In the United States, there are two parallel court systems: the federal court system and the state court system.^[1] Each of those court systems entertains both criminal and civil cases and both are important venues for the trying of commercial suits. Both systems have the same rough structure: a trial court, a court of appeals, and a highest court.

A federal court is only an appropriate forum for a commercial claim when the court has both personal jurisdiction and subject-matter jurisdiction over the matter.^[2] Personal jurisdiction primarily depends upon whether the defendant has at least minimal contacts with this judicial forum.^[3] In commercial cases, subject matter jurisdiction is often based on diversity of citizenship. To establish subject matter jurisdiction based on diversity of citizenship:

• all plaintiffs must be of different citizenship than all defendants (i.e., citizens of different U.S. states or non-U.S. citizens); and 
• the amount in controversy must be more than USD 75,000.^[4]

In the federal court system, the United States is divided into 11 numbered judicial circuits, each of which encompasses several states or territories. There is an additional judicial circuit that covers only Washington, D.C., and another called the Federal Circuit, which hears appeals on certain specialized matters, including patent law and disputes involving government contracts. 

The trial courts in the federal court system are called federal district courts. Each of the 11 numbered federal circuits is divided into several judicial districts arranged by state or territory. Depending on their respective sizes, some states have a few districts within them while some have just one district. For example, New York’s federal court system, which is part of the Second Circuit, is divided into four districts: the Northern, Southern, Western, and Eastern Districts of New York. 

In addition to the district court judges, federal district courts typically have a number of magistrate judges who assist the district judges in handling certain matters. Each district handles magistrate judge assignments in its own way, but roles filled by magistrate judges in commercial litigation often include management of discovery and adjudication of discovery disputes, mediations, and entry of default judgments.

Civil proceedings in federal district courts are governed by the Federal Rules of Civil Procedure (F.R.C.P.). Their purpose is “to secure the just, speedy, and inexpensive determination of every action and proceeding.”^[5] Additionally, each federal judicial district also has its own local rules, which are available online at the court’s website and tend to roughly parallel the provisions of the F.R.C.P. 

^{[1] Each state within the United States has its own court system containing trial courts, courts of appeals, and a highest court. State courts apply the law of that state, but also must not violate the United States Constitution. Each state court follows its own procedural rules, which are part of that state’s statutory code. This chapter focuses on the federal court system.}

^{[2] Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 577 (1999).}

^{[3] Int'l Shoe Co. v. State of Wash., Off. of Unemployment Comp. & Placement, 326 U.S. 310, 316 (1945).}

^{[4] 28 U.S.C. § 1332(a).}

^{[5] F.R.C.P. 1.} 

In federal courts, a case is commenced when the plaintiff files a complaint.^[6] A complaint must comport with the F.R.C.P. requirements regarding form and content. Plaintiffs must also be sure to comply with any local filing rules, which can be found in the local rules promulgated by that district court. The F.R.C.P. and local rules encompass not just the form and method of filing and serving complaints but also rules governing when and on what grounds certain types of claims can be filed. Furthermore, plaintiffs must be sure to file suit within any applicable statutes of limitation.

A complaint must include:

• a statement of the claim;
• the relief sought; and 
• the grounds for subject matter jurisdiction.^[7] 

It also must identify the court and all the parties.^[8] The complaint must be signed by at least one attorney of record in the attorney’s name — or by a party personally if the party is unrepresented. The paper must state the signer’s address, email address, and telephone number.^[9] Signing a complaint certifies the belief that the filing is done in good faith and after reasonable inquiry and that its claims are warranted by law and supported by the relevant factual evidence.^[10] If the court determines that F.R.C.P. 11(b) was violated, “the court may impose an appropriate sanction on any attorney, law firm, or party that violated the rule or is responsible for the violation.”^[11] This could be triggered by a motion for sanctions submitted by the opposing party or on the court’s own initiative. 

