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The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, known as the New York Convention (NYC), was adopted in New York and entered into force on 7 June 1958. The NYC, ratified by 172 Contracting States as of January 2023, is the key legal instruments governing the recognition and enforcement of foreign awards and the recognition by courts of the jurisdiction of arbitral tribunals over national courts in disputes arising under valid arbitration agreements.
Under the NYC, recognition and enforcement of an award may be refused on a limited number of grounds. Similarly, a party may seek annulment of an award only by invoking one of the grounds provided in an exhaustive list under Article V of the NYC.
The NYC aims to standardise, under Article II, the criteria for assessing the validity of arbitration agreements and referral by courts to international arbitration when seised with a request to hear a dispute involving an arbitration agreement. The arbitration agreement must be in writing and apply to all or specific differences that arise between the parties’ contractual or non-contractual relationship, as long as the subject matter is arbitrable under the applicable law. When seised to hear a dispute arising under such an agreement, the national court must decline jurisdiction in favour of arbitration unless the said agreement is null and void, inoperative or incapable of being performed.
The NYC also simplifies the procedure for obtaining recognition and enforcement of awards which enter its scope of application (NYC awards). A party seeking recognition and enforcement must submit the duly authenticated original award (or a certified copy thereof) and the original arbitration agreement (or certified copy thereof). If the documents are in a language other than the official language of the country where an application is filed, certified translations are required. After reviewing these formalities, the competent court will grant recognition and enforcement, unless any of the grounds of refusal listed in Article V apply. Under the NYC, the court has no power to review the merits of the arbitral award.
A party may seek to resist enforcement and recognition of an award only on the following enumerated grounds:
Under Article V.2(a)-(b), the court may refuse recognition and enforcement if it finds that, under its laws, the subject matter of the dispute is non-arbitrable, or recognition and enforcement would breach the country’s public policy, for example in the presence of allegations of fraud or corruption.
In some jurisdictions, such as France, the rules on recognition and enforcement are more favourable than those in the NYC, as the same formalities and grounds for annulment and refusal of recognition and enforcement would apply equally to NYC awards and to awards rendered in jurisdictions that have not ratified the NYC.
The International Centre for the Settlement of Investment Disputes (ICSID) was established as a branch of the World Bank in Washington under the ICSID Convention (or Washington Convention) which was signed on 18 March 1965 (in force on 14 October 1966). As of January 2023, the Washington Convention has 165 Signatory and Contracting States.
The ICSID was created to facilitate and promote foreign investments between its Member States. Its dispute resolution facility offers investors from Member States the possibility to resolve disputes relating to their investments by initiating international arbitration against the host state of their investment. Recourse to ICSID arbitration must be provided for in the applicable bilateral investment treaties entered into between the investor’s home state and the host state.
In terms of recognition and enforcement of awards rendered in arbitrations before ICSID, by adhering to the Washington Convention, Member States agree to recognise an ICSID award as a judgment rendered by its national courts and to enforce it accordingly (Articles 53-54). The Washington Convention contains an autonomous mechanism allowing parties to seek revision (Article 51) or annulment of ICSID awards on specific grounds provided for in Article 52(1). If an award is annulled, the parties may file a new request for arbitration at ICSID in respect of the same dispute. The case would be heard by a newly constituted arbitral tribunal.
When an arbitral award rendered in investment arbitration proceedings is not rendered by an arbitral tribunal established under the ICSID Convention, investors may still benefit from the enforcement regime provided for by the NYC.
The UNCITRAL Model Law on International Commercial Arbitration (the Model Law) was adopted in 1985 and amended in 2006. The objective of the Model Law is to assist states in reforming and modernising their arbitration legislations and to work towards a harmonised legal framework for international arbitration. The Model Law provides a set of procedural rules drafted in simple and clear language governing all stages of arbitration, including actions available before national courts in support of arbitration, that may serve as a basis for a modernised arbitration law.
Under the Model Law, parties may seek the assistance of the national courts in various aspects of the arbitral process. In terms of interim relief, the courts may assist in the enforcement of interim measures ordered by an arbitral tribunal (Articles 17H-17I) and in the issuance of court-ordered interim measures (Article 17J). The parties may also seek the support of the courts in the taking of evidence (Article 27).
