ENFORCEMENT of ARBITRAL AWARDS under the NEW YORK CONVENTION

1958: RECENT ISSUES and EMERGING TRENDS

a presentation by

HEW R. DUNDASChartered Arbitrator DipICArb

International Arbitrator & Mediator27th June 2007

OVERVIEW of PRESENTATION

Introduction Dispute Resolution in International Context International Commercial Arbitration New York Convention 1958 Enforcement Issues Related Issues Conclusions

DISPUTE RESOLUTION OPTIONS

Litigation Arbitration Domestic/International

NB significant distinctions

Expert Determination Adjudication Mediation Other ADR

ENE/Mini-Trials/Med-Arb/Arb-Med etc

LITIGATION

Difficulties of Litigating Local Laws – are they adequate ? Courts – Good, Bad and Ugly Litigation against States Timescales - long and VERY long Finality Enforceability Costs

INTL. COMM. ARBITRATION (1)OVERVIEW

What Is It ?“International”“Commercial”“Arbitration”

Profusion of Relevant/Applicable Laws Institutions and Tribunals Finality Enforceability

INTL. COMM. ARBITRATION (2) INSTITUTIONS

UNCITRAL ICSID/NAFTA/ECT ICC/LCIA Chartered Institute of Arbitrators Regional Institutions incl. CIETAC/AAA LMAA GAFTA/FOSFA/LME/RSA Other

INTL. COMM. ARBITRATION (3)PROFUSION of LAWS

Law of the Contract (Lex Causae) Law of the Arbitration Agreement Law of the Arbitration (Lex Arbitri) Law governing Capacity of Parties Law of Seat (Lex Curiae) Law of Place of Enforcement Other Potentially Applicable Laws

INTL. COMM. ARBITRATION (4)SOME KEY LEGAL ISSUES

Arbitrability Capacity Substantive vs Procedural Laws Arbitrations against States

State Immunity Interface with Courts

AppealsEnforcement

Protectionism

INTL. COMM. ARBITRATION (5)AWARDS & ENFORCEMENT

AppealsJurisdictionProcedural FailuresIssues of Law

Exequatur Enforcement New York Convention 1958

NEW YORK CONVENTION (1)

142 Contracting States @ 22/6/07 Recent additions include Afghanistan,

Brazil, Gabon, Iceland, Iran, Liberia, Montenegro, Pakistan, Qatar, UAE

Non-parties - Ethiopia, Iraq, Libya, North Korea, Yemen

Taiwan cannot accede (not a State)

NEW YORK CONVENTION (2)

Recognition of Arbitration Agreements Enforcement:

Art. V(1)Capacity/InvalidityFailure of Due Process/other Procedural FailureOutwith JurisdictionAward Not Binding/Set Aside at seat

Art. V(2)Dispute not ArbitrableAward Contrary to Public Policy

Court MAY, not “shall”, refuse enforcement

NEW YORK CONVENTION (3)

ReservationsReciprocityCommercialityVietnam

ApplicabilityUSA disapplies NYC to awards with US partyE&W applies NYC to foreign domestic awards [see IPCo]

Enforcement other than via NYC58

NEW YORK CONVENTION (4)Art. V(1)(a)

Common occurrence Incapacity

PRC + Russian casesForeign Exchange Controls/Licenses/Permits

Arbitration Agreement InvalidLex CausaeLex Arbitri

ExamplesOral contract – enforcement refused in Germany “Arbitration Hamburg” [coffee case]Contradiction of previous conductForm Requirements

NEW YORK CONVENTION (5)Art. V(1)(b), (c) & (d)

Art. V(1))(b) (Due Process) – rareGenerally high standards in international arbitrationFailures in some jurisdictions (inexperience/ignorance)Effect of Institutional RulesQuality CounselFully-trained arbitrators e.g. CIArb’s “Chartered Arbitrator”

Art. V(1)(c) (Jurisdiction) – commonWhat was/was not submitted to arbitrationAward of costs/interest in cases with US claimantSet-off Defences

NEW YORK CONVENTION (6)Art. V(2)

Art. V(2)(a) cases rare India – technology transfer contracts IP IssuesState entities/public bodiesMatrimonial/family matters (NB Jewish Law)

Art. V(2)(b) – cases common (often last resort) “Fundamental notions and principles of justice”Wide/narrow definitions of public policy International vs domestic public policyEnforcement “injurious to public good”Enforcement “wholly offensive” to civilised values Westacre/Hilmarton cases

NEW YORK CONVENTION (7)Art. V(2)(b) continued

Foreign perceptions of India/PRC/Vietnam Examples

PRC – “social and public interest”Switzerland – breach of competition lawUSA – award of legal costsEngland – Westacre/Hilmarton

CURRENT ISSUES AFFECTING ENFORCEMENT

The 8th and 9th Grounds Public policy/public interest State Immunity Form Requirements Success rates in certain countries

NEW YORK CONVENTION8th/9th GROUNDS for REFUSAL

8th Ground – JurisdictionUSA – Court must have jurisdiction over person or

property [US Constitution]Attachment of ships/aircraft/cargoes

9th Ground – Manifest Disregard of the LawArgued as extension of “public policy” groundDiffers from E&W/NZ Error of LawCourt’s different result ≠ manifest disregardLuzon v Transfield (Philippines)

STATE IMMUNITY

Distinction between State/commercial assetsCentral BanksEmbassy propertyShips, AircraftExhibits at Trade Fair [Sedelmeyer]Art Collection [NOGA]

UK State Immunity Act 1978 Examples

AIG v KazakhstanSvenska v Lithuania

USA Foreign Sovereign Immunities Act 1976Dole v Patrickson

EMERGING TRENDS

Erroneous decisions by certain Courts NYC not always understood/recognised Manipulation of public policy exception Bad losers losing badly Effect of awards against States

CONCLUSIONS (1)

Relatively small number of contentious cases

Overall state-of-play reasonably strong NYC still a major success One of the UN’s greatest success stories 10th June 2008 – the next 50 years

CONCLUSIONS (2)

THANK YOU for

your ATTENTION