In addition to the complaint, nongovernmental corporate plaintiffs must file a statement disclosing any parent corporation holding at least 10% of its stock.^[12]

Plaintiffs are obligated to serve defendants with a copy of the complaint. The standard time period for service under the F.R.C.P. is within 90 days of filing the complaint.^[13] The rules for service of agents, corporations, and substituted service at a defendant’s residence are determined by the F.R.C.P., the local federal court rules, and state law. Defendants have the option to waive service if waiver is requested by the plaintiff. 

^{[6] F.R.C.P. 3.}

^{[7] F.R.C.P. 7-8.}

^{[8] F.R.C.P. 10.}

^{[9] F.R.C.P. 11(a).}

^{[10] F.R.C.P. 11(b).}

^{[11] F.R.C.P. 11(c).}

^{[12] F.R.C.P. 7.1.}

^{[13] F.R.C.P. 4.}

Alternative Dispute Resolution methods include arbitration, mediation, and informal negotiation. 

Arbitration is generally binding and governed by contractual agreements between the parties and subject to the Federal Arbitration Act. There are several governing rules of arbitration that parties can choose to apply, generally specified in a contract or later chosen by agreement. The three most common sets of rules are promulgated by the American Arbitration Association (AAA), the Judicial Arbitration and Mediation Services (JAMS), and the International Association for Conflict Prevention and Resolution (CPR). A number of considerations, including the type of arbitrator, fees, and whether dispositive motions are sought, can impact which rules are best suited for a given dispute. 

Mediation can be by agreement or court ordered. In mediations, a third-party mediator will work with the parties in joint and individual sessions to facilitate the parties reaching a settlement. If the parties do not agree to a resolution during the mediation session, they are not forced into a judgment. However, if the parties reach a resolution, it has binding effect. 

Finally, parties often informally engage in settlement discussions that can occur by exchanging demand and offer letters or through oral discussions. 

Predicting how long it will take a given case to reach trial can be very difficult as it varies widely due to numerous factors, including the complexity of the case, the degree of cooperation and animosity between the parties, the judge’s general timing tendencies, and the judge’s current caseload. Further, different types of actions have different trends for the length of time it takes to reach trial.^[14] 

Across federal district courts generally, the time it takes a case to reach trial has been rising over the last couple of years after a few years of remaining fairly steady. In 2022, the median time from filing to trial in civil cases across federal district courts was 34.6 months. In 2021, the figure was 31.8 months. In the four previous years, from 2017 to 2020, it was steadily between 27 and 27.7 months. However, numbers vary widely across different districts. For example, in the Southern District of New York, the median time in 2022 was 49.7 months, up from 36.7 months in 2021.^[15] 

^{[14] The United States federal constitutional right to a speedy trial does not apply to civil cases.}

^{[15] www.uscourts.gov.}

F.R.C.P. 26, titled “Duty to Disclose; General Provisions Governing Discovery,” covers the overall framework for the exchange of relevant information between parties to a lawsuit. Under F.R.C.P. 26, there are certain mandatory disclosures that must be made by parties fairly early in the case. Beyond those, information is exchanged in response to discovery requests. 

Discovery in the United States is fairly broad. The scope is described in F.R.C.P. 26 (b)(1) as follows: “Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering the importance of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant information, the parties’ resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit. Information within this scope of discovery need not be admissible in evidence to be discoverable.” Accordingly, parties are required to disclose unhelpful documents if they are relevant to the claim or defense at issue in the case and requested by the opposing party.

Mandatory disclosures

Under F.R.C.P. 26(a), there are certain mandatory initial disclosures that must be made without waiting for a specific discovery request from the opposing party. The exchange of these disclosures typically occurs in the first several months after the complaint is filed. Subject to certain exceptions, a party is obligated to provide the other parties with: 

• the names and contact information of all individuals likely to have discoverable information; 
• a copy of all documents that it may use to support its claims; 
• any insurance agreement under which an insurance company may be liable to satisfy or indemnify a judgment; and 
• the basis for its computation of the damages it is claiming.

