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Convention on the Recognition and Enforcement of Foreign Arbitral Awards

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention, was adopted by a United Nations diplomatic conference on 10 June 1958 and entered into force on 7 June 1959. The Convention requires courts of contracting states to give effect to private agreements to arbitrate and to recognize and enforce arbitration awards made in other contracting states. Widely considered the foundational instrument for international arbitration, it applies to arbitrations that are not considered as domestic awards in the state where recognition and enforcement is sought.

New York Convention
Convention on the Recognition and Enforcement of Foreign Arbitral Awards
Parties to the convention include almost the full Americas, Europe, large parts of Asia, Oceania, and about 50% of Africa
Parties to the convention
Signed10 June 1958 (1958-06-10)
LocationNew York, US
Effective7 June 1959
Condition3 ratifications
Signatories24
Parties160
DepositariesSecretary-General of the United Nations
LanguagesArabic, Chinese, English, French, Russian and Spanish
Convention on the Recognition and Enforcement of Foreign Arbitral Awards at Wikisource

The New York Convention is very successful. Nowadays many countries have adopted Arbitration laws based on the UNCITRAL Model Law on International Commercial Arbitration. This works with the New York Convention so that the provisions on making an enforceable award, or asking a court to set it aside or not enforce it, are the same under the Model Law and the New York Convention. The Model Law does not replace the NYC, it works with it. For some non-contracting states such as Taiwan, its arbitral awards can be recognized by other countries according to their domestic laws, and vice versa but this is a bilateral arrangement. An award made in a country which is not a signatory to the NYC cannot take advantage of the Convention to enforce that award in the 160 signatory countries unless there is some bilateral recognition, whether or not the Arbitration was held under the provisions of the UNCITRAL Model Law.

Contents

BackgroundEdit

In 1953, the International Chamber of Commerce (ICC) produced the first draft Convention on the Recognition and Enforcement of International Arbitral Awards to the United Nations Economic and Social Council. With slight modifications, the Council submitted the convention to the International Conference in the Spring of 1958. The Conference was chaired by Willem Schurmann, the Dutch Permanent Representative to the United Nations and Oscar Schachter, a leading figure in international law who later taught at Columbia Law School and the Columbia School of International and Public Affairs, and served as the President of the American Society of International Law.

International arbitration is an increasingly popular means of alternative dispute resolution for cross-border commercial transactions. The primary advantage of arbitration over court litigation is enforceability: an arbitration award is enforceable in most countries in the world. Other advantages of arbitration include the ability to select a neutral forum to resolve disputes, that arbitration awards are final and not ordinarily subject to appeal, the ability to choose flexible procedures for the arbitration, and confidentiality.

Once a dispute between parties is settled, the winning party needs to collect the award or judgment. If the loser voluntarily pays, no court action is necessary.[1] Otherwise, unless the assets of the losing party are located in the country where the court judgment was rendered, the winning party needs to obtain a court judgment in the jurisdiction where the other party resides or where its assets are located. Unless there is a treaty on recognition of court judgments between the country where the judgment is rendered and the country where the winning party seeks to collect, the winning party will be unable to use the court judgment to collect.

Cases and statisticsEdit

Public information on overall and specific arbitration cases is quite limited as there is no need to involve the courts at all unless there is a dispute, and in most cases the loser pays voluntarily.[1] In China, a review of disputed cases in China found that from 2000 to 2011, in 17 cases the Supreme People's Court upheld the refusal to enforce the arbitration agreement due to a provision in Article V; China has an automatic appeal system to the highest court, so this includes all such refusals.[2]

Summary of provisionsEdit

Under the Convention, an arbitration award issued in any other state can generally be freely enforced in any other contracting state, only subject to certain, limited defenses. These defenses are:[3]

  1. a party to the arbitration agreement was, under the law applicable to him, under some incapacity, or the arbitration agreement was not valid under its governing law;
  2. a party was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings, or was otherwise unable to present its case;
  3. the award deals with an issue not contemplated by or not falling within the terms of the submission to arbitration, or contains matters beyond the scope of the arbitration (subject to the proviso that an award which contains decisions on such matters may be enforced to the extent that it contains decisions on matters submitted to arbitration which can be separated from those matters not so submitted);
  4. the composition of the arbitral tribunal was not in accordance with the agreement of the parties or, failing such agreement, with the law of the place where the hearing took place (the "lex loci arbitri");
  5. the award has not yet become binding upon the parties, or has been set aside or suspended by a competent authority, either in the country where the arbitration took place, or pursuant to the law of the arbitration agreement;
  6. the subject matter of the award was not capable of resolution by arbitration; or
  7. enforcement would be contrary to "public policy".

Additionally, there are three types of reservations that countries may apply:[4]

  1. Conventional Reservation - some countries only enforce arbitration awards issued in a Convention member state
  2. Commercial Reservation – some countries only enforce arbitration awards that are related to commercial transactions
  3. Reciprocity reservation – some countries may choose not to limit the Convention to only awards from other contracting states, but may however limit application to awards from non-contracting states such that they will only apply it to the extent to which such a non-contracting state grants reciprocal treatment.

