International Trade and Business Law Review
If the arbitration of disputes arising from an international contract or other legal relationship has ended with the rendering of an award, and the party against which the award is made refuses to honour the award, then the question arises as to which law governs the recognition and enforcement of this award. Ultimately, the law governing enforcement is that of the state in which enforcement is sought, which will be a state where the losing party has assets. If the state has implemented the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the Convention), recognition and enforcement will be according to the terms of this Convention.
In practice, the Convention – as adopted into municipal law – is the main vehicle for the recognition and enforcement of international arbitration awards. The Convention has been ratified by more than 130 countries, including all of the major trading nations.
The recognition and enforcement regime provided for in the Convention aims to provide straightforward and effective procedures for the enforcement of international arbitral awards. It aims to promote uniformity in the principles and processes applying to enforcement, irrespective of the country in which enforcement is sought. The place of enforcement will be chosen according to the location of recoverable assets, rather than the legal system of this state. It is therefore important that the award be readily transportable from state to state without legal or other complications. The Convention intends that the arbitral award be final and not subject to review by the courts in the country of recognition and enforcement. This, after all, is what the parties are to be taken to have intended in subscribing to an arbitral agreement. Accordingly, the Convention limits the grounds (or defences) that a party resisting enforcement can plead, although it does not entirely preclude judicial review. The list of grounds for refusing recognition and enforcement is an exhaustive one. There is no provision in the Convention for a general review of the award on the merits, by a court in the country where enforcement is sought.
The courts have manifested a pro-enforcement bias in hearing challenges to recognition and enforcement, having regard to the parties’ agreement to arbitration and to the objectives of the Convention. Even where a court finds a defence to be established, it has discretion to reject the challenge and to order enforcement.
The Convention deals with the recognition and enforcement of awards. If a court enforces an award, necessarily, it will have recognised it. Infrequently, recognition alone will be sought. This might happen, for example, where an award has been made pursuant to the arbitral agreement, and is final and binding. Notwithstanding this, a party seeks to litigate afresh issues settled in the arbitration and embodied in the resulting award. The other party could plead the res judicata principle, that is, that the issue has been conclusively and finally resolved between them by the agreed tribunal, and that it is not open to a subsequent court or other tribunal to rehear the matter.
The statutes implementing the Convention in each state, by and large, reproduce the terms of the Convention. They must, however, make provision for additional matters. One of these is the precise procedure for enforcement of the award through the vehicle of the state’s legal system. The chosen models vary:
The implementing statute may need to deal with the meaning of the term commercial. This will be where the state in question has, at the time of ratification, declared that it will apply the Convention only to differences arising out of legal relationships which are considered as commercial under the state’s law, pursuant to Article 1(3). The statute may deal with the circumstances in which an award is not to be considered as a domestic award, for the purposes of Article 1(1). The statute may deal with the situation when some other legal regime, such as the UNICTRAL Model Law on Commercial Arbitration applies to recognition and enforcement of international commercial awards, instead of the Convention.
Other arbitration conventions or instruments may also be relevant. The International Centre for the Settlement of Investment Disputes (ICSID) was established by the Washington Convention. The ICSID provides for the arbitration of disputes between a state and a national of another state. It is not commonly invoked.
The UNCITRAL Model Law on Commercial Arbitration – which was adopted by UNICTRAL in 1985 - has a wider scope than the New York Convention, although its provisions dealing with recognition and enforcement more or less mirror those of the Model Law. It will be for the state that ratifies and implements the Model Law along with the New York Convention to stipulate in statute law when each regime is to apply. Where recognition and enforcement is concerned, little will depend upon which regime applies, given that the defences to recognition and enforcement are uniform across both regimes.
The terms of the New York Convention will now be examined.
Article 1(3) of the New York Convention provides that a signatory state may declare stipulated reservations when acceding to the Convention. First, it may declare that it will apply the Convention to the recognition and enforcement of awards made only in the territory of another contracting state. Secondly, it may declare that it will apply the Convention only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the national law of the state making such a declaration.
As to the first point, it has been held by a US court that this principle of reciprocity is concerned with the state in which the arbitration will occur and whether that state is a signatory to the Convention – not whether both parties are nationals of signatory states.
Where the commercial reservation is concerned, the Convention does not define the meaning of the term commercial. Where a state has declared this reservation, the implementing statute may define the scope of commercial . It has been held in a US case, in reliance upon the implementation statute, that seafarers’ contracts of employment are excluded from the scope of a commercial dispute for the purposes of the Convention (the US having declared the commercial reservation). In another American case, it was held that, for the purposes of the Convention, a dispute between corporate shareholders regarding the proceedings of a stock transaction was one arising from a commercial relationship.
Article 1(1) of the Convention applies to the recognition and enforcement of awards which are: (i) made in the state other than the state where the recognition and enforcement of such awards are sought, and arising out of differences between persons, whether physical or legal; or (ii) not considered as domestic awards in the state where their recognition and enforcement are sought.
The intent of the Article is to confine the application of the Convention to awards which have a genuine international element. The first category of awards covers the standard case where the award is sought to be enforced in a state other than the State where the award was made. By definition, such an award has an international element. In practice (although it is not obligatory) the adversaries will be domiciled in different states.
The second category consists of awards which are not considered domestic in the country of enforcement even though, for example, the place of rendition and enforcement may be the same. This is illustrated in the US case of Bergesen v Joseph
Muller Corporation, where, although the US was the state of both arbitration and enforcement, the award was held to be within the scope of the Convention. The foreign element arose from the fact that the parties were domiciled in foreign countries. Although the Convention did not define non-domestic, the concept was to be construed broadly, having regard to the goal of the Convention. That is, in order to encourage the recognition and enforcement of commercial arbitration agreements in international contracts, and applying ‘that purpose to this case involving two foreign entities leads to the conclusion that this award is not domestic’. In another US case, the court considered an arbitral agreement entered into between US parties. The agreement related solely to matters occurring in the US, but provided for arbitration in London. Enforcement in New York was contemplated, should an award be made. Consideration of the US statute implementing the Convention led the court to conclude that the arbitral agreement lacked the requisite foreign element. Therefore, any award resulting from the agreement would not be within Article 1(1) of the Convention and thus would be unenforceable pursuant to the Convention.
Article 2(1) provides that each contracting state is to recognise an agreement in writing under which the parties undertake to submit to arbitration, any or all differences which have arisen, or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a matter capable of settlement by arbitration.
The requirements as to form are examined below. The requirement that the subject matter be capable of arbitration is a requirement, that is, it is legally arbitrable, under the law of the country of enforcement: ‘it seems … that capable means legally capable, for any matter can theoretically be arbitrated or compromised …’ Assuming that the matter has been arbitrated, it is a ground for refusing recognition and enforcement of a resulting award that the difference is not capable of settlement by arbitration under the law of the country of enforcement (Art 2(a)). This defence is also examined below.
Article 2(3) provides that the court of a contracting state, when seised of a matter in respect of which the parties have made an arbitral agreement, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the agreement is null and void, inoperative or incapable of being performed.
This issue – essentially the validity of the agreement to arbitrate – logically, will be raised prior to arbitration. If it is not raised, or it is raised unsuccessfully by a party, and this party later disputes the recognition and enforcement of the arbitral award, the issue of validity will have to be disputed pursuant to one of the Article 5 defences. It might, for example, be contended that the agreement was invalid, and the arbitrator acted beyond jurisdiction, in terms of Article 5(1)(c).
Before considering the factors bearing upon the determination of validity, it will be convenient to consider whether an arbitrator has the power to decide on the validity of the arbitral agreement which appoints him or her. Two basic agreements are discernible in the arbitration context: the underlying contract embodying the transaction between the parties and the agreement to submit to arbitration any disputes arising from this underlying contract and its performance. In practice, the arbitral agreement will usually be provided for in a clause in the underlying contract.
The starting point in resolving this issue – in essence, whether the arbitrator can determine whether or not he or she has jurisdiction – is to recognise that one party to a contract cannot compel another to submit to arbitration, unless the parties have agreed to submit any dispute to arbitration. Thus, the arbitration agreement must be valid and in existence at the time of the purported submission to arbitration.