Discovery requests

In addition to mandatory disclosures, parties can submit discovery requests. The standard categories of discovery requests are interrogatories, requests for production, physical and mental examinations, depositions, and requests for admission, each of which is covered by a different rule of the F.R.C.P. As noted above, parties may obtain discovery for any nonprivileged matter that is relevant to their claim or defense. However, it is within the court’s discretion to limit the extent of discovery if it determines that a discovery request is unreasonable because, for example, the information can be obtained from a different source in a less expensive way.^[16] Also, a party from whom discovery is sought may move for a protective order limiting the scope of discovery.^[17]

Interrogatories

Interrogatories are written questions sent by one party to another during discovery. They may relate to any matter that may be inquired into under F.R.C.P. 26(b) and can ask about facts or opinions.^[18] Typically, parties are limited to serving a maximum of 25 interrogatories on another party, though the court has the discretion to enlarge that figure.^[19] Each interrogatory must, to the extent it is not objected to, be answered separately and fully in writing under oath. If a party wishes to object to an interrogatory, the grounds for objecting to the interrogatory must be stated with specificity. Any ground not stated in a timely objection is waived unless the court, for good cause, excuses the failure.^[20]Generally, the responding party must respond within 30 days of the interrogatory being served, though that timing can be adjusted by court order or by agreement by the parties.^[21]

Requests for production

During discovery, a party may serve requests to inspect, copy, test, survey, or sample items in another party’s possession. This includes documents, electronically stored information, tangible items, land, and buildings.^[22] The request must describe with reasonable particularity each item or category of items to be inspected; must specify a reasonable time, place, and manner for the inspection and for performing the related acts; and may specify the form or forms in which electronically stored information is to be produced.^[23]The party that is served must respond to the request in writing within 30 days, unless the court sets a different time or the parties have stipulated to a different time.^[24] For each item or category, the response must either state that inspection and related activities will be permitted as requested or state with specificity the grounds for objecting to the request, including the reasons. The responding party may state that it will produce copies of documents or of electronically stored information instead of permitting inspection. The production must then be completed no later than the time for inspection specified in the request or another reasonable time specified in the response.^[25] An objection must state whether any responsive materials are being withheld on the basis of that objection. An objection to part of a request must specify the part objected to and permit inspection of the rest.^[26]

Physical and mental examinations

If a party’s mental or physical condition “is in controversy” and the opposing party wishes for the party to be examined, they may move the court for an order that the person in question be mentally or physically examined. Such examination must be conducted by “a suitably licensed or certified examiner.”^[27]

Depositions 

Depositions involve taking oral testimony from a deponent under oath.^[28] Oral depositions may be conducted remotely or in person and generally must be done before an “officer,” i.e., someone authorized by law or by the court to administer oaths and take testimony.^[29]

If a party wishes to depose someone orally, they must give reasonable written notice to every other party, stating the time and place of the deposition as well as the name and address of the person who will be deposed.^[30] The notice should include the method by which the deposition will be recorded.^[31] Audio, video, and stenographic methods of recording are all permitted.^[32] Generally, a party does not need the court’s leave to take a deposition, though the court’s permission might be required in certain circumstances—for example, if a party has already taken 10 depositions in the case, if the witness has already been deposed in the case, or if the deponent is currently in prison.^[33] The court can subpoena a reluctant deponent, forcing them to attend the deposition.^[34] 

In its notice or subpoena, a party may name as the deponent a public or private corporation, a partnership, an association, a governmental agency, or other entity and must describe with reasonable particularity the matters for examination. The named organization must designate one or more officers, directors, or managing agents, or designate other persons who consent to testify on its behalf and may set out the matters on which each person designated will testify.^[35] 

Depositions typically are limited in duration to a maximum of one seven-hour day.^[36] During depositions, a party’s objections are noted on the record, but the examination proceeds and the testimony is taken subject to any objection. An objection must be stated concisely in a nonargumentative and nonsuggestive manner.^[37] A person may instruct a deponent not to answer only when necessary to preserve a privilege, to enforce a limitation ordered by the court, or to present a motion under F.R.C.P. 30(d)(3), which provides that at any time during a deposition, the deponent or a party may move to terminate or limit it on the ground that it is being conducted in bad faith or in a manner that unreasonably annoys, embarrasses, or oppresses the deponent or party. 

