Convention on the Recognition and Enforcement of Foreign Arbitral Awards

From Kazakhstan Encyclopedia

Template:Use dmy dates Template:Infobox treaty The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention, was adopted by a United Nations diplomatic conference on 10 June 1958 and entered into force on 7 June 1959. The Convention requires courts of contracting states to give effect to private agreements to arbitrate and to recognize and enforce arbitration awards made in other contracting states. Widely considered the foundational instrument for international arbitration, it applies to arbitrations which are not considered as domestic awards in the state where recognition and enforcement is sought. Though other international conventions apply to the cross-border enforcement of arbitration awards, the New York Convention is by far the most important.

Background

In 1953, the International Chamber of Commerce (ICC) produced the first draft Convention on the Recognition and Enforcement of International Arbitral Awards to the United Nations Economic and Social Council. With slight modifications, the Council submitted the convention to the International Conference in the Spring of 1958. The Conference was chaired by Willem Schurmann, the Dutch Permanent Representative to the United Nations and Oscar Schachter, a leading figure in international law who later taught at Columbia Law School and the Columbia School of International and Public Affairs, and served as the President of the American Society of International Law.

International arbitration is an increasingly popular means of alternative dispute resolution for cross-border commercial transactions. The primary advantage of international arbitration over court litigation is enforceability: an international arbitration award is enforceable in most countries in the world. Other advantages of international arbitration include the ability to select a neutral forum to resolve disputes, that arbitration awards are final and not ordinarily subject to appeal, the ability to choose flexible procedures for the arbitration, and confidentiality.

Once a dispute between parties is settled, the winning party needs to collect the award or judgment. If the loser voluntarily pays, no court action is necessary.[1] Otherwise, unless the assets of the losing party are located in the country where the court judgment was rendered, the winning party needs to obtain a court judgment in the jurisdiction where the other party resides or where its assets are located. Unless there is a treaty on recognition of court judgments between the country where the judgment is rendered and the country where the winning party seeks to collect, the winning party will be unable to use the court judgment to collect.

Countries which have adopted the New York Convention have agreed to recognize and enforce international arbitration awards. As of June 2015, there are 156 State parties which have adopted the New York Convention: 153 of the 193 United Nations Member States, the Cook Islands, the Holy See, and the State of Palestine.[2] Forty-five UN Member States have not adopted the New York Convention and a number of British dependent territories have not had the Convention extended to them by Order in Council.

Cases and statistics

Public information on overall and specific arbitration cases is quite limited as there is no need to involve the courts at all unless there is a dispute, and in most cases the loser pays voluntarily.[1] In China, a review of disputed cases in China found that from 2000 to 2011, in 17 cases the Supreme People's Court upheld the refusal to enforce the arbitration agreement due to a provision in Article V; China has an automatic appeal system to the highest court, so this includes all such refusals.[3]

Summary of provisions

Under the Convention, an arbitration award issued in any other state can generally be freely enforced in any other contracting state, only subject to certain, limited defenses. These defenses are:[4]

  1. a party to the arbitration agreement was, under the law applicable to him, under some incapacity, or the arbitration agreement was not valid under its governing law;
  2. a party was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings, or was otherwise unable to present its case;
  3. the award deals with an issue not contemplated by or not falling within the terms of the submission to arbitration, or contains matters beyond the scope of the arbitration (subject to the proviso that an award which contains decisions on such matters may be enforced to the extent that it contains decisions on matters submitted to arbitration which can be separated from those matters not so submitted);
  4. the composition of the arbitral tribunal was not in accordance with the agreement of the parties or, failing such agreement, with the law of the place where the hearing took place (the "lex loci arbitri");
  5. the award has not yet become binding upon the parties, or has been set aside or suspended by a competent authority, either in the country where the arbitration took place, or pursuant to the law of the arbitration agreement;
  6. the subject matter of the award was not capable of resolution by arbitration; or
  7. enforcement would be contrary to "public policy".

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Additionally, there are three types of reservations that countries may apply:[5]

  1. Conventional Reservation - some countries only enforce arbitration awards issued in a Convention member state
  2. Commercial Reservation – some countries only enforce arbitration awards that are related to commercial transactions
  3. Reciprocity reservation – some countries may choose not to limit the Convention to only awards from other contracting states, but may however limit application to awards from non-contracting states such that they will only apply it to the extent to which such a non-contracting state grants reciprocal treatment.