It follows that the court will have jurisdiction to determine the threshold issue, that is, whether or not a valid arbitral agreement is in existence at the relevant time. This was confirmed in the US case of Apollo Computer Inc v Berg. A party sought a permanent stay of arbitral proceedings, contending that there was no agreement to arbitrate between the parties. The court found that the parties had agreed to submit issues to arbitration. As to the contention that this foundation agreement was no longer valid at the time when arbitration was sought, this secondary issue fell to be determined by the arbitrator. This was because the foundation arbitral agreement provided for arbitration pursuant to the Rules of Arbitration of the International Chamber of Commerce (ICC). Pursuant to these rules, the ICC’s Court of Arbitration had determined that the arbitration should proceed because it was satisfied as to the prima facie existence of the arbitration agreement. The ICC rules further provided for the delegation to the arbitrator decisions involving the (continued) existence and validity of a prima facie agreement to arbitrate.
Where, as will usually be the case, the arbitral agreement is contained in a clause in the underlying contract, and it is contended that the contract is invalid, the question is whether this logically means that the court can decide issues of both validity of the agreement to arbitrate and of the underlying contract? In deciding the threshold issue the court is necessarily deciding the larger issue. The courts have resisted taking control of both issues and have confined themselves to determining no more than is needed to resolve the arbitrator’s jurisdiction. They have done this by separating the arbitral clause from the underlying agreement and determining its validity in its severed form. Assuming the clause is found to be valid, the issue of validity, overall, is left to the arbitrator. This is consistent with respecting the parties’ agreement that substantive issues should be submitted to arbitration rather than to the courts. (Of course, sometimes a court’s determination that the arbitral clause is valid will be supported by reasoning that is sufficiently persuasive to deter a party from raising the issue of the validity of the overall contract during arbitration.)
The process of severing the arbitral clause from the overall agreement is illustrated in the US case of Société Nationale Algerienne pour la Recherche, la Production, le Transport, la Transformation et la Commercialisation des Hydrocarbures v Distrigas Corporation.12 The court held that the clause necessarily had to be separated in a dispute as to the validity of the overall contract. This was because ‘allowing an arbitration clause to be automatically invalidated along with the principal agreement would be akin to destroying precisely what the parties had sought to create as a dispute resolution device’.13 Accordingly, the court confined its attention to the validity of the arbitral clause, determining it to be valid and referring the dispute to arbitration.
In Twi Lite International Inc v Anam Pacific Corp, a US court considered that the arbitral clause in a contract would be severed, notwithstanding that the overall contract was alleged to have been vitiated by fraud. This was to compel the referral of the substantive claim – that the principal contract was null and void – to the arbitrator for decision. Furthermore, none of the fraud claimed related to the arbitral provisions.
In the Australian case of QH Tours Ltd v Ship Design and Management (Aust) Pty Ltd, the court was concerned with a domestic arbitration agreement, but the principles are logically applicable to an international agreement subject to the Convention. The court considered a challenge to an arbitral clause in a principal contract. The party resisting arbitration contended that because of the nature of the remedy it sought – an order that the contract be declared to be void ab initio pursuant to the Trade Practices Act 1974 (Cth) – the arbitrator was without jurisdiction. For the arbitrator to determine the dispute and award the remedy sought (if this was indeed the outcome of the projected arbitration), would necessarily mean that the contract including the arbitral clause would be determined to be void ab initio. As such, it was contended, in this circumstance, the arbitrator was logically without jurisdiction. The court held that the arbitral clause could be severed from the overall agreement. Given that the clause existed, it operated to compel arbitration. The claimant’s challenge to the validity of the clause was based on a technical rather than a substantive complaint. To accede to it would undermine the arbitral process that the parties had contracted for. Foster J commented:
Having regard to the specific nature of an arbitration clause … generally speaking, it can
be regarded as severable from the main contract with the result that, logically, an
arbitrator, if otherwise empowered to do so, can declare the main contract void ab initio
without at the same time destroying the basis of his power to do so.
Arbitration may be resisted on the basis that the arbitral agreement is null and void, inoperative or incapable of being performed. If the parties’ agreement to arbitrate is ineffective, then there is no legal basis for the arbitration. Limitations on the arbitrator’s jurisdiction to determine the threshold issue of the arbitral agreement have been noted above.
It has been said of the null and void, inoperative or incapable of being performed clause that it is to be construed narrowly, having regard to the objectives of the Convention. These objectives are to promote arbitration as a dispute resolution mechanism where the parties have contracted for this, and the presumption in favour of arbitration manifested by the signatory countries in their decision to accede to the Convention. In one case, a claim that the contract had been procured by fraud and was therefore null and void, was ineffective in stalling arbitration. It was held that the arbitral clause was to be properly severed from the main agreement and that the matter be referred to arbitration on the substantive claim of fraud.
In an American case, it was commented that the clause ‘must be interpreted to encompass only those situations – such as fraud, mistake, duress and waiver – that can be applied neutrally on an international scale’.
If an arbitral agreement imposes a time limit to resort to arbitration, and this time has expired, prima facie the agreement would be inoperative. Cases in which a party has contended that arbitration was time barred are examined below.
Article 4(1) provides that a party applying to a court for recognition and enforcement of an award must supply, at the time of application: (a) the duly authenticated original award or a duly certified copy thereof; and (b) the original agreement referred to in Article 2 (that is, the arbitration agreement or an agreement containing an arbitration provision) or a duly certified copy thereof. Article 4(2) requires the production of a certified translation of these documents where the originals are in a language other than that of the country of enforcement.
Article 2(2) provides that the term agreement in writing shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties, or contained in an exchange of letters or telegrams. A US court has held that notwithstanding the words shall include, this provision is exhaustive as to what satisfies an agreement in writing.21
This court held that arbitral clauses in marine insurance policies (in this case protection and indemnity policies) satisfied the Article 2(2) requirement and thus in turn, Article 4(1). In the court’s view, detailed review of the conduct of the parties in negotiating the policies, demonstrated that they had manifested their consent to the arbitral clauses within the meaning of the exchange of letters or telegrams, within Article 2(2). This conduct included the submission by their brokers to the insurers (before each renewal year) the assureds’ request for quotation by way of a document known as a slip. Each slip contained details of the proposed policy. The insurer effected a contract of insurance by affixing its stamp to the broker’s slip and endorsing it. The broker’s slip and the insurer’s certificate of insurance constituted an exchange of letters evidencing an assent to contract. These documents were not in the traditional sense letters, but the Convention concept was not to be construed so restrictively. It would be unworkable unless it was read expansively as referring to written communications including documents such these, and other forms of communication such as faxes, telexes and emails. In summary, the court held that a valid agreement in writing between the parties under the Convention had come into existence.
Furthermore, although the slip and certificate did not include the arbitral clause, they incorporated it by reference to the policy containing it.
A US court held that the Article 5(1)(a) requirement – that the party seeking enforcement must provide a duly authenticated original award (or a duly certified copy of it) – is satisfied when the party submits (at the minimum) a certified copy of the award. It does not require that this party produce either a duly authenticated original or a duly certified copy of a duly authenticated original. Such a reading of the Article was unduly restrictive. ‘Copies of the award and the agreement which have been certified by a member of the arbitration panel provide a sufficient basis upon which to enforce the award.
Enforcement was refused in an Italian case when the claimant failed to produce the award and agreement as required by Article 4.
Article 5 lists the grounds for refusing recognition and enforcement of an award. Logically, these grounds can be invoked only after an award has been made. Article 5(1) sets out the five grounds which may be invoked by the party resisting enforcement. Article 5(2) provides for two additional grounds for refusing recognition and enforcement, where the court can act of its own motion. Collectively, and informally, these grounds may be referred to as the seven defences to enforcement. Article 5 envisages that the party against whom the award has been made will take proceedings before a competent authority (in practice, a court) for a ruling against enforcement, in the state where the prevailing party seeks to enforce the award.
The preamble to Article 5(1) provides that recognition and enforcement of an award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof of the facts grounding one of the defences listed thereafter.
The preamble to Article 5(2) provides that recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought is satisfied that the facts grounding one of the grounds for refusal listed thereafter are fulfilled.