Requests for admission

Another form of discovery is the seeking of admissions. Under F.R.C.P. 36, a party may serve a written request on another party asking them to admit the truth of any matters within the scope of F.R.C.P. 26(b)(1) relating to facts, the application of law to fact, or opinions about either or the genuineness of any described documents.^[38] A matter is admitted unless, within 30 days after being served, the party to whom the request is directed serves on the requesting party a written answer or objection addressed to the matter and signed by the party or its attorney. A shorter or longer time for responding may be stipulated to by the parties or ordered by the court.^[39] If a matter is not admitted, the answer must specifically deny it or state in detail why the answering party cannot truthfully admit or deny it. A denial must fairly respond to the substance of the matter; and when good faith requires that a party qualify an answer or deny only a part of a matter, the answer must specify the part admitted and qualify or deny the rest. The answering party may assert lack of knowledge or information as a reason for failing to admit or deny only if the party states that it has made reasonable inquiry and that the information it knows or can readily obtain is insufficient to enable it to admit or deny.^[40] If the responding party wishes to object, the grounds for objecting to a request must be stated. A party must not object solely on the ground that the request presents a genuine issue for trial.^[41]

^{[16] F.R.C.P. 26(b).}

^{[17] F.R.C.P. 26(c).}

^{[18] F.R.C.P. 33(a).}

^[19] Id.

^{[20] F.R.C.P. 33(b).}

^[21] Id.

^{[22] F.R.C.P. 34.}

^{[23] F.R.C.P. 34(b)(1).}

^{[24] F.R.C.P. 34(b)(2)(A).}

^{[25] F.R.C.P. 34(b)(2)(B).}

^{[26] F.R.C.P. 34(b)(2)(C).}

^{[27] F.R.C.P. 35.}

^{[28] F.R.C.P. 30.}

^{[29] F.R.C.P. 28, 30(b).}

^{[30] F.R.C.P. 30(b).}

^[31] Id.

^[32] Id.

^{[33] F.R.C.P. 30(a).}

^{[34] F.R.C.P. 30(a), 45.}

^{[35] F.R.C.P. 30(b)(6).}

^{[36] F.R.C.P. 30(d).}

^{[37] F.R.C.P. 30(c).}

^{[38] F.R.C.P. 36(a)(1).}

^{[39] F.R.C.P. 36(a)(3).} 

^{[40] F.R.C.P. 36(a)(4).} 

^{[41] F.R.C.P. 36(a)(5).}

A witness can be compelled to attend trial and testify if subpoenaed. A witness can only be subpoenaed to testify if the trial is within 100 miles of where the witness resides, is employed, or regularly conducts business, or is within the same state and the witness would not incur significant expense travelling to the court.^[42] Typically, after the party calling the witness has finished questioning the witness, the adverse party is permitted to subject the witness to cross-examination.

If a witness refuses to attend the trial and is not within the geographic range to be subpoenaed, but the witness previously gave deposition testimony, the deposition testimony likely can be used at trial.^[43] 

^{[42] F.R.C.P. 45(c).}

^{[43] F.R.C.P. 32.}

F.R.C.P. 54 provides that costs, other than attorneys’ fees, should ordinarily be awarded to prevailing parties. A district court’s decision to award costs is reviewed for abuse of discretion, which occurs only when a district court makes an error of law. Attorneys’ fees are not recoverable as a matter of course. However, they may be awarded in exceptional cases upon a motion specifying the legal grounds entitling the movant to such fees, such as if the opposing party acted in bad faith or brought a frivolous lawsuit. Further, around 200 federal statutes permit the award of attorneys’ fees for claims brought pursuant to such statutes. These include consumer protection, environmental protection, civil rights, and copyright and patent infringement statutes.

