Arbitration Tips: Challenging recognition and enforcement of an arbitral award

Arbitration Tips

Challenging recognition and enforcement of an arbitral award

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Arbitration Tips Challenging recognition and enforcement of an arbitral award One of the primary advantages of arbitration is the relative ease of enforcement of arbitral awards in states which are signatories to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958.

The New York Convention provides an exhaustive list of grounds on which recognition or enforcement of an arbitral award may be refused. Those grounds are explained below.

John Abbott

Russell Beard

Partner john.abbott@laytons.com +44 (0)20 7842 8000

Partner russell.beard@laytons.com +44 (0)20 7842 8000

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Arbitration Tips | Challenging recognition and enforcement of an arbitral award

1. Incapacity of the parties1

4. Party unable to present its case4

Capacity represents the legal ability of a party to act and

This ground tends to be interpreted as applicable only where

to enter into an agreement in its own name and on its

a party is unable to present its case for reasons beyond its

own behalf. In practice, capacity may concern a party’s

control due to a failure of due process. The English court

competence or age or whether the law applicable to that

considers it to be concerned with the “fundamental structural

party places any restriction on it from entering into an

integrity” of the arbitration proceedings. It is not intended to

arbitration agreement.

permit a back-door route into challenging the merits of the case. Similarly, a failure by a party to produce submissions or

Questions of capacity are assessed by reference law applicable

evidence which might have helped its case is unlikely to assist.

to the party claiming incapacity/invalidity.

2. Invalidity of the arbitration agreement2

5. Award deals with matters outside the jurisdiction of the tribunal If an award goes beyond the scope of the arbitration

Invalidity may, for example, concern questions over whether a

agreement then recognition and enforcement may be

party is, in fact, bound by the arbitration agreement.

refused.

Questions of invalidity are assessed by reference to the law

The court may, where possible, sever from the award those

to which the parties subjected the arbitration agreement or,

parts of it which are outside the jurisdiction of the tribunal and

if the parties did not agree the applicable law, the law of the

permit partial enforcement of those parts which are within the

country in which the award was made.

tribunal’s jurisdiction.

3. No proper notice3

of the arbitration proceedings.

6. Composition of tribunal or procedure not in accordance with agreement or law of the country where the arbitration took place

National courts will need to consider questions such as what

The composition of the tribunal and the procedure must be

constitutes proper notice; the form notice should take; how

in accordance with the arbitration agreement. The court

notice should be given; and the timing of service. Courts

may have regard to whether or not a lack of compliance

tend not to take an overly formulaic approach and to look at

is significant and whether or not there exists any causal

all the surrounding circumstances.

connection between a lack of compliance and the award. In

1.

4.

A party may oppose recognition and enforcement if it has not received proper notice of the appointment of the arbitrator or

New York Convention Article V(1)(a) New York Convention Article V(1)(a) 3.

New York Convention Article V(1)(b) 2.

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New York Convention Article V(1)(b)

Arbitration Tips | Challenging recognition and enforcement of an arbitral award

practice, successful challenges on grounds of procedure are

award obtained by fraud or perjury; breach of fundamental

rare, given that the tribunal generally has a large degree of

principles of mandatory law.

autonomy in how it controls the proceedings.

7. Award not binding on parties or set-aside or suspended

The burden of proof The burden of establishing the grounds rests on the party seeking to challenge recognition and enforcement of the award.

Recognition and enforcement may be refused where: The court may determine the latter two (8 and 9) of its own • the award is not binding (awards are usually binding

motion, although in practice there is likely to be some onus

when made, but the relevant rules or law governing the

on the party seeking an order refusing recognition and

arbitration may impose formalities or conditions);

enforcement to establish those grounds are made out.

• the award has been set-aside or suspended by the

Waiver

supervisory court of the seat of the arbitration (the court asked to recognise and enforce the award may

Parties affected by the matters which might lend support

not always honour that decision, e.g. if it considers it to

to the grounds above need to take care not to take steps

offend principles of natural justice or public policy).

which might risk a waiving their right to object. For example, a serious procedural failing should generally be challenged

8. Subject matter not capable of settlement by arbitration

before the tribunal, rather than waiting until the enforcement stage before raising it.

The merits

The court asked to recognise and enforce an award may refuse if it determines, in accordance with its state’s laws,

The court asked to consider any of these grounds is not

that the subject matter of the dispute is not capable of being

permitted to reconsider the merits of the dispute determined

resolved by arbitration.

by the arbitral tribunal. A party who wishes to challenge the tribunal’s findings on the substance of the dispute will have

9. Recognition and enforcement contrary to public policy

to look to other options (see our separate article: Arbitration Tips: Challenging an arbitral award in the English court).

Other conventions

If an award is contrary to public policy in the state in which recognition and enforcement is sought, the court may refuse.

Other conventions may have an impact on recognition and

Whilst there is no uniformity between matters of public policy,

enforcement. Their existence and status in relation to the

the English court takes a restrictive approach prioritising the

New York Convention as a matter of national law will require

policy of upholding international arbitral awards. Examples

careful consideration in each case.

of situations where an award may be contrary to public policy include: illegality; breach of principles of natural justice;

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Arbitration Tips | Challenging recognition and enforcement of an arbitral award

Arbitration Our team is experienced in resolving disputes through arbitration and committed to providing outcomes-focused, innovative and commercially minded advice to guide our clients through all stages of the arbitration process.

We represent clients from across the globe in arbitrations involving a range of sectors including construction, international trade and commodities, investment treaties and shipping.

Our experience spans arbitrations convened through the main international institutions such as the ICC, LCIA, LMAA, DIFC and SIAC as well as on an ad-hoc basis.

Our Team John Abbott

Russell Beard

Partner john.abbott@laytons.com +44 (0)20 7842 8000

Partner russell.beard@laytons.com +44 (0)20 7842 8000

Robert Clark

Simon Foster

Partner robert.clark@laytons.com +44 (0)20 7842 8000

Partner simon.foster@laytons.com +44 (0)1483 407 000

Richard Harrison

Paddy Kelly

Partner richard.harrison@laytons.com +44 (0)20 7842 8000

Partner paddy.kelly@laytons.com +44 (0)20 7842 8000

Rebekah Parker

Will Slater

Partner rebekah.parker@laytons.com +44 (0)20 7842 8000

Consultant will.slater@laytons.com +44 (0)20 7842 8000

Geraint Thomas

Ben Thorogood

Partner geraint.thomas@laytons.com +44 (0)20 7842 8000

Solicitor ben.thorogood@laytons.com +44 (0)20 7842 8000

Daniel Walter Solicitor daniel.walter@laytons.com +44 (0)20 7842 8000

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This information is offered on the basis that it is a general guide only and not a substitute for legal advice.

We cannot accept any responsibility for any liabilities of any kind incurred in reliance on this information.

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