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Enforcement of arbitral awards pursuant to the New York Convention

January 2010

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1 Introduction

1.1 Enforcement of an award of course comes at the end of the arbitral process and so can seem a distant object during the formulation and conduct of a case.

1.2 It is nevertheless a key aspect of the process and, for reasons explored further below, must be kept in mind at all stages of a contractual relationship or dispute, and not merely at the conclusion of an arbitration.

1.3 At the end of the day, international arbitration is a risk management measure. If there is a reasonable expectation of an arbitral award being recognised and enforced against a defaulting party who refuses to comply with an award voluntarily, then it is an effective risk management measure. If not, then arbitration is in danger of being no more than an expensive and time consuming disappointment, leaving the innocent party with no means by which to protect itself.

2 Arbitration compared to other forms of dispute re solution

2.1 Litigation before the courts does not benefit from any generally applicable international system of enforcement - rather, whether a judgment from one country is enforceable in another depends on whether there are any specific treaty arrangements in place between the two relevant nations. Leaving aside certain treaties such as those in place between EU member states, this is a hit and miss process, and the rule of thumb is that where in doubt there is no such treaty. Many people are surprised to learn, for instance, that there is no treaty between key trade partners such as the UK and the USA.

2.2 Arbitration offers a key advantage over litigation in this respect since, in the New York Convention (full title United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958), it does have a generally applicable enforcement regime internationally. To date the New York Convention has been signed by 144 States and celebrated its 50th birthday last year. This is therefore a fitting time to reflect on the impact of the Convention to date on international dispute resolution.

2.3 The maps in Schedule 1 of this note illustrate this stark contrast as regards English court judgments on the one hand and arbitral awards under the New York Convention on the other.

2.4 It follows that for many international disputes, in order for the end decision to be capable of effective enforcement, arbitration is not in truth an “alternative” form of dispute resolution. It is, rather, the default option to be selected.

2.5 Certain of the 144 signatory States have signed the Convention subject to reservations. This is permitted by Article 1(3), which allows a State to:

• declare that it will apply the Convention to the recognition and enforcement of awards made only in the territory of another Contracting State (the reciprocity reservation); and/or

• 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 declaration.

2.6 It is not within the scope of this note to analyse the reservations in detail. Schedule 2 sets out a summary of which States have signed the New York Convention at the time of writing, and whether they have signed subject to reservations.

2.7 It will be noted that whilst some 144 States have signed the Convention, there are numerous jurisdictions in which international business is conducted which have not signed the Convention, notably various African nations. It was only very recently that the United Arab Emirates signed, and at the time of writing the author believes that no enforcement proceedings have been

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brought in the UAE courts pursuant to the Convention. The first cases are under way in Pakistan, another recent signatory.

3 How enforcement under the New York Convention wor ks

A framework, not a guarantee or a self-contained co de

3.1 The text of the Convention is set out in Schedule 3 of this note.

3.2 Before we look at the some of the provisions, it is important to note that the Convention does not offer any form of guarantee of enforcement. Rather, it acts as the framework pursuant to which States (through their courts) will recognise and enforce awards issued in other States.

3.3 How that recognition and enforcement is conducted in practice is a matter of local law and procedure. This is confirmed by Article III, which provides that “Each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon….”

3.4 Accordingly, many of the key issues which affect whether and how the award will in fact be enforced are determined by local law and not by the Convention itself. As we will see, different countries approach the enforcement of awards under the Convention in quite different ways. An understanding of these local practices is key for any party wishing to understand completely the risk profile of any contract it enters into containing an international arbitration provision or, should it become necessary to do so, to understand the prospects of a claim. Checking to see whether the country in question has signed the Convention is no more than a starting point.

3.5 Enforcement action is taken wherever the unsuccessful party has assets against which enforcement is sought. This is often, but is not necessarily, the jurisdiction in which that party is domiciled. Generally speaking, enforcement is only possible against the entity which was a party to the arbitration and not against other entities in the same group of companies. That said, different legal systems take different approaches to the question of when and how the “corporate veil” may be pierced. English law only allows it in limited circumstances.

3.6 An award is generally treated as made at the seat of the arbitration, regardless of where it was signed, dispatched or delivered to any of the parties (see for instance section 100(2)(b) of the Arbitration Act 1996). In order to enforce a New York Convention award it is not necessary for the award to have been made the subject of any court order or enforcement proceedings in the country of the seat. This has been referred to as the removal of the need for double exequatur (double enforcement proceedings), which was necessary under the Geneva Convention 1927 (the regime which governed arbitral award enforcement before the New York Convention).

Recognition and enforcement

3.7 The Convention deals with the recognition and enforcement of arbitral awards. "Recognition" and "enforcement" are separate processes. An award may be recognised without being enforced, but if the award is enforced, it must necessarily first be recognised by the court ordering the enforcement.

3.8 "Recognition" means the acceptance of a foreign award as having the same effect as a domestic award. Typically the award may accordingly be relied on by way of defence, set-off or otherwise in any legal proceedings (see for example section 101(1) of the Arbitration Act 1996). Based on this recognition, the court will declare the award enforceable and it will have the same effect as a domestic court judgment. The court is not ordering enforcement in recognising an award.

Article V

3.9 Article V sets out various grounds on which, without breaching the Convention, a State may refuse to recognise and enforce an award. Understanding Article V and the approach taken to it locally is the key to understanding how effective the Convention will be in a particular case. More

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often than not, in cases where enforcement action is required because the losing party fails to comply with the award voluntarily, that party will invoke Article V in order to resist enforcement.

3.10 The grounds mentioned in Article V are as follows.

(a) The parties to the agreement to arbitrate were, under the law applicable to them, under some incapacity, or the agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made.

