it is found to be in violation of fundamental principles of Vietnamese law. Vietnamese courts refused to enforce a fair number of awards on that basis.  Lately, it has been reported that Vietnamese courts have started to take a less expansive view of that ground for refusing enforcement.  Still, these sorts of grounds can be raised in many jurisdictions, delaying or even derailing enforcement if the award runs into sensitive issues.

You will want to do your homework on all that before signing on to an international arbitration clause.

Bringing It Home: Enforcing Foreign Awards in the U.S.

Foreign arbitral awards come before U.S. courts regularly, especially in New York, Miami, and Washington, D.C.  U.S. courts generally lean toward enforcement, in line with the pro-arbitration policy of both the FAA and the New York Convention. The Supreme Court has emphasized this pro-enforcement stance, holding in BG Group v. Republic of Argentina that arbitrator’s decisions deserve deference even in complex international disputes.[5]

Yet, parties still test the boundaries. They may argue that they never received proper notice, or that an award offends U.S. public policy. These challenges rarely succeed.  Parsons & Whittemore Overseas Co. v. Société Générale de l’Industrie du Papier is a leading example. There the Second Circuit narrowly construed the “public policy” argument provision of the New York Convention, upholding the award.  [6]  Still, these challenges suggest that  careful drafting of arbitration clauses and selection of the seat are critical. The more thought put in up front, the better off a winning party will be at the enforcement stage.

It is, by the way, worth noting that California has updated its arbitration laws to align with international standards and allow foreign counsel to participate. This makes California a more attractive seat for international arbitration. 

Conclusion

International arbitration differs from domestic arbitration in more than just geography. The choice of seat, the approach to evidence, and the path to enforcement all take on new dimensions once a dispute crosses borders. For businesses engaged in cross-border contracts, understanding these differences isn’t just academic.  It can affect how easily an award will be enforced,  and maybe whether it will be enforced at all.

Footnotes

1. Federal Arbitration Act, 9 U.S.C. §§ 1–16 (Chapter 1, governing domestic arbitration).

2. Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 3 (“New York Convention”).

3. New York Convention, Art. V (listing grounds for refusal, including incapacity, lack of notice, excess of authority, procedural irregularities, and violation of public policy).

4. Federal Arbitration Act, 9 U.S.C. §§ 201–208 (Chapter 2, implementing the New York Convention in the U.S.).

5. BG Group PLC v. Republic of Argentina, 572 U.S. 25 (2014).

6. Parsons & Whittemore Overseas Co. v. Société Générale de l’Industrie du Papier (RAKTA), 508 F.2d 969 (2d Cir. 1974).