ENFORCEMENT OF INTERNATIONAL COMMERCIAL

ARBITRAL AWARDS: REDRESS MECHANISMS IN THE

EVENT OF NON-COMPLIANCE
Krishnee A Appadoo
LLB with French Law (University College London), Diplome dEtudes de Droit Francais
(Universite Paul Cezanne, Aix Marseille III), LLM in International Legal Practice (College
of Law London)

Electronic copy available at: http://ssrn.com/abstract=2244872

Table of Contents
CHAPTER I .................................................................................................................................................. 4
INTRODUCTION ........................................................................................................................................ 4
a)

The Need for International Commercial Arbitration ........................................................................ 4

b)

The Assets of International Commercial Arbitration ........................................................................ 4

c)

The Evolution of International Commercial Arbitration A Brief History ..................................... 5

d)

The Enforcement and Annulment of International Commercial Arbitral Awards ............................ 5

CHAPTER II................................................................................................................................................. 7
THE FRAMEWORK OF INTERNATIONAL COMMERCIAL ARBITRATION .................................... 7
a)

The Theory and Practice of International Commercial Arbitration A Balancing Exercise ........... 7

b)

The Role of International Conventions ............................................................................................. 8

i.

1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards................... 9

ii.

Annulment Standards in National Jurisdictions .......................................................................... 15

CHAPTER III ............................................................................................................................................. 18

ENFORCEMENT IN NATIONAL COURTS ........................................................................................... 18
2

Electronic copy available at: http://ssrn.com/abstract=2244872

a)

Grounds for Challenging an Arbitral Award .................................................................................. 18

b)

The Assessment of National Systems of Enforcement ................................................................... 22

i.

International Arbitration and the English Courts ........................................................................ 23

ii.

International Arbitration and the French Courts ......................................................................... 24

CHAPTER IV ............................................................................................................................................. 27
HARMONIZATION................................................................................................................................... 27
The Need for Harmonization .......................................................................................................... 27

a)
i.

The Canadian System of Enforcement and Recognition of Foreign Arbitral Awards ................ 31

ii.

The Harmonization of International Commercial Arbitration in Singapore: A Success Story ... 33

The Challenges to Harmonization................................................................................................... 36

c)
i.

The Enforcement of Arbitral Awards in the United States ......................................................... 36

ii.

Enforcement of Annulled Arbitral Awards in the U.S ................................................................ 39

CHAPTER V .............................................................................................................................................. 41
CONCLUSION ........................................................................................................................................... 41
BIBLIOGRAPHY ....................................................................................................................................... 44
Books .......................................................................................................................................................... 44
Journals and Academic Articles .................................................................................................................. 45
Documents .................................................................................................................................................. 47
Table of Statute ........................................................................................................................................... 48
Table of Cases ............................................................................................................................................. 50

CHAPTER I
INTRODUCTION
a) The Need for International Commercial Arbitration
There is no doubt that international business is booming, and indeed the last fifty years have
witnessed an increasing dynamism in international trade. The recent decades have seen a marked
rise in the size and complexity of international commercial transactions, and this in turn has
created even more potential for disputes arising out of transnational business (Gelinas, 2000).1
Such disputes often encompass different legal systems and understandably demand a platform
where they can be settled. It is fortunate that when such disputes arise, an abundance of fora
exists which facilitates resolution or settlement.
The public court system where the business or its foreign trade partner is located might provide a
solution to the dispute at hand. It is however to be stressed that litigation through national courts
involves several drawbacks. The latter takes the form of the possibility of simultaneous litigation
in multiple jurisdictions due to the international nature of the dispute, or even the uncertainty that
enforcement of a judgment might take place outside the jurisdiction where it has been obtained
(Petrossian, 2007).2 As an alternative to the national court system for resolving international
commercial disputes, private dispute-resolution processes, including international commercial
arbitration, are now a vital component of international business relationships.

b) The Assets of International Commercial Arbitration

International arbitration is the overwhelming preference when it comes to solving cross-border
commercial disputes3, and this is because of its relative speed, neutrality, flexibility,
confidentiality, and cost-effectiveness in comparison to litigation in national courts.
International commercial arbitration is a private, non-governmental process, fashioned by
1

Gelinas, F, Arbitration and the Challenge of Globalization, (2000) J. Intl Arb, 117, p. 117.
Petrossian, E, In Pursuit of the Perfect Forum: Forum Shopping in the United States and England, (2007) 40
Loy. L.A. L. Review 1257, pp. 1260-1263
3
New Study Reports Multinational Corporations Prefer International Arbitration to Litigation, Disp. Resol. J, MayJuly 2006, p. 12
2

contract, which provides for the binding resolution of a dispute through the decision of one or
more private individuals selected by the disputants (Stromberg, 2008).4 One of the most useful
advantages of arbitration is the provision of time-honoured enforcement mechanisms established
by international treaties, the most prominent of those being the New York Convention.

c) The Evolution of International Commercial Arbitration A Brief

History
The first truly international commercial arbitration began its operation in 1923, with the
establishment of the International Court of Arbitration, set up by the International Chamber of
Commerce (hereinafter ICC). The 1927 Geneva Convention on the Execution of Foreign
Arbitral Awards (hereinafter Geneva Convention)5 set the framework for the enforcement of
international arbitral awards but proved to be full of shortcomings. The main drawback of the
Convention was the requirement for double exequatur, whereby an arbitral award had to be
confirmed in the country in which it was rendered before the courts of another country could
enforce the award. In 1958, there was the adoption of a groundbreaking international treaty,
formally known as the Convention on the Recognition and Enforcement of Foreign Arbitral
Awards (hereinafter New York Convention)6, which improved upon the existing Geneva
Convention and provided a new set of improved rules for the recognition and enforcement of
arbitral awards.7

d) The Enforcement and Annulment of International Commercial

Arbitral Awards
The ultimate test of any arbitration proceeding is its ability to render an award which, if
necessary, will be recognized and enforced in relevant national courts (Born, 2001).8 While on
the one hand, recognition of an arbitral award generally means giving preclusive effect to the
4

Stromberg, W, Avoiding the Full Court Press: International Commercial Arbitration and Other Global Alternative
Dispute Resolution Processes, (2008) 40 Loy. L.A. L. Review 1337, p.1341
5
Convention on the Execution of Foreign Arbitral Awards, Sept. 26, 1927 L.N.T.S.302
6
Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, 330
U.N.S.T. 38
7
The New York Convention provides for mutual recognition and enforcement of arbitral awards by contracting
states and limits the defenses that may be raised in opposition to the confirmation of an award, in an attempt to
eliminate litigation following arbitration.
8
Born, G.B, International Commercial Arbitration: Commentary and Materials, n. 102 (Ardsley, NY: Transnational
Publishers, 2001), 2nd Edition

award, usually in an attempt to bar re-litigation of the claims under arbitration; on the other hand,
enforcement is the invocation of coercive judicial remedies to fulfil the arbitral award.
International arbitration awards are usually complied with by losing parties, and it is often the
case that the latter settle soon after the award has been made. This is why most international
arbitration awards do not require judicial confirmation or enforcement. Because arbitration seeks
to produce results that are binding and enforceable, parties resorting to international commercial
arbitrations expect that this enforceability would enable them to obtain redress which is definite
and unequivocal. However, when the losing party under an international arbitration has grounds
to believe that the award has been made in error, it may commence proceedings in the national
court in order to annul the award. It is therefore important to understand the various ways in
which a defaulting party may use international conventions and existing national judicial
measures in an attempt not to comply with an international commercial arbitration award.
Understanding the functioning of international commercial arbitration is a difficult task because
of the interplay of concepts, jurisdictions and rules. It is important to note that the law applicable
to arbitration is not the law application in arbitration. The law applicable in arbitration
determines how the arbitrators go about making or refusing an award. The law applicable to
arbitration regulates from where the arbitrators and national courts enforcing/annulling awards
derive their authority from. It has to be highlighted on the outset that the aim of this dissertation
will be a thorough examination of the law applicable to arbitration. The purpose of this paper is
to assess the effectiveness of international conventions, in an attempt to gauge their effectiveness
in terms of recognition and enforcement of foreign arbitral awards. Chapter II thus deals with the
framework of international commercial arbitration. Additionally, the present paper will focus on
the legislative and judicial means available to challenge a duly rendered foreign arbitral award.
In this context, Chapter III considers enforcement mechanisms in national jurisdictions. Finally,
it will be proposed in Chapter IV that while the project of harmonization of international
commercial arbitration rules is one of the solutions to better recognition and enforceability of
international arbitral awards, it should not be considered as a panacea.

CHAPTER II
THE FRAMEWORK OF INTERNATIONAL COMMERCIAL
ARBITRATION
a) The Theory and Practice of International Commercial Arbitration
A Balancing Exercise
Arbitration has been broadly defined as a businessmans method of settling disputes and as a
means by which usually two parties appoint a third person to settle the dispute for them
(Rokinson, 1980).9 At the Venice Congress in 1969, Donald B. Strauss remarked that
international commercial arbitration was perfect in theory but less exemplary in practice:
International Commercial Arbitration is one of the most talked about and least utilized procedures
available to the international businessman. Those of us who are devoting our lives to this field are
faced with the strange paradox that what we have to promote is so perfect in theory [but] so
neglected in practice.10

More than four decades later, it is encouraging to note that great progress has been made in
international commercial arbitration. The number of cases, as well as the magnitude of cases
handled, have greatly increased throughout the world. Leading arbitration institutions such as the
ICC, the London Court of International Arbitration (hereinafter LCIA), the International
Centre for Dispute Resolution (hereinafter ICDR), the China International Economic and
Trade Arbitration Commission (hereinafter CIETAC), the Japan Commercial Arbitration
Association (hereinafter JCAA), the Stockholm Chamber of Commerce (hereinafter SCC),
the Centre for Effective Dispute Resolution (hereinafter CEDR), etc, have been mushrooming
across the globe. In particular, it was the role of the ICC 11 in establishing its International Court
of Arbitration (ICA) that heralded the creation of the first truly international commercial
arbitration system.12 However, in the early 1990s, most arbitral institutions resolved cases
9

Rokinson, K, Getting the Best out of Arbitration in Building Disputes (1980) Arbitration 46(2), pp. 97-101
Strauss, D.B, Proceedings on III International Arbitration Congress (1969), Venice, p. 203, Associazione Italiana
per lArbitrato, Milan, 1969
11
The ICC is a non-governmental voice of world championing the global economy as a force for economic growth,
job creation and properity, founded in 1919, http://www.iccwbo.org/id93/index.html (accessed on 25.11.2011)
12
It is true that other international arbitration institutions, such as the LCIA and the SCC, were in existence much
before 1923. Nonetheless, the ICC is credited as being the first institution with global reach.
10

through the process of conciliation and this was a time of dissatisfaction with international
arbitration. Without the creation of conventions and internationally recognized bodies in the field
of commercial arbitration, there would not have been such an impetus in the enforcement and
recognition of foreign arbitral awards.

b) The Role of International Conventions

International conventions and the setting up of the United Nations Commission on International
Trade Law (hereinafter UNCITRAL) have greatly influenced the shaping of international
commercial arbitration. The UNCITRAL was set up in 199613 by the UN General Assembly, in
an effort to provide a forum where discussion and harmonization of diverse institutional
approaches to commercial arbitration could be held. The UNCITRAL was created out of the
recognition that disparities in national laws governing international trade created obstacles to
the flow of trade. The UN General Assembly viewed the Commission as a means by which the
UN could play a more active role in reducing or removing these obstacles.14 The Commission
was given the overarching mandate of furthering the harmonization and unification of
international trade law. From the time it was founded, the UNCITRAL oversaw the preparation
of a wide range of conventions, several Model Laws and other instruments dealing with the
substantive law that governs trade transactions and regulates international commercial
arbitration. The harmonization of laws in international commercial arbitration will be analysed in
Chapter IV. Thus, the role of the UNCITRAL in paving the way for the process of modifying
domestic laws to enhance predictability in cross-border commercial transactions will be
discussed. The Geneva Convention set the framework for the enforcement of international
arbitral awards, well before the creation of the UNCITRAL. However, the Geneva Convention
proved to be inadequate and full of shortcomings and did not meet the challenges of
international commercial arbitration (Davis, 2002).15 Today, the New York Convention is a
groundbreaking international treaty which provides a set of rules for recognition and
enforcement of international arbitral awards, as its name suggests.