Interim remedies include temporary restraining orders (TROs) and preliminary injunctions. These are governed by F.R.C.P. 65. 

TROs grant emergency injunctive relief and may be issued for up to 14 days, unless extended for another 14 days.^[44] Parties seeking a TRO must demonstrate that they will suffer immediate irreparable harm and that a TRO is necessary.^[45] TROs may be granted with or without notice to the other party depending on the circumstances of the case.^[46] They are intended to only last until the court holds a hearing to determine whether to grant a preliminary injunction. Decisions on TROs ordinarily are not appealable.^[47]

Preliminary injunctions are injunctive relief to “preserve the status quo” before the entry of a final judgment. The standard for obtaining a preliminary injunction is higher than a TRO; in addition to showing irreparable harm, a party must also show a likelihood of prevailing on the merits at trial and that the balance of the equities favors granting a preliminary injunction.^[48] 

Both a TRO and a preliminary injunction require the requesting party to pay a security in an amount that the court deems proper to pay the costs and damages sustained by a party found to be wrongfully enjoined or restrained.^[49] 

^{[44] F.R.C.P. 65(b)(2).}

^{[45] F.R.C.P. 65(b)(1).}

^{[46] Id.}

^{[47] Tooele County v. United States, 820 F.3d 1183, 1186 (10th Cir. 2016).}

^{[48] Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 20 (2008). These, unlike decisions on TROs, are appealable. Id.}

^{[49] F.R.C.P. 65(c).}

Arbitration is generally a product of contracts between the parties and is private and separate from the courts. If parties agree to arbitration, a local court will dismiss any action filed in court and order the parties into private arbitration. There is no single arbitration law that governs all arbitrations. Instead, the parties choose the rules to apply by agreement and usually specify within an arbitration clause in a contract. The three most common arbitration rules are AAA, JAMS and CPR, as noted above. AAA arbitration rules have procedures for cases brought under the UNCITRAL Arbitration Rules, while JAMS has a set of International Arbitration Rules modelled after both the UNCITRAL and UNIDROIT principles. CPR also has international arbitration options available that are governed by the UNCITRAL rules. 

Depending on which rules of arbitration govern, interim relief may be available. For example, AAA Commercial Rule 37 permits arbitrators to grant any interim measures necessary, including injunctive relief, interim awards, and security for the costs of such measures. AAA Commercial Rule 38 permits parties to request emergency relief and provides that an emergency arbitrator will be appointed within one day of the notice requesting emergency relief. JAMS Rule 24(e) also permits an arbitrator to grant interim relief, including injunctive relief and measures for the protection or conservation of property, and may require security for the costs of such measures. 

Many arbitration clauses specifically prohibit a party from seeking injunctive relief in arbitration, in which instances it may be necessary to seek injunctive relief in court even where there is an arbitration clause in an agreement. However, JAMS Rule 24 specifically provides that a petition for interim relief in an arbitration will not be incompatible with an agreement to arbitrate or constitute a waiver of an agreement to arbitrate. 

Pursuant to the Federal Arbitration Act, an award of arbitration is generally not appealable on the merits unless it is irrational or the arbitrator acted in manifest disregard for the law. This is a very high standard to meet, and a decision will be upheld “as long as the arbitrator is even arguably construing or applying the [law] and acting within the scope of his authority.”^[50] Even where an arbitrator “committed serious error,” this alone “does not suffice to overturn” an arbitration award.^[51]

However, a court may vacate an award where there is a showing that the award was procured by corruption, fraud, or undue means; where there was evident partiality or corruption in the arbitrators; where the arbitrators were guilty of misconduct in refusing to postpone the hearing upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy, or of any other misbehavior which may prejudice the rights of a party; or where arbitrators exceeded their powers or so imperfectly executed them that a mutual, final, and definite award was not made.^[52] 

^{[50] Choice Hotels Int’l, Inc. v. SN Property Mgmt., LLC, 519 F,3d 200, 207 (4th Cir. 2008).}

^[51] Id.