Once the award has been rendered, a party against whom an award is rendered may apply to set aside the award at the seat of arbitration on the following grounds:
Under Articles 34(2)(b), the competent court may refuse recognition and enforcement if it finds that, under its laws, the subject matter of the dispute is non-arbitrable, or recognition and enforcement would breach the country’s public policy.
Article 36 lists the grounds on which a court may refuse recognition or enforcement of foreign awards (ie, awards issued in other jurisdictions). In addition to the grounds listed in Article 34(2)(a), a party may also challenge an award that was suspended or set aside by a court at the seat of arbitration.
To date, nearly 118 jurisdictions worldwide have adopted the Model Law or have arbitration laws based on the Model Law. These include Australia, Belgium, Canada, Hong Kong, Germany, Greece, Japan, Poland, Singapore, and the United Kingdom.
The role of the courts in facilitating arbitral proceedings varies from jurisdiction to jurisdiction. Most jurisdictions have implemented or adopted similar statutory provisions to the Model Law. Under the Model Law, the courts play a role in:
Whether the aforementioned provisions apply to both institutional and ad hoc arbitrations would largely be jurisdiction specific, although they would apply equally to both ad hoc and institutional arbitrations in the majority of jurisdictions.
In an ad hoc arbitration, the parties would preferably specify certain procedures in the arbitration agreement in order to avoid uncertainty in case of disagreement on key procedural issues.
In case of disagreement on a procedural issue and in the absence of any applicable arbitration rules, the parties would have no other choice than to seise the national court at the seat of arbitration for assistance. Such actions may increase the duration and cost of the overall arbitration and may not necessarily lead to the desired outcome, depending on the applicable arbitration laws and the practices of the national courts.
The extent of powers exercised by national courts varies from one jurisdiction to another. For example: the French arbitration law empowers the “judge acting in support of the arbitration” to appoint arbitrators in ad hoc arbitration, resolve challenges to arbitrators, and extend procedural time limits. Meanwhile, under the Hong Kong Arbitration Ordinance, the Hong Kong International Arbitration Centre (HKIAC) has been designated to deal with any issues relating to the constitution of the tribunal in ad hoc arbitrations, whilst the Court retains the power in determining challenges on the appointment of arbitrators and on whether to terminate the mandate of an arbitrator.
In terms of assistance in the constitution of the arbitral tribunal, most major arbitral institutions, including the ICC, International Centre for Dispute Resolution (ICDR), London Court of International Arbitration (LCIA) and the Permanent Court of Arbitration (PCA) offer their services as appointing authority for a fee. The advantage of these institutions over national courts is their experience with international arbitration and their ability to select arbitrators with the necessary skills and experience to hear specific types of disputes.
In practice, the parties are more likely to turn to national courts for assistance in ad hoc arbitration than in institutional arbitration, where the arbitral institution can help resolve procedural disputes in accordance with the relevant institutional rules. This is the case for, among others, arbitrator appointments, arbitrator challenges and replacements, and any disagreement on fees.
The adoption of a set of non-institutional rules such as the UNCITRAL Arbitration Rules would help to enhance predictability and ensure a smoother and more efficient arbitration. Parties may agree to adopt such rules once a dispute has arisen.
Anti-suit injunctions (ASI) are generally available in common law jurisdictions (England, Singapore, Canada, United States, Bermuda, Hong Kong, South Africa, India and Australia), and under certain laws may be granted by arbitral tribunals as well as by the courts, on both an interim and permanent basis. Such injunctions are however generally not available under civil law systems. Following the European Court of Justice’s decision in Allianz SpA v West Tankers Inc (Case C-185/07), the courts of European Union Member States are also not permitted to issue ASI in respect of proceedings in other Member States, even where those proceedings constitute a breach of a valid arbitration agreement. English courts have resumed the issuance of ASI vis-à-vis proceedings in EU Member States after Brexit.