13

G.A. Res.2205 (XXI), U.N. Doc. A/6396 (Dec. 17, 1996)

http://www.uncitral.org/uncitral/en/about_us.html (accessed on 25. 11.2011)
15
Davis, K. R, Unconventional Wisdom: A New Look at Articles V and VII of the Convention on the Recognition
and Enforcement of Foreign Arbitral Awards, (2002) 37 Tex. Intl L.J.43, pp. 54-55
14

In this second chapter, an assessment of the New York Convention will be first carried out.
Then, the reader will be provided with an overview of the effectiveness of international
commercial arbitration in specific regions of the world.

i. 1958 Convention on the Recognition and Enforcement of Foreign Arbitral

Awards
The New York Convention entered into force on the 7th June 1959. As at date, 146 States have
ratified the Convention. The objectives of the New York Convention are that foreign and nondomestic arbitral awards will not be discriminated against, that Parties are obligated to ensure
[that] such awards are recognized and generally capable of enforcement in their jurisdiction in
the same way as domestic awards, and that courts of Parties shall give full effect to arbitration
agreements by requiring courts to deny the parties access to court in contravention of their
agreement to refer the matter to an arbitral tribunal.16 A country that ratifies or accedes to the
New York Convention is under a duty to recognize and enforce arbitral awards entered in foreign
territories or those not considered as domestic, in the State where their recognition and
enforcement are sought.17 The New York Convention also has a jurisdictional element, obliging
national courts to recognize the validity of arbitration agreements and referring parties to
arbitration when they have entered into a valid agreement to arbitrate and one of the parties has
requested arbitration.18 It is also important to note that the Convention applies to all foreign
arbitration agreements, irrespective of the citizenship of the parties and regardless of the subject
matter of the dispute. Art. III directs State Parties to enforce foreign arbitral awards according to
the rules of procedure in the territory in which the award is sought to be enforced.19 The
recognition and enforcement of an award is obtained when the winning party supplies (a) the
authenticated original award or a certified copy, and (b) the original arbitration agreement or a
certified copy, to the national court where enforcement is sought.20 At this stage of proceedings,
the burden of proving one of the several defences to the validity of an award is borne by the
party resisting enforcement.

16

http://www.uncitral.org/uncitral/uncitral_texts/arbitration/NYConvention.html, (accessed on 24.11.2011)

Ibid, art. I(1)
18
Ibid, art. II(1) and (3)
19
Ibid, art. III
20
Ibid, art. II and IV
17

Arts. V and VII of the New York Convention contain the grounds for challenging the
enforcement of a foreign arbitral award. National courts can refuse to recognize or enforce an
arbitral award in the following five scenarios: (a) the arbitration agreement is invalid21; (b) the
party was denied procedural fairness or due process in the arbitral proceedings 22; (c) the
arbitrators exceeded their authority23; (d) the arbitral procedures deviated materially from the
parties agreement or the applicable procedural law24; or (e) the award is not yet binding or has
been set aside or suspended by a competent authority of the country in which, or under the law of
which, that award was made.25 Moreover, art. V(2) authorizes national courts to refuse
recognition or enforcement of an arbitral award if they so find that: (a) the subject matter of the
dispute cannot be settled by arbitration under the law of that country26; or (b) recognizing or
enforcing the award would be contrary to public policy in that country27. It has been argued that
the grounds contained in art. V(1)(a)-(d) and the ground enumerated in art. V(2)(a) do not
consider questions of error in the application of the substantive law and facts related with the
merits of a partys claim. In this sense, the New York Convention does not give the resisting
party a wide range of options to challenge any substantive errors made by the arbitral tribunal.
The remaining defences under art. V provide only limited means for the aggrieved party to
challenge substantive errors committed by the arbitral tribunal in rendering its award (Gaitis,
2004).28
There is one very interesting aspect of annulment of a foreign arbitral award which is
unsatisfactorily resolved by the New York Convention. This deals with the enforcement of
awards annulled in their state of origin under the New York Convention. Under art. V of the
New York Convention, the enforcing forum may refuse enforcement of a foreign arbitral award
that has been set aside or suspended by a competent authority of the country to which, or under
the law of which, that award was made.29 It has been argued that the proposition, that an award

21

Ibid, art. V(1)(a)

Ibid, art. V(1)(b)
23
Ibid, art. V(1)(c)
24
Ibid, art. V(1)(d)
25
Ibid, art. V(1)(e)
26
Ibid, art. V(2)(a)
27
Ibid, art. V(2)(b)
28
Gaitis, J.M, International and Domestic Arbitration Procedure: The Need for a Rule Providing a Limited
Opportunity for Arbitral Reconsideration of Reasoned Awards, (2004) 15 Am. Rev. Intl Arb, 9, 66
29
New York Convention, art. V(1)(e)
22

10

annulled by the competent courts of the state of rendition could nonetheless be enforced
elsewhere, would generate scepticism in the mind of any arbitration lawyer. In fact, one of the
leading drafters of the Convention has responded to the weaknesses inherent in art. V(1)(e) by
noting that: if the award has been set asidethere does no longer exist an arbitral award and
enforcing a non-existing arbitral award would be an impossibility or even go against the public
policy of the country of enforcement (Van den Berg, 1992).30 In line with the Convention,
national courts tend to refuse the enforcement of awards that have been set aside in their
countries of origin. For example, in the French case of Socit Berardi v Socit Clair31, the
French Court of Appeal refused to recognize an award that was made and subsequently set aside
in Geneva. Paulsson (1983) criticises the reasoning that the enforcing court is obliged under art.
V(1)(e) to refuse enforcement of an award annulled in the country of origin. He argues that the
relevant provision is discretionary and not mandatory.32 Schwartz (1997) puts forward the case
that the term may in art. V(1)(e) is definitely not a command but imports discretion for the
enforcing court.33 Nevertheless, there seem to be authority for the view that art. V(1) cuts both
ways, in that it preserves the discretion of the court to defer enforcement in certain circumstances
beyond those contemplated by art. VI and where such deferral would be warranted for foreign
judgments or domestic awards. (Petrochilos, 1999)34 Therefore, if the above interpretation is
accepted, it can be deduced that art. V(1) simply authorizes and does not mandate the
enforcement forum to refuse enforcement.
Conversely, some courts have enforced foreign arbitral awards which have been set aside in their
state of origin. In Pabalk Ticaret Sirketi Ltd v. SA Norsolor35, the French Court of Appeal
refused to enforce an award which had been annulled in its state of origin. However, in a
30

A.J. Van den Berg, Annulment of Awards in International Arbitration, in R.B. Lillich and C.N. Brower (eds),
International Arbitration in the 21st Century: Towards Judicialization and Uniformity (1992), p. 133, 161;
Saunders. P, New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1959) 6
Neth. I.L.R. 43, p. 55
31
Socit Berardi v Socit Clair, (1981) Rev. Arb. 424
32
Paulsson, J, Delocalization of International Commercial Arbitration: When and Why it Matters, (1983) 32
I.C.L.Q, p. 53
33
Schwartz, E, A Comment on Chromalloy: Hilmarton lamericaine, (1997) 14 J. Int'l Arb. 125, p. 133
34
Petrochilos, G.C, Enforcing Awards Annulled in their State of Origin under the New York Convention, (1999)
48(4) I.C.L.Q 856, p. 858; two cases deal with the subject of discretion under art. V(1) of the Convention: Far
Eastern shipping Co v. AKP Sovcomflot [1995] 1 Llyods Rep. 520; Hewlett Packcard Inc v. Berg, 61 F.3d 101 (1st
Cir.1995), vacating 867 F.Supp. 1126 (D Mass. 1994)
35
Pabalk Ticaret Sirketi Ltd v. SA Norsolor, Recueil Dalloz Sirey (1985) 10e cahier, 101 14 112 JDI (Clunet) 679681

11

landmark judgment of the French Supreme Court (Cour de Cassation), it was held that under art.
VII of the New York Convention, the enforcement forum (in this case, the French courts) had a
duty to determine whether its own law would allow enforcement irrespective of art. V of the
Convention.36 Citing art. VII37, the Court noted that the judge cannot refuse enforcement when
his own national law permits it and, by virtue of art. 12 of the Nouveau Code de Procedure Civile
(hereinafter NCPC), he should, even sua sponte, research the matter if such is the case
(translated from French). This was viewed as a pro-enforcement bias, where the French court
relied exclusively on the provisions of national law to conduct a de novo review of the award
which had been made in the competent domestic court. The court went on to grant enforcement
of the award basing itself on the relevant French law provision allowing enforcement of set-aside
awards. It would seem that French jurisprudence relies exclusively on art. VII, rather than art.
V(1)(e) in granting exequatur to annulled awards. However, it would be more logical for the
enforcing courts not to base themselves on only one provision but to refer to other relevant
articles of the Convention in an attempt to ensure that there is a balance between the needs for
enforcement and also the discretion for reviewing arbitral awards.
Additionally, the French courts have adopted the approach in Norsolor in subsequent cases
where an award had been annulled in its country of origin. In the Polish Ocean Line v Jolasry38
case, the French Supreme Court held that if the courts of the seat of arbitration suspended the
enforceability of an award, such a ruling could not prevent the enforceability of an award in
France under ordinary rules of French arbitration law.39 The controversial and infamous
(Petrochilos, 1999)40 Socit Hilmarton v. Socit OTV41 case, was an opportunity for the
French court to clarify its position, and indeed it did, but this only proved to be a manifestation
36

Cass. Civ. 1re, 9 Oct 1984, Socit Pabalk Ticaret Sirketi v. Socit Norsolor [1985] 112 J.D.I., note Kahn, (1985)
74 R.C.D.I.P. 555, [1985] D. 101, note Robert, [1985] Rev. Arb. 431, note Goldman, (1985) 24 I.L.M 360, (1986)
11 Y.C.A 484, (1985) 2 No. 2 J. Int. Arb. 67, note Thompson; B. Goldman, Une Bataille Juridique autour de la Lex
Mercatoria: Laffaire Norsolor [1983] Rev. Arb. 379
37
Art. VII(1) of the New York Convention prescribes that [t]he provisions of the present Convention shall not
affect the validity of multilateral or bilateral agreements concerning the recognition and enforcement of arbitral
awards entered into by the Contracting States nor deprive any interested party of any right he may have to avail
himself of an arbitral award in the manner and to the extent allowed by the law or the treaties of the country where
such award is sought to be relied upon. (emphasis added)
38
Polish Ocean Line v Jolasry, Cass. civ. 1re, 1993, Rev. Arb. 1993 at p. 258-259
39
Kronke, Nacimiento et al. (ed), Recognition and Enforcement of Foreign Arbitral Awards: A Global Commentary
on the New York Convention (2010), Kluwer Law International, p. 335
40
Petrochilos, p. 561
41
Socit Hilmarton v. Socit OTV, (1993) 46 R.T.D. Comm. 646, note Loquin

