AWARD ENFORCEMENT ISSUES IN INTERNATIONAL ARBITRATION
An international arbitration award is not worth the paper it is written on unless it can be enforced. If enforceability is an issue, then the integrity of the arbitration process is compromised from the outset, with the ‘final and binding decision’ essentially rendered moot.
According to Milo Molfa, counsel at Cleary Gottlieb Steen & Hamilton LLP, the primary enforcement issues are whether a state will recognise and enforce an award made in arbitration proceedings seated in another jurisdiction, whether there have been any procedural defects in the arbitral process and whether it can be proven that the assets of the party one is seeking to enforce against are actually in the state of enforcement.
In order to refuse the recognition and enforcement of an award, many jurisdictions across the globe adopt the grounds set out in Article V of the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention (NYC)). These include a range of due process objections, and other public policy considerations relating to basic notions of morality and justice.
Among a number of stipulations, Article V states that an award may be refused if there is proof that: (i) the parties to the agreement were under some incapacity or the agreement is not valid under the law of the country to which the parties have subjected it; (ii) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or was otherwise unable to present his case; (iii) the award deals with matters beyond the scope of the submission to arbitration; and (iv) the composition of the arbitral tribunal was not in accordance with the agreement of the parties or in accordance with the law of the country where the arbitration took place.
Jul-Sep 2018 issue