The courts hearing challenges to enforcement have consistently referred to the pro-enforcement bias inherent in the Convention. It has been commented in an American decision that the goal of the Convention was to encourage the recognition and enforcement of international arbitral agreements (and their underlying contracts), and to unify the standards by which these agreements are observed and awards made pursuant to their enforcement in signatory countries. This international regulatory regime would be significantly compromised if the courts in individual countries too readily construed or applied it in such a manner as to create uncertainty as to the binding effect of international arbitral awards duly made. Another US court commented that:
The expansion of American business and industry will hardly be encouraged if, notwithstanding solemn contracts, we insist on a parochial concept that all disputes must be resolved under our laws and in our courts … We cannot have trade and commerce in world markets and international waters exclusively on our terms, governed by our law, and resolved in our courts.27
The pro-enforcement bias is reflected in cases where challenges to enforcement based upon the public policy defence have been rejected, even though the award or underlying contract is contrary to the law of the country of enforcement (see below).
The court has a discretion not to refuse recognition and enforcement of an award even if a defence is established. This is made clear in the preambles to Article 5(1) and V(2). (Recognition and enforcement may be refused.) Rejecting a challenge to enforcement in, for instance, circumstances where the party resisting enforcement has established a defence, but in circumstances raising technical rather than substantive issues, would be consistent with the pro-enforcement bias informing application of the Convention. The failure of a party to object, before or during arbitration, to the matter subsequently complained of by this party will be influential in a court exercising its discretion not to refuse enforcement. In conventional terms, the party may be described as being estopped from relying upon the defence which has been established.
The seven grounds for resisting recognition and enforcement of an award which are provided for in Article 5 are exhaustive. This is made clear by the use of the word only in the preamble to Article 5(1), and limitation of the court’s authority to refuse recognition and enforcement on two grounds pursuant to Article 5(2). In short, those who are provided defences by the Convention are explicitly limited by the Convention. This is consistent with the objectives of the Convention, which include providing a uniform framework for and relative certainty in enforcement proceedings, no matter where they are sought.
An Australian judge has commented obiter that, bearing in mind the wording of the relevant implementing statute in Australia, the court has a residual discretion to refuse to enforce an award, even where none of the defences stipulated in the Convention has been established. In effect, it was contended that the grounds for refusing recognition and enforcement were not limited to those stipulated in Article
5. This contention may be queried on the basis that had the Australian legislature intended such a radical change in the operation of the Convention in Australia, this would have been expressly provided for in the statute.31
It has been commented by an American court that the effect of the Convention is that the enforcement court (in the absence of extraordinary circumstances) is not to conduct a review of the arbitrator’s findings. In particular, a mistake of law or fact is insufficient to refuse confirmation of an arbitral award. This is consistent with the Convention’s objective in making the arbitrator’s decision final, with no appeal being permitted to a court on the merits. If the situation was different, this would greatly undermine the arbitral regime, whether it be that provided for by the Convention or otherwise. Review of the decision is only permitted, if at all, to the extent provided for by the Article 5 defences. None of these provides for a general review on the merits.
The party resisting enforcement pursuant to Article 5(1) has the burden of proof imposed upon it to sustain the defence pleaded. This is made explicit by the preamble to Article 5(1), providing that this party must ‘furnish … proof’ of the matters grounding the defence. The preamble to Article 5(2) is to like effect, providing that the competent authority may refuse enforcement where it finds that the grounds for refusal exist, language consistent with a requirement that proof of these grounds must exist.
Article 5(1)(a) provides that recognition and enforcement of the award may be refused: (i) where the applicant party proves that the parties to the arbitration agreement were, under the law applicable to them, under some incapacity; or (ii) that the agreement is not valid under the law to which the parties have subjected it; or, (iii) failing any indication thereon, under the law of the country where the award was made.
The defence has seldom been invoked. It would be unlikely in practice that a party to a contract with an international dimension would be under an incapacity. On occasions, the defence of sovereign immunity has been invoked. It has been contended by a party against which enforcement of an award was sought that it was immune from the processes of the enforcement court because it enjoyed state immunity as a state or a state agency. In a US case, Libya successfully raised a claim of state immunity to defeat enforcement of an arbitral award against it. In reliance upon Article 5(2)(a) of the Convention (rather than Article 5(1)(a)), it was contended that the dispute was not arbitrable. This case will be dealt with in more detail in the review of Article 5(2)(a) below. The facts were exceptional, pivoting upon the enactment of laws in Libya which nationalised oil assets. More typically, in the instance of conventional contracts entered into by the entity and a private party, a claim of state immunity will be defeated on the basis that the entity has waived its immunity by agreeing to submit disputes to arbitration.35
The second branch of Article 5(1)(a), logically, would rarely be invoked. If a party believes that the agreement to arbitrate is invalid under the law of the arbitration agreement or the forum in which the award is made, this submission would normally be raised earlier (prior to the making of an award). Article 2(3) provides in substance that the court of the state in which arbitration is sought shall refer the dispute to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed. Presumably, a party who contests the validity of the agreement would seek a stay of arbitration in the court, on the basis that the agreement to arbitrate is null and void, or inoperative or incapable of being performed. These are grounds of stay which are broad enough to comprehend a plea of invalidity. If there is substance in the plea, in the normal course, an application for a stay would succeed. The invalidity of the agreement to arbitrate could also be raised during the course of arbitration, assuming that the issue was not raised prior to this time under Article 2(3).
In the US case of Twi Lite International Inc v Anam Pacific Corp, a party to an agreement to arbitrate sought to stay arbitration proceedings. The claimant contended that its agreement to the arbitration clause was null and void because it had been procured by fraud, was unconscionable and was voidable on the grounds of fraud and misrepresentation. The contention was found to be unpersuasive on the facts, especially having regard to the pro-enforcement bias implicit in the Convention. The matter was referred to arbitration. The court noted also that, while the court would review an arbitration clause alleged to have been procured by fraud (as envisaged by Article 2(3)), it would have been inappropriate for the court to review the underlying contract to determine whether it had been procured by fraud. This latter issue was one for the arbitrator, should be it be raised during arbitration.
The defence would therefore only be invoked in unusual situations, such as where the party pleading it had not previously raised it and was not cognisant of grounds for the plea prior to arbitration or, after having unsuccessfully raised it during arbitration, was confident that the arbitrator had ruled wrongly on the issue.
In an Italian case, a party unsuccessfully attempted to invoke Article 5(1)(a). It was argued that the applicable law (US law and the Convention as implemented by it), did not recognise an arbitration clause which was printed on the back of certain purchase orders which were at the centre of the disputed transactions.
A decision of the Administrative Tribunal of Syria, by implication, dealt with Article 5(1)(a). The contest was one between a French company and a Syrian ministry. The parties had submitted their contractual dispute to arbitration in Geneva, with the French party prevailing. Enforcement was refused in Syria, on the basis that the ministry had not sought authorisation from the Syrian Council of State before agreeing to arbitration, as required by Syrian law. Accordingly, the arbitral award was non-existent.
Article 5(1)(b) provides that a party may resist recognition or enforcement of an award on the basis that the party: (i) was not given proper notice of the appointment of the arbitrator; or (ii) of the arbitration proceedings; or(iii) was unable otherwise to present his case.
The defence, or rather the cluster of defences, is, or rather are, concerned with procedural irregularity sufficient to amount to a denial of due process or natural justice. The courts have construed the provision restrictively. An American court has commented that the defence ‘essentially sanctions the application of the forum state’s standards of due process’.40 It has been said that enforcement ‘may be denied only if there was a procedural infirmity that rendered the proceedings fundamentally unfair and caused prejudice to the complaining party’. The procedural irregularity must be more than merely technical. If the party had an opportunity to raise the perceived procedural unfairness during the arbitration and declined to do so, then normally this will preclude application of the defence in enforcement proceedings.
In the American case of Geotech Lizenz AG v Evergreen Systems Inc, a challenge to enforcement failed based upon an alleged lack of notice.42 The party resisting enforcement, Evergreen, did not participate in the arbitration. It was, however, appraised of every step of the arbitration process, given every opportunity to participate, and fully apprised of the perils of non-appearance. Its non-participation was a matter of choice. Furthermore, the fact that the arbitration was held in Switzerland (whereas Evergreen was domiciled in the US), did not justify its non-participation on the ground that this would have been inconvenient. Evergreen had entered into an agreement after arm’s length negotiations, nominating Switzerland as the forum of arbitration in the event of dispute. Likewise, in an Italian case, the absence of a party from the arbitration was held not to warrant non-enforcement of the award. The party resisting enforcement was an Italian company, and the arbitration was held in the US. The court found that the company had been informed of the pending arbitration, and that it had refused explicitly to participate in the process.