12

of the tensions between the rendition and enforcement forums. The case involved a commission
payment by a French company (OTV) which had to be paid to an English company (Hilmarton)
for obtaining a contract in Algeria. Although OTV obtained the contract, a dispute then arose
concerning the commission. Hilmarton commenced arbitration proceedings and the claim was
denied by a single arbitrator on the grounds that the contract was unenforceable because it was
contrary to Algerian anti-corruption laws. Subsequently, the award was enforced in France by
the Paris Tribunal de grande instance (hereinafter TGI). Hilmarton, by this time, succeeded in
setting aside the award in Switzerland, which was the seat of arbitration, on the ground of
arbitrariness. Several months after the enforcement had been granted in France, the Swiss
Federal Tribunal affirmed the set-aside decision. Consequently, Hilmarton appealed the TGIs
enforcement decision and the question before the French Court of Appeal was whether it could
recognize in France an award which had been set aside in the country of the seat of arbitration.
The Court of Appeal confirmed the order of the TGI, quoting art. VII of the New York
Convention as well as the relevant French national law in the NCPC42. Hilmarton was granted a
second award by the relevant Swiss court and this was upheld by the lower French courts.
However, finally the French Supreme Court reversed the decision of the lower French courts in
relation to the second award and based itself on Art. 1351 of the NCPC (relating to res judicata)
to uphold the first decision ordering enforcement of the first arbitral award, which has been set
aside in Switzerland. In essence, the Hilmarton case confirmed French jurisprudence and firmly
established the principle that an award set aside in its country of origin may be enforced in
France.
Commenting on the disturbing stance of the French Supreme Court with regard to enforcing
arbitral awards which had previously been annulled in the country of the seat of arbitration,
Petrochilos (1999) had this to say:
The problem with the Hilmarton jurisprudence and the upshot of the litigation is that one loses
any sense of right or wrong in the procedural technicalities. Tempting as it may be to dismiss the
case as a classic example of a tough case making bad law, the law need not be that bad. The Court
seems to be upholding a double standard: an international award cannot be conclusively integrated
in the legal order of the rendition forum but can be so in the enforcement forum. Put crudely, the

42

Art. 1502 du Nouveau Code de Procedure Civile

13

French position would be that an international relative currency of awards is acceptable as long as
it is kept out of its backyard.43

The main criticism of French jurisprudence is that the courts circumvent the very important
relationship between art. V(1)(e) and art. VII of the New York Convention instead of finding the
right balance between the two. As such, the New York Convention is an open-ended text, under
which two propositions have to be reconciled. On the one hand, art. V(1) provides for discretion
when considering annulment of awards, without however giving guidance as to when such
discretion should be exercised. On the other hand, art. VII allows domestic law to prevail over
the Convention if that law contains a more favourable regime for enforcement. The problem can
be explained by the fact that art. VII of the Convention is so widely drafted, allowing enforcing
courts, for example here, the French Supreme Court, to altogether bypass the application of art.
V(1)(e). This was again highlighted in the case of Chromalloy Rpublique Arabe dEgype v.
Socit Chromalloy Aeroservices; In the Matter of the Arbitration of Certain Controversies
Between Chromalloy Aeroservices and the Arab Republic of Egypt. Both the French and the US
courts44 upheld an award which had previously been annulled in the country of the seat of
arbitration (Egypt in this case). This decision apparently confirmed the position that art. VII
could have an overriding effect on art. V(1), which of course is untenable in reality.
However, the Chromalloy case was severely criticized. It was argued that this decision resulted
from the temptation by national courts to introduce domestic law via art. VII, thus potentially
leading to disunity and uncertainty in the interpretation of the New York Convention, especially
where the domestic law is at odds with art. V(1) defences (Kronke et al., 2010)45 This wave of
criticism prompted the decision in Baker Marine46, where the Second Circuit court of the U.S
held that an award set aside in Nigeria (country of the seat of arbitration), could not be enforced
in the enforcing court (the U.S). The court explained its stance by noting that:

43

Petrochilos, p. 862
Republique Arabe dEgypte v. Societe Chromalloy Aeroservices (1998) 125 J.D.I, note Gaillard; In the matter of
the Arbitration of Certain Controversies Between Chromalloy Aeroservices and the Arab Republic of Egypt 939 F
Supp 907 (DDC. 1996)
45
Kronke, Nacimiento, Otto et al, p. 338-339
46
Baker Marine (Nig) Ltd v. Chevron (Nig) Ltd, 191 F. 3d 194 (decided 1999), 909 (US Court of Appeal for the 2nd
Circuit, US).
44

14

[i]f a party whose arbitration award has been vacated at the site of the award can automatically
obtain enforcement of the awards under the domestic law of other nations, a losing party will have
every reason to pursue its adversary with enforcement actions from country to country until a court
is found, if any, which grants the enforcement.47

The above conclusion would be unacceptable because the very essence of international
commercial arbitration is to ease the enforcement and recognition of duly rendered arbitral
awards. It is hoped that there will be a reconciliation of the finality thesis (recognition of
arbitral awards that have been rendered in the seat of arbitration) and the need for national
enforcing courts to review the arbitral award. While the New York convention, like so many
private international mechanisms, is based on the postulate of international harmony of
judgments, it should be recalled that practitioners living the realities of international commercial
arbitration, should be better equipped to advise their clients on the complexities inherent in such
a mode of settlement. The incredible responses which have been developed and adapted around
the world to counter the annulment of a foreign arbitral award will now be considered.

ii. Annulment Standards in National Jurisdictions

A large majority of countries have been inspired by the 1985 UNCITRAL Model Law on
International Commercial Arbitration (hereinafter Model Law).48 This was designed to assist
States in reforming and modernizing their laws on arbitral procedure so as to take into account
the particular features and needs of international commercial arbitration.49 While Chapter VII of
the Model Law contains an exhaustive list of annulment grounds, Chapter VIII focuses on the
recognition and enforcement of awards. Art. 34 of the Model Law contains the basis for many of
the annulment grounds which have been integrated in national systems of challenging the
enforcement of an arbitration award. Art. 34 of the Model Law provides that (2) [a]n arbitral
award may be set aside by the courtif: (a) the party making the application furnishes proof that
(i) a party to the arbitration agreementwas under some incapacity; or the said agreement is not
valid under the law to which the parties have subjected it or, failing any indication thereon, under
the law of the State; or (ii) the party making the application was not given proper notice of the
47

Baker Marine v. Chevron, at [197]

UNCITRAL Model Law on International Commercial Arbitration (1985), available at
http://www.uncitral.org/pdf/english/texts/arbitration/ml-arb/06-54671_Ebook.pdf (accessed on 27.11.11)
49
UNCITRAL Model Law on International Commercial Arbitration, available at
http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbititration.html (accessed on 27.11.11)
48

15

appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present its
case; or (iii) the award deals with a dispute not contemplated by or not falling within the terms of
the submission to arbitration, or contains decisions on matters beyond the scope of the
submission to arbitration, provided that, if the decisions on matters submitted to arbitration can
be separated from those not so submitted, only that part of the award which contains decisions on
matters not submitted to arbitration may be set aside; or (iv) the composition of the arbitral
tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless
such agreement was in conflict with a provision of this Law from which the parties cannot
derogate, or failing such agreement, was not in accordance with this Law; or (b) the court finds
that: (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law
of this State; or (ii) the award is in conflict with the public policy of this State.
The grounds for annulment under art. 34 of the Model Law have also vastly inspired the drafting
of art. V of the New York Convention. As at date, 66 countries have adopted the Model Law as
part of their national arbitration legislation.50 It is to be noted however, that less than one third of
these countries have actually faithfully adopted Art. 34 of the Model Law. England51 and
Australia52, for example, give a party applying for annulment of an award, significant
opportunity to obtain the judicial review of the substantive reasoning of a non-domestic award.
Moreover, in some countries such as China, South Africa, Egypt and Brazil, the national laws
have implemented additional legal strategies to annul an award that has been rendered in the seat
of arbitration (Gaitis, 2004).53 Conversely, some countries such as France, Sweden and Belgium,
have devised laws which contain less vigorous annulment standards than that of the Model Law.
It is felt that, even in the presence of the Model Law and the New York Convention, the fact that
50

http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbitration_status.html (accessed on
27.11.11)
51
In the UK, s. 103 (2) (5) of the Arbitration Act 1996 list down the grounds for the refusal of recognition or
enforcement of an arbitral award. The list is even longer than that of the Model Law with respect to grounds for
annulment. S. 103 (5) even caters for an award which has been set aside or suspended, and thus provides that where
an application for the setting aside or suspension of an award has been made toa competent authority, the court
before which the award is sought to be relied upon may, if it considers it proper, adjourn the decision on the
recognition or enforcement of the award.
52
In Australia, the International Arbitration Act 1974 (amended in 2006) contains the grounds for annulment of a
foreign arbitral award. Part II, s. 8(3A-11) gives ample scope for a party challenging a foreign arbitral award;
International Arbitration Act 1976, C201100342, Act No. 136 of 1974 as amended, taking into account amendments
up to Statute Law Revision Act 2011
53
Gaitis, J.M, International and Domestic Arbitration Procedure: The Need for a Rule providing a Limited
Opportunity for Arbitral Reconsideration of Reasoned Awards, (2004) 15 Am. Rev. Intl Arb 9, p. 36-39

16

there are so many divergent national approaches to annulment of arbitral awards, bears testimony
to the need for greater harmonization in international commercial arbitration. While it is
important to recognize the uniqueness of national laws, lack of uniformity across jurisdictions
renders the enforcement of arbitral awards something more of a challenge.
The next chapter will evaluate how international commercial arbitration responds to the
multiplicity of aims and objectives of international business, law, and jurisdictions to provide a
three-dimensional response to the enforceability of awards.