States may make any or all of the above reservations. Because there are two similar issues conflated under the term "reciprocity", it is important to determine which such reservation (or both) an enforcing state has made.

Parties to the ConventionEdit

As of April 2018, the Convention has 160 state parties, which includes 157 of the 193 United Nations member states plus the Cook Islands, the Holy See, and the State of Palestine. Thirty-six UN member states have not adopted the Convention. In addition, Taiwan has not been permitted to adopt the Convention (but generally enforces foreign arbitration judgments) and a number of British Overseas Territories have not had the Convention extended to them by Order in Council. British Overseas Territories to which the New York Convention has not yet been extended by Order in Council are: Anguilla, Falkland Islands, Turks and Caicos Islands, Montserrat, Saint Helena (including Ascension and Tristan da Cunha).

State Date of Ratification State Date of Ratification
  Afghanistan 30 November 2005   Albania 27 June 2001
  Algeria 7 February 1989   Andorra 19 June 2015
  Angola 6 March 2017
  Antigua and Barbuda 2 February 1989   Argentina 14 March 1989
  Armenia 29 December 1997   Australia 26 March 1975
  Austria 2 May 1961   Azerbaijan 29 February 2000
  Bahamas 20 December 2006   Bahrain 6 April 1988
  Bangladesh 6 May 1992   Barbados 16 March 1993
  Belarus 15 November 1960   Belgium 18 August 1975
  Benin 16 May 1974   Bhutan 25 September 2014
  Bolivia 28 April 1995   Bosnia and Herzegovina 1 September 1993
  Botswana 20 December 1971   Brazil 7 June 2002
  Brunei 25 July 1996   Bulgaria 10 October 1961
  Burkina Faso 23 March 1987   Burundi 23 June 2014
  Cambodia 5 January 1960   Cameroon 19 February 1988
  Canada 12 May 1986   Cape Verde 22 March 2018
  Central African Republic 15 October 1962
  Chile 4 September 1975   People's Republic of China 22 January 1987
  Colombia 25 September 1979   Democratic Republic of the Congo 5 November 2014
  Comoros 28 April 2015   Costa Rica 26 October 1987
  Côte d'Ivoire 1 February 1991   Cook Islands 12 January 2009
  Croatia 26 July 1993   Cuba 30 December 1974
  Cyprus 29 December 1980   Czech Republic 30 September 1993
  Denmark 22 December 1972   Djibouti 14 June 1983
  Dominica 28 October 1988   Dominican Republic 11 April 2002
  Ecuador 3 January 1962   El Salvador 10 Jun 1958
  Estonia 30 August 1993   Fiji 26 December 2010
  Finland 19 January 1962   France 26 June 1959
  Gabon 15 December 2006   Georgia 2 June 1994
  Germany 30 June 1961   Ghana 9 April 1968
  Greece 16 July 1962   Guatemala 21 March 1984
  Guinea 23 January 1991   Guyana 25 September 2014
  Haiti 5 December 1983   Holy See 14 May 1975
  Honduras 3 October 2000   Hungary 5 March 1962
  Iceland 24 January 2002   India 13 July 1960
  Indonesia 7 October 1981   Iran, Islamic Republic of 15 October 2001
  Ireland 12 May 1981   Israel 5 January 1959
  Italy 31 January 1969   Jamaica 10 July 2002
  Japan 20 June 1961   Jordan 15 November 1979
  Kazakhstan 20 November 1995   Kenya 10 February 1989
  South Korea 8 February 1973   Kuwait 28 April 1978
  Kyrgyzstan 18 December 1996   Laos 17 June 1998
  Latvia 14 April 1992   Lebanon 11 August 1998
  Lesotho 13 June 1989   Liberia 16 September 2005
  Lithuania 14 March 1995   Liechtenstein 5 October 2011
  Luxembourg 9 September 1983   Republic of Macedonia 10 March 1994
  Madagascar 16 July 1962   Malaysia 5 November 1985
  Mali 8 September 1994   Malta 22 June 2000
  Marshall Islands 21 December 2006   Mauritania 30 January 1997
  Mauritius 19 June 1996   Mexico 14 April 1971
  Moldova 18 September 1998   Monaco 2 June 1982
  Mongolia 24 October 1994   Montenegro 23 October 2006
  Morocco 12 February 1959   Mozambique 11 June 1998
  Myanmar 16 April 2013     Nepal 4 March 1998
  Netherlands 24 April 1964   New Zealand 6 January 1983
  Nicaragua 24 September 2003   Niger 14 October 1964
  Nigeria 17 March 1970   Norway 14 March 1961
  Oman 25 February 1999   Palestine 2 January 2015
  Pakistan 14 July 2005   Panama 10 October 1984
  Papua New Guinea 17 July 2019   Paraguay 8 October 1997
  Peru 7 July 1988   Philippines 6 July 1967
  Poland 3 October 1961   Portugal 18 October 1994
  Qatar 30 December 2002   Romania 13 September 1961
  Russia 24 August 1960   Rwanda 31 October 2008
  Saint Vincent and the Grenadines 12 September 2000   San Marino 17 May 1979
  Sao Tome and Principe 20 November 2012   Saudi Arabia 19 April 1994
  Senegal 17 October 1994   Serbia 12 March 2001
  Singapore 21 August 1986   Slovakia 28 May 1993
  Slovenia 6 July 1992   South Africa 3 May 1976
  Spain 12 May 1977   Sri Lanka 9 April 1962
  Sudan 26 March 2018
  Sweden 28 January 1972    Switzerland 1 June 1965
  Syria 9 March 1959   Tanzania 13 October 1964
  Tajikistan 14 August 2012   Thailand 21 December 1959
  Trinidad and Tobago 14 February 1966   Tunisia 17 July 1967
  Turkey 2 July 1992   Uganda 12 February 1992
  Ukraine 10 October 1960   United Arab Emirates 21 August 2006
  United Kingdom 24 September 1975   United States 30 September 1970
  Uruguay 30 March 1983   Uzbekistan 7 February 1996
  Venezuela 8 February 1995   Vietnam 12 September 1995
  Zambia 14 March 2002   Zimbabwe 26 September 1994

