US Arbitration vs. Litigation 2026: Strategic Guide for Turkish Companies in Disputes

Commercial disputes are an inevitable reality of doing business in the United States. When a dispute arises — whether a contract breach, a joint venture breakdown, an employment claim, or an IP infringement — Turkish companies must navigate a dispute resolution system that differs significantly from Turkish legal practice. The threshold question is often: should this dispute be resolved through arbitration or litigation in US courts?

US federal and state courts offer a powerful dispute resolution forum, but one with distinctive characteristics that Turkish companies must understand:

US civil litigation involves extensive pre-trial discovery — the compelled exchange of documents, written interrogatories, and depositions (sworn oral testimony). Discovery in a significant commercial case can involve:

• Production of hundreds of thousands of documents, including emails and electronic records
• Depositions of key witnesses, including Turkish executives who may need to travel to the US
• Expert witness reports and depositions
• Third-party subpoenas

Discovery is expensive, time-consuming, and can expose sensitive business information. For Turkish companies, the prospect of Turkish executives being deposed in the US — and the production of Turkish-language documents — adds complexity and cost.

Most US commercial disputes can be tried before a jury of lay citizens. Jury trials introduce unpredictability, particularly for foreign companies. Jurors may not understand complex commercial arrangements, and anti-foreign-company bias, while not universal, is a real consideration.

US law permits class action lawsuits, where a single plaintiff can represent a large class of similarly situated individuals. Turkish companies with US consumer-facing operations face class action risk in areas including consumer protection, employment, and data privacy.

US litigation is expensive. Attorney's fees in a significant commercial case can reach millions of dollars. Cases often take 3–5 years from filing to trial. The "American rule" — each party pays its own attorney's fees regardless of outcome — means that even a successful defendant bears substantial litigation costs.

Commercial arbitration is a private dispute resolution process where parties agree to submit disputes to one or more arbitrators rather than courts. Key features:

• American Arbitration Association (AAA): The largest US arbitration institution; its Commercial Arbitration Rules are widely used for domestic disputes
• International Centre for Dispute Resolution (ICDR): The AAA's international division; commonly used for cross-border disputes involving Turkish parties
• ICC International Court of Arbitration: Paris-based but globally used; preferred for high-value international commercial disputes
• JAMS: A leading US arbitration provider, particularly for complex commercial and technology disputes

Confidentiality: Arbitration proceedings and awards are generally confidential, unlike court proceedings which are public record. This is significant for Turkish companies that want to avoid public disclosure of business disputes.

Neutral forum: Arbitration allows parties to select a neutral forum and arbitrators with relevant expertise, avoiding home-court advantage concerns.

Enforceability of awards: Arbitration awards are enforceable in Turkey under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, to which both the US and Turkey are parties. US court judgments, by contrast, are not automatically enforceable in Turkey.

Limited discovery: Arbitration typically involves more limited document exchange than US court litigation, reducing cost and exposure.

Arbitrator expertise: Parties can select arbitrators with specific industry or legal expertise, leading to more informed decisions in complex technical or commercial disputes.

Finality: Arbitration awards are generally final and not subject to appeal on the merits, providing certainty.

Cost: Arbitration filing fees and arbitrator compensation can be substantial, particularly for three-arbitrator panels in high-value disputes Limited discovery: Can be a disadvantage when the Turkish party needs documents from the counterparty No class action: Arbitration agreements typically preclude class actions, which can be an advantage or disadvantage depending on the Turkish company's position Limited remedies: Some remedies available in court (injunctions, punitive damages) may be limited in arbitration

The most important dispute resolution decision is made when drafting contracts — not when a dispute arises. Turkish companies entering US commercial agreements should negotiate dispute resolution clauses carefully:

Any dispute arising out of or relating to this Agreement, including 
its formation, validity, breach, or termination, shall be finally 
resolved by arbitration administered by [AAA/ICDR/ICC] under its 
[applicable] Rules. The number of arbitrators shall be [one/three]. 
The seat of arbitration shall be [New York/another neutral city]. 
The language of the arbitration shall be English. The governing 
law shall be the law of [New York/another state].

Seat of arbitration: The legal "home" of the arbitration affects procedural law and court supervision. New York is a common and favorable seat for international commercial arbitration.

Governing law: Turkish companies should negotiate for New York law or another US state law they understand, rather than accepting the counterparty's home state law.

Number of arbitrators: One arbitrator is faster and cheaper; three arbitrators provide more deliberation and reduce the risk of an idiosyncratic decision.

Emergency relief: Include provisions for emergency arbitrator relief to preserve the status quo pending arbitration.

Some matters are typically carved out from arbitration clauses:

• Injunctive relief for IP infringement or trade secret misappropriation
• Collection of undisputed amounts
• Regulatory proceedings

A critical consideration for Turkish companies is the enforceability of US dispute resolution outcomes in Turkey:

Arbitration awards: Turkey is a party to the New York Convention. US arbitration awards are generally enforceable in Turkish courts, subject to limited grounds for refusal (public policy, procedural fairness).

Court judgments: The US and Turkey do not have a bilateral treaty on the recognition and enforcement of judgments. US court judgments may be recognized in Turkey under Turkish private international law, but the process is less certain than for arbitration awards.

This enforceability asymmetry is a significant reason why Turkish companies often prefer arbitration for cross-border disputes.

Before arbitration or litigation, mediation — a non-binding facilitated negotiation — can resolve disputes efficiently and preserve business relationships. Many US commercial contracts include tiered dispute resolution clauses requiring mediation before arbitration or litigation.

Our dispute resolution attorneys represent Turkish companies in US commercial arbitration and litigation, from pre-dispute contract drafting through enforcement of awards and judgments. We have experience with AAA, ICDR, and ICC proceedings involving Turkish parties and understand the strategic considerations that affect Turkish companies in US disputes.

This article is for informational purposes only and does not constitute legal advice. Dispute resolution strategy is highly fact-specific; please consult qualified counsel when a dispute arises.