17

CHAPTER III
ENFORCEMENT IN NATIONAL COURTS
As the purpose of this dissertation is to assess the effectiveness of the law applicable to
international commercial arbitration, i.e. gauging the extent to which it can balance the
competing priorities of national courts and those of the international framework for recognition
and enforcement of arbitral award, it is thus vital to examine first the different grounds to
challenging an arbitral award and then proceed to conduct a comparative evaluation of the
current trends in national enforcement of arbitral awards.

a) Grounds for Challenging an Arbitral Award

The ability to challenge an arbitral award by way of appeal in the country of the seat of
arbitration is limited in scope. Whether or not it is possible to challenge an arbitral award
depends on both the applicable Rules of Arbitration,54 and the law of the seat of arbitration. In
the UK, the Arbitration Act 1996 regulates the enforcement of arbitral awards and thus provides
the grounds of challenge. Sections 66 to 71 list the powers of the court in relation to the award.
S. 67 provides that (1) [a] party to arbitral proceedings may (upon notice to the other parties and
to the tribunal) apply to the court (a) [c]hallenging any award of the arbitral tribunal as to its
substantive jurisdiction; or (b) [f]or an order declaring an award made by the tribunal on the
merits to be of no effect, in whole or in part, because the tribunal did not have substantive
jurisdiction. In France, the recognition and enforcement of foreign arbitral awards is regulated
by the NCPC. Article 1520 of the NCPC lists down five founds for challenging a foreign arbitral
award, namely that the arbitral tribunal has wrongly declared itself competent or incompetent;
the arbitral tribunal has not been correctly constituted; the arbitral tribunal has rendered a
decision which does not comply with its mission; the principle of contradiction has not been
met; the recognition and enforcement of the award would be contrary to international public
policy55 (translated from French). Part III of the International Arbitration Act (hereinafter IAA)
54

The Rules of art 32 of the UNCITRAL, the LCIA and ICC each state that an arbitral award is final and binding.
Article 1520, Nouveau Code de Procedure Civile, Le recours en annulation n'est ouvert que si le tribunal arbitral
s'est dclar tort comptent ou incomptent ou le tribunal arbitral a t irrgulirement constitu ou le tribunal
arbitral a statu sans se conformer la mission qui lui avait t confie ou le principe de la contradiction n'a pas t
respect ou la reconnaissance ou l'excution de la sentence est contraire l'ordre public international.
55

18

1974 (amended in 2010) provides for the recognition and enforcement of international
commercial arbitral awards in Australia. Mirroring art. V of the New York Convention, the IAA
sets out six grounds under which courts may refuse to enforce a foreign award. In the face of
Australian courts56 reading the grounds listed in the IAA as inclusive, the amended legislation
now expressly provides that the court may only refuse to enforce the foreign award in specific
circumstances.
Logically, each State is distinguished by the varying level of control it exercises over the arbitral
process. This is all the more accentuated in international arbitration than in the domestic sphere,
thus making enforcement of international commercial arbitral awards more complex and multidimensional. Paulsson describes how arbitration in modern society is accurately perceived as a
complex, three-dimensional form of pluralism, in which legal orders are not exclusively those of
states and [thus] frequently overlap (Paulsson, 2010).57 The seat of arbitration determines
whether the appeal is to the Commercial Court of the Queens Bench Division of the High Court
of Justice (UK), to the Cour dAppel in Paris (France), to the Swiss Federal Tribunal
(Switzerland), and so on. Purposefully, the decisions of arbitrators are meant to be final and
binding,58 and this explains why challenges to awards by way of appeal are difficult to make.
Notwithstanding this, the English High Court in the case of Shell Egypt West Manzala GmbH &
Anor v Dana Gas Egypt Ltd59, held that although the UNCITRAL Rules provide that an award is
final, conclusive and binding, this does not exclude the possibility of appealing on a point of law.
In this case, the award was made by an UNCITRAL arbitration tribunal, as specified at clause 14
of the contract between the two firms. Clause 14.3 provided for the dispute to be:
submitted to the arbitrators in such manner as they shall deem appropriate and the decision of the
majority of arbitrators, rendered in writing, shall be final, conclusive and binding on the parties,

56

In Resort Condominiums Inc v Bolwell, [1995] 1 Qd R. 406, the Queensland Supreme Court held that the grounds
for annulment of a foreign arbitral award which are found in the New York Convention and the IAA could be read
as being inclusive and that the court could exercise a general discretion as to whether to enforce an award or not.
57
Paulsson, J, Arbitration in Three Dimensions, (2010) 60(2) I.C.L.Q. 291, p. 291
58
The words final, conclusive, and binding do not exclude the possibility of an appeal on a point of law. Article
26.9 of the LCIA Arbitration Rules and Article 28(6) of the ICC Rules include wording which is effective to exclude
the right of appeal (under section 69 of the Arbitration Act 1996) to the English Court. The UNCITRAL Rules do
not contain such wording.
59
[2009] EWHC 2097 (Comm)

19

and the judgment upon such decision upon such a decision may be entered in any country having
jurisdiction.60

Section 69(1) of the Arbitration Act 1996 permits the parties to an arbitration dispute to exclude
any right of appeal to the Court.61 This was not in dispute but what was under scrutiny was
whether clause 14 of the contract indeed excluded the right of appeal. Gloster J DBE held that
including the words final, conclusive and binding in a fairly standard governing law and
arbitration clause, such as clause 14 above, in an isolated manner, does not mean that the parties,
in the light of all the background knowledge reasonably available to a person, had agreed to
exclude all rights of appeal on points of law under section 69.62 The Court found that the
expression final, conclusive and binding was used in the traditional sense, creating a res
judicata between the parties. Thus, the finality and binding nature of an award does not exclude
the possibility of challenging an award, by any arbitral process of appeal or review () 63 To
prevent the possibility of an appeal on a point of law, it is crucial that parties agreeing to arbitrate
in London under the UNCITRAL Rules include sufficiently clear and unambiguous wording in
the arbitration clause.
The grounds for challenging an arbitral award are also influenced by the difference between the
supervisory court and the enforcing court. This has been the subject of debate in the case of
Dallah Estate and Tourism Holding Co v Ministry of Religious Affairs, Government of
Pakistan.64 The factual background of the case is that Dallah, a Saudi Arabian company
providing services to pilgrims travelling to Saudi Arabia had a long-standing relationship with
Pakistan. The Ministry was responsible for the safety and welfare of Muslim Pilgrims from
Pakistan. A Trust was established by Pakistan for the provision of services to pilgrims. The Trust
was valid through a Presidential Ordinance which expired shortly after. In the meantime, the
Trust and Dallah entered in a contract for the construction and establishment of accommodation
in Mecca. The contract contained a dispute resolution clause which provided for ICC arbitration
in Paris. Although Pakistan was not a party to the contract it however guaranteed the Trusts
60

[2009] EWHC 2097 (Comm), at [4]

Section 69(1) of the 1996 Act provides that unless otherwise agreed by the parties, a party to arbitral proceedings
may (upon notice to the other parties and to the tribunal) appeal to the court on a question of law arising out of an
award made in the proceedings.
62
[2009] EWHC 2097 (Comm), at [38]
63
[2009] EWHC 2097 (Comm), at [38]
64
[2011] 1 All ER 485
61

20

loan obligation Dallah invoked the above clause to initiate proceedings against Pakistan, when
the contract was not performed according to its terms and provisions. The arbitral tribunal upheld
its jurisdiction and awarded Dallah US$20, 000, 000. Subsequently, Dallah sought to enforce the
award before the English courts. However, Pakistan challenged the enforcement by applying to
the Paris Court of Appeal to have the award annulled. Dallah applied for leave to enforce the
award under s.101 of the Arbitration Act 1996 and the application was granted. Later, when
Pakistan sought to set aside the grant of leave, Aikens J held that the government was not party
to the arbitration agreement clause, therefore concluding that there was no valid arbitration
award between both parties.65 Dallah appealed to the Court of Appeal without success.66
The English Supreme Court had to consider whether Pakistan was a party to the arbitration
agreement and whether under art. V(1)(a) of the New York Convention, it could be argued that
there was no valid agreement, thus no possible enforcement. The award being made in France,
the question had to be determined according to French law. Both parties agreed that any
arbitration agreement derive their existence, validity and effect from supra-national law67, thus
making it unnecessary to refer to national law in determining the validity of the award. However,
the latter statement does not mean that the arbitration agreement is totally independent of any
national law.68 Further, Dallahs assertion that the arbitral tribunals decision on jurisdiction
should be given strong evidential weight was rejected by the English Supreme Court. It was
found that the Court had to make an independent determination of the question whether there
was indeed an arbitration agreement between the parties. Thus, reviewing the arbitral tribunals
jurisdiction, the Lords concluded that the tribunal had wrongly decided that Pakistan was party to
the arbitral agreement. Similarly, the French Court of Appeal found that it was entitled to review
the decision of the arbitral tribunal, but came to a different conclusion based on the facts of the
case, finding that Pakistan had been a party to the contract. This complex case at least shows that

65

[2008] EWHC 1901 (Comm)

[2009] EWCA Civ 755
67
[2011] 1 All ER 485, at [15]
68
Poudret, J-F and Besson, S, Comparative Law of International Arbitration, (2007, Sweet and Maxwell) 2nd
Edition, p.180; Fouchard, Gaillard, Goldman in International Commercial Arbitration (1999) p. 440 also noted the
unfortunate terminology found in French decisions which describe arbitration agreements as autonomous from any
national law and possessing their own effectiveness.
66

21

both the French and the UK courts believe that they are better placed to determine a tribunals
jurisdiction than the tribunal in question.69

b) The Assessment of National Systems of Enforcement

An evaluation of the responsiveness of national systems of enforcement in dealing with
challenges to the validity of an international arbitral award is necessary to measure the
effectiveness of international commercial arbitration in terms of enforceability of awards.
Annulment standards are far from uniform throughout the world. However, the national laws of
many countries have retained the principle that courts at the place of arbitration have primary
jurisdiction to annul arbitral awards.70 This notion, in fact, has been adopted by most states,
including England, France, Germany, Greece, Hungary, India, Lebanon, Mexico, the
Netherlands, Russia, Scotland, Spain and Ukraine.71 It is to be noted however, that some States
have been developing annulment awards which disregard the well-respected principle of primary
jurisdiction. This is not to say that this approach is necessarily wrong in essence when the multidimensional domain of international commercial arbitration is considered. In several countries,
court decisions or positive law have created an extra-territorial jurisdictional rule. This rule
allows national courts to exercise their jurisdiction over the annulment of arbitral awards which
have been rendered outside their territory. Some commentators have warned that this concept,
which has been developed in such countries as Pakistan, Brazil, Indonesia, Saudi Arabia, etc, can
potentially create a legally unstable climate and insecurity in international business. Indeed, it
is worrying to note that this framework of extra-territorial jurisdiction not only increases the
risk attributed to doing business internationally, but also gives national courts the authority to
hold, through doubtful reasoning, that they possess jurisdiction over the annulment of an award
which has been rendered abroad and [which is] unfavourable to their nationals.72
There will be an analysis of the British and French systems of enforcement of international
commercial arbitral awards as the author of this dissertation is a Mauritian national who seeks an
understanding of the mechanisms for the enforcement of foreign arbitral awards. The
69

Martinez, A, Dallah, A Tale of Two Judicatures, (2011) 14(2) Intl. Arb. L. Rev, N4-8
Gharavi, H. G, The International Effectiveness of the Annulment of an Arbitral Award (2002, Kluwer Law
International)
71
Gharavi, p. 12-15
72
Gharavi, p. 24
70

22

government of Mauritius has expressed its ambition of making the island a hub for the handling
of international commercial arbitral disputes for the Southern African region. As it is, Mauritius
has a hybrid legal system of French civil law and British common law, the island having been
under both British and French colonial rule in the past. Therefore, Mauritius is willing to draw
inspiration from these two jurisdictions which have different but richly and legally-provoking
national systems of enforcement of foreign arbitral awards.

i. International Arbitration and the English Courts

Enforcement and recognition of international commercial arbitration in the UK is subject to the
provisions of the Arbitration Act 1996, which contains a specific part dealing with the
Recognition and Enforcement of Certain Foreign Awards. The Act recognizes the New York
Convention award73 in the following way:
A New York Convention award must be recognized as binding on the persons as between whom it
was made, and may accordingly be relied on by those persons by way of defence, set off or
otherwise in any legal proceedings in England, Wales and Northern Ireland. A New York
Convention award may, by permission of the court, be enforced in the same manner as a judgment
or order of the Court to the same effect. Where permission is so given, judgment may be entered in
terms of the award.74

The landmark case of Dallah75 concerning the practicalities of enforcing international

commercial arbitral awards needs to be revisited because it gives an insight into the complexities
which practitioners of international arbitration law need to grapple with in advising potential
clients. In this case, as was seen above, it fell upon the UK Supreme Court to determine the issue
regarding the existence of any relevant arbitration agreement, under relevant provisions of the
1996 Act76, which themselves are a reflection of the art. V(1)(a) of the New York Convention.77
The debate again turned to the three-dimensional fluid relationship between the enforcing court
(in this case, the UK courts) and the arbitral tribunal; the relationship between the supervisory
73

Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (United Nations)
Section 101, Arbitration Act 1996
75
[2011] 1 All ER 485
76
Arbitration Act 1996
77
Art. V(1)(a) prescribes that recognition and enforcement of the award may be refused, at the request of the party
against whom it is invoked, only if that party furnishes to the competent authority where the recognition and
enforcement is sought, proof that: (a)[t]he parties to the agreement referred to in article II were, under the law
applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have
subjected it or, failing any indication thereon, under the law of the country where the award was made()
74

23

courts at the seat of arbitration (here the French courts) and the arbitral tribunal; and the
relationship between the enforcing court and the supervisory court at the seat of arbitration.
The decision of the UK Supreme Court to hold that it could proceed to a de novo review of the
arbitral tribunals competence has been widely criticised as this seemingly fails to acknowledge
the complexities of international commercial arbitration and its interaction with national
courts.78 The Supreme Court, in its reasoning, rejected Dallahs claim that a reviewing court
should adopt a flexible and nuanced approach.79 Lord Mance quoted both case law and
relevant academic writings from the UK, France and the USA in holding that the enforcing court
was neither bound nor restricted by the findings of an arbitral tribunal. 80 He indeed noted that
neither art. V(a)(1) nor s. 103(2)(b)81 hints at any restriction on the nature of the exercise open,
either to the person resisting enforcement or to the court asked to enforce an award, when the
validity of the supposed arbitration agreement is in issue.82 The English courts therefore put
forward the proposition that art. (V)(1)(a) leaves open the standard of review in relation to the
enforceability of a foreign award. This stance weakens the role of the arbitral tribunal and can
lead to eroding the very essence of international commercial arbitration as well as weakening the
principle of recognition and enforcement of foreign arbitral awards. This is because the
effectiveness of foreign arbitral awards lies in the finality of such an award, as well as in its
procedural efficiency. As will be noted below, French law also recognises that an enforcing court
at the seat of arbitration has the authority to conduct a review of an arbitral tribunals decision on
jurisdiction.

ii. International Arbitration and the French Courts

In France, national and international commercial arbitration is subject to the NCPC.83 This has
been recently amended in January 2011, to modernize French arbitration law at the national and
international levels; to simplify the rules of the arbitration agreement, those of double
exequatur, and those of enforcement and recognition of awards; to affirm the authority of the
78

Tan, P, Competing Priorities in International Commercial Arbitration, (2011) 14(3) Intl. A. L. R. 67, p. 67
[2011] 1 All ER 485
80
[2011] 1 All ER 485 at [1-90]
81
Art 103(2)(b) of the Arbitration Act 1996 lists down the grounds for challenging an arbitral award.
82
[2011] 1 All ER 485 at [28] per (Lord Mance)
83
Code de Procedure Civile, Version consolide au 11 novembre 2011,
http://www.legifrance.gouv.fr/affichCode.do;jsessionid=5D3A241CAA323F1F90080261D41ACDD0.tpdjo06v_2?c
idTexte=LEGITEXT000006070716&dateTexte=20111124 (accessed on the 24 November 2011)
79

24

arbitral tribunal, thus giving the institution the opportunity to render either partial or full awards;
and finally to reinforce the role of the French judge as that of complementing and assisting the
arbitrator (s). Part IV of the NCPC is similar to the Arbitration Act 1996 in that it also contains
specific sections on the arbitration agreement84, enforcement practicalities85, grounds to the
annulment of an arbitral award86, as well as recognition of foreign arbitral awards87. Fouchard,
Gaillard and Goldman (1999) have observed that:
[e]ven today, the competence-competence principle is all too often interpreted as empowering the
arbitrators to be the sole judges of their jurisdiction. That would be neither logical nor acceptable.
In fact, the real purpose of the rule is in no way to leave the question of the arbitrators jurisdiction
in the hands of the arbitrators alone. Their jurisdiction must instead be reviewed by the courts if an
action is brought to set aside or to enforce an award.88

This assertion as to the apparent power vested upon the enforcing court at the seat of arbitration
is in line with the relevant provisions of the French NCPC concerning the enforcement and the
grounds for annulment of arbitral awards. However, there is also another line of thought in
France which purports that arbitrators derive their authority from an autonomous arbitral legal
order. This idea has been developed and perfected for around fifty years among a range of
French scholars, extending even to judicial pronouncements, but not yet subject to legislative
reforms. Gaillard (2008)89, asserts that the arbitrators power to judge derives from an
autonomous arbitral legal order, something which he describes as operating outside the sphere
of any national legal order, that is neither the place of arbitration (the seat of arbitration), nor the
place of execution of the award (both the supervisory court at the seat of arbitration and the
enforcing court). Gaillard refers to the rules of the ICC and the LCIA respectively to demonstrate
that the arbitrator (s) must make every possible effort to ensure the enforceability of arbitral
awards, especially those having commercial and cross-border aspects. Paulsson (2010) criticises
this view and suggests that as far as French judicial pronouncements have confirmed that
arbitrators are not integral parts of the judicial organization of the state, this only serves to
prove that:
84

Chapitre 1, Titre Ier, Livre IV Code de Procdure Civile

Chapitre 4-5, Titre Ier, Livre IV Code de Procdure Civile
86
Chapitre 6, Titre Ier, Livre IV Code de Procdure Civile
87
Chapitre 1-4, Titre IIme, Livre IV Code de Procdure Civile
88
Fouchard, Gaillard, Goldman, International Commercial Arbitration, (1999, Kluwer Law International,1999),
Gaillard and Savage (eds)
89
Gaillard, E, Aspects philosophiques du droit de larbitrage international, (2008, Martinus Nijhoff Publishers)
85

25

the French legal order is willing to give effect to arbitral awards when enforcement is sought in
France without concerning itself with the views of the courts of the seat. It does not demonstrate
the existence of an autonomous arbitral legal order. It is but the reaction of a single national order
among the multiplicity of orders which may have the occasion to play a role in the life of an
arbitration.90

Therefore, as has been rightly noted by the Swiss scholars Poudret and Besson (2007), this
relatively novel French notion of the separability of arbitration clauses and the concept of an
autonomous legal order ensuring the enforceability of arbitration awards, is merely part of
French law and in no way, reflects the reality of any international or transnational system of
international commercial arbitration.91 The above debates surrounding the enforceability of
arbitral awards under French law convince us that a single unifying theory cannot be applied to
the understanding and functioning of international commercial arbitration. Just like their British
counterparts, French practitioners dealing with enforcement issues must grapple with the
complexities of a multi-faceted set of notions which are present in foreign arbitral awards. These
notions are interesting but contradictory at times, displaying the fact that the manifold priorities
in international commercial arbitration require a more flexible and nuanced approach (Tan,
2011)92, the very argument of the losing side in Dallah.
The next chapter will focus on the attempts at harmonizing the law relating to international
commercial arbitration. From the humble beginnings of the UNCITRAL to the near-universal
application of the New York Convention, international commercial arbitration has come a long
way by navigating the complexities of national systems of enforcement of arbitral awards. The
challenge of finding a unifying theory of international commercial arbitration has been
excruciatingly painstaking. But as will be evident from Chapter IV of this dissertation, the quest
for harmonization of the law applicable to international commercial arbitration has been
extremely enriching for practitioners, academics and jurists alike.

90

Paulsson, p. 299
Poudret and Besson (2007), p. 185
92
Tan, p. 72
91

26

CHAPTER IV
HARMONIZATION
International commercial arbitration has the potential of serving as a vehicle of uniform law and
legal harmonization (Gelinas, 2010).93 As the international business community has continued to
choose commercial arbitration over national courts for resolving international commercial
disputes, the need for procedural harmonization is all the more being felt. The increasing scope
for challenging an arbitral award has limited the means of ensuring a cost-effective, fair and
timely resolution of dispute. Without procedural uniformity throughout jurisdictions, challenging
an award which has been duly made by an arbitral tribunal becomes all too easy. Accordingly,
parties have thus begun to demand that the possibility for challenging an award be minimized
(Forster, 2008).94 This chapter will consider how the growing use of international commercial
arbitration to resolve disputes has lead to a push for procedural and substantive legal
harmonization of its rules. Then an assessment of the effectiveness of this drive for
harmonization will be carried out by conducting an analysis of some jurisdictions which have
adopted the Model Law. Finally, the current challenges to harmonization of international
commercial arbitration rules will be considered in depth.

a) The Need for Harmonization

Recognition and enforcement proceedings are sought in the country where the defaulting party
has his/her assets. Usually, the place of enforcement of an award might be unforeseeable at the
time of drafting the arbitration agreement or arbitral proceedings. Moreover as has been
demonstrated in Chapter III of this dissertation, domestic arbitration laws vary across
jurisdictions. Therefore, it was essential to bring about international conventions which would
attempt to promote enforcement of foreign arbitral awards in various jurisdictions and also
devise ways to harmonize enforcement proceedings. The first significant international
convention on arbitration was the Geneva Protocol on Arbitration Clauses of 1923 (the Geneva
93

Gelinas, F, Peeking through the Form of Uniform Law: International Arbitration Practice and Legal
Harmonization (2010) 27 J. Intl Arb 317, pp. 317-318
94
Forster, D and Edwards, D, Challenges to Arbitrators: The European and Middle Eastern Arbitration Review
(2008), Transnational Dispute Management (eds)

27

Protocol). The main intention of the drafters of the Geneva Protocol was to ensure that arbitral
awards would be enforced in their states of origin. The Geneva Protocol had four principal aims.
Firstly, to oblige contracting states to recognize the validity of agreements to arbitrate disputes
between parties who were subject to the jurisdiction of the various contracting States, regardless
of where the arbitration took place95; secondly, to require contracting States to ensure that
awards made within their jurisdictions are executed in accordance with their domestic laws96;
thirdly, to oblige courts in contracting States to refer disputes covered by the arbitration
agreement to the appointed arbitrators, rather than proceeding with the matter, and fourthly to
provide by what rules the arbitral procedure will be recognized as being regulated and to oblige
contracting States to facilitate arbitral proceedings in their respective countries.97
Consequently, the Geneva Convention expanded on the provisions of the Geneva Protocol. The
scope was widened to make an award enforceable not only in the State of origin (country of the
seat of arbitration), but also in all contracting States. The Geneva Convention was seen as being
pro-enforcement, in that it reduced the burden of the party seeking enforcement and also
considerably limited the measures available for a defaulting party to challenge the arbitral award.
The Geneva Protocol and Convention had a positive role in leading to the promotion of
international commercial arbitration, but it soon became apparent that these two international
legal tools were insufficient to cater for the increasingly complex nature of international disputes.
Indeed, in 1953, a report by the ICC forming the basis of the draft convention adopted by the
Committee on International Commercial Arbitration criticised the fact that the 1927 Geneva
Convention no longer corresponded to the requirements of international trade.98 It was felt by
the international community, as well as practitioners around the world, that there could be no
progress without the full recognition of the conception of international awards.99
More importantly, the ICC report heralded the drafting of the New York Convention,
highlighting the fact that:

95

Article I, Geneva Protocol on Arbitration Clauses 1923 (hereinafter the Geneva Protocol)
Article V, Geneva Protocol
97
Article II, Geneva Protocol
98
Lisbon congress of the International Chamber of Commerce, 1951, ICC Publication no. 174; Report and
Preliminary Draft Convention adopted by the Committee on International Commercial Arbitration at its meeting of
13th March 1953
99
Same as above.
96

28

[t]he idea of an international award, i.e. an award completely independent of national laws,
corresponds precisely to an economic requirement. It is certain that a commercial agreement
between the parties, even for international transactions, will always be linked to a given national
system of law. Nevertheless, the fact that an award settling a dispute arising in connection with this
agreement will produce its effects in different countries makes it essential that it should be enforced
in all these countries in the same way. The development of international trade depends on this.100

