On the day a bond refinancing was due to pay out, a young associate stood in the lobby of the Bank of New York holding a single piece of paper: an ex parte order from a federal judge, signed the day before. The moment the money moved, he was going to hand it over.
It worked. Roughly $300 million was frozen before the underlying arbitration had even been filed.
The associate was Michael J. Baratz, now a partner at Steptoe LLP. He calls it his one “law and order” moment. His partner Steven K. Davidson, who led the case, describes something less cinematic and more useful: the freeze was only possible because of decisions made years earlier, in how the deal was structured and which rules governed the dispute.
That idea sits at the center of a recent episode of the LexTalk World Podcast, where host Ajay Bhardwaj sat down with both partners to talk about what happens after a legal win, when the real work of getting paid begins.
Watch the full episode on YouTube: Winning an arbitral award is only half the battle
Key Takeaways
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The most common mistake corporate legal teams make in cross-border disputes is not planning for enforcement. They focus entirely on winning the case.
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According to Davidson, a few hours of a good disputes lawyer’s time on the dispute resolution clause can change the outcome of a recovery years later.
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Waiving immunity from a court’s jurisdiction is not the same as waiving immunity from attachment and execution. Contracts with foreign sovereigns should address both.
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Arbitration is no longer automatically “faster and cheaper.” The better question is which features of arbitration or court matter most to your client.
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Enforcement is a specialized skill. A talented trial lawyer is not automatically a talented judgment enforcement lawyer.
Why Is Winning the Case Only Half the Job?
What is the number one mistake corporate legal teams make when planning for judgment enforcement?
Not planning. That was Davidson’s answer, given without hesitation. Legal teams pour their attention into winning, which is obviously critical, but a judgment or arbitral award is only a piece of paper until someone collects on it. As Davidson puts it, clients enjoy receiving the piece of paper, but they like receiving the money better.
Baratz adds that the planning has to start before a dispute exists. Whenever an in-house team enters a cross-border deal, the working assumption should be: when things go sideways, how will we recover? That framing changes what gets negotiated at the start, not just what gets litigated at the end.
The Paragraph Most Contracts Skip
How much attention should a dispute resolution clause get?
More than it usually does. Davidson’s point is that deal points dominate the negotiation because they are the terms everyone cares about, while the dispute clause gets treated as boilerplate. In the vast majority of contracts, nothing goes wrong, which makes it easy to skip. But he estimates that 5 to 10 hours of a good disputes lawyer’s time negotiating that clause can make all the difference in recovery, and that many long, expensive disputes could be cut off at the clause stage.
Baratz gives a specific example of what a stronger clause can do when the counterparty is a foreign sovereign. Parties often focus on waivers of immunity that deal with the jurisdiction of a court or tribunal. But in many jurisdictions, including the United States, a foreign sovereign has a separate immunity against attachment or execution of assets. If that second immunity is not addressed in the waivers, winning may still not get you paid. He also flags prejudgment attachment as something worth covering in the contract, alongside practical protections such as security or letters of credit that put you in a position to recover early rather than “in for the long haul.”
The Exxon Freeze: What Advance Planning Made Possible
Davidson’s account of the case shows how those ideas work in practice.
The dispute involved a joint venture in which an Exxon subsidiary participated alongside a subsidiary of Venezuela’s state oil company. Under the ICC arbitration rules, and under New York procedural rules, a party can go to court for provisional measures such as attachment before the arbitration is filed. Davidson’s team knew a bond-related payment was coming because they were kept informed by the deal lawyers on that side of the transaction. The job was to time the order so it landed between the closing of the deal and the money leaving the bank.
That is the part Baratz describes waiting in the Bank of New York for. About $300 million was frozen, pending the outcome of the arbitration.
Davidson is careful to say what this shows and what it does not. Exxon is a sophisticated party that had been contracting with sovereigns for a very long time, and not every client can replicate all of what it did. The repeatable lesson is the planning: anticipating the problem and building the structure around it. He notes that the enforcement effort in the wider case has run for close to two decades and has collected over a billion dollars, which he offers as a reminder of how long these matters can last.
Arbitration or Court? The Old Answer No Longer Holds
When does international arbitration make more sense than US federal court?
For years, the stock answer was that arbitration is faster and cheaper. Davidson says that is no longer a safe assumption. Document volume has made discovery in arbitration nearly as expensive as in court, and high-value arbitrations can involve millions of dollars in arbitrator fees. He suggests the more useful questions are these:
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Does the client need the dispute to be confidential? If so, arbitration works better.
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Is enforceability a concern? Arbitration is generally stronger here because of the New York Convention and similar agreements that most countries have joined.
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How much discovery does the client want? More or less, and whether the matter should be public.
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Does the client want to choose the decision-maker? Arbitration allows a clause requiring an arbitrator with specific expertise or limits on discovery.
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How much does early relief matter? Court usually offers faster access to a judge, and in the Southern District of New York, emergency judges are available. Arbitration takes longer to constitute, even for provisional measures.
He also names some trade-offs worth weighing: arbitration rarely offers a meaningful dispositive motion, and arbitrators have a reputation for splitting the difference. A party likely to be a defendant might prefer a forum that leans on equitable principles, while a party that wants the law applied strictly might not.