The incapacity is to be judged under the law applicable to the party to the arbitration agreement. The incapacity may relate to the age or competence of a party to enter into the arbitration agreement. Alternatively, it may relate to whether the party is prohibited from entering into an arbitration agreement by the law applicable to it. The defence of incapacity has never been raised in enforcement proceedings in England in relation to a New York Convention award.

The invalidity refers to a defect in the arbitration agreement rather than the incapacity of the parties or the fact that the matter is not capable of being dealt with by arbitration. An example of invalidity of an arbitration agreement would be where it has not been properly incorporated into the contract. If the parties have not indicated the governing law of the arbitration agreement then the validity of the arbitration agreement is determined by the law of the country where the award was made. An English court will interpret this to mean the law of the seat of the arbitration.

(b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case.

This provision requires that the arbitral proceedings have been carried out with "due process". Where a party shows that it did not have proper notice of the arbitration or the appointment of the tribunal, this will be a ground for refusing to recognise or enforce an award. The word "proper" refers to such requirements as exist under the contract. The phrase "unable to present his case" has been held to refer to the standard of due process to be applied in the State where the arbitration took place (Parsons & Whittemore Overseas Co v Société Générale de l’Industrie du Papier, Yearbook Comm Arb’n I (1976) p. 205). In England this has been interpreted to mean that the requirements of natural justice should be met. In Minmetals Germany GmbH v Ferco Steel Ltd [1999] CLC 647 at p.656H Colman J stated that this provision imposes "the requirements of natural justice reflected in the audi alteram partem rule" (the rule that a fair opportunity to be heard is a fundamental principle of justice (R v Chancellor of Cambridge University (1723) 1 Stra 557).

(c) The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced.

This refers to the tribunal's obligation to deal only with the matters that are referred to it under the arbitration agreement. Where the tribunal deals with matters that do not fall within its jurisdiction, partial enforcement of the award may be possible, but only where the courts are able to identify the areas of the award which are not outside the jurisdiction of the tribunal.

(d) 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.

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Where the parties have made an agreement for the appointment of the tribunal and the conduct of the arbitration, enforcement of any subsequent award may be refused if this agreement has not been complied with. However, the breach of the agreement regarding the procedure of the arbitration must be substantial (Tongyuan (YSA) International Trading Group v Uni-Clan Ltd, Yearbook Comm Arb’n XXVI (2001), pp. 886-892). Further, in each case the court will examine the agreement and decide whether a party has waived the breach of the agreement. In some cases this may occur by the party not objecting at the outset or within a reasonable time after the breach took place.

(e) The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

This provision foresees three sets of circumstances. The first is that the award has not become binding. The second is that the award is set aside. The third is that the award is suspended. An award is generally binding as soon as the tribunal makes it. However, the rules of arbitration may provide that, prior to the award becoming binding, it must be approved by an arbitral institution. Alternatively, the laws of the seat of the arbitration may require some formality to be undertaken before the award obtains a binding status. An award that is annulled or set aside is no longer binding on the parties (Fred E Beiser v Ibolya Weyler, 19 March 2002, United States Court of Appeals, Fifth Circuit, No 01-20152; 284 Federal Reporter, Third Series (5th Cir 2002) pp. 665-675). A party who alleges that an award is not binding has the burden of proving this (Rosseel NV v Oriental Commercial Shipping Ltd, Yearbook Comm Arb’n XVI (1991), p. 615).

An award may be set aside by the courts of the seat of the arbitration. Whether a court should ever enforce an award that has been set aside at the seat of the arbitration has been the subject of much academic debate. In Apis AS v Fantazia Kereskedelmi KFT [2001] 1 All ER (Comm) 348, 352 the English Commercial Court considered when an award could be suspended. Jack J held that the courts of the seat of the arbitration had an inherent jurisdiction to suspend the arbitration pending an application to set aside the award.

In the light of this provision, it is not unusual for an unsuccessful party who intends to resist enforcement to issue some form of challenge (even if without prospect of success) against the award in the seat of arbitration once it is issued, to prevent any enforcement action being taken until that matter is resolved. In this respect, choosing a seat of arbitration which takes a robust attitude to challenges of this nature is advantageous.

(f) The subject matter of the difference is not capable of settlement by arbitration under the law of the country in which recognition and enforcement is sought.

The enforcing court applies its own law in deciding whether a matter is capable of settlement by arbitration or not. Under English law, matters which would not be capable of settlement by arbitration would include:

• decisions affecting the legal status of the parties;

• decisions which affect the legal status or rights of non-parties; and

• decisions which are not quasi-judicial (for example, valuations, mediations and appraisements).

The court may consider this ground on its own motion, i.e. irrespective of whether one of the parties seeks to resist enforcement on this ground.

(g) The recognition or enforcement of the award would be contrary to the public policy of the country in which recognition and enforcement is sought.

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Again, the court may consider this ground on its own motion, i.e. irrespective of whether one of the parties seeks to resist enforcement on this ground. In practice, this is probably the ground most commonly discussed in deciding whether to enforce awards.

Public policy is by its nature a concept which is somewhat difficult to define and is approached differently in different jurisdictions. Consequently:

• the inherent uncertainty and unpredictably acts as something of an incentive for the unsuccessful party to raise this ground in argument; and

• above all other grounds, it is important to consider this ground ahead of commencing arbitration to evaluate any risks.

It would be impossible in a brief note to seek to analyse fully the approach taken internationally to this ground. The following paragraphs summarise the position under certain laws by citing example cases, and make some general observations.

The question arises whether “public policy” means “international public policy” or “domestic public policy”. Most commentators appear to believe that it refers to the former, and that even though the Convention refers to public policy “of that country” this should be interpreted as meaning that country’s conception of international public policy. However, Article V expressly provides for each jurisdiction to judge where the balance lies between international and domestic interests and where such discretion is available, its application will necessarily be variable.