Subsequently, the ICC submitted its complete proposal to the United Nations Economic and
Social Council for a new Convention which would pave the way for an international award
completely independent of national laws. It has already been seen in Chapter II of this
dissertation how the New York Convention presently functions as an effective means of
enforcing and recognizing international commercial arbitral awards, albeit the numerous
challenges which have been highlighted in Chapter III.
The quest for harmonization in international commercial arbitration also leads arbitrators to rely
on written transnational instruments, and this regardless of whether their applicability can be
attributed to official state decisions or not. For example, the United Nations Convention on
Contracts for the International Sale of Goods (hereinafter the Vienna Sales Convention) is
often applied by arbitrators without them pausing to reflect whether its rules are strictly
applicable in international commercial arbitral awards (Moore, 2006).101 This is also the case for
the UNIDROIT Principles of International Commercial Contracts (hereinafter the Principles)
which arbitrators and drafters of international commercial arbitral contracts have recourse to
when devising the modalities for enforcement and recognition of foreign awards. Although the
Preamble to the Principles sets forth rules for general international contracts, arbitrators often
base themselves on the latter to determine international commercial arbitral awards (Jolivet,
2006).102 The Preamble highlights the fact that the Principles:
shall be applied when the parties have agreed that their contracts be governed by them; [t]hey
may be applied when the parties have agreed that their contract be governed by general principles
of law, the lex mercatoria or the like; [t]hey may be applied when the parties have not chosen any

100

Same as above.
Moore, A, Application of the Vienna International Sales Convention in Arbitration (2006) 17/1 ICC
International Court of Arbitration Bulletin 43
102
Jolivet, E (ed), UNIDROIT Principles: New Developments and Applications (2006) (Paris, ICC Publishing)
101

29

laws to govern their contract; [t]hey may be used to interpret or supplement international uniform
law instruments; [t]hey may be used to interpret or supplement domestic law.103

Therefore, the current existing international laws and international legal instruments regulating
international commercial arbitration demonstrate the power of harmonization to create a uniform
application of rules in this field, while also allowing for diversity within the boundaries of
international commercial arbitration. Convergence of rules need not be the only aim of
harmonization. Additionally, harmonization should also endeavour to promote legitimate
difference which is the space in which nations can generally take differing approaches with
respect to the specific policy choices embedded in each others national laws, but nevertheless
respect those laws as legitimate means to the same ultimate ends.104 It has been seen in Chapter
III of this dissertation how the existing gaps across national jurisdictions favour too much scope
in challenging duly rendered foreign arbitral awards. McIssac (2010) has proposed that:
by relying on harmonized challenge procedures that are updated to reflect current trends and to
close existing gaps, the arbitration community can more effectively serve its clients through a
standard that promotes certainty, minimizes delays, and preserves proportional party autonomy. All
the while, arbitration will remain the top choice for trans-border dispute-resolution.105

The next section of this chapter will consider the extent to which the drive for harmonization of
international commercial arbitration rules has been successfully implemented in two select
countries around the world.

b) The Successful Implementation of Harmonization

The New York Convention is formally recognized as the most successful multilateral treaty in
the area of international trade. As has been observed above in Chapter II of this dissertation, the
Convention binds signatory States to refer disputes subject to an arbitration agreement to arbitral

103

Preamble to the UNIDROIT Principles of International Commercial Contracts (2004) At its 90th session the
Governing Council of UNIDROIT adopted the third edition of the UNIDROIT Principles 2010; Published by the
International Institution for the Unification of Private Law, Rome
104
Harmonization is generally understood as the convergence or coordination of rules and policies. Anne Marie
Slaughter argues that while harmonization networks exist primarily to create compliance, at the same time, legal
diversity or legitimate difference allows for legal and regulatory diversity within certain boundaries. Slaughter,
A-M, A New World Order (Princeton University Press, 2004)
105
McIssac, C, Challenging the rules of the game: certainty through procedural harmonization of challenges in
international commercial arbitration, (2010) 13(4) Intl Arb. L. Rev. 127, at p. 127

30

mechanisms and to enforce foreign arbitral awards rendered in the country of the seat of
arbitration. Two countries in particular, namely Canada and Singapore, are examples of the
efficiency of harmonization, especially in bringing a more balanced perspective to international
commercial arbitral awards. The author will first conduct an assessment of the Canadian system
of enforcement and recognition of foreign arbitral award. Then a thorough assessment of the
implementation of harmonization in the Singaporean system of international commercial
arbitration will be carried out.

i. The Canadian System of Enforcement and Recognition of Foreign Arbitral

Awards
Canada acceded to the New York Convention in 1986, and also became the first country to adopt
the Model Law. Federalism required independent adoption by the legislative body of each
jurisdiction, so both the accession to the New York Convention and the adoption of the Model
Law were significant achievements for Canada. It is impressive that all, but one of the common
law provinces and the three territories, enacted an international commercial arbitration statute
which incorporated the text of the Model Law as an appendix.106 Qubec adapted the Model Law
to the structure and civilian style of its relevant codified legislation. For this reason, its
arbitration law is contained in the Civil Code and the Code of Civil Procedure, which both
provide a uniform framework expressly adopting the substantive law of the Model Law for
domestic and international arbitration. Likewise, British Columbia enacted legislation based on
the Model Law. The harmonization of international arbitration law in Canada is an on-going
process, as part of an international harmonization movement. This has been described in the light
of the UNCITRALs mission to further the progressive harmonization and unification of the
law of international trade (Leebron, 1995)107 and by extension, that of international arbitration
law. The broad international consensus which triggered the Model Law and the New York
Convention, gave the relevant Canadian authorities the impetus and the faith to modernize and
106

International Arbitration Act, R.S.A 2000, c-I-5 (Alberta); International Commercial Arbitration Act, S.S 19881989, c. I-10.2 (Saskatchewan); International Commercial Arbitration Act, S.M 1986-1987, c. 32, C.C. S.M. c. C151
(Manitoba); International Commercial Arbitration Act, R.S.O. 1990, c. I.9 (Ontario); International Commercial
Arbitration Act, S.N.B. 1986, c. I-12.2 (New Brunswick); International Commercial Arbitration Act, R.S.N.S. 1989,
c. 234 (Nova Scotia); International Commercial Arbitration Act, R.S.P.E.I. 1988, c. I-5 (Prince Edward Island);
International Commercial Arbitration Act, R.S.N.L. 1990, c. I-15 (Newfoundland and Labrador); International
Commercial Arbitration Act, R.S.N.W.T. 1988, c. I-6 (Northwest Territories, also applicable in Nunavut);
International Commercial Arbitration Act, R.S.Y. 2002, c. 123 (Yukon).
107
Leebron, D. W, Claims for Harmonization: A Theoretical Framework, (1995) 27 Can. Bus. L. J 63, p. 75

31

harmonize the framework of international commercial arbitration in the country, despite the
challenges of federalism.
Turning to the options available to challenge a foreign arbitral award, the Canadian legal system
is largely pro-enforcement. This is immediately apparent by studying recent Canadian case law
(both at the federal and provincial levels) which demonstrates that courts are largely giving effect
to the provisions of the Model Law and the New York Convention. This is achieved by a marked
tendency by Canadian courts to enforce arbitral awards and to limit the scope of judicial review
over enforcement and recognition of foreign arbitral awards. Indeed, since Canadas accession to
the New York Convention, Canadian courts have applied a consistent jurisprudence of restraint
in reviewing foreign international commercial arbitration awards. Challenges to foreign arbitral
awards based on public policy grounds have been rejected by the Canadian courts. The case law
clearly highlights the fact that the refusal to enforce a foreign arbitral award on grounds of its
violation of the public policy of the forum will only be justified where the award contravenes a
fundamental principle of justice or fairness in substantive or procedural respects.108
The authoritative case of Schreter v. Gasmac Inc109 is an example of the pro-enforcement stance
adopted by the Canadian courts. In this case, the Ontario court granted an application under s. 35
of the Model Law, as adopted in the Ontario International Commercial Arbitration Act 1991
(hereinafter the 1991 Act)110, for an international arbitral award made in the American state of
Georgia to be enforced and recognized in the enforcing court of Ontario. The Canadian
respondents resisted enforcement on various grounds, namely that (1) the award had merged into
the Georgian court judgment and could only be enforced as a foreign judgment but not as an
international award; (2) there was a denial of natural justice because the arbitrator had failed to
give reasons for the award, and (3) it would be contrary to the public policy of Ontario to enforce
the award because the award included a sum which represented an acceleration of further
damages not contemplated by the agreement between the parties. In a judgment which until now
is used as the basis for enforcing and recognizing foreign arbitral awards, the Ontario court held
that the 1991 Act did not give the court jurisdiction to refuse to enforce an award where such

108

Fleet v. Bimman Realty Inc. [1994] O.J 3018 (Ont Gen. Div) Somers J, Corporacion Transnacional [2000] 49
O.R (3d) 414 (Ont. C.A)
109
Schreter v. Gasmac Inc. (1992) 7 0. R. (3d) 608, 89 D.L.R. (4th) 365 (Ont. Gen. Div.).
110
Arbitration Act, 1991, S.O

32

award had been confirmed by a court order or judgment in the country of the seat of arbitration
(the American State of Georgia). The Court clearly stated that it was clear that any such bar to
enforcement would create a gaping hole in the scope of the [1991] Act111 and would thus prove
to be a deterrent for those who would wish to resort to the mechanism of international
commercial arbitration with confidence in the enforcement forum. The Court further highlighted
that:
The purpose of enacting the Model Law in Ontario and in other jurisdictions is to establish a
climate where international commercial arbitration can be resorted to with confidence by parties
from different countries on the basis that if the arbitration is conducted in accordance with the
agreement of the parties, and award will be enforceable if no defences are successfully raised under
articles 35 and 36[of the Model Law as adopted in Ontario].112

ii. The Harmonization of International Commercial Arbitration in Singapore: A

Success Story
There has been a marked increase in the number of international arbitration with Singapore as
the seat of arbitration. Singapore is strategically located at the heart of Asia and is a hub for
world international commerce. The Singapore International Arbitration Act 1994 (hereinafter
IAA 1994) demonstrated the countrys acceptance of international best practice for
international commercial arbitration by the simultaneous adoption of the Model Law and the
New York Convention. Singapores International Arbitration (Amendment) Act 2009
(hereinafter Amending Act 2009) came into force in January 2010 and implemented a vast
proportion of the amendments brought to the Model Law by the UNCITRAL in 2006. The
Amendment Act 2009 currently allows Singaporean courts to grant interim orders such as
disclosure and the freezing of assets in arbitrations which have foreign seats.
It is encouraging to note that over the years, the Singapore High Court (hereinafter SHC) has
built up a substantial body of case law on international arbitration. The trend in Singapore is that
the courts have shown their support for international arbitration awards and also adopted a proenforcement stance. The courts have expressed a reluctance to intervene in duly rendered
international arbitral awards. However, the recent decision in the AJT v AJU113 case is troubling
111

(1992) 7 0. R. (3d) 608, at [618]

(1992) 7 0. R. (3d) 608, at [619]
113
AJT v AJU [2010] S.G.H.C. 201, Singapore High Court, Chan Seng Onn J.
112