The Convention has also been extended to a number of British Crown Dependencies, Overseas Territories, Overseas departments, Unincorporated Territories and other subsidiary territories of sovereign states.

Territory Date of Ratification Territory Date of Ratification
  American Samoa   Aruba
  Ashmore and Cartier Islands   Australian Antarctic Territory
  Baker Island   Bermuda 14 November 1979
  British Virgin Islands 25 May 2014   Christmas Island 26 March 1975
  Cayman Islands 26 November 1980   Cocos (Keeling) Islands 26 March 1975
  Coral Sea Islands   Faroe Islands 10 February 1976
  French Guiana   French Polynesia 26 June 1959
  French Southern and Antarctic Lands   Gibraltar 24 September 1975
  Greenland 10 February 1976   Guadeloupe
  Guam 30 September 1970   Guernsey 19 April 1985
  Heard Island and McDonald Islands   Howland Island
  Isle of Man 22 February 1979   Jarvis Island
  Jersey 19 April 1985   Johnston Atoll
  Kingman Reef   Martinique
  Mayotte   Midway Atoll
  Navassa Island   New Caledonia 26 June 1959
  Norfolk Island   Palmyra Atoll
  Puerto Rico   Réunion
  Saint Pierre and Miquelon   United States Virgin Islands
  Wake Island   Wallis and Futuna

States which are not party to the ConventionEdit

United States issuesEdit

Under American law, the recognition of foreign arbitral awards is governed by chapter 2 of the Federal Arbitration Act, which incorporates the New York Convention.[5]

Therefore, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "Convention") preempts state law. In Foster v. Neilson, the Supreme Court held "Our constitution declares a treaty to be the law of the land. It is, consequently, to be regarded in courts of justice as equivalent to an act of the Legislature, whenever it operates of itself without the aid of any legislative provision."[6] Thus, over a course of 181 years, the United States Supreme Court has repeatedly held that a self-executing treaty is an act of the Legislature (i.e., act of Congress).

With specific regard to the New York Convention, at least one court discussed, but ultimately avoided, the issue of whether the treaty is self-executing. The court nonetheless held that the Convention was, at the least, an implemented non-self-executing treaty that still had legal force as a treaty (as distinguished from an Act of Congress).[7] Based on that determination, the court held that the Convention preempted state law that sought to void arbitration clauses in international reinsurance treaties.

See alsoEdit

External linksEdit

ReferencesEdit

  1. ^ a b Argen, Robert (1 January 2015). "Ending Blind Spot Justice: Broadening the Transparency Trend in International Arbitration". Rochester, NY: Social Science Research Network. SSRN 2393188.
  2. ^ ""Implementation of the New York Convention in China" by Xiaohong Xia". digitalcommons.wcl.american.edu. Retrieved 21 March 2016.
  3. ^ ""Enforcement of Arbitral Awards under the New York Convention - Practic" by Joseph T. McLaughlin and Laurie Genevro". scholarship.law.berkeley.edu. Retrieved 21 March 2016.
  4. ^ "Archived copy". Archived from the original on 20 June 2013. Retrieved 14 May 2014.CS1 maint: Archived copy as title (link) New York Convention, 1958 - Reservations
  5. ^ "New York Arbitration" (PDF). CMS Legal. Retrieved 21 May 2012.
  6. ^ Foster v. Neilson, 27 U.S. 253, 314 (1829). See also Valentine v. U.S. ex rel. Neidecker, 57 S.Ct. 100, 103 (1936); Medellin v. Dretke, 125 S.Ct. 2088, 2103 (2005); Sanchez-Llamas v. Oregon, 126 S.Ct. 2669, 2695 (2006).
  7. ^ Safety National Casualty Corp. v. Certain Underwriters at Lloyd's, London, 587 F.3d 714 (5th Cir. 2009) (en banc), cert. den'd, 562 U.S. 827 (2010).