INTERNATIONAL ARBITRATION

The New York Convention 1958

Domenico Di Pietro

STUDYING LAW AT ROMA TRE FALL SEMESTER

11 November 2010

ARTICLE III

Each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the following Articles. There shall not be imposed substantially more onerous conditions or higher fees or charges on the recognition or enforcement of arbitral awards to which this Convention applies than are imposed on the recognition or enforcement of domestic arbitral awards.

ARTICLE IV1. To obtain the recognition and enforcement mentioned in

the preceding article, the party applying for recognition and enforcement shall, at the time of application, supply:a) The duly authenticated original award or a duly certified

copy thereof; b) The original agreement referred to in Article II or a duly

certified copy thereof.2. If the said award or agreement is not made in an official

language of the country in which the award is relied upon, the party applying for recognition and enforcement of the award shall produce a translation of these documents into such language. The translation shall be certified by an official or sworn translator or by a diplomatic or consular agent.

RESISTING ENFORCEMENTARTICLE V(1)

1. 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: […]

RESISTING ENFORCEMENTARTICLE V(2)

2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that: […]

ARTICLE V: ANALYSIS

• Exhaustive list

• May – No obligation to refuse recognition and enforcement

• Paragraph (1) and (2) work differently:– (1) on party application and with relative

burden of proof– (2) ex officio

ARTICLE V(1)(A)

1. 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) The parties to the agreement referred to in article II were, under the law applicable to them, under some incapacity, orthe 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;

• Corte di Cassazione, 9 May 1996, No. 4342, Société Arabe des Engrais Phosphates et Azotes – SAEPA v. Gemanco Srl

‘legal persons of public law may, unless the parties have explicitly agreed otherwise, undoubtedly agree to arbitration, independent of domestic prohibitions, by expressing their consent and sharing in the international marketplace, the conditions common to all operators.’

• Administrative Tribunal of Damascus, 31 March 1988, Fougerolle SA v. Ministry of Defence of the Syrian Arab Republic

The tribunal refused the enforcement of two arbitral awards against the Syrian Ministry of Defence on the ground that the Syrian party lacked the required capacity to submit to arbitration. Since the arbitration clause was entered into without the preliminary advice of the competent Committee of the Council of State, the awards were to be considered as ‘non-existent’.

ARTICLE V(1)(A)

ARTICLE V(1)(B)

(b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or

was otherwise unable to present his case; or

ARTICLE V(1)(B)

• United States District Court, District of Massachusetts, 28 December 1989, Sesostris S.A.E. v. Transportes Navales S.A. and M/V Unamuno

• United States Court of Appeals, Seventh Circuit, 29 September 1997, No.96-400 Generica Limited v. Pharmaceutical Basics Inc.‘defence basically corresponds to the due process defence that a party was not given the opportunity to be heard at a meaningful time and in a meaningful manner (…)It is clear that an arbitrator must provide a fundamentally fair hearing (…). A fundamentally fair hearings is one that meets the minimal requirements of fairness – adequate notice, a hearing on the evidence and an impartial decision by the arbitrator.’

ARTICLE V(1)(C)

(c) The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it 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, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or

ARTICLE V(1)(C) cont.

• Extra petita

• Ultra Petita

• “Salvage” clause

ARTICLE V(1)(C)

• United States District Court, Southern District of Ohio, 9 June 1981, Fertilizer Corporation of India v. IDI Management Inc.The tribunal awarded a substantial sum of consequential damages while the contract between the parties expressly excluded this sort of damages. The award was nevertheless enforced, the court relied on the justification of the award made by the arbitral tribunal.

• Cereals of the Arab Republic of Syria v. SpA Simer (Societe delle. Industrie Mercaniele di Rovereio)Only part of the award was consistent with the mandate given to the arbitral tribunal, thus ordered the enforcement of that part. The court refused to enforce the remaining part of the decision, which exceeded the tribunal’s jurisdiction.

ARTICLE V(1)(D)

(d) The composition of the arbitral authority or

the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

ARTICLE V(1)(D)

• Supreme Court of Hong Kong, High Ct., 13 July 1994, China Nanhai Oil Joint Service Corp. Shenzhen Branch v. Gee Tai Holdings Co.

The Court rejected an application aimed at refusing enforcement even if the arbitration agreement provided for arbitrators who were on the Beijing list, whereas they were actually on the Shenzhen list. The tribunal was irregularly constituted but, being the arbitrators on the CIETAC list and having the parties opted for a CIETAC arbitration, the court did not recognise this issue as sufficient to prevent enforcement of the award. Additionally, the party was estopped from invoking Article V(1)(d), since the objection was not raised during the arbitration proceedings.

ARTICLE V(1)(E)

(e) The award has not yet become binding on the parties, 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.

ARTICLE V(1)(E)• US District Court, Southern District of Ohio, 9 June 1981, Fertilizer

Corporation of India v. IDI Management Inc.Although there might be still recourse to a court in the place of arbitration to set aside the award as opposed to an appeal on the merits, this fact does not prevent the award from being binding. Thus, the award would be considered binding if no additional recourse is possible to another arbitral tribunal.

• French Cour de Cassation, 23 March 1994, Hilmarton Ltd. V. Omnium de Traitement et de Valorisation(OTV)The award had been made and consequently set aside in Switzerland; it was then enforced in France relying on the more favourable right provision of Article VII of the Convention and Article 1502 of the French Code of Civil Procedure which does not contain any ground for refusing enforcement related to the setting aside of the award by a court in the place of arbitration.

• US Court of Appeals, District of Columbia Circuit, Chromalloy Aeroservice Inc. v. Arab Republic of EgyptThe award was enforced in the United States despite it had been made and set aside in Egypt.

ARTICLE V(2)

2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that:(a) The subject matter of the difference is not capable of settlement by arbitration under the law of that country; or (b) The recognition or enforcement of the award would be contrary to the public policy of that country.

PUBLIC POLICY IN INTERNATIONAL ARBITRATION

• Which Public Policy?- International Public Policy- Domestic Public Policy

- International public policy under domestic law

- Domestic lois de police• Degree of Analysis

e.g. The English Court of Appeal in Soleymany vs.Soleymany and Westacre

International

Domestic

with international element

Domestic

CUSTOMARY PUBLIC POLICY

Substantive• Activities contra bonos mores

- piracy, terrorism, genocide, slavery, drug trafficking, corruption (see OECD Convention)

• Pacta sunt servanda• Good faith? Abuse of rights?Procedural• bias or partiality• making of award induced or affected by fraud

“CODIFIED” PUBLIC POLICY

• anti-trust laws (e.g. Article 81EC)

• currency controls

• price fixing rules

• environmental protection laws

• embargo, blockade, boycott

• tax laws

• consumer protection laws

ARTICLE V(2)(a)

• United States District Court, District of Massachusetts, 17 March 1987, Sonatrach v. Distrigas Corp.

The needs of international commerce require the States to interfere as little as possible with international commercial arbitration. ‘The expansion of American business and industry will hardly be encouraged if, notwithstanding solemn contracts, we insist on a parochial concept that all disputes must be resolved under our laws and in our courts (…)We cannot have trade and commerce in world markets and international waters exclusively on our terms, governed by our laws and resolved in our courts.’

ARTICLE V(2)(b)

• Parsons & Whittemore Overseas Co. V. Société Générale de l’Industrie du Papier (RAKTA), 508 F.2d 969 (2d Cir. 1974)

‘(…)the Convention’s public policy defence should be construed narrowly. Enforcement of foreign arbitral awards may be denied on this basis only where enforcement would violate the forum State’s most basic notions of morality and justice.’