New York Convention

The 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards is without doubt the most important international instrument on Arbitrational Law.

There will be other International Instruments’ that many people will have at least heard of if not be familiar in some ways with. These include:

• The Geneva Protocol [1923]

• The Geneva Convention [1927]

• The European Convention [1961]

• The Washington Convention [1965]

• The UNCITRAL Model Law

• The UNCITRAL Arbitration Rules

Enforcement of International Arbitration Decisions

Grounds on which Arbitrations decisions can be challenged are contained in Article V of the New York Convention and this provided an exhaustive list of grounds. However these are narrowly construed to uphold the pro-enforcement bias of the Convention.

The defences under Article V are as follows:

1. one party to the arbitration agreement was, under the applicable law, under some incapacity;

2. the arbitration agreement was not valid under its governing law

3. one party was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings, or was otherwise unable to present its case

4. the award deals with an issue not contemplated by or not falling within the terms of the submission to arbitration, or contains matters beyond the scope of the arbitration

5. the composition of the arbitral tribunal was not in accordance with the agreement of the parties or, failing such agreement, with the law of the place where the hearing took place (the “lex loci arbitri”)

6. the award has not yet become binding upon the parties, or has been set aside or suspended by a competent authority, either in the country where the arbitration took place, or pursuant to the law of the arbitration agreement

7. the subject matter of the award was not capable of resolution by arbitration 8. enforcement would be contrary to “public policy”.

There are also three types of reservations that countries may apply, these being:

1. Conventional Reservation – some countries only enforce arbitration awards issued in a Convention member state

2. Commercial Reservation – some countries only enforce arbitration awards that are related to commercial transactions

3. Reciprocity reservation – some countries choose not to limit the Convention to only awards from other contracting states, but may however limit application to awards from non-contracting states such that they will only apply it to the extent to which such a non-contracting state grants reciprocal treatment.

States may make any or all of the above reservations. Because there are two similar issues conflated under the term “reciprocity”, it is important to determine which such reservation (or both) an enforcing state has made

In the majority of instances It is easier to enforce Arbitration awards in a foreign country than a judgement by a rightfully constituted court. Under the Convention, an award issued in a contracting state can generally be freely enforced in any other contracting state, only subject to certain, limited defences as contained in Article V.

Only foreign arbitration awards are enforced pursuant to the New York Convention. An arbitral decision is deemed to be foreign where the award was made in a state other than the state of recognition or where foreign procedural law was used.

There are currently 156 signatories to the New York Convention, which is virtually every significant country with a robust commercial dimension is party to the Convention and very few countries have a framework for cross-border enforcement of judgments by their courts.

Typically monetary only judgements by rightfully constituted court are enforceable in a cross-border context. In an international enforcement of an Arbitration it is possible, although unusual, to obtain an enforceable order for specific performance in an arbitration proceeding under the New York Convention.

As virtually every significant country with a robust commercial dimension is party to the Convention it is more expedient to list those countries which are NOT signatories.

• Angola

• Belize

• Cape Verde

• Chad

• Republic of the Congo

• Equatorial Guinea

• Eritrea

• Ethiopia

• Gambia

• Grenada

• Guinea-Bissau

• Iraq

• Kiribati

• North Korea

• Libya

• Malawi

• Maldives

• Federated States of Micronesia

• Namibia

• Nauru

• Niue

• Palau

• Papua New Guinea

• Saint Kitts and Nevis

• Saint Lucia

• Samoa

• Seychelles

• Sierra Leone

• Solomon Islands

• Somalia

• South Sudan

• Sudan

• Suriname

• Swaziland

• Taiwan

• Timor-Leste

• Togo

• Tonga

• Turkmenistan

• Tuvalu

• Vanuatu

• Yemen

It should also be noted that Taiwan has not been permitted to adopt the Convention, although it generally enforces foreign arbitration judgments.

Next time we will look at the format, composition of and outcome of Arbitration.

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