In brief
A commercial dispute in the US is heard in a state court, or in a federal court when the amount claimed exceeds 75,000 dollars and the parties are a citizen of a US state against a foreign party, such as an Israeli company. A common alternative is international arbitration at the ICDR of the American Arbitration Association, and an arbitral award is enforceable in most countries of the world under the New York Convention, to which the US and Israel are parties. There is no treaty between Israel and the US on enforcement of judgments, and an Israeli judgment is recognised in each state under its own law, in most states under a uniform act on recognition of foreign judgments. The biggest expense in US litigation is usually the discovery process, and each party generally bears its own attorneys' fees.
Key takeaways
- 1A federal court has jurisdiction over a claim between a citizen of a US state and a foreign party when the amount exceeds 75,000 dollars, excluding interest and costs (28 U.S.C. § 1332).
- 2The limitation period for a contract claim differs from state to state: 6 years in New York, 5 years on a written contract in Florida, and 3 years as a rule in Delaware.
- 3The US acceded to the New York Convention in 1970 with reciprocity and commercial-relationship reservations. An application to confirm a foreign arbitral award is filed within 3 years of the award.
- 4An Israeli judgment is recognised in each state under its own law. In Florida, the debtor may file an objection within 30 days of service of the notice, and in Delaware a recognition action must be filed within 15 years at most.
- 5Broad discovery, within the limits of a proportionality test, is the main source of cost, and each party generally bears its own fees.
- 6Israel and the US are members of the Hague Service Convention, so process can be served through the central authority.
Israeli companies that sell to the US, work with American suppliers or hold a subsidiary there run into commercial disputes: an unpaid debt, breach of a distribution agreement, a dispute with a partner or an intellectual property claim. This guide explains how the court system is structured, when it is better to choose arbitration, how long you have to file a claim, and how an Israeli judgment is enforced in the US.
If the dispute concerns a real estate asset or a developer, see also our guide to a dispute with a developer abroad, which explains jurisdiction clauses and the enforcement of foreign judgments in Israel.
How is the US court system structured for a commercial dispute?
The US has two parallel systems: the courts of each state and the federal courts. Most commercial disputes are heard in the state courts, under state law. A federal court hears a commercial dispute mainly when it has diversity jurisdiction or when the claim is based on federal law.
Several states have set up dedicated divisions for commercial cases. In Delaware, for example, the state's general trial court (Superior Court) has a Complex Commercial Litigation Division (CCLD), which accepts, among others, cases in which a claim of one million dollars or more is made, or cases with an exclusive jurisdiction clause. Delaware also has the Court of Chancery for corporate and equity matters. In New York, there is a Commercial Division in the state court, with a monetary threshold that varies by county.
When can an Israeli company sue or be sued in federal court?
When the parties are citizens of different states and the amount in controversy exceeds 75,000 dollars, or when the claim is based on federal law - as of November 2026, under the US Code. Under section 1332 of Title 28 of the US Code, a federal court has jurisdiction over a claim between a citizen of a US state and a citizen or subject of a foreign state, when the amount in controversy exceeds 75,000 dollars, excluding interest and costs. An Israeli company is treated as a foreign party for this purpose.
- Citizenship of a company: a company is deemed a citizen of every state and foreign state in which it is incorporated, and also of the state where its principal place of business is located. A subsidiary incorporated in Delaware is a “citizen” of Delaware, even if its owners are Israeli.
- Removal to federal court: a defendant sued in a state court may, under certain conditions, move the case to federal court (Removal). This is a tactical decision made at a very early stage.
- Exception: jurisdiction does not apply to a claim against a foreigner who is a lawful permanent resident of the US and lives in the same state as the other party.
| State court | Federal court | Arbitration (for example ICDR) | |
|---|---|---|---|
| When available | Always, subject to jurisdiction over the defendant | Diversity and above 75,000 dollars, or a federal cause of action | Only if there is an arbitration agreement |
| Discovery rules | Under state rules, usually broad | Under the federal rules of procedure, subject to proportionality | Narrower, under the rules and the arbitrator's discretion |
| Publicity | Generally public | Generally public | Generally confidential, under the rules and the agreement |
| Appeal | Yes | Yes | Limited grounds for vacatur |
| Enforcement abroad, including in Israel | Under the law of the enforcing state | Under the law of the enforcing state | Under the New York Convention |
Why is litigation in the US so expensive?
