Enforcement of Awards - Chapter 17 - International Arbitration Checklists

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Originally from: International Arbitration Checklists - 2nd Edition - Hardcover
International Arbitration Checklists - 2nd Edition - Electronic

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Enforcement of Awards

Jean-Piere Harb and Chuan Thye Tan

      When the losing party does not voluntarily comply with the award, the
arbitration process is only as valuable as the effectiveness of the means of
enforcement of the arbitration award. In the case of an international
arbitration, this will usually mean enforcement in a jurisdiction other than
the place of arbitration. The award will be enforced either in the home
jurisdiction of the party against which enforcement is sought, or in some
other jurisdiction in which that party has assets.

Enforcement under the New York Convention

      An oft-cited advantage of international arbitration over litigation is
the treaty structure in place to facilitate the enforcement of
international arbitration awards. The New York Convention has had
great success as illustrated by the still growing number of contracting
states after fifty years. It is intended to provide a speedy, simple and
uniform mechanism for the enforcement of foreign arbitration awards,
i.e. where the successful party seeks to enforce the award against assets
of the losing party in another jurisdiction. he Convention applies to “...
awards made in the territory of a State other than the State where the
recognition and enforcement of such awards are sought” or “awards not
considered as domestic awards” under the law of the country where
enforcement is sought. It does not require that the award be made in
another signatory state.
      However, a signatory may limit the application of the New York
Convention to awards made in another signatory state (the “reciprocity”
rule), and this “first reservation” is made by a majority of signatories.
Nevertheless, some authors, noticing that “the world’s major trading
nations – Arab, African and Latin American as well as European and
North American” are part of the Convention, consider that due to the
growing number of contracting states, such a reservation “becomes less
significant.” The majority of signatories also make the “second
reservation” that they will apply the New York Convention only to
disputes arising out of legal relationships, whether contractual or not,
which are considered “commercial” under the national law of the
signatory state (the “commercial” reservation). However, “the fact that
each contracting state may determine for itself what relationships it
considers “commercial” has created problems in the application of the
New York Convention” and has sometimes resulted in differing
interpretations of the Convention.