In the US case of International Standard Electric Corporation v Bridas Sociedad Anonima Petrolera Industrial y Comercial, a claim was rejected by a party resisting enforcement. A relevant procedural irregularity occurred when the arbitrators would not disclose the identity of a secret expert. The expert testified on aspects of New York State law. The party contended that the expert might have a conflict of interest. The court found the possibility theoretical and speculative. The complaint did not address a matter of substance. Moreover, it was very relevant that the party had not complained of the matter during arbitration, when substantive arguments, if any, could have been put to the arbitral panel.
Enforcement was refused in another US case, on the basis that the party resisting enforcement had improperly been denied an opportunity to present its case to the arbitral tribunal. At a prehearing conference, the party was told to submit audited accounts receivable ledgers rather than a vast collection of invoices. Later, another arbitrator questioned the method of proof, in response to which the party explained that it was proceeding according to an earlier understanding. Without having made it clear that the actual invoices were required to substantiate its claim, the arbitrator subsequently found against the party on the ground of lack of clear proof. The party had proceeded on the basis that the audited accounts were adequate for the purposes of arbitration. As such, it had not been given an opportunity to be heard ‘at a meaningful time and in a meaningful manner’.
In the American case of Karaha Bodas Co LLC v Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, enforcement was challenged on the basis that the arbitral tribunal failed to grant it a continuance, in order that it could prepare a response to new allegations made by the opposing party, and that it was unfairly denied discovery on a material issue. The challenge was unsuccessful, with the court finding that the party had ample time to prepare its case and that it had not been unfairly denied discovery. The hurdle for the defence was high: ‘the issue is not whether this Court would have granted the discovery or continuance. The issue is whether the procedures employed met the minimum requirements of fairness.’ In any event, the procedural issues were well within the reasonable exercise of the arbitral tribunal’s discretion and its decisions did not prevent the party ‘from having a meaningful hearing; [they did] not rise to the level of fundamental unfairness necessary to deny enforcement of the arbitration award’.
Article 5(1)(c) provides that recognition or enforcement of an award may be refused on the grounds: (i) that the award deals with a difference not contemplated by or not falling within the terms of submission to arbitration; or (ii) it contains decisions on matters beyond the scope of submission to arbitration provided that, if the decisions on matters submitted to arbitration can be separated from those not submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognised and enforced. The two branches of the defence overlap. The first allows contentions that the issues raised were beyond the scope of the arbitration agreement, while the second allows submissions that some of these matters were beyond scope.
In substance, the Article provides a defence that the award does not relate to matters which the parties have agreed may be submitted to arbitration. If this is so, then the arbitral authority has exceeded its jurisdiction, either wholly or in part. The instrument for determining this issue of arbitrability is the parties’ arbitral agreement (or more usually, arbitration clause within the underlying contract). The Article then creates a defence that a particular issue was not arbitrable according to the terms of this agreement.
As such, the Article is to be distinguished from Article 5(2)(a), which provides for non-recognition or enforcement where the dispute is not arbitrable under the law of the country where recognition or enforcement is sought.
An attempt to stay arbitration proceedings was rejected in the US case of Twi Lite International Inc v Anam Pacific Corp. Although the case was one where a stay was sought, rather than one involving a challenge to enforcement of an award, it is instructive. The issues in dispute were numerous and included a claim of misappropriation of trade secrets. One of the claimant’s claims was that the issue in question was beyond the scope of the arbitration provision. It was held that the clause was sufficiently broad to cover the issue. The clause provided for the arbitration of all disputes which may arise between the parties, out of or in connection with the (underlying) agreement, or for the breach thereof.
The court in Twi Lite drew a distinction between another case where a clause was found to be insufficiently broad to encompass the dispute in question. The case dealt with a claim of misappropriation of trade secrets, an issue not dealt with in the contract. In this latter case, the arbitral clause covered disputes arising out of the agreement, but omitted reference to claims relating to an agreement. The court construed the phrase arising out of as applying only to disputes ‘relating to the interpretation and performance of the contract itself’, and not to a collateral issue such as a claim of misappropriation of trade secrets.
If the award deals partly with issues which are properly arbitrable pursuant to the agreement to arbitrate and partly with those which are not then, in terms of the article, the award may be enforced in respect of the first category of issues, provided (as would normally be the case) the two categories of finding can properly be separated.
If a party contends that the matter was not within the terms of the arbitration because the arbitration clause is no longer valid or operative (if ever it was), this would ordinarily be a matter for assessment pursuant to Article 2(3). This would be resolved prior to submission to arbitration or, alternatively, would be raised during arbitration with a view to procuring a determination from the arbitral panel that it is without jurisdiction. However, in the US case of Henry v Murphy, a party resisted enforcement of an award – without having raised this issue before or during arbitration – on the basis that the arbitrator was barred by a time clause. The arbitration, by agreement, was heard in Ireland and proceeded pursuant to Irish law. The Irish statute of limitations imposed a six-year limitation on arbitration proceedings. The arbitration took place beyond this time. Enforcement of the award was sought under the New York Convention. The statute of limitations defence was rejected by the court of enforcement, on the basis that the party seeking to invoke it had not raised it before or during arbitration.
Article 5(1)(d) provides for non-recognition or enforcement where the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place.
In a Hong Kong case, enforcement of an award made in China was resisted on the basis that the arbitral panel was not composed of arbitrators on the Beijing list as specified in the agreement to arbitrate. Instead, arbitrators were drawn from the Shenzhen list. Enforcement was permitted in reliance upon the court’s residual discretion, the party resisting enforcement having participated in the arbitration, knowing of the non-conformity with the agreement and not having complained of this.
It is to be noted that where a complaint is made of a substantive procedural irregularity amounting to a denial of due process, the defence provided for in Article 5(1)(b) is applicable.
If it is contended that the arbitral panel was wrongly constituted because there was no valid agreement to arbitrate in the first place, Article 2(1) or (3) may be invoked.
Article 5(1)(e) provides that recognition and enforcement of an award may be refused where the award: (i) has not yet become binding on the parties; or (ii) has been set aside or suspended by a competent authority of the country in which, or under the law of which, the award was made.
According to the cases, an award is binding when it is contractually binding on the parties, pursuant to the terms of their agreement to arbitrate, the arbitration process having run its course and the award having been made. It does not cease to be binding merely because (in the event of non-compliance by a burdened party) some further step has to be taken to have it enforced by a court, or because recourse may still be had to the court by way of proceedings to resist enforcement. In the words of a US court, the ‘terms final and binding merely refer to a contractual intent that the issues joined and resolved in the arbitration may not be tried de novo in any court … even a final and binding arbitral award is subject to the defences to enforcement provided for in the New York Convention’.
In an Italian case, an award rendered in the US was enforced in Italy. According to the court, the award was binding when it is no longer open to attack in arbitral proceedings, according to the law where enforcement is sought.
In the US case of Fertiliser Corp of India v IDI Management Inc (Fertiliser case), an award made in India was sought to be enforced in the US. It was contended that the award was not yet binding on the parties because it had not been reviewed for errors of law by an Indian court. The award was currently before the Indian courts for ruling on a range of issues. The court held that an award was not precluded from being binding merely because it is appealable, or even under current challenge before a court. Furthermore, Indian law recognised it to be not only binding on the parties when made, but as having a res judicata effect which could be relied upon in litigation of the same subject matter between the parties. In the court’s view, an award was binding if it could be said that recourse could not be had to another (appellate) arbitral tribunal. The possibility of recourse to a court does not prevent it from being binding in terms of the article. This is because, otherwise, an obstructive loser could delay enforcement by bringing or threatening to bring proceedings to have the award set aside or suspended. Notwithstanding this conclusion as to the scope of the first branch in the Article 5(1)(e) defence, the court stayed enforcement proceedings pending the outcome of the Indian litigation, pursuant to Article 6. This aspect of the case will be further commented upon below.
In a Dutch case, likewise, it has been held that an award does not cease to be binding merely because an action has been initiated to set it aside. The award had been made in France. The party resisting enforcement commenced proceedings in a French court. The Dutch court granted leave to enforce the award, having regard to the purpose of the Convention – to enhance the recognition and enforcement of awards subject to a minimum number of conditions.
The second branch of the Article 5(1)(e) defence permits the discretionary refusal of recognition or enforcement, where the award has been set aside or suspended by a competent authority, in the country where recognition and enforcement is sought. It is to be distinguished from Article 6, permitting adjournment of enforcement proceedings where application for the setting aside or suspension of an award by this competent authority referred to in Article 5(1)(e).
