The rationale of those cases is that Article V 1 e of the Convention provides express authority for the courts at the place of arbitration to apply domestic arbitration law to a motion to set aside the award. Gutenhoffnungshutte, F. Erwin Behr, 87 F. This commentary will demonstrate that such reliance was misplaced. The framers of the New York Convention elected not to create a uniform regime governing motions to set aside awards to which the Convention applies.
Congress in enacting Chapter 2 to implement the Convention also created no regime concerning motions to set aside Convention awards. They did not seek to establish a uniform international standard for motions to vacate awards. That Section provides that Chapter 1 applies to the extent it is not in conflict with express provisions of Chapter Two or of the Convention. Insofar as a party opposing recognition by an American court of a foreign-made award might argue that recognition should be refused on a ground stated in Section 10, a conflict does exist: The Article V regime is exclusive — in the realm of motions to recognize and enforce awards.
But if the award whose recognition is sought was made in the United States, then a cross-motion to set aside the award is permitted by Chapter Two and the Convention to the extent it is permitted by the FAA. Such exceptional circumstances were not found in the case before the court and so the court refused to enforce the annulled award.
French law provides for limited grounds for refusing enforcement of awards. Accordingly, French courts have long held that an award which has been annulled at the seat can still be enforced in France. In the seminal decision of Hilmarton v Omnium , the Cour de Cassation permitted enforcement of an arbitral award which had been set aside in Switzerland. Since annulment of an award is not one of the grounds for refusing enforcement under French law, the court held that the permissive language of Article V 1 e in conjunction with Article VII constituted a sufficient basis to enforce awards annulled at the seat.
Subsequent cases represent a continuation of this approach. In a leading US decision in Chromalloy Aeroservices v Arab Republic of Egypt , the court set out the grounds for enforcing an arbitral award annulled at the seat. The award had been set aside in Egypt following a detailed substantive judicial review, in circumstances where the parties had waived any such review.
The US court reasoned that the US public policy in favour of final and binding arbitration of commercial disputes compelled it to enforce the award despite its annulment at the seat. In other judgments, although approving the reasoning in Chromalloy , US courts have not found adequate reasons on the facts for disregarding foreign annulments for example, Martin I.
Spier v Calzaturficio Recnica. The arbitral award in question had been set aside in Mexico on the ground that Pemex, as an entity deemed part of the Mexican government, could not be forced to arbitrate. Having been drafted in a permissive manner, the New York Convention leaves domestic courts with a discretion to enforce annulled awards.
As this area of law is not settled, different jurisdictions have adopted diverging standards with regards to the circumstances in which the enforcement of annulled awards may be permitted. Taken very generally, these circumstances can include. Parties should, however, be aware that in most jurisdictions, there is an increasingly high burden to satisfy when seeking to enforce an annulled award. Particularly, where a claim is made that the annulment was contrary to basic principles of justice.
However, the key takeaway is that just because an award seems dead and buried, that does not mean that it is necessarily the end of the matter. Where an award has been set aside, it is essential that parties seek advice from arbitration counsel knowledgeable in the jurisdiction of the enforcement to identify if recovery may still be possible.
The authors would like to thank Ewelina Kajkowska, trainee, for her contribution to this article. Password at least 8 characters required Confirm Password. Already have access? Email: Password: Forgot your password? Remember login. You must correct or enter the following before you can sign up:. Please provide a professional email:.
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