The main source of cost is discovery. Under Rule 26(b)(1) of the Federal Rules of Civil Procedure, a party may obtain discovery of any non-privileged matter that is relevant to any party's claim or defence and proportional to the needs of the case. Proportionality is assessed, among other things, by the importance of the issues, the amount in controversy, each party's access to information, the parties' resources, and whether the burden or expense outweighs the benefit.
- Electronic discovery: emails, messages, CRM systems and documents stored in the cloud. An Israeli company must suspend deletion of relevant information from the moment the dispute is anticipated.
- Depositions: examination of witnesses and managers under oath before trial, sometimes on a broad scale.
- Attorneys' fees: the American rule is that each party bears its own attorneys' fees, unless a statute or contract provides otherwise. So a contract clause making the loser pay attorneys' fees changes the calculation.
- Jury: in many money claims there is a right to a jury trial, which adds uncertainty. A contractual waiver of the right can be considered, subject to state law.
How long do you have to file a contract claim in the US?
As of November 2026, under the state statutes, the general period for a contract claim is 6 years in New York, 5 years for a written contract in Florida and 3 years as a rule in Delaware. The limitation period is set by the law of each state, so it varies. These are the general periods in the three states where Israelis are most active, according to the text of the statutes:
| State | Contract claim | Source |
|---|---|---|
| New York | 6 years for a claim on a contractual obligation, express or implied | CPLR § 213(2) |
| Florida | 5 years for a claim on a written contract. 4 years for a contract not in writing | Fla. Stat. § 95.11(2)(b), § 95.11(3)(j) |
| Delaware | 3 years as a rule. In a written contract of at least 100,000 dollars, the parties may set a longer period, up to 20 years | 10 Del. C. § 8106 |
There are many exceptions, for example for the sale of goods under the Uniform Commercial Code, so the limitation date in a particular case is checked with a lawyer in the relevant state as soon as the dispute begins, not after long negotiations.
Do you have to mediate before suing in the US?
There is no general obligation to mediate before filing a commercial claim, but the courts refer many cases to mediation. In Florida, for example, under section 44.102 of the state statutes, the court must refer a money claim to mediation if a party requests it, except for exceptions such as small claims, debt collection and cases in which the parties agreed to binding arbitration. It may refer any other civil case to mediation. Many commercial contracts also include a tiered mechanism: negotiation, mediation and only then arbitration or a lawsuit.
When is international arbitration preferable, and which institution?
Arbitration is usually preferable when the other party is in a third country, when confidentiality is needed, or when you want to limit the scope of discovery. In the US, the main institution for international arbitration is the International Centre for Dispute Resolution (ICDR), the international arm of the American Arbitration Association (AAA).
- ICDR 2021 rules: came into force on 1 March 2021. According to law firm summaries, an expedited procedure applies by default when no claim or counterclaim exceeds 500,000 dollars, and mediation runs alongside the arbitration by default, unless the parties opt out.
- New York Convention: the US acceded to the Convention on 30 September 1970, with a reservation that it will apply it on the basis of reciprocity and only to relationships that are commercial under US law. Israel ratified the Convention on 5 January 1959.
- Confirming an arbitral award in the US: under section 207 of the Federal Arbitration Act (Title 9), a party to the arbitration may apply to confirm an award covered by the Convention within three years of the award, and the court will confirm it unless a ground for refusal under the Convention exists.
A good arbitration clause sets the institution, seat of arbitration, language, number of arbitrators, governing law and scope of discovery. A vague clause sometimes leads to preliminary court litigation over jurisdiction itself, and the result is delay and double costs.
How do you enforce an Israeli judgment in the US?