The decision of the court in the country where enforcement is sought to decline enforcement is discretionary, whenever any of the Article 5 defences are made out. This is made clear by the preamble to Article 5. In the US case of Chromalloy Aeroservices v The Arab Republic of Egypt, the award had been made in Egypt and enforcement was sought in the US. The arbitral agreement precluded appeal to an Egyptian court. Notwithstanding this, the party against which the award had been made appealed to an Egyptian court, which suspended it and subsequently made an order for its nullification. The US court made an order for the enforcement of the award, in exercise of its discretion to enforce it, notwithstanding fulfilment of the requirements of the defence provided for in the second branch of Article 5(1)(e). It was relevant that the party resisting enforcement had provided no evidence that corruption, fraud or undue means was used in procuring the award, or that the arbitrators exceeded their powers in any way. It was also relevant that US law presumed that arbitral awards were binding. It was further relevant that the US courts had manifested a pro-enforcement bias in relation to awards made under the New York Convention. There ‘are no reported cases in which a court of the United States has faced a situation, under the Convention, in which the court of a foreign nation has nullified an otherwise valid arbitral award’.63 Considerations of comity between nations favoured non-enforcement, but the objectives of the Convention favoured enforcement. It was relevant that Egypt had made a ‘solemn promise to abide by the results of the arbitration’.
For the purpose of Article 5(1)(e), the Convention does not specify or otherwise limit the grounds upon which the court of the state of rendition, may set aside the award, thus potentially triggering an application for non-recognition or enforcement under the Article. It is for this reason that the court from which an order for enforcement is sought will logically need to be vigilant against attempts to stymie enforcement of awards which have been set aside on insubstantial grounds. This approach is reflected in the Chromalloy case, above.
A US court has held that in an action to set aside an award as contemplated by Article 5(1)(e), the applicable law controlling the application and its determination is that of the state which made the award.
Article 6 may be compared with Article 5(1)(e). Article 6 provides for the adjourning of enforcement proceedings where an application has been made to the court for the setting aside or suspension of an award in the country in which, or under the law of which, that award was made. Article 6 is further commented upon below.
It is provided in Article 5(2)(a) and (b) that the competent authority (usually, the court) in the country of enforcement may, of its own motion, refuse to recognise and enforce an award in defined cases. Refusal is discretionary.
Pursuant to Article 5(2)(a), this may be done where the subject matter of the difference is not capable of settlement under the law of the country of enforcement. Capable has been described as meaning legally capable, because ‘any matter can in theory be arbitrated or compromised’.
The issue was touched upon in the US case of Parsons & Whitmore Overseas Co Inc v Société Generale de l’Industrie du Papier (RAKTA). In the court’s opinion, the party resisting enforcement did not raise a substantial issue of arbitrability. The claim that the national interest of the US, as the state of enforcement, in some way made the dispute non-arbitrable was rejected. It was commented that there ‘is no special national interest in judicial, rather than arbitral, resolution of the breach of contract claim underlying the award in this case’.68 The court commented obiter that a US court might be expected to decline enforcement of an award involving arbitration of an antitrust claim in view of domestic arbitration cases. Such cases have determined that this issue is not arbitrable and must be determined by the judiciary. On the other hand, ‘it may well be that the special considerations and policies underlying "a truly international agreement" … call for a narrower view of non-arbitrability in the international rather than the domestic context’. In the later case of Mitsubishi Motors Corp v Soler Chrysler-Plymouth Inc, the court held that an international arbitration could not arbitrate on US antitrust issues, commenting that ‘decisions as to antitrust regulation of business are too important to be lodged in arbitrators chosen from the business community – particularly those from a foreign community that has had no experience with or exposure to our law and values’. The US interest in judicial resolution of antitrust issues could not be described as parochial in the sense of being petty provincialism.
In a Belgian case, enforcement of an award made in Switzerland was refused on the basis that Belgian law precluded an agreement for the submission of a dispute to arbitration before the end of the contract from which it arose, with the result that the dispute was not arbitrable. This might be thought to reflect an unduly parochial attitude towards application of the Convention. The parties had, after all, agreed that any arbitration was to be conducted in Switzerland pursuant to Swiss law. In favour of the decision, the underlying contract was one for the granting of a motor vehicle sales franchise, wholly or partially within Belgian territory. This was a class of contract which was closely regulated by Belgian law, a feature of which was the vesting of a right in the concessionaire to invoke the protection of Belgian law, except where he has renounced the right by an agreement after the end of the contract pursuant to which the concession was granted.
In an American case, enforcement of a foreign arbitral award in a US court was refused on the basis that the dispute was not arbitrable and by application of the act of state doctrine (namely, sovereign immunity). It was not arbitrable because of the application of the doctrine of sovereign state immunity. The party resisting enforcement was a state which had nationalised certain oil assets, an act which had given rise to the subject of arbitration. In the view of the court, expropriation of the assets of an alien within the boundaries of the sovereign state are considered to be classic acts of state immunity from judicial scrutiny. If it was so immune, it would likewise be non-arbitrable, and the court could not review any arbitral award pertaining to the topic.
Article 5(2)(b) provides that recognition and enforcement of an arbitral award may be refused if the competent authority in the country where recognition and enforcement is sought finds that recognition and enforcement would be contrary to the public policy of that country.
The ground is more commonly invoked than most of the grounds, but with indifferent success. The courts have given the clause a restricted scope, defeating attempts to treat it as a catch-all defence comprehending grounds of resistance to enforcement not specifically enumerated in the preceding clauses in Article 5.
The public policy defence has been described as one which should be ‘construed narrowly’, so that the enforcement of awards may be denied on this basis ‘only where enforcement would violate the forum state’s most basic notions of morality and justice’.77 It was said in an Indian case that the public policy exception was enlivened only where enforcement would be contrary to: ‘(i) fundamental policy of Indian law; or (ii) the interests of India; or (iii) justice or morality.’ An English judge commented that the public policy principles captured in essence ‘principles of morality of general application’. A United States authority holds that the defence applies ‘only where enforcement would violate [the forum state’s] most basic notions of morality and justice’.80 In Germany, it has been commented that for the arbitral proceeding to deviate from domestic rules is not necessarily sufficient to ground the public policy defence. What is needed is ‘an infringement of international public policy’; the arbitral proceedings must ‘have been affected by a serious shortcoming touching upon fundamental principles of economic and constitutional life’. A Swiss court commented that a procedural irregularity, in arbitral proceedings, would not ground the public policy defence. This would be the case unless it was such a violation of Swiss law as to amount to ‘a violation of fundamental principles of our legal system, which would contrast in an unbearable manner with our feelings of justice’ In an Ontario case, it was commented that the award must ‘be contrary, not merely to Ontario law, but contrary to the essential morality of the community in Ontario’.
It is generally accepted that the mere fact that the recognition or enforcement of the award (or for that matter, the contract upon which it is based) is contrary to the law of the forum state, does not per se ground the public policy exception. Municipal law is of course infinitely variable in its details, across the range of states. A technical or even a substantive illegality of a parochial kind ought not to render an award unenforceable as a matter of form, otherwise the enforcement of awards would be seriously compromised. Thus, the usual approach of the courts has been to look to international norms in public policy and to minimise the significance of inconsistencies with local law.
The Italian Court of Appeal in Florence enforced an award made in the US under the rules of the American Arbitration Association. This was notwithstanding a challenge to enforcement based on the fact that the arbitrators’ reasons for decision were not stated in the award. The public policy defence was not enlivened by the fact that the statement of reasons in an adjudicator’s decision was a principle in the Italian constitution. ‘The fact that reasoning constitutes a principle of the Italian Constitution is not important because what is fundamental in Italian law of procedure may not be considered as such by foreign legislative and judicial authorities.’
In the Indian case of Renusagar Power Co Ltd (India) v General Electric Co (US), the Supreme Court of India refused to stay enforcement of an award on the public policy ground, rejecting claims that the award violated technical provisions in Indian legislation. The court remarked in any event that ‘contravention of the law alone will not attract the bar of public policy and something more than contravention of the law is required’.87 Enforcement would be refused, as noted above, if such enforcement would be contrary to the fundamental policy of the law, or the interests of India, justice or morality.