^{[52] 9 U.S.C. § 10.}

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) is part of the Federal Arbitration Act. United States courts will recognize and enforce awards pursuant to the New York Convention. The United States has also adopted UNCITRAL’s model law and is part of the Inter-American Convention on International Commercial Arbitration (the “Panama Convention”), the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID or “Washington Convention”), and a number of Bilateral Investment Treaties between the United States and other countries. 

Most commercial judgments can be enforced in U.S. courts. This includes financial awards, default judgments, and injunctions. For the most part, this is true even if the judgments were made in foreign courts.^[53] One significant exception is that U.S. courts generally will not enforce a foreign court’s judgment if it determines that judgment was “penal” in nature.^[54] 

^{[53]Restatement (Third) of Foreign Relations Law § 481 (1987).}

^{[54] Id. § 483.}

Recognition and enforcement of non-U.S. court judgments in U.S. courts is not governed by any convention or treaty. Instead, the question of whether to recognize and enforce a non-U.S. judgment is left to the U.S. court where the party tries to enforce the foreign judgment.

An individual who wishes to enforce a foreign judgment in the United States must file suit before a U.S. court (either federal or state), and the court then will determine whether or not it should recognize and enforce that judgment. The enforcement of foreign judgments is governed on a state-by-state basis by the laws of the individual states. Many states have adopted one of a series of model acts that attempt to standardize the U.S. recognition of foreign judgments. These include the 1962 Uniform Foreign Money Judgments Recognition Act and the 2005 Uniform Foreign-Country Money Judgments Recognition Act. Under those model acts, if a judgment was final and enforceable in the foreign country, was issued by a fair tribunal, and meets the requirements of local law, the judgment will be enforced. 

Regarding arbitral awards made in foreign countries, the United States is a party to a few international arbitration agreements. These include the New York Convention and the Panama Convention. This generally means that recognizing and enforcing foreign arbitration awards is a more straightforward process than the one used for enforcing foreign judgments. 

If a money judgment is not paid voluntarily, it is enforced by a writ of execution, which is an order issued by a court directing a United States Marshal to enforce and satisfy a judgment for payment, pursuant to F.R.C.P. 69. Procedures on execution are governed by the procedure of the state where the court is located. 

These procedures can include the seizure of property of the debtor for public auction. Additionally, a judgment holder may file a lien on the property of the debtor, or an encumbrance, which requires a court order to attach the judgment to the property. Another method is garnishment of wages, where an employer gives a portion of the wages to the court, which is then released to the creditor. This requires a court order of garnishment. 

Even in federal courts, the execution of a judgment is governed by the state law of the state where that court sits.^[55] If a party fails to comply with court orders regarding payment or discovery in aid of execution, the party seeking to enforce the judgment may be able to move for sanctions, which could involve additional financial penalties, or contempt, which could lead to arrest and imprisonment. Other potentially available remedies include seizure or replevin of assets by the court, attachment of a lien on the judgment debtor’s property in favor of the creditor, and wage garnishment, which is when the court orders a person’s employer to withhold their salary so the money can be used for payment of their debts.^[56] Sometimes, attachment of a lien is automatic with the rendering of a judgment.^[57] Depending on the law of the state in question, the creditor may be able to get the state to suspend or revoke the debtor’s business license or permit. Asset freezing is unlikely to be granted as a remedy.^[58] 

^{[55] F.R.C.P. 64, 69.}

^{[56] F.R.C.P. 64.}

^{[57] 28 U.S.C § 1962.}

^{[58] Grupo Mexicano de Desarrollo S.A. v. All. Bond Fund, Inc., 527 U.S. 308, 327-32 (1999).}