Challenge of Arbitral Awards

¹ See, e.g, LCIA Rules, Art. 26(8); ICC Arbitration Rules, Art. 34(6); ICDR Arbitration Rules, Art. 30(1).

² Parsons Whittemore Overseas Co. Inc. v Société Générale de l’Industrie du Papier 508 F.2d 969, 973 (2nd Cir. 1974).

³ Or, if the parties have chosen a different procedural law to govern the arbitration, under that law: New York Convention, Art. V.1(e); Model Law, Art. 36(1)(a)(v).

⁴ Including a partial, or interim, award that is final as to the issue(s) with which it deals.

⁵ Also referred to as ‘actions seeking annulment of the award’.

⁶ New York Convention, Art. V, provides only that a competent national authority may refuse to enforce an award that has been annulled at the seat. It is not obliged to do so; accordingly, an award that has been set aside by the court of the seat of arbitration may be granted recognition and enforcement if the enforcing court so concludes. France is one of the more liberal jurisdictions in this regard, famously granting recognition to a Swiss-seated award that had been set aside by Swiss courts: Hilmarton I, Cour de Cassation, 1ère Civ., 23 Mar. 1994, [1994] Rev Arb 437. See also PT Putrabali Adyamulia v Rena Holdings, Cour de Cassation, Ch. Civ. 1ere, 29 June 2007, in which a French court enforced an award that had been set aside at the seat in England. Similarly, the District Court for the District of Columbia in Chromalloy Aeroservices v Arab Republic of Egypt 939 F.Supp. 907, 909 (DDC 1996) enforced an award that had been annulled at its seat in Egypt. In Corporacion Mexicana de Mantenimiento Integral, S. de R.L. de C.V. v PEMEX-Exploracion y Produccion, No 10 Civ 206 (AKH) 2013 WL 4517225 (SDNY, August 27, 2013), the US courts enforced an ICC award set aside in Mexico where denying enforcement would be fundamentally unfair and violate basic notions of justice. However, much will depend on the particular award and the enforcing court will still give great weight to the courts of the seat: see, e.g., TermoRio SA ESP v Electranta SP 487 F.3d 928 (DC Cir. 2007) (refusing to enforce an award annulled by the courts of the seat in Colombia). For further discussion of this concept, see Chapter 11.

⁷ New York Convention, Art. V.1(e); Model Law, Art. 36(1)(a)(v).

⁸ See paragraphs 10.21ff.

⁹ See, e.g., the English Arbitration Act 1996, s. 70(2), which states that an application or appeal may not be brought if the applicant or appellant has not first exhausted (a) any available arbitral process of appeal or review, and (b) any available recourse under s. 57 (correction of award or additional award).

¹⁰ Article 35 of the 2012 ICC Rules is based on Art. 29 of the 1998 ICC Rules. For a comprehensive analysis of the latter, see Daly, ‘Correction and interpretation of arbitral awards under the ICC Rules of Arbitration’ (2002) 13 ICC International Court of Arbitration Bulletin 61.

¹¹ UNCITRAL Rules, Arts 37 and 38.

¹² UNCITRAL Rules, Art. 39.

¹³ UNCITRAL Rules, Art. 39. The Model Law also permits the arbitral tribunal, at the request of either party, to issue an additional award: Model Law, Art. 33. The English Arbitration Act 1996 also provides for this possibility under s. 57, and this possibility must be exhausted before any application or appeal to the court against an arbitral award may be made (s. 70(2)).

¹⁴ See, e.g., Terna Bahrain v Bin Kamil [2012] EWHC 3283, in which the applicant tried to challenge an award under the English Arbitration Act 1996 for procedural irregularity, but the court refused to hear the challenge because the application was made after the twenty-eight-day period for doing so had expired. See also Glaser v Legg, Case No. 12-cv-00805, 2013 WL 870382 (DDC, 11 March 2013), in which a petition to vacate award was untimely, because it was filed more than three months after award was issued; Companhia do Metropolitano de São Paolo—Metrô v Consórcio Via Amarela, Apelação 0177130-22.2010.8.26.0100, 3 December 2012, holding that the Brazilian statutory period of five days for challenging an award did not run during the thirty-day period for the correction and interpretation of award provided for by the ICC Rules, but finding the request for annulment to be nonetheless untimely, because the party failed to comply with the ICC Rules in making its second request for clarification of the award.

