CROSS-BORDER DISPUTE? SHOULD YOU CHOOSE ARBITRATION OR COURT? A FOUNDER’S PRACTICAL GUIDE (2025 GLOBAL EDITION)

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For most cross-border commercial disputes, arbitration is the safer and more enforceable option, especially when counterparties hold assets in different countries. Arbitration gives neutrality, confidentiality and global enforceability through the New York Convention. Courts become essential only when the dispute involves fraud, statutory violations, urgent freezing orders or multiple parties who are not bound by an arbitration clause. The right choice depends entirely on the nature of the dispute, the location of assets and the urgency of relief required.

Founders who want a clear, risk-proof approach should continue reading this guide. It explains the strategy behind each choice, the data shaping global dispute trends in 2025 and how to draft a dispute clause that actually protects the business when things go wrong.

Cross-border disputes can turn costly if the dispute clause is vague or the enforcement strategy is unclear. SolvLegal helps founders draft airtight dispute frameworks, choose the right arbitration or court structure and prepare enforcement-ready contracts for international operations. Visit SolvLegal’s Blog Library for similar type of blogs for better understanding.

INTRODUCTION

Cross-border commercial activity is entering a new phase in 2025. Global trade in goods and services reached an unprecedented USD 33 trillion in 2024, according to the United Nations Conference on Trade and Development, marking the highest recorded level in modern history.

International services trade, which includes IT, SaaS exports, consulting, licensing and digital delivery, touched USD 7.9 trillion in 2023 and continued to grow at more than eight percent year on year into 2024.

With this expansion, cross-border disputes have grown at the same pace. The ICC International Court of Arbitration recorded 890 new arbitration cases in 2023, with institutions noting a continued upward trend through 2024 as filings increased from Asia, the Middle East and Europe.

The commercial stakes are significant. In 2023, the ICC reported that the average amount in dispute exceeded USD 65 million, and 2024 preliminary reports indicate that large-value disputes continue to dominate global arbitration.

Asia has become a central hub for cross-border dispute resolution. The Singapore International Arbitration Centre (SIAC) reported that more than sixty five percent of its filings were international, reflecting strong participation from technology, infrastructure, energy and private investment sectors.

A supplier disagreement in Shenzhen, a licensing conflict in Berlin or a payment delay from a client in Dubai is no longer a local matter. Enforcement risk, jurisdictional conflict and the choice between arbitration and court litigation determine how quickly the dispute can be resolved and whether the outcome can actually be enforced where it matters.

Most founders encounter this only when the dispute begins. A dispute resolution clause that looked like a routine line in a contract becomes the most consequential provision. A poorly drafted clause can force a founder into a foreign court, prevent access to urgent interim relief or make enforcement difficult. A well-chosen mechanism, on the other hand, gives control, predictability and negotiating strength.

This 2025 global edition has been written to give founders a clear, commercially grounded framework to decide whether arbitration or court litigation is better suited for their cross-border disputes. The goal is to help businesses think strategically before a dispute arises and to approach international conflict in a way that protects business continuity and long-term interests.

UNDERSTANDING WHY ARBITRATION HAS BECOME THE FIRST CHOICE IN 2025

Arbitration has become the preferred mechanism for resolving cross-border business disputes, and this trend is becoming even more pronounced in 2025. The reasons go far beyond convenience. They stem from enforceability, neutrality, confidentiality and commercial sophistication. These factors together create a dispute resolution environment that courts often struggle to match in international matters.

The biggest advantage remains enforceability. An arbitration award issued in one country can be enforced in more than one hundred sixty jurisdictions because of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

Courts in these countries are legally obliged to recognise and enforce foreign arbitral awards unless a very narrow set of exceptions applies. This enforceability regime is significantly stronger than the patchwork recognition system that applies to foreign court judgments.

To appreciate why this matters, consider a scenario involving a Singapore-based investor and an Indian technology founder. If a dispute arises and the contract specifies Singapore arbitration, the final award can be enforced in India through the provisions of the Arbitration and Conciliation Act, 1996, which incorporates the New York Convention framework. A foreign court judgment, on the other hand, is only enforceable in India if the country issuing the judgment is a “reciprocating territory” under the Code of Civil Procedure, 1908.

Many countries do not fall within this category. Arbitration therefore provides a far more reliable enforcement pathway.

