Recognition and Enforcement of Foreign Arbitral Awards in Theory and in Practice

By Dr. Jur. Ihab Amro (Professor of Private Law and a practicing lawyer and an arbitrator; Ph.D. Athens, Greece).

The book concludes with the following findings:

1. The New York Convention of 1958 (hereafter “the NYC”) is an improvement on the Geneva Treaties (Geneva Protocol of 1923 and Geneva Convention of 1927). The NYC allows recognition and enforcement of an arbitral award even if such award has been made in a Non-Contracting State.
2. Some provisions of the NYC do not meet the recent trends of international commerce such as the writing requirement and the setting aside ground for refusing recognition and enforcement.
3. The text of the NYC is ambiguous, for example, the definition of the arbitral award “not considered as domestic” in the enforcing country and the absence of a reference to the kinds of award (partial, interim, provisional and final).
4. In most common law and civil law countries, the NYC prevails over national arbitration laws including the Federal Arbitration Act in the United States (hereafter “the FAA”), the 1996 Arbitration Act in England, the German Arbitration Law of 1998 contained in the German Code of Civil Procedure (hereafter “ZPO”) and the Greek Law on International Commercial Arbitration of 1999.
5. The enforcement of an arbitral award in common law countries requires that judgment be entered upon the award, and that judgment, not the award, will be enforced. In civil law countries, an arbitral award is enforced by a declaration of enforceability “exequatur”.
6. The FAA does not require the arbitration agreement to be signed by the parties to arbitration, while the NYC provides that the parties must sign the arbitration agreement as a condition for its validity.
7. As opposed to other NYC States, the setting aside of an arbitral award in the country of origin is not a ground for refusing recognition and enforcement under the French Code of Civil Procedure as amended in 2011. Based on the more-favourable-right provision provided for in Article VII of the NYC, French courts have decided to enforce foreign arbitral awards, despite the awards’ annulment in the countries of origin.
8. Unlike in the NYC, the German Arbitration Law does not require the party seeking recognition and enforcement to provide a copy of the arbitration agreement. That is, the Law deals in a liberal manner with formality issues relating to recognition and enforcement of an arbitral award under Section 1064 of the ZPO.
9. Courts in both common law and civil law countries have applied the writing requirement contained in Article II(2) of the NYC strictly. However, courts in the United States and in Germany have applied the writing requirement in some cases liberally. Also, courts in the United States and in Germany have so far dealt with the formalities provided for in Article IV of the NYC liberally.
10. The Supreme Court of Greece has decided that an arbitration agreement contained in an exchange of letters or telegrams also encompasses any reference in a bill of lading to the arbitration clause in a charter party agreement.

 

In light of the above findings and in order to face the new developments of international commercial arbitration, there is a need for the improvement of the NYC of 1958.

The following recommendations should be considered for the efficacy of recognition and enforcement of arbitration agreements and arbitral awards.

In particular, a revised NYC:

 

1. Must encompass provisions that deal with the writing requirement broadly, considering the new developments in electronic contracts. Apart from that, a revised NYC could provide that an arbitral tribunal, not a court, has a primary authority to decide on cases concerning invalidity of an arbitration agreement.
2. Must deal in a liberal manner with the formalities required for the recognition and enforcement of a foreign arbitral award. It must also specify the applicable law on these formalities.
3. May refer to specialized court “judges” that can decide the disputes relating to the recognition and enforcement properly.
4. Could establish an international court of commercial arbitration (an appellate body) to which parties can resort and submit disputes arising out of the erroneous judicial application of the NYC in national courts. Accession to such International Court of Commercial Arbitration might be optional for the NYC States. A decision made by this court is recognized and enforced in any of the court’s Contracting States in the same manner and to the same effect of recognition and enforcement of foreign arbitral awards.
5. Must include provisions pertaining to the enforcement of online arbitration awards, e-awards, as a part of online dispute resolution.
6. May provide either that the setting aside of an arbitral award in the country of origin obliges the enforcing country to refuse to recognize and enforce an award or alternatively, a revised NYC may provide that setting aside of an award in the country of origin does not form an obstacle for recognizing and enforcing an award.
7. Must define the public policy ground as the following: a violation of the international public policy whether substantive or procedural in the country in which recognition and enforcement is sought.
8. Must clarify the situations in which a lack of due process constitutes a violation of international public policy.
9. Should contain some provisions that concern evolving issues in the field of international commercial arbitration, including, but not only, alter ego theory, multi-tier (step) dispute resolution clauses, multi-party arbitration and multi-party contracts, facing of guerrilla tactics in international arbitration, the principle of Iura novit curia, the new trends of case and evidence management and the role of an arbitrator when acting as a settlement facilitator.
10. Must deal with the taking of evidence either documentary or oral, and the judicial assistance in regards to the taking of evidence in international arbitration.

 

*(You can find a more detailed analysis of these issues in Ihab Amro’s book, Cambridge Scholars Publishing, UK, 2013, at: http://www.cambridgescholars.com/recognition-and-enforcement-of-foreign-arbitral-awards-in-theory-and-in-practice-13).