In England, the public policy defence was considered in Westacre Investments v Jugoimport-SDPR Holding Co Ltd [1998] 2 Lloyd’s Law Rep 111 (section 103(3) of the Act). A distinction is made between domestic public policy and public policy as it applies to the enforcement of international arbitration awards. In Westacre Investments the Court of Appeal, referring to Lemenda Trading Co Ltd v African Middle East Petroleum Co [1988] 1 QB 448, held that it was difficult to see why acts, outside the field of such universally condemned activities such as terrorism, drug trafficking, prostitution, paedophilia, or anything short of corruption or fraud in international commerce, should invite the attention of English public policy where the contracts are not performed within the jurisdiction of the English courts. It would therefore be rare for a New York Convention award not to be enforced for public policy reasons (Tongyuan (USA) International Trading Group v Uni-Clan Limited, Yearbook Comm Arb’n XXVI (2001), pp. 886-892).

However, the English courts have recognised that where enforcement of an award would result in a breach of England's treaty obligations then they should not enforce that award on public policy grounds. The issue came before the European Court of Justice in Eco Swiss China Time Ltd v Benetton International BV ([1999] 2 All ER (Comm) 44). The ECJ ruled that the enforcement of the EU competition rules is a public policy ground justifying the annulment of the decisions of private arbitration bodies. This will be the case even where the application of national competition law is not a basis for annulment of an arbitration award in the law of the relevant Member State. The ECJ considered that Article 81 of the EC Treaty was essential for the functioning of the European internal market and should be categorised as a matter of public policy under the New York Convention. Any agreements or decisions prohibited pursuant to that Article were automatically void (Article 81(2) of the EC Treaty). It followed that a national court to which application was made for annulment of an arbitration award had to grant that application if it considered that the award was contrary to Article 81 of the EC Treaty.

The public policy defence can often be invoked if the award in question gives effect to an illegal contract. In the Westman1 case, the Paris Court of Appeal held that to find

1 Westman v Gaz Turbine, Rev. arb. 1996 p.49

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otherwise would be contrary to “international French public policy and also to the ethics of international business under the conception of most of the states composing the international community.”2 Similarly, in Soleimany v Soleimany3, the English Court of Appeal was asked to examine the enforcement of an award based on an illegal act. The act in question had been examined under Jewish law and it was held at first instant that the illegality would have no effect on the rights of the parties. The English court found, however, that because of the nature of the underlying transaction, the award could not be enforced in England.

In Germany, the public policy exception has been defined very narrowly. Even where the application of mandatory German law would have led to a different result, an award does not necessarily violate international public policy unless its enforcement violates the most fundamental principles of German public and economic life “in such a way that its enforcement seems simply unbearable.” 4

A common approach taken by the courts - internationally - follows the 1974 United States Court of Appeals for the Second Circuit which limits the concept of public policy to being “the forum state’s most basic notions of morality and justice.”5 Elsewhere it has been held that enforcement should only be refused where it would be “clearly injurious to ordinary, reasonable and fully informed members of the public.”6

It is inevitable that the discretion afforded the enforcing jurisdiction under Article V(2)(b) allows for cultural, political and economic differences and interpretations as to the meaning of “public policy”. The findings of the Central Jakarta District Court in the Indonesian case of Kahara Bodas7 case demonstrate this. Indonesia has not interpreted “public policy” to mean “international public policy” but rather frames the concept in domestic terms. An award which conflicted with a Presidential Decree (which was issued to protect the Indonesian economy from the Asian financial crisis) was refused on the grounds that it would detrimentally affect the “welfare” of Indonesia and its people.8 In EDF&Man (Sugar) Ltd v Yani Haryanto the Supreme Court held that a contract with an English entity for the importation of sugar was against public policy as another Presidential Decree had banned foreign sugar imports to protect the domestic sugar industry. This case is no longer jurisprudence but it is indicative that protectionist economic considerations in certain jurisdictions can influence judicial decision-making.

It is probably fair to say that the majority of jurisdictions seek to limit the public policy exception to cases which raise genuine concerns about risks to international notions of public policy. However, there exists the danger that certain jurisdictions will take advantage of the flexibility of Article V(2)(b) to protect national interests to the detriment of international interests and the Convention.

Article V concluding remarks

3.11 On the one hand, Article V is of course an important safeguard. There has to be a mechanism to prevent the enforcement of awards which plainly ought not to be enforced.

3.12 However, and crucially, Article V is subject to local interpretation in the jurisdiction in which enforcement is being sought, the courts of one country not being bound by decisions of the courts of another. Contracting parties should therefore be aware of the approach taken in the country or countries in which they are likely to be enforcing an award in the event that a dispute arises.

2 Westman, cited in Poudret & Besson ‘Comparative Law of International Arbitration’, Sweet& Maxwell, 2007 3 [1999] Q.B. 785 4 Kroli, S.M. ‘Recognition & enforcement of foreign arbitral awards in Germany’, International Arbitration Law Review, 2002 5 Parsons & Whittemore Overseas Co. Inc. v Soc. Generale de l’Industrie du Papier 508 F. 2d, 6 Deutsche Schachtbau v Shell International Petroleum Co. Ltd [1990] 1 A.C. 295 7 Karaha Bodas Company, LLC v Perusahaan Pertambangan Minyak Dan Gas Bumi Negara3364 F. 3d 274 8 This case is currently being reviewed by the Supreme Court but it is not thought likely that it will be overturned on the grounds of this element of the decision

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3.13 Due to the above, it is unwise to take the wording of the Convention at face value or to assume in relation to an unfamiliar jurisdiction that any particular approach would be adopted. Advice is required in the relevant jurisdiction(s) in which enforcement could be sought.

