chevron-down Created with Sketch Beta.
March 12, 2019

Global Construction Disputes – Basics on U.S. Domestic Versus International Arbitration

Daniel B. Swaja

As U.S.-based contractors continue to expand their reach into the international construction arena, those contractors and their U.S. lawyers may find themselves in international arbitration proceedings that differ substantially from their experience with domestic arbitration.  It is therefore important for construction practitioners to have a general understanding of the differences between being governed by common U.S. domestic arbitration rules and procedures (such as the American Arbitration Association’s (“AAA”) Construction Industry Rules and Procedures) versus an international tribunal (such as the International Chamber of Commerce’s (“ICC”) Rules and Procedures).  Without focusing on a specific arbitration-body due to the varying procedures – which ultimately may be determined by the arbitrator – or varying laws, this article looks at some important considerations associated with international arbitration as well as how U.S. domestic arbitration and international arbitration differ.

General Notes Regarding Arbitration in the International Context

Certain advantages of arbitration are amplified for international disputes because parties cross national boundaries and oftentimes would be in a truly foreign forum when resolving the dispute without arbitration (i.e. a Kansas-based contractor is not in Kansas anymore, and not even in the U.S.).  The forum may be in a highly developed country with a well-respected court system, but for the U.S. contractor it is all completely foreign, including the language of the proceedings.  The situation can be even worse if there are not reliable judicial bodies to adjudicate disputes, distrust of the forum’s national courts, and concerns over bias toward the opposing foreign entity.  Moreover, arbitration is typically known for lower costs, compared to litigation which may be further magnified in the international context.  There are also challenges with international arbitration, such as uncertainty on which law, substantive or procedural, to apply.  Language barriers, cross-cultural differences, and geographical distances present further possible complications.  Lastly, it can be more difficult to enforce an award on foreign turf.  Despite the challenges, the aforementioned advantages associated with international arbitration outweigh the perceived negatives. 

Selection of Arbitrators

One of the most important steps in arbitration is the process of selecting the arbitrator(s).  All parties want an arbitrator who they are familiar with and who they believe will best support their positions and enforce the law in the way they see it.  Typically, an arbitration panel or tribunal will have either one or three arbitrators and the selection process varies.  For most U.S. domestic-based arbitrations, the underlying arbitration agreement sets forth the procedure for appointing arbitrators, either expressly or by reference to arbitral rules.  The default procedure, subject to the parties’ agreement, can be the strike and rank method.  For example, Rule 14 of the AAA’s Construction Industry Arbitration Rules and Mediation Procedures provides that a list of ten names of arbitrators from the National Construction Panel will be provided to the parties and, subject to an agreement otherwise, the parties will “strike names objected to, number the remaining names in order of preference, and return the list to the AAA.”  This is a confidential submission and the AAA will try to match the highest ranked remaining arbitrator(s) to serve on the dispute.  If the appointment cannot be made from the strike and rank process, the parties may be at the mercy of the AAA making the appointment on its own.  This process will also apply, by default, whether there is a sole arbitrator or three arbitrators. 

Another avenue for U.S. domestic arbitrator selection can be found in the Federal Arbitration Act (“FAA”).  Specifically, Section 5 of the FAA permits courts to appoint arbitrators at the request of either party when (1) the agreement fails to specify the procedure for appointing the arbitrators, (2) a party fails to abide by the designated procedure, or (3) if, for any other reason, there is a lapse in appointing an arbitrator or filling a vacancy.

In contrast, although the international arbitration arbitrator selection process can vary, the strike and rank process is not the norm.  For a sole arbitrator matter, the parties typically have the opportunity to reach an agreement on the arbitrator.  Absent agreement, the ICC Court may appoint the sole arbitrator.  The standard method in international arbitration for selecting arbitrators for a three-party tribunal is the party appointment method.  In the party appointment method, the claimant and respondent each select one arbitrator.  This allows the parties to assure themselves that the Panel will include at least one of their preferred arbitrators.  Article 11 of the ICC Arbitration Rules, however, confirms that all arbitrators “must be and remain impartial and independent of the parties involved in the arbitration.”  Depending on the agreement, these two party-appointed arbitrators may confer and name a chairperson, or “president.”  If they fail to do so within the time designated in the rules or if the agreement does not allow for the party-appointed arbitrators to confer and decide, the institution will ultimately select the chairperson. 

As can be seen, there are some variations in the types of default procedures depending on whether the arbitration is domestic or international.  If the parties do not issue an up-front agreement on selection, the choice of applicable rules will have an impact on the method of appointment and could result in less party control over the process.