Another reason for arbitration’s dominance is neutrality. When two parties belong to different jurisdictions, neither wants to litigate in the other’s domestic courts. Arbitration allows both sides to choose a neutral seat such as Singapore, London or Paris. The concept of the seat is central because it determines the procedural law of the arbitration and the supervisory jurisdiction of courts. The ability to choose a neutral forum gives comfort to investors, suppliers, distributors and technology partners operating internationally.

Arbitration also provides procedural autonomy. Parties can decide the rules that will govern their dispute. They may choose the UNCITRAL Arbitration Rules or institutional rules such as those of the Singapore International Arbitration Centre (SIAC), the London Court of International Arbitration (LCIA), or the International Chamber of Commerce (ICC).

These rules provide flexible yet structured procedures that are geared toward efficiency and commercial practicality. They allow parties to tailor timelines, choose decision-makers with industry expertise and shape the process to suit the complexity of the dispute.

Confidentiality is another major reason why arbitration has become the first choice for international businesses. Court litigation is public in most jurisdictions. Filings, evidence, arguments and even judgments often become part of the public record. Arbitration keeps the dispute private. This is crucial when the disagreement involves intellectual property strategy, proprietary technology, product design, private investment terms or sensitive financial data. The ability to resolve high-stakes matters quietly is attractive for founders who want to protect brand reputation or avoid alarming customers or investors.

Speed has also played a significant role in arbitration’s growth. Many cross-border disputes involve time-sensitive commercial relationships. Traditional litigation in some countries can take years to conclude because of backlog or procedural complexity. Arbitration institutions now offer expedited proceedings. SIAC, for example, offers fast-track arbitrations where the final award can be delivered within six months for qualifying disputes. ICC and LCIA provide similar frameworks. This speed is often essential for businesses that cannot afford long periods of uncertainty.

Arbitration also attracts companies because of the ability to appoint arbitrators with specialised expertise. Courts assign judges based on roster and jurisdiction. Arbitration allows parties to select professionals who understand their industry. A dispute involving renewable energy contracts, financial derivatives or pharmaceutical licensing can be decided by arbitrators with decades of sector experience. This contributes to more informed and commercially grounded decisions.

However, arbitration is not perfect. The process can be expensive, especially when a three-member tribunal is appointed. The fees of arbitrators, administrative charges and venue-related costs add up quickly. While arbitration reduces procedural friction, the cost of the tribunal can still be significant for small or early-stage companies. Another challenge is the limited ability to appeal. Once the tribunal issues an award, the grounds to challenge it in court are very narrow. This finality is attractive when seeking closure but can feel harsh if the award contains material errors.

Interim relief also requires careful consideration. Emergency arbitrators are available under institutional rules, but the enforceability of emergency orders depends on the jurisdiction. Some courts enforce them readily while others do not. In high-pressure situations where assets are being moved or trade secrets are being misused, court litigation may offer faster and more secure interim relief.

Overall, arbitration operates as an international system with predictable enforcement, procedural neutrality and commercial flexibility. It is not a replacement for courts but rather an alternative structure designed specifically for cross-border commercial matters. For this reason, many founders, investors and international companies view arbitration as the default mechanism for resolving global disputes in 2025.

WHEN CROSS-BORDER COURT LITIGATION BECOMES THE STRONGER CHOICE

While arbitration has become the preferred pathway for many international commercial disputes, there are several situations where court litigation is not only appropriate but essential. Cross-border disputes are rarely uniform. They vary in urgency, public interest, complexity and the type of rights involved. Courts remain central to the global dispute resolution ecosystem because certain matters simply cannot be managed within the private framework of arbitration.

The first and most important category is disputes that involve statutory rights or matters of public law. Many jurisdictions prohibit arbitration for disputes relating to criminal misconduct, consumer rights, regulatory enforcement or insolvency. If a dispute implicates issues such as violation of competition law, breach of foreign exchange rules or public health obligations, only courts can adjudicate them. Arbitration is a creature of contract and cannot override statutory restrictions imposed by national laws.

Complex multi-party disputes also often require judicial intervention. Arbitration operates only between parties who have agreed to arbitrate. When a dispute involves several stakeholders, some of whom are not bound by the arbitration clause, courts become the only viable forum. Supply chain disputes, multi-tier distribution conflicts or investor battles involving subsidiaries and affiliates may fall into this category. Courts have inherent jurisdiction to join parties, consolidate matters and issue directions that arbitration tribunals cannot.

