THE INTERNATIONAL CURRENCY OF AWARDS*
No discussion of the interaction of courts and arbitrators would be complete without mention of the role of the New York Convention. In 137 countries,1 agreements to arbitrate are enforced under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards.2 Usually called the “New York Convention” by virtue of its city of adoption (or sometimes the “United Nations Convention” after the sponsoring organization), this treaty implements business managers’ agreements to waive recourse to otherwise competent national courts in favor of binding private dispute resolution. The Convention gives effect to both the arbitration clause and the resulting award even in countries that have resisted analogous treaties to enforce court selection agreements and foreign judgments.
Notwithstanding the broad scope of the Convention with respect to the interaction of courts and arbitrators, two introductory caveats remain in order. First, the Convention says nothing about the grounds on which an award may be annulled under national law. Although Article V(1)(e) suggests deference by the recognition forum to annulment at the arbitral situs, the law at the place of arbitration may provide for nullification under any grounds it sees fit, or indeed, for none at all. Second, a special enforcement regime covers enforcement of investor-state cases decided pursuant to the 1965 Washington Convention establishing ICSID, the International Centre for Settlement of Investment Disputes, which also contains its own internal process for award challenge on bases such as corruption, manifest excess of powers, or serious departure from fundamental rules of procedure.3 By contrast, however, the New York Convention will cover investor-state disputes conducted pursuant to the United Nations’ UNCITRAL Rules or the ICSID Additional Facility, supervised by ICSID but outside its treaty framework.
More than a half century ago, the International Chamber of Commerce (ICC) issued a report underscoring the commercial community’s need for arbitral awards that are transportable from one country to another,4 to liberate foreign arbitral awards from burdensome “double exequatur” enforcement procedures which had required judicial recognition orders in both the country where the award was made and the enforcement forum.5 Thus an award rendered in Boston would have had to be confirmed by a court in Massachusetts before enforcement in Montréal.
The ICC proposed streamlining award enforcement, shifting key burdens of proof from the party seeking award enforcement to the party resisting its recognition. For example, under the prior treaty the party relying on the award had to present documentary evidence that the award had not been annulled where rendered.6 In contrast, the ICC draft treaty required that award annulment be invoked by the party resisting recognition.7
In its final form, the New York Convention operates both to enforce arbitration agreements and to promote recognition of awards at the place where the loser has assets. The Convention requires courts of contracting states to refer the parties to arbitration when a dispute is subject to a written arbitration agreement that is not “null and void, inoperative or incapable of being performed.”8 Although this duty to refer the parties to arbitration will apply to judicial actions, the arbitration clause will not necessarily bar administrative proceedings.9
In addition, courts must recognize foreign awards “in accordance with the rules of procedure of the territory where the award is relied upon”10 and subject to conditions no more onerous than those imposed on domestic awards. Thus the Convention’s practical effectiveness can depend on national arbitration law.
In this connection, recent Court of Appeals decisions show just how troublesome national arbitration law can be. On forum non conveniens grounds the Second Circuit refused to confirm an award rendered in Moscow,11 while the Ninth Circuit has invoked absence of “minimum contacts” to deny recognition to a London award.12 The Second Circuit invoked the above-cited Convention language (“rules of procedure of the territory where the award is relied upon”) as an escape hatch from enforcement obligations, while the Ninth Circuit focused on Constitutional notions of the “due process” and personal jurisdiction (as understood in American law) as preconditions for award enforcement.13 Significantly both decisions note an absence of identifiable property within the jurisdiction,14 which reduces grounds for criticism by those who read the Convention reference to local procedural law as including only minor matters such as filing requirements and fees.15
There is no requirement that the litigants come from different states, or that the party seeking to enforce an award be from a country that has adhered to the Convention. Citizenship is relevant to Convention coverage only indirectly, when the parties’ different nationalities add an element indicating an award is “not domestic,” as discussed below.16
Geography is the principal trigger for application of the Convention, which covers primarily foreign awards.17