¹⁵ UNCITRAL Rules, Arts 37–39.

¹⁶ See, e.g., the Arbitration Rules of the Grain and Feed Trade Association (GAFTA), effective 1 July 2007, and the Arbitration Rules of the Chambre Arbitral Maritime de Paris of 2007. Similarly, r. 47 of the 2013 Arbitration Rules for the Court of Arbitration for Sport (CAS) provides for an internal appeal procedure within CAS, so long as the relevant sports federation or body has expressly provided for such an appeal in its rules. See also Arbitration Rules of the European Court of Arbitration, Arts 23(12) and 28, under which the parties are deemed to have waived any right to challenge, except by appeal to an appellate tribunal consisting of three arbitrators. To appeal, the losing party must deposit the amount of original award with the court, and if it loses the appeal, the award is automatically paid to the prevailing party.

¹⁷ For a thorough review of the ICSID annulment process, see Bishop and Marchilli, Annulment under the ICSID Convention (Oxford University Press, 2012). See also Paulsson, Reed, and Blackaby, Guide to ICSID Arbitration (2nd edn, Kluwer Law International, 2010), pp. 159ff.

¹⁸ ICSID Convention, Art. 52(1)(a).

¹⁹ Ibid., Art. 52(1)(b).

²⁰ Ibid., Art. 52(1)(c).

²¹ Ibid., Art. 52(1)(d).

²² Ibid., Art. 52(1)(e).

²³ ICSID Rules, r. 52. Unlike the constitution of the original arbitral tribunal, there are no party appointments of annulment panel members.

²⁴ Ibid., r. 55. If the original award has been annulled only in part, the new tribunal will not reconsider any portion of the award that has not been annulled: ICSID Rules, r. 55(3).

²⁵ Fraport AG Frankfurt Airport Services Worldwide v Republic of the Philippines, Decision on Annulment, ICSID Case No. ARB/03/25, 23 December 2010.

²⁶ Sempra Energy International v Argentina, Decision on Annulment, ICSID Case No. ARB/02/16, 29 June 2010, annulling the award based on the tribunal’s manifest excess of powers because it disagreed with the tribunal’s interpretation of a provision in the relevant bilateral investment treaty; Enron Creditors Recovery Corporation v Argentina, Decision on Annulment, ICSID Case No. ARB/01/3, 30 July 2010, annulling the award based on the tribunal’s manifest excess of powers (the committee said that the tribunal had ‘failed to apply’ the applicable law, because it disagreed with the tribunal’s interpretation of that law).

²⁷ See, e.g., Reed and Mandelli, ‘Ad hoc or ad arbitrium? An audit of recent ICSID annulment decisions’, in Rovine (ed.) Contemporary Issues in International Arbitration and Mediation: The Fordham Papers 2012 (Martinus Nijhoff, 2012); Caron, ‘Framing the work of ICSID annulment committees’ (2012) 6 World Arb & Med Rev 173.

²⁸ ICSID, Background Report on Annulment by the ICSID Secretariat Provided to State Parties (12 August 2012), available online at https://icsid.worldbank.org/apps/ICSIDWEB/resources/Documents/Background%20Report%20on%20Annulment_English.pdf.

²⁹ Upon filing for annulment, an automatic stay of execution enters into force and is usually extended by the annulment committee pending issuance of the annulment decision without necessarily requiring the posting of security. This has created a perverse incentive to seek annulment as a means of postponing enforcement with very little cost (because interest is usually fixed far lower than the relevant state’s cost of borrowing).