In the English Court of Appeal case of Westacre Investments Ltd v Jugoimport-SDPR Holding Co Ltd, the enforcement of an award made in Switzerland in relation to a contract governed by Swiss law was challenged on the basis that the contract was unenforceable in England. This was because one of its terms involved the purchasing of personal influence over government officials. The court held by majority that because the arbitrators had considered and rejected this bribery claim and there was no fresh evidence adduced on the issue, it was inappropriate for the court to go behind the award and investigate the claim afresh. Furthermore, there was nothing to suggest incompetence on the part of the arbitrators, nor was there reason to suspect collusion or bad faith in the obtaining of the award. The third member of the court would have investigated the claim afresh.
An English court refused to stay enforcement on the public policy ground. The court rejected a claim that the public policy of England was violated where the two parties were each citizens of countries between which a state of war had existed from a date after formation of the contract. The claim was rejected on the basis that such a change in the political situation would have dissolved the contract by operation of a rule of English common law or international law.
An Australian court held that an alleged arbitral award was not an award within the meaning of the Convention because it was in the nature of interlocutory orders rather than a final award. Even if it were an award, public policy would preclude its enforcement. This is because the orders comprised in this award were of a drafted type that would not be made in Queensland, particularly without undertakings as to appropriate security, but also because of double vexation and practical difficulties in interpretation and enforcement.
The public policy defence was rejected in a Swiss case. It was contended that Swiss public policy had been violated because one of the members of the arbitral tribunal did not sign the award, a requirement imposed neither by Swiss law nor by the Convention. In a German decision, the participation of a legal consultant in the arbitral proceedings, including drafting the award, although not a member of the arbitral panel, did not enliven the defence. This was so, even if the activity of a consultant in this role would have required the express agreement of the parties in a German domestic arbitration (an issue which had not been settled). In another German case, it was insufficient that one of the parties had appointed the arbitrator, rather than the appointment being jointly agreed to. The respondent had not shown any violation of the arbitrator’s duty of neutrality, nor that the arbitrator had a relationship with the party which appointed him, which would have raised any concerns.
The public policy defence has also been employed as a catch-all defence, in order to ground a defence which cannot be comprehended under the more specific grounds for refusing recognition and enforcement in Art 5 (which exhaustively defines the grounds for refusal). For example, a line of American cases has seen the public policy defence invoked in situations where it has been argued that the award was made in manifest disregard of the law (a defence to enforcement in the domestic arbitration context impliedly provided for in the Federal Arbitration Act, specifically 9 USC 10).
Article 5 provides that if an application for the setting aside or suspension of the award has been made to a competent authority (usually, the court), referred to in Article 5(1)(e), the authority before which the award is sought to be relied upon may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security.
Article 5(1)(e) provides, inter alia, that enforcement may be refused where it has been set aside or suspended by a competent authority of the country in which, or under the law of which, the award was made. Given the provision of this ground of refusal, it is logical to provide for the adjournment of enforcement proceedings where application has been made to this competent authority for the setting aside or suspension of the award.
Article 6 was invoked in the US case of Fertiliser Corp of India v IDI Management Inc. The US sought to enforce an award made in India. At the time enforcement was sought the losing party had commenced proceedings before an Indian court. They challenged the award on the basis that arbitrators had exceeded their jurisdiction by awarding consequential damages despite an express clause in the contract to the contrary. The court noted that it had an unfettered grant of discretion under Article 6. The court noted that the objectives of the Convention were to liberalise enforcement procedures, limit defences and place the burden of proof upon the party opposing enforcement. By implication, these considerations disposed the court towards applying a stringent standard to adjourning the proceedings. However, the court granted the adjournment sought ‘in order to avoid the possibility of an inconsistent result’. Accordingly, the matter would be adjourned until the Indian court had rendered its decision.
The decision may be contrasted with the Dutch case of SPP(Middle East) Ltd(Hong Kong) v The Arab Republic of Egypt, and cases dealing with Article 5(1)(e), where a court enforced an award notwithstanding that the award had been set aside by a court in the place where the award was made (see above). Consideration of the purposes of the Convention would not favour adjourning proceedings. On the other hand, the presence of Article 6 in the Convention cannot be ignored. The Convention clearly envisages that adjournment may be appropriate in certain circumstances. The substantive merits of the case made (at least on a prima facie view) by the party challenging the award in the place of rendition will logically inform the exercise of the discretion under Article 6. Furthermore, a refusal to adjourn proceedings might not (all things being equal) save time or expense. If proceedings had not been adjourned in the Fertiliser case, presumably, the US court would had to have heard arguments directed towards establishing the same defence under Article 5, that was to be heard by the Indian court.
• Binder, P, International Commercial Arbitration in UNCITRAL Model Law
Jurisdictions (London: Sweet & Maxwell, 2000) chapter 8.
Coe, J, International Commercial Arbitration: American Principles and Practice in a
Global Context (New York: Transnational Publishers Inc, 1997).
Islam, R, International Trade Law (Sydney: LBC, 1999) chapter 8.2.
Redfern, A and Hunter, M, Law and Practice of International Commercial Arbitration (3rd edn, London: Sweet and Maxwell, 1999) chapter 10.
Sarcevic, P, (ed), Essays on International Commercial Arbitration (London: Graham & Trotman, 1989) chapter 9.
• Schaffer, R, Earle, B and Agusti, F, International Business Law and its Environment (Cincinnati, Ohio: West Educational Publishing Co, 1999) chapter
Van den Berg, A, The New York Arbitration Convention of 1958: Towards a Uniform Judicial Interpretation (Netherlands: Kluwer, 1981).
Aksen, G, ‘American arbitration accession arrives in the age of Aquarius: United States implements United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards’ (1971) 3 Southwestern University Law Review 1.
Chukwumerije, O, ‘Enforcement of foreign awards in Australia: the implications of Resort Condominiums’ (1994) 5 Australian Dispute Resolution Journal 237.
Garnett, R, ‘The current status of international arbitration agreements in Australia’ (1999) 15 Journal of Contract Law 29.
100 10 YB Com Arb 487, 489–90 (District Court of Amsterdam, 1985).
Gaillard, G, ‘Enforcement of a nullified foreign award’ (1997) 3 New York Law Journal 218.
Kolkey, D, ‘Attacking arbitral awards: Rights of appeal and review in international arbitrations’ (1988) 22 International Lawyer 693.
Paulsson, J, ‘Rediscovering the New York Convention: further reflections on Chromalloy’ (1997) 1 Mealey’s International Arbitration Report 20.
Taherzadeh, M, ‘International arbitration and enforcement in US federal courts’ (2000) 22 Houston Journal of International Law 371.
Volz, J and Haydock, R, ‘Foreign arbitral awards: Enforcing the award against the recalcitrant loser’ (1996) 21 William Mitchell Law Review 867.
Bernini, G, ‘The enforcement of foreign arbitral awards by national judiciaries: a trial of the New York Convention’s ambit and workability’ in Schultsz, J and Van den Berg, A (eds), The Art of Arbitration: Essays on International Arbitration (Netherlands: Kluwer, 1982) 51.
Kaplan, N, ‘A case by case examination of whether national courts apply different standards when assisting arbitral proceedings and enforcing awards in international cases as contrasting with domestic disputes. Is there a worldwide trend towards supporting an international arbitration culture?’ in Van den Berg, A (ed), International Dispute Resolution: Towards an International Arbitration Culture (The Hague: Kluwer Law International, 1996) 187.
Ratnapala, S and Haller, S, ‘International Commercial Arbitration’ in Moens, G and Gillies, P (eds), International Trade and Business: Law, Policy and Ethics (London: Cavendish, 1998) chapter 11.
Schultsz, J, ‘Recognition and enforcement of foreign arbitral awards without a convention being applicable’ in Schultsz J and Van den Berg, A (eds), The Art of Arbitration: Essays on International Arbitration (Netherlands: Kluwer, 1982) 295.
* MA, LLM Syd, PhD NSW, Law Division, Macquarie University.
 United Nations Commission on International Trade Law.
 See, eg, in Australia the International Arbitration Act 1974 (Cth) provides that the Convention governs the enforcement of foreign arbitral awards, but the Model Law applies to local awards made in respect of international disputes, except where the parties have expressly opted out of the Model Law.
 EAST Inc v M/V ALAIA,  USCA5 1215; 876 F 2d 1168 (5th Cir, 1989).
