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California Looking to Become a Hub for International Arbitrations

Erwin J. Shustak, Esq.         9 August 2018

Governor Jerry Brown recently signed into law Senate Bill 766 intended to make California a more attractive locale for international arbitrations. While international arbitrations are one of the fastest growing segments of the legal industry, California has not shared in that growth due, primarily, to the 1998 decision by the California Supreme Court which held that non-California lawyers violated the California Business and Professions Code if they participated in arbitrations in California without being admitted to practice here. Birbrower v. Montalbano, Condron & Frank, P.C. v. Superior Court, 17 Cal. 4th 119 (1998). Although the restriction was later removed for attorneys licensed in other U.S. states or territories, the net effect was to make California a less desirable venue for international arbitrations and cut the state out of the growing, multi-billion dollar international arbitration business.

Under the new law, any “qualified attorney” will be able to participate in an international arbitration in California provided the case has a connection to the attorney’s home jurisdiction. Most international lawyers will meet the “qualified attorney” test and most international arbitrations will have a sufficient nexus to the lawyer’s home jurisdiction to allow foreign attorneys to handle international arbitrations in California. According to a recent survey, 92 percent of in-house lawyers stated that international arbitration is their preferred method for resolving cross-border disputes.

California is a good venue for international arbitrations. It has strong national and state laws favoring recognition and enforcement of arbitral awards and agreements to arbitrate. It has sophisticated state and federal courts that have a reputation for being regionally unbiased, and it has world class cities, airports, and transportation systems that offer good access, facilities and resources to host international disputes. And of course, the weather can’t be beat! It is too soon to see if California will gain a larger share of international arbitrations, but this law is a good start.

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