An Israeli judgment can be enforced in the US only after a recognition procedure under the law of the state where the debtor's assets are located, as of November 2026. There is no treaty between Israel and the US on reciprocal enforcement of judgments, and no federal statute governs the matter. Recognition of a foreign money judgment is made under the law of the state where the debtor's assets are located. Most states have adopted a version of the Uniform Foreign-Country Money Judgments Recognition Act, in the 1962 text or the updated 2005 text.
| State | The law | Key points |
|---|---|---|
| New York | Article 53 of the Civil Practice Law and Rules (CPLR Article 53), updated in 2021 | Mandatory grounds for non-recognition: a system without impartial courts, or lack of personal or subject matter jurisdiction. Discretionary grounds: insufficient notice to the defendant, fraud, conflict with public policy, conflict with another final judgment and more. The burden is on the party opposing recognition |
| Florida | Uniform Out-of-Country Foreign Money-Judgment Recognition Act (Fla. Stat. §§ 55.601-55.607) | The judgment is recorded with the county's official records, and the debtor may file an objection within 30 days of service of the notice. One of the discretionary grounds is that the country of origin would not recognise a similar Florida judgment, i.e. a reciprocity check |
| Delaware | Uniform Foreign-Country Money Judgments Recognition Act (10 Del. C. ch. 48) | A recognition action is filed within the period during which the judgment is enforceable in the country of origin, and no later than 15 years from the date it became enforceable there |
The practical meaning: an Israeli judgment given in fair proceedings, where the Israeli court had jurisdiction over the defendant and the defendant was duly notified, is usually a good candidate for recognition. The risk increases when the defendant did not defend in Israel and claims lack of jurisdiction or defective service, so already at the stage of the claim in Israel it is worth serving process in a way that will withstand US scrutiny.
How do you enforce a US judgment in Israel?
A US judgment against someone with assets in Israel is enforced under Israel's Foreign Judgments Enforcement Law, 1958. Among the conditions: the judgment was given by a competent court, is no longer appealable, is enforceable in the state where it was given and does not conflict with public policy, and reciprocity is required. The application is generally filed within five years of the date of the judgment. Details in our guide to a dispute with a developer abroad.
How do you serve a claim on an Israeli or American company?
The safe route is service under the 1965 Hague Service Convention, through the central authority of the receiving state. Israel and the US are members of the 1965 Hague Convention on the Service Abroad of Documents: the Convention entered into force for the US on 10 February 1969 and for Israel on 13 October 1972. Service through the central authority is slower, but it reduces future challenges to the validity of service, which is particularly important when you plan to enforce the judgment in the other country. Pleadings and documents in a foreign language are filed with a US court in English translation.
What should a contract with an American party say to prepare for a dispute?
- Governing law: the law of a specific US state (for example New York or Delaware), Israeli law, or a combination. “US law” alone is not a sufficient choice, because contract law is mainly state law.
- Forum: a specific court, exclusive or non-exclusive, or arbitration. When the other party's assets are in the US, an Israeli judgment will require an additional recognition stage there.
- Attorneys' fees: a clause making the loser pay reasonable attorneys' fees.
- Jury waiver: in states that recognise it.
- A tiered mechanism: negotiation between management, mediation and then a binding procedure, with clear deadlines.
- Notices and service: an address for service in each country, to save international service.
What do you do in the first week of a dispute?
- Locate the contract and all annexes, and read the governing law, forum, notices and attorneys' fees clauses.
- Check the limitation date under the relevant state and mark a target date.
- Issue an internal document preservation instruction: emails, messages, files and records in systems, in Israel and in the US.
- Map the other party's assets: in which state it is incorporated, where its principal place of business is and where the money is.
- Send a carefully drafted letter of demand, and do not admit facts that could be used against you.
- Estimate in advance the cost of the proceedings, including discovery, against the amount in controversy, and consider mediation.
- Coordinate between the lawyer in Israel and the lawyer in the US state, so that steps in Israel do not harm enforcement in the US, and vice versa.