 See, eg, Food Corp of India v Mardestine Compania Naviera (1979) 4 YB Com Arb 270; Sumitomo Corp v Parakopi Compania Maritima, SA, 477 F Supp 737 (SDNY, 1979).
 Jaranilla v Megasea Maritime Ltd, 171 F Supp 2d 644, 646 (La, 2001).
 710 F 2d 928 (2nd Cir, 1983). Consideration of the US statute implementing the Convention fortified this conclusion 933-34.
 Ibid, 932.
 Jones v Sea Tow Services Freeport New York Inc,  USCA2 820; 30 F 3d 360 (2nd Cir, 1994).
 Mitsubishi Motors Corp v Soler Chrysler-Plymouth,  USCA1 399; 723 F 2d 155, 164 (1st Cir, 1983).
  USCA1 507; 886 F 2d 469 (1st Cir, 1989).
 See also Filanto SpA v Chilewich International Corp, 789 F Supp 1229 (SDNY, 1992), holding that it is for the court to decide whether the arbitral agreement exists, and if it does, it is for the arbitrator to decide issues regarding the existence of the underlying contract.
 80 BR 606, 612 (1987).
 Ibid, 609, citing Lummus Co v Commonwealth Oil Refining Co Inc, 280 F 2d 915,924 (1st Cir), cert denied, 364 US 911 (1960); see also Filanto SpA v Chilewich International Corp, 789 F Supp 1229
 1996 WL 637843 (ND Cal).
  FCA 637;  33 FCR 227.
 Ibid, 234–37, applying Heyman v Darwins Ltd  Law Reports, House of Lords, Appeal Cases 356.
 Ibid, QH Tours Ltd, 240.
 Twi Lite International Inc v Anam Pacific Corp, 1996 WL 637843 (ND Cal), where it was claimed that the contract containing the arbitral clause was procured by fraud; Oriental Commercial and Shipping Co Ltd v Rosseel, NV, 609 F Supp 75 (SDNY, 1985).
 Ibid, Twi Lite International Inc.
 Ledee v Ceramiche Ragno,  USCA1 283; 684 F 2d 184,187 (1st Cir, 1982); Mitsubishi Motors Corp v Soler Chrysler-Plymouth,  USCA1 399; 723 F 2d 155, 165 (1st Cir, 1983); Oriental Commercial and Shipping Co Ltd v Rosseel NV, 609 F Supp 75 (SDNY, 1985).
 But see Chloe Z Fishing Co Inc v Odyssey Re (London) Ltd, 109 F Supp 2d 1236 (SD Cal, 2000), where the court held that Article 2(2) prescribes a mandatory, not a minimum requirement.
 See also Compagnie de Navigation et Transports SA v MSC (Mediterranean Shipping Co), 21 YB Com Arb 690, 697 (Switzerland, 1996), minimising the need for a signature having regard to modern forms of communication.
 Bergesen v Joseph Muller Corp, 710 F 2d 928, 934 (2nd Cir, 1983).
 Vicere Livio v Prodexport (Italy v Romania), 7 YB Com Arb 345 (1981).
 Sumitomo Corp v Parakopi Compania Maritima SA, 477 F Supp 737 (SDNY, 1979); Seven Seas Shipping (UK) Ltd v Tondo Limitada, 99 Civ 1164 (DLC, 1999).
 The Bremen v Zapata Off-Shore Co, 407 US 1 (1972), cited in Société Nationale Algerienne pour la Recherche, la Production, le Transport, la Transformation et la Commercialisation des Hydrocarbures v Distrigas Corp, 80 BR 606, 612 (D Mass, 1987).
 See, eg, China Nanhai Oil Joint Service Corp v Gee Tai Holdings Co Ltd, 20 YB Com Arb 671 (1995), 678–79 (objection to an award because the arbitrators were drawn from list A and not list B; defence established but rejected in exercise of the court's discretion). See also Chromalloy Aeroservices v The Arab Republic of Egypt, 939 F Supp 907, 909 (DDC, 1996).
 Ibid, China Nanhai Oil Joint Service Corp, 678–79.
 Karaha Bodas Co LCC v Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 190 F Supp 2d 936, 943 (SD Texas 2001); Parsons & Whittemore Overseas Co Inc v Société Generale de l'Industrie du Papier (RAKTA) USCA2 836; , 508 F 2d 969,973 (2nd Cir, 1974); Yusuf Ahmed Alghanim & Sons WLL v TOYS 'R' US Inc USCA2 518; , 126 F 3d 15 (2nd Cir, 1997).
 Resort Condominiums International Inc v Bowell (1993) 118 ALR 655, 675–78. The judge, Lee J, held that the alleged award was not an arbitral award within the scope of the Convention, being in the nature of interlocutory orders and not a final award. Even if it was an award, he considered that he had a residual discretion to refuse recognition independently of the Convention defences which were provided for in the implementing statute. This was because this statute, the International Arbitration Act 1974 (Cth), s 8(5), provided that the court ‘may, at the request of the party against whom it is invoked, refuse to enforce the award if that party proves that’ [the defences in Article 5(1)(a) are listed in the remainder of s 8(5)]. Lee J saw it to be significant that the term only was not used in this preamble to s 8(5), in contrast to Article 5(1)(a), the preamble to which states that recognition and enforcement may be refused ‘only if the party’ [proves one of the defences enumerated below]; see the comment by Chukwumerije, O, ‘Enforcement of foreign awards in Australia: the implications of Resort Condominiums’ (1994) 5 Aust Dispute Resolution Journal 237.
 Karaha Bodas Co LCC v Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 190 F Supp 2d 936, 943 (SD Texas, 2001).
 See, eg, Karaha Bodas Co LCC v Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 190 F Supp 2d 936, 943 (SD Texas, 2001) that the party resisting enforcement bears the burden of proof has been confirmed by the courts many times.
 Libyan American Oil Co v Socialist People's Libyan Arab Jamahirya, 482 F Supp 1175 (Colombia, 1980).
 See, eg, Libyan American Oil Co v Socialist People's Libyan Arab Jamahirya, 482 F Supp 1175, 1178 (Colombia 1980), citing Ipitrade International SA v Federal Republic of Nigeria, 465 F Supp 824 (DDC, 1978). See also the discussion of the issue in the decision of an arbitration panel in Southern Pacific Properties (Middle East) Ltd (Hong Kong) v Arab Republic of Egypt 9 YB Com Arb 111 (1983). The panel rejected Egypt’s claim of sovereign immunity, endorsing the view that it would be anomalous to conclude that a state, because of its supreme position and qualities, should be unable to give a binding promise (119).
 1996 WL 637843 (ND Cal).
 Citing Prima Paint Corp v Flood & Conklin Manufacturing Co,  USSC 172; 388 US 395, 404 (1967).
 Bobbie Brooks Inc v Lanificio Walter Banci SaS (US v Italy) 4 YB Com Arb 289, 290-91 (Court of Appeal, Florence, 1979).
 Fougerolle SA (France) v Ministry of Defence of the Syrian Arab Republic 15 YB Com Arb 515
 Iran Aircraft Industries v AVCO Corp,  USCA2 1072; 980 F 2d 141, 145 (2nd Cir, 1992).
 Karaha Bodas Co LLC v Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 190 F Supp 2d 936, 949 (SD Texas, 2001), citing Compagnie des Bauxites de Guinée v Hammermills Inc, 1992 WL 122712, 5 (DDC) (PM).
 697 F Supp 1248 (EDNY, 1988).
 Bobbie Brooks Inc v Lanificio Walter Banci SaS (US v Italy) 4 YB Com Arb 289, 290–91 (Court of
Appeal, Florence, 1979).
 Ibid, 291.
 745 F Supp 172 (SDNY, 1990).
 International Standard Electric Corp v Bridas Sociedad Anonima Petrolera Industrial y Comercial, l
 F Supp 172, 180 (SDNY, 1990).
 Iran Aircraft Industries v AVCO Corp,  USCA2 1072; 980 F 2d 141, 145–46 (2nd Cir, 1992), citing Mathews v Eldrige,  USSC 20; 424 US 319, 333 (S Ct, 1976); Armstrong v Manzo,  USSC 81; 380 US 545, 552 (1965).
 190 F Supp 2d 936 (SD Texas, 2001).
 Karaha Bodas Co LLC v Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 190 F Supp 2d
 , 951 (SD Texas, 2001), fn 15. 50 Ibid, 952. 51 1996 WL 637843 (ND Cal).