33

because for the first time, the SHC set aside an award under art. 34(2)(b)(ii) of the Model Law,
finding that it conflicted with Singapore public policy. Although the case also shows that the
SHC will respect the finality of a foreign arbitral award and only on very rare occasions will it
set aside an award which contradicts public policy, the decision leaves a gap in the enforcement
system of foreign awards in Singapore. The case of AJT v AJU is interesting because in the early
months of 2010, the SHC had set an extremely high threshold for challenging duly rendered
foreign arbitral awards. Indeed, in the Sui Southern Gas Co Ltd v. Habibullah Coastal Power Co
(Pte) Ltd114 case, the SHC held that a party challenging an arbitral award on the basic of a breach
to public policy had to demonstrate egregious circumstances such as corruption, bribery or
fraud, which would violate the most basis notions of morality and justice.115 In AJT v AJU, an
arbitral tribunal held that a settlement agreement was not illegal. AJT sought to set the award
aside in the SHC on the basis that it violated public policy provisions. Referring to the very high
threshold set in Sui Southern Gas Co Ltd, Chan Seng Onn J affirmed that to prove conflict with
public policy, the applicant had to show that enforcement of the foreign arbitral award would
shock the conscience, be clearly injurious to public good or would contravene fundamental
notions and principles of justice.116 However, the SHC set aside the award, finding that to
uphold it would be tantamount to enforcing an illegal agreement which was contrary to the
public policy of Thailand, and by operation of the principle of international comity, that of
Singapore.117
This decision was widely criticised as it exemplified a move towards a substantive and proactive
approach to uncovering illegality in agreements forming the basis of an arbitral award. It is
feared that this could lead to an erosion of the concept of recognition and enforcement of foreign
awards in Singapore. While in the past, the courts in Singapore adopted a more pro-enforcement
approach to international arbitral awards, the decision of the High Court in the above case
represents a radical shift away from the traditional exceptionality concept of grounds to
challenging an arbitral award. For this reason, Megens and Finch (2011) warn that [t]he real
issue for practitioners in this area as well as their clients is that this case reveals that the
114

[2010] S.G.H.C 62
Same as above
116
[2010] S.G.H.C. 201
117
[2010] S.G.H.C. 201 at [34]; citing Peh Teck Quee v Bayerische Landesbank Girozentrale [199] 3 S.L.R. (R) 842
at ]45] (Yong Pung How C.J.)
115

34

exercise of a courts discretion to investigate the legality of an agreement underlying an award

may be capricious.118 The SHC, after reviewing the authorities to determine the case, stated
that in an appropriate case, a supervisory court may be empowered to examine whether an
arbitral tribunals award was conclusive or not. This affirmation by the SHC introduces a level of
uncertainty in the recognition and enforcement of foreign arbitral awards in Singapore.
However, it should be noted that the case proceeded on appeal119 to the Singapore Court of
Appeal, (hereinafter SCA) which in August 2011, overturned the decision of the SHC and held
that the latter had erred in reopening the arbitral tribunals finding of fact that the agreement in
issue was not illegal. The SCA thus reaffirmed the narrow scope of the public policy ground for
challenging an arbitral award under art. 34(2)(b)(ii) of the Model Law, which as we have seen,
forms part of the Amending Act 2009. It was an opportunity for the SCA to remind the
Singapore courts of the prevailing international judicial and legislative primacy to the autonomy
of arbitral proceedings and the upholding of the finality of foreign arbitral awards. As such, the
traditional understanding of the public policy ground as prescribed by the Model Law is that it
should be construed narrowly. This is why it is only reserved for exceptional cases. Only in
instances where arbitral awards violate the forums most basic notions of morality120, can a
court be empowered not to enforce such an award. Lowering the threshold in determining
whether the arbitral award breached provisions of public policy and revisiting the findings of fact
of the arbitral tribunal would be contrary to the legislative intent of the Amendment Act 2009.
This is why the SCAs decision is welcomed because it is in line with harmonization by
recognizing that the international commercial arbitration regime should exist as an autonomous
system of private dispute resolution, capable of meeting the needs of the international business
community and instilling faith in clients who resort to arbitration for the settlement of disputes.
The final section of this chapter will deal with the challenges to harmonization faced by a
particular jurisdiction which has enacted domestic legislation in line with the Model Law and the
New York Convention.

118

Megens, P and Finch, D, Setting Aside an Award on Public Policy Grounds: AJT v AJU, (2011) 77(1) Case
Comment, Arbitration 155, p. 157
119
AJU v AJT [2010] SGCA 41
120
Per the Singapore Court of Appeal in PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2007] 1 S.L.R (R)
597

35

c) The Challenges to Harmonization

The challenges to harmonization are manifold, in that international commercial arbitration
pursues several aims, one of which is the enforcement and recognition of foreign arbitral awards.
For this reason, it is hoped that jurisdictions around the world shall place limits on the grounds
for annulment of a duly rendered arbitral award. However, due to the multiplicity of
jurisdictions, and the fact that not all of them have similar rules of procedure and the same stance
towards enforcement, harmonization of international commercial arbitration is a difficult process
of balancing the competing priorities of domestic courts and those of the international business
community. U.S jurisprudence is particularly revealing of the non-uniform application of
international commercial arbitration harmonization rules. This is why an assessment of the
mechanisms for the enforcement of foreign arbitral awards in the U.S is an important step in
determining how courts have been trying to perform the above balancing exercise. It will first be
considered how the enforcement of foreign awards is dealt with in U.S courts. Then there will be
a review of the stance adopted by U.S courts in dealing with annulled foreign arbitral awards.

i. The Enforcement of Arbitral Awards in the United States

Chapter II of the Federal Arbitration Act (hereinafter FAA) allows the implementation of the
New York Convention in U.S courts.121 To encourage parties in resorting to arbitration of
disputes arising out of transactions by American business in foreign countries, and also to unify
standards of arbitration agreements and enforcement of arbitral awards, the implementing
legislation was enacted. The recognition and enforcement of foreign awards is governed by s.
207 of the FAA in the U.S. This section prescribes that:
Within three years after an arbitral award falling under the Convention is made, any party to the
arbitration may apply to any court having jurisdiction under this chapter for an order confirming
the award as against any other party to the arbitration. The Court shall confirm the award unless it
finds one of the grounds for refusal or deferral of recognition and enforcement of the award
specified in the said Convention (emphasis added).

While courts in the U.S have generally been highly inclined to enforcing and recognizing foreign
arbitral awards under the New York Convention, recently there have been procedural as well as
substantive issues that U.S courts have had to deal with, and the latter have not always shown a
121

9 U.S.C 201-208 (s. 201-208)

36

commitment towards international coordination and harmonization of international commercial

arbitration standards. The author of this dissertation will examine two procedural bars to
enforcement in the U.S courts.

1. Personal Jurisdiction as a Ground for Annulment of an Arbitral Award

In recent years, some U.S courts have consistently declined to enforce arbitral awards, basing
themselves on the notion of lack of personal jurisdiction. This notion prescribes that in order for
an arbitral award to be enforced, the enforcing court is required to either possess personal
jurisdiction over the award debtor or quasi in rem jurisdiction over the latters property. The
Fourth and Ninth Circuit courts have clashed concerning the requirement to demonstrate
personal jurisdiction or quasi in rem jurisdiction for the enforcement of a foreign arbitral
award.122 The Ninth Circuits stance is more in line with the New York Convention and the
Model Law in that it correctly recognized that neither the Convention nor its implementing
legislation [the FAA] expressly requires personal jurisdiction and lack of personal jurisdiction
over the [award-debtor] in the state where enforcement is sought is not among the Conventions
seven defences to recognition and enforcement of a foreign arbitral award.123
The Fourth Circuit relied on the U.S Supreme Courts decision in Shaffer v. Heitner124 where the
latter held that an award-debtor was required to have certain minimum contacts with the
enforcing court so as to prevent the enforcement suit from going against the principles of fair
play and substantial justice. However, the Fourth Circuit failed to take into consideration that one
of the goals of the New York Convention is harmonization in enforcement standards of foreign
arbitral awards. This is the reason why the Supreme Court rightly remarked in Shaffer that once
it had been determined by a court of competent jurisdiction that the defendant is a debtor of the
plaintiff, there would seem to be no unfairness in allowing an action to realize on that debt in a
state where the defendant has property, whether or not that state would have jurisdiction to
determine the existence of the debt as an original matter.125 This rationale of the Supreme

122

Glencore Grain Rotterdam B. V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1128 (9th Cir.2002); Base Metal
Trading Ltd v. OJSC Novokuznetsky Aluminium Factory, 283 F.3d 208, 211 (4th Cir. 2002)
123
284 F.3d at [1121]
124
433 U.S 186 (1977)
125
433 U.S 186 (1977)

37

Court, it would seem, urges U.S courts to adopt a harmonized standard when considering the
enforcement of arbitral awards and judgments rendered in foreign countries.

2. Forum non conveniens as a Bar to Enforcement of an Arbitral Award

Although the concept of forum non conveniens is not a legislative requirement for the
recognition and enforcement of foreign arbitral awards under the FAA, the Second Circuit in
Monegasque de Reassurances S.A.M v. NAK Naftogaz of Ukraine126, affirmed a district courts
dismissal of an action to enforce a foreign arbitral award duly rendered in Russia, on the grounds
of forum non conveniens. The claimant was seeking enforcement in New York, of a multimillion dollar arbitration award that was granted by a court in Moscow. The claimants argument
that forum non conveniens was not one of the grounds enumerated for challenging a foreign
arbitral award under the New York Convention was rejected by the Second Circuit. The latter
held that there was no procedural restrictions in the text of the New York Convention that
prevented the court from applying the procedural doctrine of forum non conveniens as a ground
for annulment of a foreign arbitral award.
It is argued that the Second Circuits reasoning in holding that art. V of the New York
Convention does not give a definitive and exhaustive list of grounds for annulment of a foreign
arbitral award is grossly inconsistent with the language of the FAA which expressly provides that
[t]he court shall confirm the award unless it finds one of the grounds for refusal or deferral of
recognition or enforcement of the award specified in the said Convention.127 (emphasis added).
Moreover, and most importantly, applying the principle of forum non conveniens as an additional
ground for the annulment of a duly rendered international arbitral award is contrary to the notion
of harmonization of international commercial arbitration rules across jurisdictions and flouts the
very principle of the New York Convention which is to unify the standards by which arbitral
awards are enforced in signatory countries.128

126

311 F.3d 488 (2nd Cir. 2002)

9. U.S.C. 207 (2000)
128
Travaux Preparatoires, New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards
1998, Report of the Committee on the Enforcement of International Arbitral Awards (Resolution of the Economic
and Social Council establishing the Committee, Composition and Organization of the Committee, General
Considerations, Draft Convention), E/2704 E/AC.42/4/Rev.1
127