Urgency is another practical reason why courts become relevant in cross-border settings. Courts possess strong coercive powers. They can issue freezing orders, search orders and anti-suit injunctions. In situations where assets are being transferred outside the jurisdiction or where a party attempts to liquidate holdings to frustrate enforcement, courts can intervene immediately. Although arbitration institutions have introduced emergency arbitrators, enforcement of such emergency orders still varies from country to country. Some jurisdictions recognise emergency arbitrator decisions while others do not, creating unpredictability.

Courts also play an essential role in cross-border intellectual property disputes. Many IP conflicts involve validity challenges, statutory rights or allegations of infringement that require judicial determination. A patent infringement claim involving multiple markets or a trademark violation affecting different jurisdictions may require court action for effective relief. Even when arbitration is used for commercial aspects of a contract, IP enforcement frequently continues through courts.

Another advantage of litigation is the depth of evidence-gathering mechanisms. Courts provide discovery tools that can compel production of documents and data. Arbitration allows disclosure but the process often depends on the arbitrators’ preferences or the chosen institutional rules. In disputes where one party controls most of the evidence, court litigation may provide a clearer pathway to obtaining necessary information.

The availability of appellate review is another factor. Arbitration awards are final and can be challenged only on narrow grounds. Court judgments, in contrast, can be reviewed by appellate courts. This layered structure offers corrective oversight, which can be important in disputes involving significant legal questions or complex factual matrices. If a founder is concerned that the matter requires judicial scrutiny at multiple levels, litigation may be more appropriate.

Cost can also play a role. In several jurisdictions, court litigation is less expensive than arbitration. Filing fees are lower than tribunal fees and parties are not required to bear the cost of arbitrators or institutional administration. For small and mid-size disputes, especially those involving clear contractual breaches, litigation may offer an affordable path to resolution.

However, the major limitation of court litigation in cross-border disputes remains enforcement. A court judgment issued in one country may not be recognised in another unless there is a reciprocal enforcement treaty or a statutory mechanism that permits enforcement. Even then, courts may refuse recognition if the judgment violates public policy or procedural fairness. This is why a founder must always analyse where the counterparty’s assets are located. A perfectly favourable judgment becomes meaningless if it cannot be executed in the country where assets exist.

Perception of bias is another practical concern. A founder may find it uncomfortable to litigate in the counterparty’s home courts. Even if the court is impartial, the psychological disadvantage and unfamiliar procedural landscape can impact negotiation dynamics.

Yet courts remain indispensable. They operate with constitutional authority, have inherent powers that arbitration tribunals lack and serve as the backbone of any dispute system. In many cross-border disputes, litigation serves as the first step, especially for interim protection. There are also situations where a mixed strategy is the most effective. A founder may approach courts for urgent relief while pursuing arbitration for final resolution, depending on the nature of the contract and dispute.

Court litigation therefore remains a critical part of the dispute resolution landscape in 2025. It is not less sophisticated or less effective than arbitration. The appropriate choice depends entirely on the nature of the dispute, the urgency of the relief sought, the parties involved and the enforceability landscape. Understanding these nuances gives founders the ability to navigate cross-border conflict with greater clarity and strategic foresight.

THE MOST OVERLOOKED PART OF CROSS-BORDER CONTRACTS

In cross-border contracts, the dispute resolution clause is often treated as a standard paragraph placed near the end of the agreement. Many founders focus heavily on commercial terms, pricing, deliverables, IP ownership and timelines, while the dispute clause is accepted as drafted by the counterparty. This is where most cross-border disputes begin long before any conflict actually arises. A poorly drafted dispute resolution clause can force a business into an unfavourable forum, create uncertainty around enforcement or leave the parties without a reliable mechanism for urgent relief.

The dispute resolution clause is the legal roadmap for every cross-border disagreement. It determines whether the matter will be resolved through arbitration or through courts. It specifies which country's law will govern the dispute, which jurisdiction will supervise the process and whether the final outcome will be enforceable in the country where assets are located. Every one of these choices directly impacts time, cost and the practical chances of winning.

The first element that shapes the dispute is the governing law. Parties often assume that the governing law and the place of resolution must be the same, but they operate independently. A contract may provide for English law to govern the agreement, while the dispute may be resolved through arbitration seated in Singapore or litigation in the courts of Dubai. Each choice carries serious implications. Governing law affects how contractual obligations are interpreted, what constitutes a breach and what remedies are available. A founder who signs a contract governed by a foreign law without understanding its impact may find the dispute shaped by principles that differ substantially from home-country expectations.

