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Grounds for refusing recognition and enforcement of arbitral awards

Justin Williams

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Refusal of recognition or enforcement of an arbitral award

Section 103 of the Arbitration Act 1996 – New York Convention grounds● The grounds are exhaustive● There is no review on the merits● Discretion of the court

Section 66 of the Arbitration Act 1996 ● Mandatory grounds● Discretionary grounds

Common law● Invalidity● Estoppel

Section 99 of the Arbitration Act 1996 – Geneva Convention● Russia is not a signatory

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NY Convention – s103 AA grounds for refusal

Section 103 – court may decline enforcement where: Section 103(2) – the person against whom it is invoked proves:

● (a) a party was under some incapacity● (b) the arbitration agreement was invalid● (c) a party did not have proper opportunity to present its case● (d) the arbitral tribunal exceeded its jurisdiction● (e) tribunal improperly constituted, or procedure irregular● (f) award not binding or set aside by court where the award was made

Section 103(3) - the matter is not capable of settlement by arbitration or would be contrary to public policy

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NY Convention - s103(2)(a) AA ground for refusal

Recognition or enforcement of the award may be refused if the person against whom it is invoked proves –

(a) that a party to the arbitration agreement was (under the law applicable to him) under some incapacity.

■ Incapacity judged under law applicable to the party to the arbitration agreement■ Never been raised in England

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NY Convention - s103(2)(b) AA ground for refusal

Recognition or enforcement of the award may be refused if the person against whom it is invoked proves –

(b) that the arbitration agreement was not valid under the law to which the parties subjected it or, failing any indication thereon, under the law of the

country where the award was made

■ Defect in the arbitration agreement itself

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NY Convention - s103(2)(c) AA ground for refusal

Recognition or enforcement of the award may be refused if the person against whom it is invoked proves –

(c) that he was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present

his case

■ Due process and a fair hearing for the parties■ Role of the English court is to decide whether there has been a fair hearing, NOT

whether the award is correct as a matter of fact and law■ Requirements of natural justice

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NY Convention - s103(2)(d) AA ground for refusal

Recognition or enforcement of the award may be refused if the person against whom it is invoked proves –

(d) that the award deals with a difference not contemplated by or not falling within the terms of

the submission to arbitration or contains decisions on matters beyond the scope of the submission to arbitration (but see subsection 4)

Section 103(4)An award which contains decisions on matters not

submitted to arbitration may be recognised or enforced to the extent that it contains decisions on matters submitted to arbitration which can be separated from those on matters not so submitted.

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NY Convention - s103(2)(e) AA ground for refusal

Recognition or enforcement of the award may be refused if the person against whom it is invoked proves –

(e) that the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such

agreement, with the law of the country in which the arbitration took place

■ Breach must be substantial

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NY Convention - s103(2)(f) AA ground for refusal

Recognition or enforcement of the award may be refused if the person against whom it is invoked proves –

(f) that 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, it was made

■ Meaning of “binding”■ Formalities required to make an award binding■ Only the court of the country in which the award was made can suspend or set

aside

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NY Convention - s103(3) AA ground for refusal

Recognition or enforcement of the award may also be refused if the award is in respect of a matter which is not capable of settlement by arbitration…

■ Non-arbitral matters in England: Legal status of the parties Legal status or rights of non-parties Decisions which are not quasi-judicial

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NY Convention - s103(3) AA ground for refusal

Recognition or enforcement of the award may also be refused if the award is in respect of a matter which is not capable of settlement by arbitration, or if it would be contrary to public policy to recognise or enforce the award

■ Rarely applied■ An award cannot conceal an illegal contract■ Bias in favour of enforcement of awards■ But not where it would be contrary to England’s treaty obligations■ Court can consider public policy issues under its own motion■ Ground cannot be used tactically

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s66 AA – mandatory ground for refusal

Leave to enforce an award shall not be given where, or to the extent that, the person against whom it is sought to be enforced against shows that the tribunal lacked substantive jurisdiction to make the award

■ Mandatory provision of the Act■ Objection must be made in time■ Arbitration agreement must be in writing

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s66 AA – discretionary grounds for refusal

Court has discretionary power to refuse enforcement Not exhaustive grounds, but along the same lines as the New York

Convention grounds:● Award defective or ambiguous● Applicant has waived its right by seeking to enforce out of time● Failure to take action in the national courts of the seat of arbitration● Public policy

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Common law

Invalidity● Presumption in favour of enforcement unless real grounds for doubt

Estoppel● Foreign judgment on the merits of the action● Proceedings are time barred

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s99 AA – Geneva Convention

Geneva Convention on the Execution of Foreign Arbitral Awards 1927

Regime for the enforcement of foreign awards which are not also New York Convention Awards

Russia is not a signatory to the Geneva Convention Grounds for refusal of enforcement include:

● Award annulled in country in which it was made● Party was not given sufficient notice or was under some incapacity● Award does not deal with all the questions referred● Award goes beyond the scope of the arbitration agreement

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Other Issues

Limitation● Limitation At 1980● 6 years from date on which cause of action accrued – time of breach of

obligation to carry out the award

Insolvency

Evasion● Freezing injunction