The information in this guide is general information as of November 2026, and is not legal advice. Every dispute requires review under the contract and the law of the relevant state.
More on doing business in the US: Setting up a company in the US · Corporate tax and transferring profits to Israel from the US · An Israeli company operating in the US · Comparison of 8 countries · All guides for companies and businesses
Frequently asked questions
Can you sue an American company in federal court?
Yes, when there is diversity of citizenship and the amount in controversy exceeds 75,000 dollars, excluding interest and costs, under 28 U.S.C. § 1332. An American company is deemed a citizen of the state of incorporation and of the state of its principal place of business. Otherwise, the claim is filed in a state court.
Is an Israeli judgment enforced in the US?
Yes, subject to a recognition procedure under the law of the state where the debtor's assets are located, because there is no treaty between Israel and the US and no federal statute on the subject. Most states have adopted the uniform act on recognition of foreign money judgments, which allows recognition to be refused on grounds such as lack of jurisdiction, defective notice, fraud or conflict with public policy. Florida also has a discretionary reciprocity ground.
How long do you have to sue for breach of contract in the US?
As of November 2026, it depends on the state. In New York 6 years, in Florida 5 years for a written contract and 4 for a contract not in writing, and in Delaware 3 years as a rule, with the option of setting up to 20 years in a written contract of at least 100,000 dollars. There are exceptions, for example in the sale of goods.
Is arbitration in the US cheaper than court?
Not always. In arbitration you also pay the arbitrators and the institution, but the scope of discovery is usually narrower, and there is no ordinary appeal, so the proceedings are shorter. Under the ICDR 2021 rules, cases in which no claim exceeds 500,000 dollars proceed by default under an expedited procedure.
How long do you have to confirm a foreign arbitral award in the US?
Under section 207 of the Federal Arbitration Act, an application to confirm an award covered by the New York Convention is filed within three years of the award. The court confirms the award unless one of the grounds for refusal in the Convention exists.
Who pays the lawyers' fees in a US lawsuit?
Under the American rule, each party generally pays its own attorneys' fees, even if it wins. A specific statute or a contract clause can provide that the loser pays. So it is worth considering such a clause already at the contract drafting stage.
Do documents in Hebrew need to be translated for a lawsuit in the US?
Yes. Documents filed with a US court in a foreign language are filed in English translation, and in discovery large volumes of correspondence in Hebrew may need to be translated. This is a cost worth estimating in advance.
Is mediation mandatory before suing in the US?
There is no general duty to mediate before filing a commercial claim, but the courts refer many cases to mediation. In Florida, for example, under section 44.102 of the state statutes, the court must refer a money claim to mediation if a party requests it, subject to exceptions. Many commercial contracts also set a tiered mechanism of negotiation, mediation and only then binding proceedings.
Read next · 10 min readForming a US Company as an Israeli in 2026: LLC or Corporation (C-Corp), Which State, the Operating Agreement, Bank and ReportingHow to form a US company from Israel in 2026: the difference between an LLC and a corporation (C-Corp), Delaware or your operating state, what the operating agreement must cover, tax ID, bank and reporting.Read the guideSources
- 28 U.S. Code § 1332 - Diversity of citizenship; amount in controversy (Cornell LII)
- 9 U.S. Code § 207 - Award of arbitrators; confirmation (Cornell LII)
- Federal Rules of Civil Procedure, Rule 26 (Cornell LII)
- New York Convention: Contracting States
- HCCH: Status table, Service Convention (1965)
- New York CPLR § 5304 - Grounds for non-recognition
- New York CPLR § 213 - Six-year limitation
- Florida Statutes §§ 55.604-55.605 - Uniform Out-of-Country Foreign Money-Judgment Recognition Act
- Florida Statutes § 95.11 - Limitations other than for real property
- Florida Statutes § 44.102 - Court-ordered mediation
- Delaware Code Title 10, Chapter 48 - Uniform Foreign-Country Money Judgments Recognition Act; Chapter 81 § 8106
- Delaware Superior Court: Complex Commercial Litigation Division
