Dealmaking with state-owned companies: Drafting, enforcement tips

Parties entering into commercial agreements with foreign state-owned entities frequently insist that their agreements provide for disputes to be resolved through binding arbitration rather than litigation. The reasons for this preference are straightforward. Counterparties owned by foreign governments often enjoy a powerful "home court" advantage in litigation, and their home courts may have a reputation for corruption or a lack of due process that calls into question their ability to reliably and fairly resolve complex business disputes. Neutral countries' courts may be available, but may not be trusted by one or both sides. The arbitration solution seems perfect: Parties can select an arbitral body, seat, and internationally respected governing law in their agreement, ensuring a fair process for resolving any disputes.

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