3.14 The extent of local variations can result in what is more or less a simple rubber stamping exercise at one extreme versus something more akin to a complete re-hearing of the case at the other. As a consequence, and leaving aside the danger of the successful party having the benefit of the award taken away from it, considerable time and cost can be incurred in enforcement proceedings depending on the attitudes of the unsuccessful party and the local courts. In many cases, parties to an arbitration are well advised not to consider the issue of the award being the final step in arbitral proceedings.

4 The Convention is relevant at all stages

4.1 The Convention, and Article V in particular, should be borne in mind by tribunals and parties at all stages of an arbitration. By way of example:

(a) Service of the proceedings is to be done in a way that satisfies requirements at the likely place of enforcement.

(b) Generally, the procedural aspects of the arbitration need to be conducted with Article V in mind so as to minimise the chances of the successful invocation of any of the grounds for refusing enforcement. Thus, for instance, measures such as limiting the length of written or oral submissions below that desired by one of the parties, excluding the evidence of a witness on the basis of inadmissibility, reducing hearing lengths below that suggested by one of the parties and the like need to be treated carefully. In this respect, there is perhaps a tension between keeping appropriate control on the time and costs of the proceedings versus avoiding any difficulty under Article V. Ultimately, parties must rely on both tribunals and local courts taking a sensible and pragmatic approach to this issue.

4.2 Indeed, the parties should have Article V in mind even at the time of entering into the contract which contains the arbitration agreement. Consideration should be given to matters such as:

(a) Whether disputes of the type likely to arise under the contract are capable of being arbitrated according to the law of the countries in which enforcement of an award would be likely to be sought.

(b) Selecting the seat of arbitration: if the award is to be made in a Convention State and the assets against which enforcement would be sought are located in a Convention State, matters ought to be straightforward in principle. However, in view of the reciprocity reservation permitted by Article III of the Convention, care must be taken before agreeing to a seat of arbitration which is not a Convention State.

5 Other local practices and timing

5.1 Since the Convention leaves matters of procedure to the local courts in the place of enforcement, it follows that parties should make themselves aware of that procedure well in advance of the need to enforce. Indeed, especially in a risky jurisdiction, knowing the likely difficulties and timeframe involved in enforcement proceedings ought to be an element of a party’s case analysis and assessment of risk, as well as having a bearing on any consideration of settlement.

5.2 It is not possible to comment here in any detail on the variations that may be encountered around the world. An example drawn from the People’s Republic of China illustrates the point, however. Enforcement action must be commenced within six months of the award being issued. It is not clear whether that period is capable of being extended by agreement between the parties. Bearing in mind the requirement to have documentation submitted to the court in Chinese in order to seek enforcement, it is not uncommon for it to take several months to prepare the papers required for an enforcement application. It is a common tactic of losing Chinese parties to enter into settlement negotiations during this period. Successful parties must consider preparing the

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necessary paperwork in parallel with such negotiations, and be prepared to commence enforcement proceedings at the end of the six month period even if the negotiations are continuing.

5.3 Further, for arbitrations conducted with their seat in the PRC, it is necessary for the award to be issued by one of the recognised arbitration “commissions”, such as CIETAC. Perhaps the best known arbitral institution, the ICC, is not recognised as an arbitration commission. This requirement does not apply to arbitrations seated outside the PRC, however this is an issue easily overlooked at the negotiation stage. It also leaves an open question as to the status of foreign ad hoc, as opposed to procedural, awards if enforcement is sought in the PRC.

5.4 On a more positive note, the PRC is an example of a jurisdiction which is taking positive steps to ensure that it is perceived to be a jurisdiction in which enforcement under the Convention is easily achievable and that the domestic courts take a consistent approach between them as to challenges to enforcement. To that end, a system has been set up whereby lower courts must refer to higher courts any case where the lower court intends to refuse enforcement.

5.5 The Convention does not specify what orders may be made to enforce the award. Again, this is a local question, usually depending on what measures the country in question permits for the enforcement of its own domestic court judgments and arbitral awards. Therefore, parties should seek local advice as to whether, for instance, measures such as attachments of earnings, forced transfer of property including real estate, seizure of bank accounts and insolvency proceedings are available in principle.

6 “Awards”

6.1 The New York Convention applies to “awards”. Article II of the Convention provides that the term "arbitral awards" shall include not only awards made by arbitrators appointed for each case but also those made by permanent arbitral bodies to which the parties have submitted. The Convention does not further define what is meant by an “award”. This is left to a matter of local interpretation.

6.2 As a generalisation, most jurisdictions will regard an “award” as meaning a final ruling on the merits of the case, but will not regard a procedural order as an “award”.

6.3 A final ruling on the merits would include a partial award, provided it is a final one. This would allow, for instance, a (final) ruling on a preliminary issue to be treated as an enforceable award separate from a later award on other issues in the case. Similarly, in a case where a bifurcated procedure is adopted to deal with liability ahead of quantum, the earlier award on liability will be enforceable ahead of and separate from the later award on quantum.

6.4 By contrast, "provisional awards" are not final and cannot be enforced. Section 39 of the Arbitration Act 1996 recognises that the parties are free to agree that the tribunal has the power to order, on a provisional basis, any relief which it would have power to grant in a final award. This includes, for example, making a provisional order for the payment of money or the disposition of property as between the parties, or an order to make an interim payment on account of the costs of the arbitration. However, any such order is subject to the tribunal's final adjudication and must be taken into account in the tribunal's final award, on the merits or as to costs.

