In domestic disputes, many businesses understandably focus on familiarity, cost, or appeal rights. In cross-border disputes, the centre of gravity often shifts to enforceability. A strong decision is only useful if it can ultimately be turned into money, performance, or real commercial pressure in the places where assets sit. That is where arbitration often has its strongest structural advantage. Under section 1061 ZPO, recognition and enforcement of foreign arbitral awards in Germany follows the New York Convention. UNCITRAL’s status page currently records 172 parties to that Convention, which is why arbitral awards usually travel far more effectively across borders than many national court judgments. 

That is only part of the story. Arbitration also offers neutrality. Parties can choose a neutral seat, a neutral tribunal, and a neutral procedural framework. In negotiations, that often makes agreement on a dispute clause possible where neither side is willing to accept the other’s home courts. The ability to predetermine the seat, language, and rules also improves planning. The point is not symbolic, it often determines whether the dispute clause is accepted at all.

The current reform would strengthen this proposition further by introducing English-language court support in arbitration matters through proposed sections 1063a, 1063b and 1065 ZPO-E, including reduced translation requirements.

However, international enforceability should not be oversold into complacency. Recognition and enforcement proceedings are still needed where assets are located. Local refusal grounds still matter. Local counsel still matters. And a neutral seat is not automatically the best seat. The enforcement geography of the likely counterparty should influence seat selection just as much as concepts like prestige or arbitral reputation.

Key takeaway 

In an international contract, the better forum is usually the one that gives the most realistic path to enforcement, not the one that looks most balanced at the signing table. 

German Disputes Bites series

We hope you are enjoying our series of blogs on Litigation vs Arbitration. This series will cover different aspects of the choice between a litigation or arbitration forum. Previous posts in the series:

• German Disputes Bites – Arbitration vs Litigation: confidentiality doesn’t make a dispute invisible

• German Disputes Bites – Arbitration vs Litigation: deciding who decides?

• German Disputes Bites – Arbitration vs Litigation: tribunal choice is key strategic phase

• German Disputes Bites – Arbitration vs Litigation: procedural flexibility is an advantage if managed