The criteria for obtaining an ASI vary from one jurisdiction to another. However, a generally accepted consideration is whether the requesting party is able to demonstrate a breach of a valid arbitration agreement, on the basis that parties ought to abide by their agreement to arbitrate. Other relevant factors include whether the injunction would cause undue prejudice in the form of the responding party being deprived a legitimate juridical advantage of commencing court proceedings, the stage of the court proceedings, or overriding considerations of international comity.
As to the power of an arbitral tribunal to grant anti-suit relief, most modern arbitration laws and institutional rules are widely drafted to acknowledge the power of arbitrators to order various interim measures, arguably including the power to grant ASI. For instance, the English and Singapore courts have confirmed the competence of arbitral tribunals to issue ASI; the UNCITRAL Working Group has also agreed that a tribunal constituted under the UNCITRAL Arbitration Rules is empowered to grant such relief.
It should be noted that in any event, an ASI if granted will bind the responding party, and not the foreign court. However, the order will usually be sent to the foreign court, so that it is aware of the existence of the order.
In some instances, parties to a potential arbitration may need to obtain urgent temporary measures in order to prevent further harm (e.g. preservation of evidence, continuation of contractual relationship despite a termination, etc.). In virtually all jurisdictions, an application for urgent or conservatory measures may be filed in the national courts under summary proceedings, and such proceedings are also available for disputes covered by arbitration clauses. Arbitral tribunals usually have the power to revisit the interim measures adopted by state courts in such proceedings.
In addition, most arbitral institutions (including the ICC, LCIA, SIAC, etc.) offer in their sets of rules a procedure for parties to seek urgent temporary relief from a so-called “Emergency Arbitrator” before the constitution of the arbitral tribunal that will rule on the merits of the dispute. The Emergency Arbitrator will not be part of the arbitral tribunal. The emergency measure, that should in principle be rendered within a deadline fixed by the arbitration rules (usually around 14 days), may be later revisited by the arbitral tribunal once constituted. If the party against whom an emergency measure is issued does not abide voluntarily, the requesting party will have to go through enforcement proceedings before state courts. Most arbitration rules provide that emergency arbitration does not prevent any party from seeking urgent interim or conservatory measures from national courts at any time.
Under most arbitration laws, the parties have the choice between the two remedies. The interactions between emergency arbitration and interim national court proceedings (e.g. whether emergency arbitration should take precedence over national court proceedings or vice versa; whether the Emergency Arbitrator may revisit an order rendered by a national court; whether a national court may review an Emergency Arbitrator’s order, etc.) vary from one arbitration law to the other.
Although an efficient tool available to arbitration users, some uncertainty remains regarding the enforceability of emergency arbitrators’ decisions. While some jurisdictions such as Hong Kong and Singapore have amended their arbitration laws in order to expressly allow for enforcement of such decisions, most of the other major seats of arbitration have not yet taken such measures. National courts in these countries have adopted diverging approaches, in particular in light of considerations under the New York Convention and the UNCITRAL Model Law, if applicable.
Emergency arbitration should be distinguished from expedited or “fast-track” arbitration proceedings, which are proceedings on the merits but conducted under simplified procedural rules to lower the costs and duration of the arbitration. While the specific rules vary from one arbitral institution to another, expedited proceedings usually allow the institution to shorten certain time limits, to restrict the number of submissions, to favour a written procedure and/or to appoint a sole arbitrator.
Article V(1)(e) of the NYC provides that recognition and enforcement of an award may be refused if the award has been set aside by the courts of the seat. The wording of this article (“may”) grants leeway to the court before which the enforcement is sought, which could exercise a discretion to recognise or enforce an annulled award.
In addition, Article VII of the NYC allows a party to avail itself of the most favourable provisions of the country where such award is sought to be relied upon.
Some national laws (such as France) do not include the annulment of an award at the seat amongst the ground for refusal of recognition and enforcement. As such, awards that have been set aside at the seat of arbitration may still be enforced by French courts (see the decisions rendered by the French Cour de cassation in Norsolor (1984), Hilmarton (1991), Chromalloy (1997) and Putrabali (2007)).