6.5 It follows that the Convention cannot be used directly to address a situation where a party fails to comply with the timetable ordered by the tribunal or (for instance) to disclose documents. Indirectly, the Convention is still of benefit in these situations. Under the majority of arbitral rules, the tribunal would have the power to issue an award even if one of the parties fails to participate in the arbitration, and to draw adverse inferences against a party who refused to disclose relevant documentation when ordered to do so. The award therefore reflects the procedural failings of the guilty party and is then enforceable under the Convention, but the Convention does not come into play at any earlier stage. Of course, tribunals who proceed on this basis ought to ensure so far as they can that they are not conducting the matter in a way which might lead to

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difficulties later under Article V of the Convention should the formerly recalcitrant losing party suddenly show more interest in the case at that stage (having lost).

6.6 Consent awards are in principle able to be dealt with under the Convention. Where an arbitration is already afoot and the parties agree a settlement, it is common for the terms of settlement to include a form of “consent award” that the parties will ask the tribunal to issue. Generally speaking, these awards will be enforceable under the Convention in the same manner as awards which are issued following the tribunal dealing in full with the merits of the case. Indeed, there is a strong argument that it would be absurd not to enforce the award in these circumstances, since that would effectively force the parties to arbitrate notwithstanding that they have resolved their differences. The situation where a settlement is reached without any tribunal having first been constituted can become considerably more complex.

7 Conclusions

7.1 The New York Convention is a vital reason why international arbitration is an attractive form of dispute resolution in many cases. Indeed, in many cases, even though the parties may well agree on steps such as negotiations and mediation along the way, and as pre-conditions to any arbitration, the process must ultimately end in arbitration in order for there to be any prospect of a defaulting party being held to the contract or forced to pay damages. The fact that the Convention has been signed by some 144 nations should without doubt be seen as a major achievement and a major factor promoting international trade.

7.2 It is, however, incorrect to see the Convention as a guarantee of enforcement. It provides the framework for enforcement, but leaves questions of detailed procedure to the local law in the place where enforcement is sought.

7.3 Article V of the Convention provides grounds by which local courts may, in accordance with the Convention, refuse to recognise and enforce awards. The interpretation and operation of Article V is again a local matter. Certain of the grounds in Article V leave plenty of scope for uncertainty and difference of approach between different jurisdictions.

7.4 In short, whilst the Convention provides the backbone of international enforcement, much still depends on the local law. As with many things in arbitration, courts in different countries take different approaches depending on how supportive of the arbitral process the country in question is.

7.5 Sophisticated parties should have enforcement in mind when drafting contracts and, if unlucky enough to have a dispute, at all stages of dispute resolution and not merely at the end of the arbitration. It is most unwise to ignore detailed consideration of enforcement and the Convention until after the award has been issued.

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Schedule 1

Enforcement maps

Please see overleaf

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Schedule 2

Status of the New York Convention

The following is taken from the UNCITRAL web site at the following address: http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention_status.html

State Signature Ratification, Accession or Succession

Entry into force

Afghanistan (a), (b) 30 November 2004 (c) 28 February 2005

Albania 27 June 2001 (c) 25 September 2001

Algeria (a), (b) 7 February 1989 (c) 8 May 1989

Antigua and Barbuda (a), (b) 2 February 1989 (c) 3 May 1989

Argentina (a), (b), (d) 26 August 1958 14 March 1989 12 June 1989

Armenia (a), (b) 29 December 1997 (c) 29 March 1998

Australia 26 March 1975 (c) 24 June 1975

Austria 2 May 1961 (c) 31 July 1961

Azerbaijan 29 February 2000 (c) 29 May 2000

Bahamas 20 December 2006 (c) 20 March 2007

Bahrain (a), (b) 6 April 1988 (c) 5 July 1988

Bangladesh 6 May 1992 (c) 4 August 1992

Barbados (a), (b) 16 March 1993 (c) 14 June 1993

Belarus (e) 29 December 1958

15 November 1960 13 February 1961

Belgium (a) 10 June 1958 18 August 1975 16 November 1975

Benin 16 May 1974 (c) 14 August 1974

Bolivia 28 April 1995 (c) 27 July 1995

Bosnia and Herzegovina (a), (b), (f), (g)

1 September 1993 (h) 6 March 1992

Botswana (a), (b) 20 December 1971 (c) 19 March 1972

Brazil 7 June 2002 (c) 5 September 2002

Brunei Darussalam (a) 25 July 1996 (c) 23 October 1996

Bulgaria (a), (e) 17 December 1958

10 October 1961 8 January 1962

Burkina Faso 23 March 1987 (c) 21 June 1987

Cambodia 5 January 1960 (c) 4 April 1960

Cameroon 19 February 1988 (c) 19 May 1988

Canada (i) 12 May 1986 (c) 10 August 1986

Central African Republic (a), (b) 15 October 1962 (c) 13 January 1963

Chile 4 September 1975 (c) 3 December 1975

China (a), (b), (o) 22 January 1987 (c) 22 April 1987

Colombia 25 September 1979 (c) 24 December 1979

Cook Islands 12 January 2009 (a) 12 April 2009

Costa Rica 10 June 1958 26 October 1987 24 January 1988

Côte d' Ivoire 1 February 1991 (c) 2 May 1991

Croatia (a), (b), (f), (g) 26 July 1993 (h) 8 October 1991

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Cuba (a), (b), (e) 30 December 1974 (c) 30 March 1975

