Abstract: This paper addresses the definition of internationalization as it encompasses both direct and indirect internationalization. Before the implementation of internationalization, the traditional view claimed that the state contracts should be governed by the law of the country in which the contract is performed. However, international law identifies the obligation of the host state to not to deny any foreigner of justice by identifying concepts such as denial of justice. Eventually, the aim of scholars and arbitrators favored developed countries was to withdraw state contracts from the domestic legal system and place them in the international sphere by applying some external law to regulate the state contract rather than the host state s law. They used concepts like "direct internationalization" and "indirect internationalization".