English courts will ordinarily give effect to the decision rendered by the seat annulling an arbitral award, unless said decision is deemed to be contrary to the basic principles of honesty, natural justice or public policy. As such, in a case Yukos Capital SARL v OJSC Rosneft Oil Company, several awards that had been set aside in Russia were recognised and enforced by English courts, as the annulment was found to be a result of a “partial and dependent judicial system”.
Similarly, in Yukos Capital SARL v Rosneft, Dutch courts gave effect to awards that had been annulled at the seat, as said annulment resulted from a partial and dependent judicial process in Russia. In another case (Maximov v OJSC Novolipetsky Metallurgichesky Kombinat), the Dutch Supreme Court confirmed that it has discretion to enforce an annulled award under the NYC, but held that this power can only be exercised in exceptional circumstances (ie where the annulment decision was based on grounds that do not comply with internationally acceptable standards).
High stake, global, disputes often lead to a series of parallel proceedings spanning, inter alia, the arbitral tribunals, civil and commercial courts, and criminal courts, leading to multiple legal issues. As the global economy is slowing down, insolvency procedures will also increasingly affect arbitration proceedings (read our insights here)
Faced with parallel proceedings, arbitral tribunals may notably be called to rule on requests to stay the proceedings (for instance, pending the resolution of criminal proceedings that have been launched before national courts), or to issue anti-suit injunctions with the aim of restraining the foreign proceedings, if provided for under the applicable law. If parallel proceedings are allowed to continue, the rules of res judicata could be relied upon to prevent two contradictory awards/judgments being given.
Arbitral awards are also increasingly subject to parallel and successive enforcement and annulment proceedings. Parallel proceedings may not only lead to conflicting results on the merits of the dispute, but issues arise in particular when a party is looking to enforce an award despite the existence of a parallel procedure, as has been recently demonstrated in the CJEU’s Prestige-case.
In certain civil law jurisdictions, such as France and Belgium, the principle “le criminel tient le civil en l’état” (criminal action takes precedence over civil action) imposes on arbitral tribunals to stay the proceedings for the duration of started criminal proceedings where the result of such criminal proceedings may influence the result of the arbitration proceedings.
It will be for the national court where the enforcement is sought to rule on the question whether lis alibi pendens is a restraint of enforcement according to the applicable rules of private international law, including – if applicable – the New York Convention and potentially even the European regulations and the CJEU’s case-law.
Thanks to instruments such as the New York Convention and other regional agreements, arbitral awards benefit from near-worldwide enforceability. For this reason, it is essential to develop a clear understanding of where a counterparty’s assets are located in order to decide where to seek enforcement of the award. To this end, so-called asset tracing may be conducted with the help of a global network of lawyers and specialised investigators. Asset tracing may be carried out at any stage of a dispute, not only after the award has been issued. For example, in some instances, it may be useful to know the financial resources of a counterparty when defining the amount of a claim. Similarly, the availability of a state counterparty’s assets and the possibility of enforcement against those sovereign assets could strongly impact one’s decision to bring an arbitration claim.
Asset tracing typically consists of three elements:
To uncover and trace enforceable assets, a broad range of investigative measures is available, including:
It is important to conduct asset tracing in unison with specialised legal advice. This is because the rules regarding enforcement vary from jurisdiction to jurisdiction and the hurdles may range from low (ie, quick enforcement) to insurmountably high. Thus, after having identified the jurisdictions where the counterparty’s main assets are located, the respective legal requirements of enforcement must be analysed. Beyond the general prerequisites, specific questions frequently come up, such as to what extent enforcement may be levied against assets held only proportionately (e.g., attachment of company shares), or when enforcement is possible against assets held only indirectly (e.g., letterbox companies or straw men).
Asset tracing is also of paramount importance for enforcement against states or state entities, to identify their commercial assets that may be seized. Commercial assets are indeed usually excluded from states’ immunity from enforcement.
How can the courts in your jurisdiction assist with international arbitration?
Each jurisdiction has adopted different rules to regulate the relationship between national courts and arbitral tribunals.
To view the actions available in specific jurisdictions, please click on the link below to download the country chapters, or to download the full guide.