The next element is the forum selection. If arbitration is chosen, the clause must specify the seat of arbitration. The seat is not a venue. It is a legal concept that identifies the jurisdiction whose procedural law will govern the arbitration. For example, choosing Singapore as the seat means the arbitration is governed by the Singapore International Arbitration Act, regardless of where the hearings take place. The seat determines which courts can intervene, which courts can grant interim relief and which courts have the power to set aside an award. A contract that simply states “arbitration in Asia” creates far more confusion than clarity.

If court litigation is chosen, the clause must specify whether jurisdiction is exclusive or non-exclusive. Exclusive jurisdiction prevents forum shopping and ensures both parties know where the dispute will be heard. Non-exclusive jurisdiction allows parties to pursue litigation in multiple jurisdictions depending on urgency and the nature of relief required. Many founders unknowingly accept non-exclusive jurisdiction clauses inserted by foreign counterparts, which sometimes allow the counterparty to initiate proceedings in a court that may be highly inconvenient.

The clause must also address interim relief. Many international contracts now follow a hybrid approach. They select arbitration for final dispute resolution while permitting parties to approach courts for urgent interim measures. This approach is practical because it recognises that arbitration may not always provide immediate enforceability for emergency orders. A founder may need to freeze assets, secure equipment or prevent misuse of confidential information long before a tribunal is constituted. Courts provide these remedies through their inherent authority, which an arbitral tribunal lacks until properly constituted. Hybrid clauses therefore combine the best features of both systems.

Institutional rules are another aspect often overlooked. Many contracts state that disputes will be resolved by arbitration but fail to specify the rules. This forces the parties to rely on ad hoc arbitration, which can lead to procedural delays and uncertainty. Specifying rules, whether of SIAC, LCIA, ICC or UNCITRAL, ensures that the dispute follows a well-understood procedural structure. This provides clarity on appointment of arbitrators, timelines, evidence, confidentiality and cost sharing.

Poor drafting increases the risk of parallel proceedings in multiple countries, conflicting judgments, unenforceable awards and months of procedural litigation before addressing the substance of the dispute. Courts around the world have repeatedly highlighted the importance of clear dispute resolution clauses. In the Indian context, cases like CENTROTRADE MINERALS AND METALS INC V HINDUSTAN COPPER LTD, demonstrate how complex multi-tier dispute resolution clauses can become if not drafted carefully.

The commercial cost of uncertainty is far greater in cross-border contracts. A founder dealing with a distributor in the Middle East or a supplier in East Asia cannot afford to spend two years debating where the dispute should be heard. Business continuity demands a clear, enforceable and predictable mechanism. This is why dispute resolution clauses are no longer standard boilerplate paragraphs. They are strategic tools that determine the reliability of international contracts.

A contract that contains a precise and well-considered dispute resolution clause gives founders a significant advantage. It reduces the scope of procedural challenges, strengthens negotiating power and improves chances of enforcing outcomes. For cross-border business in 2025, the importance of this clause cannot be overstated. It is the foundation upon which the entire dispute strategy rests.

A FOUNDER’S FRAMEWORK FOR CHOOSING BETWEEN ARBITRATION AND COURT IN 2025

Once the commercial relationship becomes international, the question is no longer whether a dispute will arise but when and how it will unfold. A founder who is negotiating a cross-border contract should understand that the choice between arbitration and court litigation is not theoretical. It is a strategic decision that determines enforcement prospects, leverage in negotiations, access to urgent relief and the predictability of the final outcome. This is especially important in 2025, where cross-border supply chains, digital licensing and offshore financing have made jurisdictional overlaps more common than ever.

The first consideration is enforceability. A dispute resolution mechanism is only as strong as a party’s ability to enforce the outcome in the country where the counterparty’s assets are located. Arbitration enjoys a structural advantage here because of the New York Convention, which obligates signatory countries to recognise and enforce foreign arbitral awards, subject only to narrow grounds for refusal. Court judgments, by contrast, depend on whether the foreign country is willing to recognise and enforce them. Some jurisdictions have reciprocal enforcement arrangements, while many do not. This makes arbitration the more dependable tool when the counterparty’s operations, bank accounts or property are spread across multiple jurisdictions.

The second part of the framework is urgency. Many international disputes require immediate intervention. A manufacturer may be diverting goods to a competitor. A distributor may be transferring funds out of the jurisdiction to avoid payment. A partner may be leaking confidential information or IP to third parties. Courts retain stronger coercive powers to issue freezing orders, search orders and injunctions at short notice. Arbitration has emergency arbitrators and expedited procedures, but the enforceability of emergency orders varies significantly between countries. A founder should therefore identify whether the nature of the business relationship is such that interim relief may be needed, because this consideration may tilt the balance toward litigation or a hybrid clause.

