Overview
Enforcing monetary judgments across borders remains a significant challenge for international businesses. Even where a final court judgment has been obtained, recovery can be delayed or frustrated by inconsistent recognition regimes, lack of reciprocity, and practical difficulties in pursuing overseas assets.
In response to these challenges, McDermott Will & Schulte Partner, Hilton Mervis, has developed a new contractual mechanism designed to strengthen cross-border enforcement of monetary judgments. To help address this enforcement gap, parties may wish to introduce an arbitration clause to their contracts that combines the benefits of court litigation with the enforcement advantages of arbitration under the New York Convention.
In Depth
The clause and how it works
Under the proposed clause, which was devised to address practical enforcement risks commonly encountered in cross-border disputes, parties would agree in advance that if a final court judgment for payment remains unpaid after a specified period, the judgment creditor may refer the matter to arbitration for a strictly limited purpose. The arbitral tribunal would not revisit the merits of the dispute, with its mandate confined to:
- confirming the existence of a final and binding court judgment;
- determining payment consequences of non-payment, including interest and costs; and
- ordering relief, including the provision of security.
Any resulting decision would take the form of an arbitral award capable of enforcement under the New York Convention.
Security as a key feature
A central feature of the clause is the ability for the tribunal to order security equivalent to the unpaid judgment debt, typically to be paid into court or a designated account within a defined timeframe. This is designed to reduce delay, mitigate asset dissipation risk, and provide leverage in jurisdictions where post-judgment remedies may be limited or slow.
A dual-track enforcement model
The newly devised clause is intended to complement rather than replace litigation. It preserves open justice and full court adjudication while providing an additional arbitration-based enforcement pathway where direct enforcement of foreign judgments is uncertain.
The clause is currently the subject of comparative analysis across more than 40 jurisdictions, examining both the validity of the clause under local law and the enforceability of resulting awards under the New York Convention. The results will be published in the forthcoming Commercial Litigation and Cross-Border Enforcement Law Over Borders Comparative Guide 2026, published by The Global Legal Post and edited by McDermott Will & Schulte Partner, Hilton Mervis.
Read more on The Global Legal Post.