Clients frequently ask whether they are better off litigating or arbitrating a dispute. The answer is generally that “it depends.” Except in the international context, where enforceability considerations come into play, to a great extent both the advantages and disadvantages of arbitration arise from the same sourcethe abbreviated nature of the proceedings and the unavailability of appellate review of the merits of the arbitration award.
Enforceability Trumps All
In the international context, there is one critical and often overriding criteria that determines the choice of arbitrationenforceability. Over 140 nations are signatories to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (the New York Convention). Signatories agree to enforce arbitral awards rendered in signatory nations without court review on the merits. Awards may only be set aside by the courts of the rendering country, and awards may be refused enforcement in signatory countries only on very limited due process type grounds.