Another factor is confidentiality. In an age where reputation influences valuations, investor confidence and customer trust, confidentiality is not a luxury. It is a commercial necessity. Arbitration keeps the dispute private, while court litigation puts filings, arguments and orders in the public domain. A dispute involving proprietary algorithms, product design, trade secrets or internal financials can harm a company’s standing if litigated publicly. For founders in technology, health, manufacturing and investment sectors, arbitration is often the natural choice simply because confidentiality protects competitive advantage.

The nature of the dispute also plays an important role. Commercial disputes involving breach of contract, licensing disagreements, joint venture issues or distribution conflicts are well suited to arbitration. Matters involving statutory rights, fraud, consumer protection or regulatory compliance often require courts because they involve public law considerations or third-party rights that arbitrators cannot adjudicate. When a dispute is likely to involve multiple parties, or when the obligations extend beyond purely contractual relationships, courts may be the more appropriate forum.

Commercial predictability is another dimension. Arbitration allows parties to select arbitrators who understand the industry. A tribunal comprising professionals familiar with the technology, financial or manufacturing sector reduces the risk of decisions that overlook commercial realities. Court judges are often generalists and may not have access to specialised expertise. This difference can significantly influence the quality of the final outcome.

The final element of the framework is cost. Arbitration can be expensive when a multi-member tribunal is used, partly because tribunal fees and institutional charges can exceed court filing fees. However, litigation can also become costly in jurisdictions with lengthy procedures or multiple appeals. The cost question cannot be answered in isolation. It must be assessed alongside enforceability and the nature of relief required. In many cross-border disputes, arbitration’s advantages outweigh its cost. In smaller disputes, or where judicial relief is essential, litigation may be more practical.

FREQUENTLY ASKED QUESTIONS

1. Is arbitration always better for cross-border disputes?

Arbitration is often preferred because it is enforceable in more than one hundred sixty countries under the New York Convention. It also offers neutrality and confidentiality. However, when the dispute involves statutory violations, fraud, consumer claims or multiple parties without arbitration agreements, courts become the more suitable forum. SolvLegal can help founders evaluate which option aligns with the structure of their transaction.

2. Can a foreign court judgment be enforced as easily as an arbitral award?

Generally not. Foreign court judgments can only be enforced if the issuing country is recognised as a “reciprocating territory” under the Code of Civil Procedure, 1908. Arbitral awards, by contrast, benefit from global enforceability. This makes arbitration more reliable when counterparties hold assets in multiple jurisdictions.

3. Do courts still play a role when arbitration is chosen?

Yes. Courts remain essential for granting urgent interim protection, assisting with evidence and enforcing awards. Many international contracts now choose arbitration for final resolution while allowing parties to approach courts for urgent orders. SolvLegal can assist in drafting these hybrid clauses for balanced protection.

4. Does choosing arbitration guarantee confidentiality?

Arbitration proceedings are private by default, especially under rules of institutions like SIAC

and ICC. However, privacy also depends on the seat of arbitration and how the clause is drafted. Founders who prioritise confidentiality should ensure that the contract expressly provides for it.

5. Is arbitration always faster than litigation?

Arbitration usually proceeds more quickly because it avoids judicial backlog and follows structured timelines. Expedited procedures offered by institutions like SIAC and ICC can shorten timelines further. However, the actual duration depends on the complexity of the matter and the conduct of the parties.

6. What should founders consider when negotiating dispute clauses?

The primary considerations include enforceability, neutrality, urgency of potential disputes, confidentiality requirements and the location of assets. The dispute clause must be tailored to the commercial relationship rather than replicated from another contract.

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ABOUT THE AUTHOR

Aman Patel is a corporate lawyer focusing on company law, commercial agreements, and compliance strategy. He advises on contract drafting, business structuring, and legal due diligence for growing companies. A graduate of Symbiosis Law School, Hyderabad (B.A. LL.B.), he contributes his practical experience to SolvLegal’s legal resources for professionals and businesses.

DISCLAIMER

The information provided in this article is for general educational purposes and does not constitute a legal advice. Readers are encouraged to seek professional counsel before acting on any information herein. SolvLegal and the author disclaim any liability arising from reliance on this content. Connect with SolvLegal on LinkedIn.