States may make any or all of the above reservations. Because there are two similar issues conflated under the term "reciprocity", it is important to determine which such reservation (or both) an enforcing state has made.

Parties to the Convention

As of March 2017, the Convention has 157 state parties, which includes 154 of the 193 United Nations member states plus the Cook Islands, the Holy See, and the State of Palestine. Forty UN member states have not adopted the Convention. In addition, Taiwan has not been permitted to adopt the Convention (but generally enforces foreign arbitration judgments) and a number of British Overseas Territories have not had the Convention extended to them by Order in Council. British Overseas Territories to which the New York Convention has not yet been extended by Order in Council are: Anguilla, Falkland Islands, Turks and Caicos Islands, Montserrat, Saint Helena (including Ascension and Tristan da Cunha).

State Date of Ratification State Date of Ratification
Template:Flag 30 November 2005 Template:Flag 27 June 2001
Template:Flag 7 February 1989 Template:Flag 19 June 2015
Template:Flag 2 February 1989 Template:Flag 14 March 1989
Template:Flag 29 December 1997 Template:Flag 26 March 1975
Template:Flag 2 May 1961 Template:Flag 29 February 2000
Template:Flag 20 December 2006 Template:Flag 6 April 1988
Template:Flag 6 May 1992 Template:Flag 16 March 1993
Template:Flag 15 November 1960 Template:Flag 18 August 1975
Template:Flag 16 May 1974 Template:Flag 25 September 2014
Template:Flag 28 April 1995 Template:Flag 1 September 1993
Template:Flag 20 December 1971 Template:Flag 7 June 2002
Template:Flag 25 July 1996 Template:Flag 10 October 1961
Template:Flag 23 March 1987 Template:Flag 23 June 2014
Template:Flag 5 January 1960 Template:Flag 19 February 1988
Template:Flag 12 May 1986 Template:Flag 15 October 1962
Template:Flag 4 September 1975 Template:Flag 22 January 1987
Template:Flag 25 September 1979 Template:Flag 5 November 2014
Template:Flag 28 April 2015 Template:Flag 26 October 1987
Template:Flag 1 February 1991 Template:Flag 12 January 2009
Template:Flag 26 July 1993 Template:Flag 30 December 1974
Template:Flag 29 December 1980 Template:Flag 30 September 1993
Template:Flag 22 December 1972 Template:Flag 14 June 1983
Template:Flag 28 October 1988 Template:Flag 11 April 2002
Template:Flag 3 January 1962 Template:Flag 10 Jun 1958
Template:Flag 30 August 1993 Template:Flag 26 December 2010
Template:Flag 19 January 1962 Template:Flag 26 June 1959
Template:Flag 15 December 2006 Template:Flag 2 June 1994
Template:Flag 30 June 1961 Template:Flag 9 April 1968
Template:Flag 16 July 1962 Template:Flag 21 March 1984
Template:Flag 23 January 1991 Template:Flag 25 September 2014
Template:Flag 5 December 1983 Template:Flag 14 May 1975
Template:Flag 3 October 2000 Template:Flag 5 March 1962
Template:Flag 24 January 2002 Template:Flag 13 July 1960
Template:Flag 7 October 1981 Template:Flag, Islamic Republic of 15 October 2001
Template:Flag 12 May 1981 Template:Flag 5 January 1959
Template:Flag 31 January 1969 Template:Flag 10 July 2002
Template:Flag 20 June 1961 Template:Flag 15 November 1979
Template:Flag 20 November 1995 Template:Flag 10 February 1989
Template:Flag 8 February 1973 Template:Flag 28 April 1978
Template:Flag 18 December 1996 Template:Flag 17 June 1998
Template:Flag 14 April 1992 Template:Flag 11 August 1998
Template:Flag 13 June 1989 Template:Flag 16 September 2005
Template:Flag 14 March 1995 Template:Flag 5 October 2011
Template:Flag 9 September 1983 Template:Flag 10 March 1994
Template:Flag 16 July 1962 Template:Flag 5 November 1985
Template:Flag 8 September 1994 Template:Flag 22 June 2000
Template:Flag 21 December 2006 Template:Flag 30 January 1997
Template:Flag 19 June 1996 Template:Flag 14 April 1971
Template:Flag 18 September 1998 Template:Flag 2 June 1982
Template:Flag 24 October 1994 Template:Flag 23 October 2006
Template:Flag 12 February 1959 Template:Flag 11 June 1998
Template:Flag 16 April 2013 Template:Flag 4 March 1998
Template:Flag 24 April 1964 Template:Flag 6 January 1983
Template:Flag 24 September 2003 Template:Flag 14 October 1964
Template:Flag 17 March 1970 Template:Flag 14 March 1961
Template:Flag 25 February 1999 Template:Flag 2 January 2015
Template:Flag 14 July 2005 Template:Flag 6 March 2017
Template:Flag 10 October 1984 Template:Flag 8 October 1997
Template:Flag 7 July 1988 Template:Flag 6 July 1967
Template:Flag 3 October 1961 Template:Flag 18 October 1994
Template:Flag 30 December 2002 Template:Flag 13 September 1961
Template:Flag 24 August 1960 Template:Flag 31 October 2008
Template:Flag 12 September 2000 Template:Flag 17 May 1979
Template:Flag 20 November 2012 Template:Flag 19 April 1994
Template:Flag 17 October 1994 Template:Flag 12 March 2001
Template:Flag 21 August 1986 Template:Flag 28 May 1993
Template:Flag 6 July 1992 Template:Flag 3 May 1976
Template:Flag 12 May 1977 Template:Flag 9 April 1962
Template:Flag 28 January 1972 Template:Flag 1 June 1965
Template:Flag 9 March 1959 Template:Flag 13 October 1964
Template:Flag 14 August 2012 Template:Flag 21 December 1959
Template:Flag 14 February 1966 Template:Flag 17 July 1967
Template:Flag 2 July 1992 Template:Flag 12 February 1992
Template:Flag 10 October 1960 Template:Flag 21 August 2006
Template:Flag 24 September 1975 Template:Flag 30 September 1970
Template:Flag 30 March 1983 Template:Flag 7 February 1996
Template:Flag 8 February 1995 Template:Flag 12 September 1995
Template:Flag 14 March 2002 Template:Flag 26 September 1994