38

ii. Enforcement of Annulled Arbitral Awards in the U.S

Another challenge to the harmonization of international commercial arbitral awards in the U.S
concerns the question of enforcing arbitral awards which have been annulled in the court of the
seat of arbitration. The few U.S courts which have handled the issue have not given a uniform
response to the extent to which annulment in the country of the seat of arbitration implies that an
enforcing court should necessarily refuse to recognize or enforce a foreign arbitral award. In the
Chromalloy Aeroservices v. Arab Republic of Egypt, as has already been observed in Chapter
II(b)(i) of this dissertation, the U.S District Court for the District of Columbia enforced an
arbitral award that had been rendered but then annulled in Egypt, the country of the seat of
arbitration.129 The court focused on the language of art. V(I)(e) of the New York Convention and
determined that it had discretion to enforce an annulled foreign arbitral award.130 The court held
that it could enforce the award based on art. VII of the New York Convention which prescribes
the Convention shall not deprive any interested party of any right he may have to avail
himself of an arbitral award in the manner and to the extent allowed by the law of the country
where such award is sought to be relied upon.
The courts interpretation of art. VII of the Convention apparently meant that it could infer that
Chapter I of the FAA gave Chromalloy the means to enforce the award in the enforcing court,
and that such enforcement could only be refused if it was found that one of the exceptions
contained in the FAA existed. The court concluded that, in the face of strong U.S public policy to
recognize arbitration agreements, not enforcing the annulled award would be tantamount to
violating this compelling U.S policy. Other U.S courts have not provided a satisfactory answer as
to whether the enforcement of foreign arbitral awards in the U.S should remain discretionary or
altogether forbidden. For example, in the Baker Marine (Nig.) Ltd v. Chevron (Nig) Ltd 131 case,
the Second Circuit disagreed on the conclusion reached in Chromalloy that Art. VII allows the
FAA to govern enforcement proceedings of awards which have been vacated in the country of
the seat of arbitration. However the court went on to cite Chromalloy and found that an enforcing
court had a discretionary power to enforce annulled awards if it could be shown that there is an
adequate reason for such enforcement.
129

939 F. Supp. 907

939 F. Supp. 907 at [911]
131
191 F. 3d 194 (2nd Cir. 1999)
130

39

Academics have also been at pains to formulate a uniform theory of the enforcement of annulled
foreign arbitral awards in the U.S. It is put forward by Park (1999) that a court should only
enforce a vacated award when the annulment decision was either procedurally unfair or contrary
to the fundamental notions of justice.132 On his part, Drahozal (2000) suggests an economic
approach to the enforcement of annulled awards which would permit the parties to resolve the
issue by inserting a contractual clause in the arbitration agreement.133 Paulsson (1998) is of the
opinion that courts should enforce vacated arbitral awards only if the basis for such annulment
was not one expressly recognized in international practice.134 However, Gharavi (2002), while
recognizing that the practice of enforcing annulled awards might have some validity, also warns
that the negative consequences of such enforcement are drastic and might generate an instability
prejudicial to international commercial arbitration and [give] a serious blow to the reputation
and development of this international dispute settlement mechanism.135 It can be thus submitted
that while it is possible that the language of Art. V of the New York Convention effectively
suggests the possibility of enforcing annulled arbitral awards, international comity would best be
served by restricting such enforcement to limited occasions. Expanding the scope of enforcement
of annulled foreign arbitral awards would be unfortunate for the project of harmonization and
international coordination of the rules of international commercial arbitration.

132

Park, W, W, Duty and Discretion in International Arbitration (1998) 93 Am. J. Intl L 805, p. 813
Drahozal, C, Enforcing Vacated International Arbitration Awards: An Economic Approach, (2008) 11 Am.
Rev. Intl. Arb 451, p. 478
134
Enforcing Arbitration Awards under the New York Convention: Experience and Prospects 4, U.N Sales No.
E.99.V.2 (1998), UNCITRAL, http://www.uncitral.org/pdf/english/texts/arbitration/NY-conv/NYCDay-e.pdf
(accessed on 01.12.11)
135
Gharavi, p. 119, 138
133

40

CHAPTER V
CONCLUSION
This practiced focused dissertation has delved into the very complex and fluid mechanisms
which form the foundations of international commercial arbitration. It has been put forward that
international commercial arbitration and its efficiency not only depend on the recognition and
enforceability of foreign arbitral awards, but also rest on a willingness by national jurisdictions
to minimize the scope for challenging the validity of a duly rendered award. The author
performed an evaluation into the effectiveness of the redress mechanisms available for a party
seeking to enforce a foreign arbitral award against an award-debtor seeking to challenge such an
award. Furthermore there has been an assessment of the role of international conventions,
especially the Model Law and the New York Convention, in determining whether international
comity favours enforcement or not. However, it has been demonstrated that the multiplicities of
legal systems as well as the problems of interpretation of the provisions of the New York
Convention have prevented national courts from solving the complexities inherent in
international commercial arbitration. This has been evident, from a study of case law, on the
subject of recognition and enforcement of foreign arbitral awards, which demonstrates a lack of
consistency across jurisdictions.
Moreover, it has been proposed that, to understand the multifarious aims of international
commercial arbitration, there is the need to evaluate the interplay of relationships between the
enforcing court and the arbitral tribunal; the supervisory courts at the seat of arbitration and the
arbitral tribunal, and finally the enforcing court and the supervisory courts at the seat of
arbitration. It is argued that whatever the priorities of national courts in their policy with respect
to international commercial arbitration, what is sought is not merely a pro-enforcement stance,
but rather a willingness to comply with one of the fundamental principles of the New York
Convention which is to harmonize the enforcement and recognition of duly made foreign arbitral
awards.
From a practitioners standpoint, it could be safely submitted that the effectiveness of redress
mechanisms for a party seeking to enforce a foreign award, depends first, on a properly drafted
arbitration agreement, on the good faith of both parties, on the efficiency of national jurisdictions
41

in adopting a flexible and nuanced approach to enforcement and recognition of duly rendered
arbitral awards, as well as on the successful implementation of relevant bilateral and multilateral
treaties. Moreover, practitioners of international commercial arbitration are encouraged to
contribute to a better application of the rules relative to enforcement and recognition of foreign
arbitral awards. This can be achieved by bringing to judges the practitioners experience on the
ground. A lawyer-witness, as a practitioner of international commercial arbitration, has the
privilege of being at the centre of international commercial disputes, advising clients as to the
potential for enforcement of arbitral awards, and also making sure that the arbitration agreement
meets the demands of legal certainty and facilitates the settling of disputes. Beyond the roles of
adviser and facilitator, the practitioner had the duty to convey the experiences of parties
expectations in light of agreements and disagreements that emerge from case to case. The
practitioner, as an expert of international commercial arbitration, is well situated to enrich the
reasoning of the courts, which as we have seen, are still struggling to adopt a harmonized
approach to the enforcement and recognition of foreign arbitral awards. The practitioner is thus
called upon to constantly look back and forth, from the abstract to the concrete, from theory to
practice, from the general to the specific, from hypothetical propositions to the specific facts of a
case.136
International commercial arbitration has come a long way from its humble beginnings. The
Geneva Convention, the New York Convention, the work of the UNCITRAL and the willingness
of States to converge towards the harmonization project, have been the driving force of
international commercial arbitration. It has been observed however that States exercise varying
levels of control on the enforcement and recognition of foreign arbitral awards. Such a stance is
understandable in the light of the concept of State autonomy, but less desirable in the context of
the increasing internationalization of international commercial arbitration. The fate of a foreign
arbitral award should not be conclusively and exclusively determined by any of the following,
namely, the country of the seat of arbitration, the country of the supervisory courts, or that of the
enforcement courts. In this sense, national courts should be pressed upon to limit the grounds for
challenging a duly rendered foreign arbitral award. It is to be stressed that the aim of the New
York Convention is to ease enforcement and recognition of foreign arbitral awards and not to
136

Gelinas (2010), p. 329

42

create more scope for challenging the validity of such awards. A staggering reality which has
struck the author in writing this dissertation, is the disappointment expressed by highly
developed legal systems and leading trading nations, regarding the interpretation and application
of the provisions of the New York Convention, especially relating to challenging duly rendered
foreign arbitral award. This flaw, which is a feature of transnational commercial law, can be
reduced by establishing an international tribunal having the task of interpreting uniform
international commercial arbitration rules. It remains to be seen, however, whether States will be
willing and committed to elevating disputes between private parties to the level of state disputes.

43

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47

UNCITRAL,

Table of Statute
Australia
International Arbitration Act 1974 (amended in 2010)

Canada
Arbitration Act, 1991, S.O (Ontario)
International Arbitration Act, R.S.A 2000, c-I-5 (Alberta)
International Commercial Arbitration Act, S.S 1988-1989, c. I-10.2 (Saskatchewan)
International Commercial Arbitration Act, S.M 1986-1987, c. 32, C.C. S.M. c. C151 (Manitoba)
International Commercial Arbitration Act, R.S.O. 1990, c. I.9 (Ontario)
International Commercial Arbitration Act, S.N.B. 1986, c. I-12.2 (New Brunswick)
International Commercial Arbitration Act, R.S.N.S. 1989, c. 234 (Nova Scotia)
International Commercial Arbitration Act, R.S.P.E.I. 1988, c. I-5 (Prince Edward Island)
International Commercial Arbitration Act, R.S.N.L. 1990, c. I-15 (Newfoundland and Labrador)
International Commercial Arbitration Act, R.S.N.W.T. 1988, c. I-6 (Northwest Territories, also
applicable in Nunavut)
International Commercial Arbitration Act, R.S.Y. 2002, c. 123 (Yukon)

France
Code

de

Procedure

Civile,

Version

consolide

au

11

novembre

2011,

http://www.legifrance.gouv.fr/affichCode.do;jsessionid=5D3A241CAA323F1F90080261D41A
CDD0.tpdjo06v_2?cidTexte=LEGITEXT000006070716&dateTexte=20111124

Singapore
International Arbitration Act 1994
48

International Arbitration (Amendment Act) 2009

United Kingdom
Arbitration Act 1996

United States of America

Federal Arbitration Act 2000 - 9 U.S.C

49

Table of Cases
AJT v AJU [2010] S.G.H.C. 201
Base Metal Trading Ltd v. OJSC Novokuznetsky Aluminium Factory, 283 F.3d 208, 211 (4th Cir.
2002)
Corporacion Transnacional, [2000] 49 O.R (3d) 414 (Ont. C.A)
Dallah Estate and Tourism Holding Co v Ministry of Religious Affairs, Government of Pakistan,
[2011] 1 All ER 485
Eastern shipping Co v. AKP Sovcomflot, [1995] 1 Llyods Rep. 520
Fleet v. Bimman Realty Inc, [1994] O.J 3018 (Ont Gen. Div)
Glencore Grain Rotterdam B. V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1128 (9th
Cir.2002)
Hewlett Packcard Inc v. Berg, 61 F.3d 101 (1st Cir.1995)
In the matter of the Arbitration of Certain Controversies between Chromalloy Aeroservices and
the Arab Republic of Egypt , 939 F Supp 907 (DDC. 1996)
Monegasque de Reassurances S.A.M v. NAK Naftogaz of Ukraine, 311 F.3d 488 (2nd Cir. 2002)
Peh Teck Quee v Bayerische Landesbank Girozentrale, [1999] 3 S.L.R. (R) 842
Polish Ocean Line v Jolasry, Cass. civ. 1re, 1993
PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA, [2007] 1 S.L.R (R) 597
Republique Arabe dEgypte v. Societe Chromalloy Aeroservices, (1998) 125 J.D.I
Resort Condominiums Inc v. Bolwell, [1995] 1 Qd R. 406
Schreter v. Gasmac Inc, (1992) 7 0. R. (3d) 608, 89 D.L.R. (4th) 365 (Ont. Gen. Div.).
Shaffer v. Heitner, 433 U.S 186 (1977)

50

Shell Egypt West Manzala GmbH & Anor v Dana Gas Egypt Ltd, [2009] EWHC 2097 (Comm)
Societe Berardi v Societe Clair, (1981), Rev. Arb. 424
Socit Hilmarton v. Socit OTV, [1993] Rev. Arb. 300, (1993) 46 R.T.D. Comm. 646
Socit Pabalk Ticaret Sirketi v. Socit Norsolor, [1985] 112 J.D.I, Cass. Civ. 1re, 9 Oct 1984
Sui Southern Gas Co Ltd v. Habibullah Coastal Power Co (Pte) Ltd, [2010] S.G.H.C 62

51