³⁰ For example, similar rules include UNCITRAL Rules, Art. 38; ICSID Additional Facility Rules, r. 7(1); LCIA Rules Art. 27(1). The UNCITRAL Rules were modified slightly in 2010 to allow a party to request the tribunal to correct not only ‘any error in computation, any clerical or typographical error’, but also any erroneous ‘omission’; it further requires the tribunal to make any appropriate corrections within forty-five days of receipt of the request. Furthermore, under UNCITRAL Rules, Art. 38, any such corrections shall be deemed to ‘form part of the award’.

³¹ Daly, ‘Correction and Interpretation of arbitral awards under the ICC Rules of Arbitration’ (2002) 13 ICC International Court of Arbitration Bulletin 62. For example, in ICC Case No. 10189, the tribunal’s addendum amended the text of an award in order to avoid any uncertainty as to the time period of the royalty payments owed by the claimant.

³² An award that is infra petita. See, e.g., English Arbitration Act 1996, s. 68(2)(d).

³³ See, e.g., French law (Cour de Cassation in Fougerolle v Procofrance [1992] J du Droit Intl 974) and Swiss law (Swiss Federal Supreme Court in Sovereign Participations International SA v Chadmore Developments Ltd (2001) XXVI YBCA 299, at 301ff). This principle was confirmed in the 2011 French Arbitration Law, art. 1502.

³⁴ See American Law Institute, Restatement (Third) International Commercial Arbitration, § 4-36, TD No. 2 (April 2012), restating the US case-generated rule as positing that ‘[a]‌ court may in exceptional circumstances remand a U.S. Convention award to the arbitral tribunal with instructions to complete the award or to clarify its meanings’.

³⁵ ICC Rules, Art. 35(4):

Where a court remits an award to the arbitral tribunal, the provisions of Articles 31, 33, 34, and this Article 35 shall apply mutatis mutandis to any addendum or award made pursuant to the terms of such remission. The Court may take any steps as may be necessary to enable the arbitral tribunal to comply with the terms of such remission and may fix an advance to cover any additional fees and expenses of the arbitral tribunal and any additional ICC administrative expenses.

³⁶ Model Law, Art. 34(4).

³⁷ Model Law, Art. 34(4) provides:

The court, when asked to set aside an award, may, where appropriate and so requested by a party, suspend the setting aside proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal’s opinion will eliminate the grounds for setting aside.

³⁸ See Weinburg v Silber, 140 F.Supp.2d 712 (ND Tex. 2001), remanding the award to the tribunal to explain how it should be discharged in view of the emergence of certain apparently unforeseen circumstances; Fisher v General Steel Domestic Sales, LLC, Slip Copy No. 10-cv-0109-WYD-BNB, 2011 WL 524362 (D. Colo., 31 October 2011), remitting to the tribunal to address a jurisdictional issue left undecided. See also Coe, ‘Making remission and other “curative” mechanisms part of the forum shopping conversation: A view from the US with comparative notes’, in Ferrari (ed.) Forum Shopping in the International Commercial Arbitration Context (Sellier European Law, 2013), pp. 382–383.

³⁹ Model Law, Art. 6, provides for each state to designate the court, courts, or other authority competent to perform the functions laid down by the Model Law, which include the setting aside of awards under Art. 34.

⁴⁰ See the decision of the Mexican Supreme Court in Amparo Directo en Revisión No. 8/2011, which deemed that only judges at the seat of the arbitration are competent to annul an award.

⁴¹ Swiss Private International Law Act 1987 (Swiss PIL), Ch. 12, s. 191, as amended.

⁴² While a statute will often explicitly prescribe a particular court, it is not always easy to determine which court within the seat is the appropriate court before which to raise a challenge. The Paris Cour d’Appel struggled with the issue of whether a civil or administrative court must determine a challenge to an arbitral award that touched on both administrative and civil law. Ultimately, the Court determined that a civil court should hear the case unless the award involved issues of mandatory French administrative law: INSERM v Fondation F. Saugstad, Paris Cour d’Appel, 13 November 2008.

⁴³ US Federal Arbitration Act of 1925 (FAA), § 10(a).