Cyprus (a), (b) 29 December 1980 (c) 29 March 1981

Czech Republic (f), (j) 30 September 1993 (h) 1 January 1993

Denmark (a), (b) 22 December 1972 (c) 22 March 1973

Djibouti (f) 14 June 1983 (h) 27 June 1977

Dominica 28 October 1988 (c) 26 January 1989

Dominican Republic 11 April 2002 (c) 10 July 2002

Ecuador (a), (b) 17 December 1958

3 January 1962 3 April 1962

Egypt 9 March 1959 (c) 7 June 1959

El Salvador 10 June 1958 26 February 1998 27 May 1998

Estonia 30 August 1993 (c) 28 November 1993

Finland 29 December 1958

19 January 1962 19 April 1962

France (a) 25 November 1958

26 June 1959 24 September 1959

Gabon 15 December 2006 (c) 15 March 2007

Georgia 2 June 1994 (c) 31 August 1994

Germany (a), (k), (l) 10 June 1958 30 June 1961 28 September 1961

Ghana 9 April 1968 (c) 8 July 1968

Greece (a), (b) 16 July 1962 (c) 14 October 1962

Guatemala (a), (b) 21 March 1984 (c) 19 June 1984

Guinea 23 January 1991 (c) 23 April 1991

Haiti 5 December 1983 (c) 4 March 1984

Holy See (a), (b) 14 May 1975 (c) 12 August 1975

Honduras 3 October 2000 (c) 1 January 2001

Hungary (a), (b) 5 March 1962 (c) 3 June 1962

Iceland 24 January 2002 (c) 24 April 2002

India (a), (b) 10 June 1958 13 July 1960 11 October 1960

Indonesia (a), (b) 7 October 1981 (c) 5 January 1982

Iran (Islamic Rep. of) (a), (b) 15 October 2001 (c) 13 January 2002

Ireland (a) 12 May 1981 (c) 10 August 1981

Israel 10 June 1958 5 January 1959 7 June 1959

Italy 31 January 1969 (c) 1 May 1969

Jamaica (a), (b) 10 July 2002 (c) 8 October 2002

Japan (a) 20 June 1961 (c) 18 September 1961

Jordan 10 June 1958 15 November 1979 13 February 1980

Kazakhstan 20 November 1995 (c) 18 February 1996

Kenya (a) 10 February 1989 (c) 11 May 1989

Kuwait (a) 28 April 1978 (c) 27 July 1978

Kyrgyzstan 18 December 1996 (c) 18 March 1997

Lao People's Democratic Republic

17 June 1998 (c) 15 September 1998

Latvia 14 April 1992 (c) 13 July 1992

Lebanon (a) 11 August 1998 (c) 9 November 1998

Lesotho 13 June 1989 (c) 11 September 1989

Liberia 16 September 2005 (c) 15 December

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2005

Lithuania (e) 14 March 1995 (c) 12 June 1995

Luxembourg (a) 11 November 1958

9 September 1983 8 December 1983

Madagascar (a), (b) 16 July 1962 (c) 14 October 1962

Malaysia (a), (b) 5 November 1985 (c) 3 February 1986

Mali 8 September 1994 (c) 7 December 1994

Malta (a), (m) 22 June 2000 (c) 20 September 2000

Marshall Islands 21 December 2006 (c) 21 March 2007

Mauritania 30 January 1997 (c) 30 April 1997

Mauritius (a) 19 June 1996 (c) 17 September 1996

Mexico 14 April 1971 (c) 13 July 1971

Moldova (a), (g) 18 September 1998 (c) 17 December 1998

Monaco (a), (b) 31 December 1958

2 June 1982 31 August 1982

Mongolia (a), (b) 24 October 1994 (c) 22 January 1995

Montenegro (a), (b), (g) 23 October 2006 (h) 3 June 2006

Morocco (a) 12 February 1959 (c) 7 June 1959

Mozambique (a) 11 June 1998 (c) 9 September 1998

Nepal (a), (b) 4 March 1998 (c) 2 June 1998

Netherlands (a) 10 June 1958 24 April 1964 23 July 1964

New Zealand (a) 6 January 1983 (c) 6 April 1983

Nicaragua 24 September 2003 (c) 23 December 2003

Niger 14 October 1964 (c) 12 January 1965

Nigeria (a), (b) 17 March 1970 (c) 15 June 1970

Norway (a), (n) 14 March 1961 (c) 12 June 1961

Oman 25 February 1999 (c) 26 May 1999

Pakistan (a) 30 December 1958

14 July 2005 12 October 2005

Panama 10 October 1984 (c) 8 January 1985

Paraguay 8 October 1997 (c) 6 January 1998

Peru 7 July 1988 (c) 5 October 1988

Philippines (a), (b) 10 June 1958 6 July 1967 4 October 1967

Poland (a), (b) 10 June 1958 3 October 1961 1 January 1962

Portugal (a), (o) 18 October 1994 (c) 16 January 1995

Qatar 30 December 2002 (c) 30 March 2003

Republic of Korea (a), (b) 8 February 1973 (c) 9 May 1973

Romania (a), (b), (e) 13 September 1961 (c) 12 December 1961

Russian Federation (e), (p) 29 December 1958

24 August 1960 22 November 1960

Rwanda 31 October 2008 29 January 2009

Saint Vincent and the Grenadines (a), (b)

12 September 2000 (c) 11 December 2000

San Marino 17 May 1979 (c) 15 August 1979

Saudi Arabia (a) 19 April 1994 (c) 18 July 1994

Senegal 17 October 1994 (c) 15 January 1995

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Serbia (a), (b), (g), (q) 12 March 2001 (h) 27 April 1992

Singapore (a) 21 August 1986 (c) 19 November 1986

Slovakia (f), (j) 28 May 1993 (h) 1 January 1993

Slovenia (a), (b), (f), (g) 6 July 1992 (h) 25 June 1991

South Africa 3 May 1976 (c) 1 August 1976

Spain 12 May 1977 (c) 10 August 1977

Sri Lanka 30 December 1958

9 April 1962 8 July 1962

Sweden 23 December 1958

28 January 1972 27 April 1972

Switzerland (r) 29 December 1958

1 June 1965 30 August 1965

Syrian Arab Republic 9 March 1959 (c) 7 June 1959

Thailand 21 December 1959 (c) 20 March 1960

The former Yugoslav Republic of Macedonia (a), (b), (f), (g)

