Facing a Cross-Border Dispute That Threatens Your Global Growth?

The choice-of-law question depends on the nature of the dispute, the contract terms, and the laws governing the choice of law.

If the dispute relates to a contract
Many contracts specify the governing law. The courts will often honor the choice-of-law provisions, with some exceptions. If the contractual relationship has no connection to the state, the choice-of-law rules of a particular state may override the contractual choice of law.

If the contract does not have a choice-of-law provision, the court will apply the choice-of-law rules of the state where it sits. The choice-of-law rules can be found in the case law or in statutes. Those choice-of-law rules typically consider which state has more connection to the contract, where the contract should be performed, the place of contracting, the location of the subject, where the parties are incorporated or headquartered, and other factors.

Does CISG apply?
CISG is the UN Convention on Contracts for the International Sale of Goods. It applies only to sale of goods between parties whose places of business are in different countries. Distributorship agreements are not contracts for the sale of goods. However, specific sales between the supplier and distributor may be subject to CISG. The U.S. is a signatory to CISG.
The CISG may apply if:

• the contract does not have a choice-of-law provision,
• the contract does not opt out of CISG,
• the contract concerns the sale of goods,
• the contract is between businesses from different countries,
• the parties are from countries who are CISG signatories (or at least one country is a CISG signatory + (1) the private international law indicates application of CISG or (2) the contract itself makes CISG applicable law).

Please consult with an attorney to determine which law applies to the dispute.

If the dispute relates to non-contractual claims
Even if the claims are non-contractual (such as fraud, conversion, negligence, or unfair competition), some contracts may still specify the governing law for those situations. But this will depend on the interpretation of the choice-of-law provision and the specific facts of the case.

If the contractual choice-of-law is found inapplicable, the court will apply the choice-of-law rules of the state where it sits, which may depend on various factors. For example, the court may look at the connection of the dispute to the state, where the events took place, where the losses or injury were sustained, and where the parties are located.

The forum for dispute may be specified in the contract. If the opposing party does not dispute the validity of the forum selection clause, the dispute will proceed there.
If the agreement does not contain a forum selection provision, then it may consider choosing the forum based on the following factors:

• Where will the court or arbitration have jurisdiction over the defendant?
• Where will the court or arbitrator apply the substantive law with more favorable to the plaintiff rules?
• Which court or arbitrator will interpret the contract more favorably?
• Which forum has better procedural safeguards and discovery rules?
• Which forum provides better provisional remedies?
• Where is the most convenient forum for witnesses, interpretation and translation, and discovery proceedings?
• In which country can the judgment be enforced?
• Which court will stay the parallel proceedings if the defendant races to a different forum and files a lawsuit there?
• Which court has a faster or slower track for dispute resolution?

Arbitration is a private dispute resolution with a binding result. Arbitration is usually mandatory if the parties agree to it through an arbitration agreement. However, the right to arbitration may sometimes be waived if the other party does not timely object to it.

Advantages of arbitration:

• it is more informal and streamlined
• it may be faster than courts because there are usually no appeal proceedings
• discovery proceedings may be more limited than in courts
• case records are less available to the public, making arbitration more confidential
• it may limit the potential for a class action
• there is no jury, which in some cases may help your case

Disadvantages of arbitration:

• arbitrator's award is final and usually cannot be appealed
• discovery proceedings may be more limited
• arbitration can be expensive because of administrative and arbitrator's fees
• there is no jury option, which in some cases may affect your case negatively

Whether arbitration is better for your situation will depend on your resources, timeline, preferences for confidentiality, and other factors, which you should discuss with your attorney.

Owners and holders of intellectual property (IP) have several types of redress:

1. Customs recordation of IP rights with Customs and Border Protection (CBP). This process allows the IP owner to exclude and seize the infringing products at the border. Section 526 of the 1930 Tariff Act (19 U.S.C. Sec. 1526) authorizes CBP to exclude infringing goods in the course of enforcing the customs laws. Section 42 of the Lanham Trademark Act (15 U.S.C. Sec. 1124) provides for customs recordation of any trademark registered in the U.S. The 1976 Copyright Act also provides for the exclusion of infringing works (17 U.S.C. Sec. 603). If CBP has suspicion about goods, it may contact the owner for clarification. However, this redress is difficult to enforce in relation to patents and trade secrets because of the nature of these IP rights.
2. Section 337 Investigation to stop the goods at the border. This is an administrative procedure authorized under 19 U.S.C. Sec. 1337. The IP owner may file a petition with the U.S. International Trade Commission (ITC), but only if the IP is part of the U.S. domestic industry. A foreign company with no significant presence in the U.S. will be unable to invoke the 337 Investigation. ITC may not award monetary damages, but it may issue an exclusion order to CBP to deny entry of goods, and to issue a cease and desist order with a potential fine. 19 U.S.C. Sec. 1337(f).
3. Litigation. Owners and holders of IP can also file a lawsuit for an injunction to stop the infringement, including future infringements, and to stop the distribution of the products. IP owners may also ask for monetary damages caused by the infringement.

It depends on the country, the state, and international conventions.

The U.S. recognizes foreign judgments based on the principles of judicial comity and the Uniform Foreign-Country Money Judgments Recognition Act (UFCMJRA).
If the foreign judgment is enforced in a state that adopted the UFCMJRA, the judgment will be recognized under the terms of UFCMJRA. UFCMJRA applies only to monetary judgments, and with certain exceptions.

If the foreign judgment is enforced in a non-UFCMJRA state, the principles of comity may still allow the judgment to be recognized. However, it will depend on the comity principles and specific facts.

If a U.S. judgment needs to be enforced in a different country, the domestic laws of that country and certain international conventions may apply. For example, the Hague Convention on Choice of Court Agreements (2005) and the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (2019).

If the enforcement concerns an arbitral award, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) may apply, as well as the domestic laws of the country where the award should be enforced.