Absent a specific discovery agreement in the arbitration clause, there tend to be differences in the scope of discovery in the U.S. domestic versus international context.  Although the general purpose of arbitration is to reduce costs and streamline the dispute resolution process, a typical U.S. domestic arbitration will still involve broad discovery similar to what is found in court litigation.  Subject to the arbitrator(s) discretion, there likely will be a selected number of depositions, including a deposition of a corporate representative, and broad document production requirements, whether through ESI search terms or more traditional productions in response to a request for production of documents.  In fact, JAMS Engineering and Construction Rule 17 requires, by default, a “voluntary and informal exchange of all non-privileged documents and other information . . . relevant to the dispute or claim immediately after the commencement of the Arbitration.”  In summary, many U.S. domestic arbitration discovery procedures can be broad, expensive, and take many months to complete. 

Most arbitral rules governing international arbitration proceedings, however, are largely silent regarding discovery, leaving that issue to the discretion of the arbitral tribunal.  Discovery tends to be much more limited in international arbitration than in U.S. domestic arbitration. Discovery in international arbitration generally follows the civil law approach in which the parties only exchange documents they intend to rely on in the arbitration.  The parties do not exchange other “relevant documents” and generally do not take depositions, prepare and exchange interrogatories, or conduct inspections.  As a result, international arbitration generally attempts to ensure the policy of providing an efficient, speedy, and cost-effective means to resolve disputes.  This does not mean, however, that international arbitrations are significantly cheaper as there are other procedural mechanisms, such as fact witness statements, which tend to be time consuming and costly. 

Presentation of Evidence

Another general difference between international and U.S. domestic arbitration concerns the presentation of evidence at the hearing.  In U.S. domestic arbitrations, fact and expert witnesses generally testify live at the hearing for purposes of direct and cross-examination.  Although the court rules of evidence are typically not strictly adhered to during such examination, this direct/cross examination procedure is similar to what is found in the court system. 

Contrary to the approach in U.S. domestic arbitrations, it is common in international arbitration to present the direct testimony of witnesses in a written statement, which is like an affidavit on steroids.  For example, Article 20(5) of the International Arbitration Rules of the International Centre for Dispute Resolution (“ICDR”), the international division of the AAA, allows “evidence of witnesses [to be] presented in the form of written statements signed by them.”  Most international arbitration rules allow this type of evidence.  The witnesses are then subject to only live cross-examination.  This process allows the witnesses and lawyers, to carefully craft the statement, but also gives the opposing side more time to prepare cross-examination on the specific statements which are binding on the individual.

Award of Attorneys’ Fees

An important consideration of any dispute proceeding is the ability of the decision-maker to award attorneys’ fees.  While applicable law may provide some guidance, it is important to understand the procedural rules regarding the ability of the arbitrator(s) to award fees.  There are some slight variations within some of the more popular arbitral forums with regard to this issue. 

For U.S. domestic arbitrations, Rule 48(d) of the AAA Construction Rules provide that the arbitrator(s) may award fees if all parties request such relief, if the award is authorized by law, or if the parties provide for such relief in the arbitration agreement.  This Rule is often overlooked and can lead to unintended consequences when a party, without much thought, requests an award of fees.  Regardless of the lack of an agreement or law authorizing the fees, as soon as both parties request such an award, the arbitrator(s) are authorized to award them.  Unlike the AAA Rule, Rule 24(f) of the JAMS Engineering and Construction Rules, does not authorize the award of fees based on mutual request.  Rule 24(f) only authorizes the arbitrator(s) to allocate fees and expenses “if provided by the Parties’ agreement or allowed by applicable law.”

There are variations in the international arbitral forums regarding attorneys’ fees.  Article 38(1) of the ICC Rules, , confirms that legal costs are a part of the “costs of the arbitration” and Article 38(4) confirms that the “final award shall fix the costs of the arbitration and decide which of the parties shall bear them or in what proportion they shall be borne by the parties.”  Thus, while the tribunal has discretion in the allocation, the ICC rules make it clear that the final award “shall” include a determination on “costs of the arbitration,” which includes legal costs. 

Similarly, Article 34 of the ICDR International Dispute Resolution Procedures requires the tribunal to fix the costs of arbitration in its award, and such costs “may” include legal costs incurred by the parties.  This discretion to fix the “costs” is based on a reasonable allocation “taking into account the circumstances of the case.”  Thus, in the international context, it is generally perceived that an attorney’s fees award, in some form, will be included in the award.


This is a non-exhaustive summary of differences between U.S. domestic and international arbitration from a procedural standpoint.  The distinctions may provide guidance in negotiations over an arbitration agreement if one procedure is preferred over another.  In forming an agreement, all pros and cons should be weighed when deciding on a cross-border contract, including the type of dispute resolution process and which forum will govern the construction dispute.  Likewise, on the back end, practitioners should know what to expect after the disputes process is initiated.  As with any matter, the procedures can change based on subsequent party agreements or vary based on the arbitrator(s) procedural orders.

The material in all ABA publications is copyrighted and may be reprinted by permission only. Request reprint permission here.

Daniel B. Swaja

Partner at Kilpatrick Townsend & Stockton LLP, Construction and Infrastructure Team, Atlanta, Georgia, Forum Division