10 March 1994 (h) 17 November 1991

Trinidad and Tobago (a), (b) 14 February 1966 (c) 15 May 1966

Tunisia (a), (b) 17 July 1967 (c) 15 October 1967

Turkey (a), (b) 2 July 1992 (c) 30 September 1992

Uganda (a) 12 February 1992 (c) 12 May 1992

Ukraine (e) 29 December 1958

10 October 1960 8 January 1961

United Arab Emirates 21 August 2006 (c) 19 November 2006

United Kingdom of Great Britain and Northern Ireland (a)

24 September 1975 (c) 23 December 1975

United Republic of Tanzania (a) 13 October 1964 (c) 12 January 1965

United States of America (a), (b) 30 September 1970 (c) 29 December 1970

Uruguay 30 March 1983 (c) 28 June 1983

Uzbekistan 7 February 1996 (c) 7 May 1996

Venezuela (Bolivarian Republic of) (a), (b)

8 February 1995 (c) 9 May 1995

Vietnam (a), (b), (e), (s) 12 September 1995 (c) 11 December 1995

Zambia 14 March 2002 (c) 12 June 2002

Zimbabwe 29 September 1994 (c) 28 December 1994

Parties: 144

(a) Declarations and reservations (excludes territorial declarations and certain other reservations and declarations of a political nature). This State will apply the Convention only to recognition and enforcement of awards made in the territory of another contracting State.

(b) Declarations and reservations (excludes territorial declarations and certain other reservations and declarations of a political nature). This State will apply the Convention only to differences arising out of legal relationships, whether contractual or not, that are considered commercial under the national law.

(c) Accession.

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(d) Declarations and reservations (excludes territorial declarations and certain other reservations and declarations of a political nature). Argentina declared that the Convention should be construed in accordance with the principles and rules of the National Constitution in force or with those resulting from reforms mandated by the Constitution.

(e) Declarations and reservations (excludes territorial declarations and certain other reservations and declarations of a political nature).With regard to awards made in the territory of non-contracting States, this State will apply the Convention only to the extent to which those States grant reciprocal treatment.

(f) The date of effect of the succession is as follows: for Bosnia and Herzegovina, 6 March 1992; for Croatia, 8 October 1991; for the Czech Republic, 1 January 1993; for Djibouti, 27 June 1977; for Slovakia, 1 January 1993; for Slovenia, 25 June 1991; and for the former Yugoslav Republic of Macedonia, 17 September 1991.

(g) Declarations and reservations (excludes territorial declarations and certain other reservations and declarations of a political nature). This State will apply the Convention only to those arbitral awards which were adopted after the entry into effect of the Convention.

(h) Succession.

(i) Declarations and reservations (excludes territorial declarations and certain other reservations and declarations of a political nature). Canada declared that it would apply the Convention only to differences arising out of legal relationships, whether contractual or not, that were considered commercial under the laws of Canada, except in the case of the Province of Quebec where the law did not provide for such limitation.

(j) The former Czechoslovakia signed the Convention on 3 October 1958 and deposited an instrument of ratification on 10 July 1959. On 28 May and 30 September 1993, respectively, Slovakia and the Czech Republic deposited instruments of succession.

(k) The former German Democratic Republic acceded to the Convention on 20 February 1975 with the reservations mentioned in footnotes (a), (b), (e).

(l) On 31 August 1998, Germany withdrew the reservation made upon ratification mentioned in footnote (a).

(m) The Convention only applies with regard to Malta with respect to arbitration agreements concluded after the date of Malta's accession to the Convention.

(n) Declarations and reservations (excludes territorial declarations and certain other reservations and declarations of a political nature). This State will not apply the Convention to differences where the subject matter of the proceedings is immovable property situated in the State, or a right in or to such property.

(o) Upon resumption of sovereignty over Hong Kong on 1 July 1997, the Government of China extended the territorial application of the Convention to Hong Kong, Special Administrative Region of China, subject to the statement originally made by China upon accession to the Convention. On 19 July 2005, China declared that the Convention shall apply to the Macao Special Administrative Region of China, subject to the statement originally made by China upon accession to the Convention.

(p) The Russian Federation continues, as from 24 December 1991, the membership of the former Union of Soviet Socialist Republics (USSR) in the United Nations and maintains, as from that date, full responsibility for all the rights and obligations of the USSR under the Charter of the United Nations and the multilateral treaties deposited with the Secretary-General.

(q) The former Yugoslavia acceded to the Convention on 26 February 1982. On 12 March 2001, the Secretary-General received from the Government of Yugoslavia a notification of succession, confirming the declaration dated 28 June 1982 by the Socialist Federal Republic of Yugoslavia (see footnotes (a), (b) and (g) above).

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(r) Declarations and reservations (excludes territorial declarations and certain other reservations and declarations of a political nature). On 23 April 1993, Switzerland notified the Secretary-General of its decision to withdraw the reciprocity declaration it had made upon ratification.

(s) Viet Nam declared that interpretation of the Convention before the Vietnamese Courts or competent authorities should be made in accordance with the Constitution and the law of Viet Nam.

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Schedule 3

Text of the New York Convention

CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS

Article I

1. This Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a 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. It shall also apply to arbitral awards not considered as domestic awards in the State where their recognition and enforcement are sought.

2. The term "arbitral awards" shall include not only awards made by arbitrators appointed for each case but also those made by permanent arbitral bodies to which the parties have submitted.

