As the world’s fifth-largest economy and a hub for some of the world’s biggest and boldest companies, California has long been at the cutting edge of technology, culture, and innovative business models. One area where California has curiously lagged behind its peer states in the U.S. is on the topic of international arbitration—the preferred method of dispute resolution for most transnational companies.

Over the past few decades, California has demonstrated a reluctance to embrace international arbitration, in contrast to the ever-strengthening laws and judicial decisions handed down at the state and federal level in other jurisdictions in support of the autonomy of arbitral tribunals convened under private international contracts. Among some of the factors that has made California less attractive in the eyes of those who practice international arbitration was the state’s longstanding ban that prevented non-U.S. and out-of-state attorneys from representing clients in international arbitrations, or from serving as arbitrators. This meant that only California-licensed lawyers could act in California-seated international arbitrations (even if California law did not govern the merits of the dispute), which drastically reduced the pool of qualified lawyers, particularly given that the California Bar is one of a minority of states that does not extend reciprocity to U.S. lawyers qualified in other states. In practical terms, this often led companies to seat their arbitrations elsewhere. But just last week, on July 9, 2018, the California legislature did away with this outdated rule by passing SB 766, which Governor Jerry Brown is expected to sign. SB 766 permits attorneys qualified in other jurisdictions to serve as counsel or arbitrator in international arbitrations seated in California, with limited restrictions.

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