 Twi Lite International Inc v Anam Pacific Corp, 1996 WL 637843 (ND Cal).
 Tracer Research Corp v National Environmental Services Co, 42 F 3d 1292 (9th Cir, 1994).
 Lexis 227 (US Dist, 2002).
 Compare, a party resisting enforcement of an award in the English case of Ford & Co Ltd v Compagnie Furness (France) (1922) 12 LlL Rep 281, on the same ground, that is, that the arbitration was time barred, was successful. This party had raised the issue prior to arbitration and had declined to participate in it. The case predated the New York Convention, but the outcome would logically be the same had it applied to enforcement.
 China Nanhai Oil Joint Service Corp v Gee Tai Holdings Co Ltd, 20 YB Com Arb 671, 679 (1995).
 Iran Aircraft Industries v AVCO Corp,  USCA2 1072; 980 F 2d 141, 145 (2nd Cir, 1992), citing I/S Stavborg v National Metal Converters Inc,  USCA2 418; 500 F 2d 424, 427 (2nd Cir, 1974).
 Bobbie Brooks Inc v Lanificio Walter Banci SaS (US v Italy), 4 YB Com Arb 289, 291 (Court of Appeal, Florence, 1978).
 517 F Supp 948 (SD Ohio, 1981).
 Fertiliser Corp of India v IDI Management Inc, 517 F Supp 948, 958 (SD Ohio, 1981), noting the comments of Professor Gerald Aksen, General Counsel of the American Arbitration Association.
 Southern Pacific Properties (Middle East) Ltd (Hong Kong) v The Arab Republic of Egypt, 10 YB Com Arb 487, 489–90 (District Court of Amsterdam, 1985).
 939 F Supp 907 (DDC, 1996).
 Ibid, 911.
 Ibid, 912ff. In Hilmarton Ltd v Omnium de Traitement et de Valorisation (OTV) Revue de l'Arbitrage 1994 (see extracts in 20 YB Com Arb 663 (1995)), an award which had been set aside in Switzerland was enforced by a French court.
 Yusuf Ahmed Alghanim & Sons WLL v TOYS 'R' US Inc USCA2 518; , 126 F 3d 15 (2nd Cir, 1997). See also International Standard Electric Corp v Bridas Sociedad Anonima Petrolera, Industrial y Comercial,
 F Supp 172, 178 (SDNY, 1990).
 Mitsubishi Motors Corp v Soler Chrysler-Plymouth Inc,  USCA1 399; 723 F 2d 155 (1st Cir, 1983).
  USCA2 836; 508 F 2d 969 (2nd Cir, 1974).
 Ibid, 975.
 Citing Scherk v Alberto-Culver Co, 42 USLW 4911, 4914 (1974).
 Parsons & Whittemore Overseas Co Inc v Société Generale de l'Industrie du Papier (RAKTA) USCA2 836; , 508 F2d 969, 974 (2nd Cir, 1974).
  USCA1 399; 723 F 2d 155 (1st Cir, 1983).
 Mitsubishi Motors Corp v Soler Chrysler-Plymouth Inc,  USCA1 399; 723 F 2d 155, 162 (1st Cir, 1983).
 Ibid, 163.
 Audi-NSU Auto Union AG (FR Germ) v SA Adelin Petit & Cie (Belgium), 5 YB Com Arb 257
(Court of Appeal of Liege, 1979).
 Libyan American Oil Co v Socialist People's Libyan Arab Jamahirya, 482 F Supp 1175, 1178–79 (Colombia, 1980).
 Parsons & Whittemore Overseas Co Inc v Société Generale de L'Industrie Du Papier (RAKTA) USCA2 836; , 508 F.2d 969, 974 (2nd Cir, 1974), per Joseph Smith J, citing Loucks v Standard Oil Co, 224 NY 99, 111 (1918). See also Mitsubishi Motors Corp v Soler Chrysler-Plymouth,  USCA1 399; 723 F 2d 155, 164 (1st Cir, 1983); Renusagar Power Co Ltd v General Electric Co (India v US), 20 YB Com Arb 681, 701 (Supreme Court of India, 1995); Henry v Murphy Lexis 227 (US Dist, 2002), 11 (confirming the judicial bias in favour of narrow construction).
 Parsons & Whittemore Overseas Co Inc v Société Generale de L'Industrie Du Papier (RAKTA) USCA2 836; , 508 F 2d 969 (2nd Cir, 1974).
 Renusagar Power Co Ltd v General Electric Co (India v US), 20 YB Com Arb 681, 702 (Supreme Court of India, 1995).
 Lemenda Trading Co Ltd v African Middle East Petroleum Co Ltd  QB 448, 461, per Phillips J, cited in Westacre Investments Inc v Jugoimport-SDPR Holding Co Ltd  3 All ER 864, 874, per Waller LJ.
 Waterside Ocean Navigation Co v International Navigation Ltd,  USCA2 620; 737 F 2d 150, 152 (2nd Cir, 1984); Europcar Italia SpA v Maiellano Tours Inc,  USCA2 379; 156 F 3d 310, 315 (2nd Cir, 1998); Henry v Murphy, Lexis 227 (US Dist 2002), 11.
 Seller (Nationality not indicated) v Buyer (Nationality not indicated), 17 YB Com Arb 503, 505 (Federal Supreme Court, Germany, 1992). See also German (FR) Charterer v Romanian Shipowner, 12 YB Com Arb 489, 490 (Federal Supreme Court, Germany, 1987).
 KS AG v CC SA, 20 YB Com Arb 762, 763–64 (Execution and Bankruptcy Chamber, Canton Tessin, Switzerland, 1995).
 Arcata Graphics Buffalo Ltd v The Movie (Magazine) Corp, Lexis 530 (Ont Sup CJ, 1993).
 Bobbie Brooks Inc v Lanificio Walter Banci SaS (US v Italy), 4 YB Com Arb 289, 292 (Court of Appeal, Florence, 1978); Renusagar Power Co Ltd v General Electric Co (India v US), 20 YB Com Arb 681, 701 (Supreme Court of India, 1995); Westacre Investments Inc v Jugoimport-SDPR Holding Co Ltd  3 All ER 864, 873ff, per Waller J; Seller (Nationality not indicated) v Buyer (Nationality not indicated), 17 YB Com Arb 503, 505 (Federal Supreme Court, Germany, 1992); KS AG v CC SA, 20 YB Com Arb 762 (Execution and Bankruptcy Chamber, Canton Tessin, Switzerland, 1995).
 Ibid, Bobbie Brooks Inc, 292.
 20 YBCom Arb 681, 701 (1995).
 Renusagar Power Co Ltd (India) v General Electric Co (US), 20 YB Com Arb 681, 701 (1995).
 Ibid, 702.
  3 All ER 864.
 Westacre Investments Ltd v Jugoimport-SDPR Holding Co Ltd  3 All ER 864, 887–88, per Mantell and Hirst LJJ.
 Ibid, 887.
 Dalmia Dairy Industries Ltd v National Bank of Pakistan  2 Lloyd’s Rep 223.
 Resort Condominiums International Inc v Bolwell (1993) 111 ALR 655, 680.
 KS AG v CC SA, 20 YB Com Arb 762, 763–64 (Execution and Bankruptcy Chamber, Canton
Tessin, Switzerland, 1995).
 Seller (Nationality not indicated) v Buyer (Nationality not indicated), 17 YB Com Arb 503, 505 (Federal Supreme Court, Germany, 1992).
 German (FR) Charterer v Romanian Shipowner, 12 YB Com Arb 489, 491 (Federal Supreme Court, Germany, 1987).
 See Parsons & Whittemore Overseas Co Inc v Société Generale de L'Industrie Du Papier (RAKTA) USCA2 836; , 508 F 2d 969, 977 (2nd Cir, 1974), citing a dictum in Wilko v Swan,  USSC 112; 346 US 427 (2nd Cir, 1953). Its invocation in the Parsons case was unproductive. See also Yusuf Ahmed Alghanim & Sons, WLL v TOYS 'R' US Inc (HK) USCA2 518; , 126 F 3d 15 (2nd Cir, 1997), where the manifest disregard of the law defence was unsuccessfully invoked in a case governed by the New York Convention.
 517 F Supp 948 (SD Ohio, 1981).
 Fertiliser Corp of India v IDI Management Inc, 517 F Supp 948, 962 (SD Ohio, 1981).