The Convention has also been extended to a number of British Crown Dependencies, Overseas Territories, Overseas departments, Unincorporated Territories and other subsidiary territories of sovereign states.

Territory Date of Ratification Territory Date of Ratification
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Template:Flag Template:Flag 14 November 1979
Template:Flag 25 May 2014 Template:Flag 26 March 1975
Template:Flag 26 November 1980 Template:Flag 26 March 1975
Template:Flag Template:Flag 10 February 1976
Template:Flag Template:Flag 26 June 1959
Template:Flag Template:Flag 24 September 1975
Template:Flag 10 February 1976 Template:Flag
Template:Flag 30 September 1970 Template:Flag 19 April 1985
Template:Flag Template:Flag
Template:Flag 22 February 1979 Template:Flag
Template:Flag 19 April 1985 Template:Flag
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Template:Flag Template:Flag 26 June 1959
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States which are not party to the Convention

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United States issues

Under American law, the recognition of foreign arbitral awards is governed by chapter 2 of the Federal Arbitration Act, which incorporates the New York Convention.[6]

Therefore, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "Convention") preempts state law. In Foster v. Neilson, the Supreme Court held “Our constitution declares a treaty to be the law of the land. It is, consequently, to be regarded in courts of justice as equivalent to an act of the Legislature, whenever it operates of itself without the aid of any legislative provision.” Foster v. Neilson, 27 U.S. 253, 314 (1829). See also Valentine v. U.S. ex rel. Neidecker, 57 S.Ct. 100, 103 (1936); Medellin v. Dretke, 125 S.Ct. 2088, 2103 (2005); Sanchez-Llamas v. Oregon, 126 S.Ct. 2669, 2695 (2006). Thus, over a course of 181 years, the United States Supreme Court has repeatedly held that a self-executing treaty is an act of the Legislature (i.e., act of Congress).

External links

References

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