3. When signing, ratifying or acceding to this Convention, or notifying extension under article X hereof, any State may on the basis of reciprocity declare that it will apply the Convention to the recognition and enforcement of awards made only in the territory of another Contracting State. It may also 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 declaration.

Article II

1. Each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration.

2. 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.

3. The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.

Article III

Each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the following articles. There shall not be imposed substantially more onerous conditions or higher fees or charges on the recognition or enforcement of arbitral awards to which this Convention applies than are imposed on the recognition or enforcement of domestic arbitral awards.

Article IV

1. To obtain the recognition and enforcement mentioned in the preceding article, the party applying for recognition and enforcement shall, at the time of the application, supply:

(a) The duly authenticated original award or a duly certified copy thereof;

(b) The original agreement referred to in article II or a duly certified copy thereof.

2. If the said award or agreement is not made in an official language of the country in which the award is relied upon, the party applying for recognition and enforcement of the award shall produce a translation of these documents into such language. The translation shall be certified by an official or

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sworn translator or by a diplomatic or consular agent.

Article V

1. Recognition and enforcement of the 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 that:

(a) The parties to the agreement referred to in article II were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or

(b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or

(c) The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or

(d) 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; or

(e) The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that:

(a) The subject matter of the difference is not capable of settlement by arbitration under the law of that country; or

(b) The recognition or enforcement of the award would be contrary to the public policy of that country.

Article VI

If an application for the setting aside or suspension of the award has been made to a competent authority referred to in article V(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 Vll

1. The provisions of the present Convention shall not affect the validity of multilateral or bilateral agreements concerning the recognition and enforcement of arbitral awards entered into by the Contracting States nor deprive any interested party of any right he may have to avail himself of an arbitral award in the manner and to the extent allowed by the law or the treaties of the country where such award is sought to be relied upon.

2. The Geneva Protocol on Arbitration Clauses of 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927 shall cease to have effect between Contracting States on their becoming bound and to the extent that they become bound, by this Convention.

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Article VIII

1. This Convention shall be open until 31 December 1958 for signature on behalf of any Member of the United Nations and also on behalf of any other State which is or hereafter becomes a member of any specialized agency of the United Nations, or which is or hereafter becomes a party to the Statute of the International Court of Justice, or any other State to which an invitation has been addressed by the General Assembly of the United Nations.

2. This Convention shall be ratified and the instrument of ratification shall be deposited with the Secretary-General of the United Nations.

Article IX

1. This Convention shall be open for accession to all States referred to in article VIII.

2. Accession shall be effected by the deposit of an instrument of accession with the Secretary-General of the United Nations.

Article X

1. Any State may, at the time of signature, ratification or accession, declare that this Convention shall extend to all or any of the territories for the international relations of which it is responsible. Such a declaration shall take effect when the Convention enters into force for the State concerned.

2. At any time thereafter any such extension shall be made by notification addressed to the Secretary-General of the United Nations and shall take effect as from the ninetieth day after the day of receipt by the Secretary-General of the United Nations of this notification, or as from the date of entry into force of the Convention for the State concerned, whichever is the later.

3. With respect to those territories to which this Convention is not extended at the time of signature, ratification or accession, each State concerned shall consider the possibility of taking the necessary steps in order to extend the application of this Convention to such territories, subject, where necessary for constitutional reasons, to the consent of the Governments of such territories.

Article XI

In the case of a federal or non-unitary State, the following provisions shall apply:

(a) With respect to those articles of this Convention that come within the legislative jurisdiction of the federal authority, the obligations of the federal Government shall to this extent be the same as those of Contracting States which are not federal States;

(b) With respect to those articles of this Convention that come within the legislative jurisdiction of constituent states or provinces which are not, under the constitutional system of the federation, bound to take legislative action, the federal Government shall bring such articles with a favourable recommendation to the notice of the appropriate authorities of constituent states or provinces at the earliest possible moment;

(c) A federal State Party to this Convention shall, at the request of any other Contracting State transmitted through the Secretary-General of the United Nations, supply a statement of the law and practice of the federation and its constituent units in regard to any particular provision of this Convention, showing the extent to which effect has been given to that provision by legislative or other action.

Article XII

1. This Convention shall come into force on the ninetieth day following the date of deposit of the third instrument of ratification or accession.

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2. For each State ratifying or acceding to this Convention after the deposit of the third instrument of ratification or accession, this Convention shall enter into force on the ninetieth day after deposit by such State of its instrument of ratification or accession.

Article XIII

1. Any Contracting State may denounce this Convention by a written notification to the Secretary-General of the United Nations. Denunciation shall take effect one year after the date of receipt of the notification by the Secretary-General.

2. Any State which has made a declaration or notification under article X may, at any time thereafter, by notification to the Secretary-General of the United Nations, declare that this Convention shall cease to extend to the territory concerned one year after the date of the receipt of the notification by the Secretary-General.

3. This Convention shall continue to be applicable to arbitral awards in respect of which recognition or enforcement proceedings have been instituted before the denunciation takes effect.

Article XIV

A Contracting State shall not be entitled to avail itself of the present Convention against other Contracting States except to the extent that it is itself bound to apply the Convention.

Article XV

The Secretary-General of the United Nations shall notify the States contemplated in article VIII of the following:

(a) Signatures and ratifications in accordance with article VIII;

(b) Accessions in accordance with article IX;

(c) Declarations and notifications under articles I, X and XI;

(d) The dale upon which this Convention enters into force in accordance with article XII;

(e) Denunciations and notifications in accordance with article XIII.

Article XVI

1. This Convention, of which the Chinese, English, French, Russian and Spanish texts shall be equally authentic, shall be deposited in the archives of the United Nations.

2. The Secretary-General of the United Nations shall transmit a certified copy of this Convention to the States contemplated in article VIII.