⁴⁴ ‘Unnecessary’, because if the law of a particular country contains procedures that the parties prefer, the parties would do better to adopt those specific procedures rather than to try to adopt a law of procedure that is alien to the lex arbitri and which might indeed be in conflict with it. ‘Unhelpful’, because it means adding another set of legal rules to which the arbitration will be subject, in addition to those agreed by the parties or imposed by the lex arbitri. This topic is more fully discussed in Chapter 3.

⁴⁵ New York Convention, Art. V(1)(e) (emphasis added). See also International Electric Corporation v Bridas Sociedad Anonima Petrolera, Industrial y Comercial 745 F.Supp. 172, 178 (SDNY 1990), in which the court held that the italicised words (‘since the situs of the arbitration is Mexico, and the governing procedural law that of Mexico, only Mexican courts have jurisdiction under the Convention to vacate the award’) referred to the procedural law governing the arbitration and not to the substantive law governing the agreement between the parties.

⁴⁶ See Oil & Natural Gas Commission v Western Co. of North America (1987) AIR 674 (SC); National Thermal Power Corporation v Singer Corporation et al. (1993) XVIII YBCA 403. See also Paulsson, ‘The New York Convention’s misadventures in India’ (1992) 7 Intl Arb 18.

⁴⁷ (2002) 4 SCC 105.

⁴⁸ Venture Global Engineering v Satyam Computer Services Ltd and anor, Civil Appeal No. 309 of 2008, Supreme Court of India (arising out of SLP (C) No. 8491 of 2007).

⁴⁹ Civil Appeal No. 7019 of 2005, 6 September 2012 (holding that Indian courts will no longer be able to vacate international arbitral awards not seated in India or issue interim measures concerning ongoing international arbitrations seated abroad).

⁵⁰ See Sociedad de Inversiones Inmobiliarias Del Puerto SA v Constructora Iberoamericana SA, Court of Appeals on Commercial Matters, Division D, 7 February 2011, in which the Argentina Court of Appeals on Commercial Matters held that parties may validly waive the right to challenge an arbitral award. However, for a contrary view, see the Swiss Supreme Court’s annulment of an award rendered by CAS, in which waivers to challenge awards were held to be invalid: Case No. 4P–172/2006, 22 March 2007.

⁵¹ Swiss PIL, Ch. 12, s. 192.

⁵² See Belgian Judicial Code, art. 1718, as amended in 2013.

⁵³ French Arbitration Law, arts 1520, 1522 CCP (2011).

⁵⁴ ICC Rules, Art. 34(6).

⁵⁵ General waivers may suffice to waive some rights, such as the right to appeal an arbitral award on points of English law contemplated in the English Arbitration Act 1996, s. 69. See Lesotho Highlands Development Authority v Impreglio SpA and ors [2005] UKHL 43, [2005] Arb LR 557, at [3]‌ per Lord Steyn, finding that, by submitting to ICC arbitration, Art. 34(6) (then Art. 28(6)) of the ICC Rules sufficed to waive the parties’ right to appeal.

⁵⁶ Fry, Greenberg, and Mazza, The Secretariat’s Guide to ICC Arbitration (ICC, 2012), paras 3.1254–3.1255 (emphasis added).

⁵⁷ See, e.g., Thyssen Canada Ltd v Mariana Maritime SA and anr [2005] EWHC 219, in which it was held that a party who takes part in arbitral proceedings and fails to raise an objection as to a serious irregularity affecting the proceedings will lose the right to object, unless it can show that, at the time that it took part or continued to take part in the proceedings, it did not know and could not with reasonable diligence have discovered the grounds for the objection.

⁵⁸ See, e.g., English Arbitration Act 1996, s. 73; Belgian Judicial Code, art. 1704(5); Dutch Code of Civil Procedure, art. 1027.

⁵⁹ See, e.g., ICC Rules, Art. 39; UNCITRAL Rules, Art. 32; ICDR Rules, Art. 25; ICSID Rules, r. 27; LCIA, Art. 32(1).

⁶⁰ English Arbitration Act 1996, s. 31.

⁶¹ English Arbitration Act 1996, s. 73. See also teleMates Pty Ltd v Standard SoftTel Solutions Pvt Ltd