Baratz adds a distinction that applies when the counterparty is a foreign sovereign itself, as opposed to a state-owned enterprise. In his account, a court judgment against a foreign state in the United States can generally be enforced only against assets connected to the underlying dispute. If the claim proceeds through arbitration and the award is then turned into a judgment, commercial assets of the sovereign can be pursued regardless of whether they relate to the original dispute. That difference can shape the very first forum decision.
Both partners note that, when the counterparty is a sovereign, arbitration is often the only realistic option anyway, since a sovereign is unlikely to accept the other side’s home courts.
Their bigger complaint is about how the decision gets made. Too often, clients say they do not want a jury and default to a stock arbitration clause, without using arbitration’s real benefits, such as choosing the arbitrator or defining how the dispute will be decided.
A Practical Checklist for Lawyers Drafting Cross-Border Contracts
Drawing on the discussion, here is what the guests suggest thinking through before a deal is signed:
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Have a disputes lawyer review the dispute resolution clause, not just the deal lawyers. A few hours of review is the trade-off Davidson highlights.
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Address both types of sovereign immunity when a foreign state is a party: immunity from jurisdiction, and immunity from attachment and execution, including before judgment.
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Think about security early. Waivers, letters of credit, and similar protections can put assets within reach while the case is pending.
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Decide where the investment vehicle sits. Baratz points out that jurisdictions differ widely in the creditor remedies they offer, and that some fast-moving markets offer little relief in the first 48 hours.
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Talk with the client about what matters most in a forum (confidentiality, enforceability, discovery, choice of decision-maker) before defaulting to a template clause.
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Bring in enforcement expertise early. Davidson stresses that getting the money in the door is a special skill, and that a superb trial lawyer may not have it.
What You Will Hear in the Full Episode
The article covers the part of the conversation about planning and drafting. The full episode goes considerably further, including:
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The five questions every investor should ask before entering a deal with a sovereign or state-owned enterprise
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The ExxonMobil blueprint, including how treaty protections and simultaneous actions in multiple jurisdictions fit together
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How judgment creditors trace and freeze sovereign assets, and why the guests have attached everything from airplanes to gold bullion
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First steps for a General Counsel facing a hostile cross-border dispute, starting before any outside counsel is retained
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Davidson’s idea of “creative, sensible aggression,” and how it shaped some of the team’s most unusual wins
Watch the full LexTalk World Podcast episode on YouTube
About the Guests
Steve Davidson leads Steptoe LLP judgment enforcement practice. He is ranked in Band 1 for trial lawyers by Chambers USA and has served as lead counsel for clients including ExxonMobil, American Airlines, UBS, and BNSF.
Michael Baratz is a partner at Steptoe LLP who represents Fortune 500 companies in high-stakes federal and state trials, appeals, and international arbitrations before ICSID, ICC, and AAA, with deep experience in cross-border judgment enforcement and asset recovery.
Frequently Asked Questions
What is judgment enforcement?
Judgment enforcement is the process of collecting on a court judgment or arbitral award once a case has been won. It can involve locating assets, obtaining court orders to attach or freeze them, and pursuing recovery across several countries when the losing party is a foreign company or government.
Why is enforcing an arbitral award against a foreign sovereign difficult?
Sovereigns often benefit from immunities that protect certain assets from seizure, and some assets, such as purely sovereign property, are effectively untouchable. According to the guests, the practical work involves identifying commercial assets, understanding who really owns them, and sometimes looking through a state-owned enterprise to the state behind it.
What is the difference between immunity from jurisdiction and immunity from attachment?
Immunity from jurisdiction concerns whether a sovereign can be brought before a court or tribunal at all. Immunity from attachment or execution concerns whether its assets can be seized once a judgment or award exists. As Baratz explains, a contract that waives only the first may leave the second intact, which is why both should be addressed, including prejudgment attachment.
Is arbitration faster and cheaper than litigation?
Not reliably, according to Davidson. Document volume and arbitrator fees have narrowed or erased the historic advantage. He suggests choosing between the two based on confidentiality, enforceability, discovery, control over the decision-maker, and access to early relief.
How much time should be spent on a dispute resolution clause?
Davidson suggests that 5 to 10 hours of a good disputes lawyer’s time negotiating the clause can significantly affect recovery if a dispute later arises. His broader point is that the clause deserves attention before there is any sign of a problem.
What should a General Counsel do first in a hostile cross-border dispute?
The guests describe four early steps: understand the key facts, ideally by speaking with the key witness directly; inform the strategic leadership team; preserve documents; and align with the communications team. They also recommend naming a single person in charge of the legal team. The full sequence is covered in the episode.
This article summarizes views expressed by guests on the LexTalk World Podcast and is provided for general information only. It is not legal advice. Legal points, including those about sovereign immunity and the enforcement of awards and judgments, are the guests’ characterizations and vary by jurisdiction and facts.
LexTalk World also brings legal leaders together in person. Cross-border compliance and enterprise risk are among the themes at LexTalk World San Francisco, November 19 and 20, 2026. Explore the conference.
