The Effect of Annulment
WHAT IS TO BE DONE WITH ANNULLED AWARDS?*
If an award rendered in Boston is set aside by a court in Massachusetts, should it (can it) be given effect against assets in Paris or London? Different courts take varying positions. Although the French have shown little difficulty in enforcing annulled awards, American and British courts tend to hesitate. The effect of annulled awards presents itself differently in an international context from a single-country context. If a judge in Boston vacates an award made in Massachusetts, the award normally becomes unenforceable against assets throughout the United States. The story will be different, however, at least in legal analysis, if the vacated award is presented for enforcement against bank accounts in Zürich or London.
The subject retains considerable sex appeal, continuing to provoke controversy among scholars and practitioners. Some eminent writers suggest a free-floating autonomous legal order for arbitration (un ordre juridique arbitral) distinct from any national legal orders.1 Others are more skeptical on that score.2
The matter was revisited in lively debate about a Dutch court decision granting enforcement of four arbitral awards that had been annulled in Russia, all arising from the much publicized Yukos controversies.3 Some scholars have expressed a general sympathy with enforcement of vacated awards, at least if the annulment was for a “local” standard, while others argue that an arbitral award has no existence after annulment.4
Each side of the debate seems to invoke the same regard for party intent. If litigants agree to remove a dispute from the courts, why defer to a judicial annulment? On the other hand, the parties often agree to arbitration not in the abstract, but in a specific geographical venue. Thus the prospect of annulment at the arbitral seat forms part of the bargain.
A middle position suggests that the soundest policy lies in treating annulment decisions like other foreign money judgments. The annulment should be respected except when reason exists to think that the judgment vacating the award lacked procedural integrity.