In June 2018, the 60th anniversary of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards – known the "New York Convention" – was celebrated at the United Nations Headquarters and the U.S. Courthouse in New York.
The tremendous success of the New York Convention, which provides for national court enforcement of foreign arbitration awards and agreements, is one of the principal reasons arbitration has become the preferred choice of parties around the world for resolving cross border commercial disputes. The Convention now has 159 state parties, including virtually all the world's major trading nations.
Following a conference at the UN Headquarters in New York, a "birthday" celebration was held at the U.S. Courthouse on Pearl Street in Manhattan featuring representatives from the United Nations Commission on International Trade Law ("UNCITRAL"), International Council for Commercial Arbitration ("ICCA"), International Chamber of Commerce ("ICC"), American Arbitration Association-International Centre for Dispute Resolution ("AAA-ICDR"), International Bar Association, New York State Bar Association, and other organizations.
Prior to adoption of the New York Convention, parties seeking to enforce foreign arbitral awards usually had to obtain two court decisions of exequatur, one at the country where the award was issued and another at the place of enforcement. The Convention eliminated the requirement of double exequatur, significantly restricted the grounds for national court refusal of recognition and enforcement and placed the burden of proving such grounds on the party opposing such recognition and enforcement. Under the Convention, national courts considering applications for recognition and enforcement of foreign awards may not review the merits of the arbitral tribunal's decision.
Although there are, of course, outlier decisions (about which more below), the overwhelming majority of national court decisions have interpreted Article V of the Convention's grounds for refusal of recognition and enforcement under the Convention narrowly, and exercised their discretion to refuse recognition and enforcement only in exceptional cases. Enforcement of arbitral awards by national courts is now considerably easier than enforcement of national court judgements in many countries, greatly facilitating resolution of international business disputes.
The Convention and the complementary UNCITRAL Model Law on International Commercial Arbitration in 1985 ("UNCITRAL Model Law") have led to an increasingly harmonized arbitration law. The UNCITRAL Model Law, which has now been adopted by 111 jurisdictions in 80 countries, essentially repeats the grounds of the New York Convention regarding enforcement and setting aside of foreign awards.
Resources that promote uniform application of the New York Convention
National court decisions interpreting the New York Convention provide a wealth of jurisprudence on enforcement of arbitration agreements and awards. A number of online resources provide access to court decisions under both the New York Convention and the UNCITRAL Model Law (which provides essentially the same enforcement grounds as the New York Convention). These include ICCA's Yearbook of International Arbitration, which was created in 1976 and has published over 2,500 decisions. The ICCA Guide to the Interpretation of the Convention is available in 20 languages and has been distributed to judges around the globe. The 1958 New York Convention Guide prepared by UNCITRAL, Shearman & Sterling and Columbia Law School, also has over 2,500 decisions and has a search function permitting searches by Convention provision or more than 60 jurisdictions. Other resources include: http://www.newyorkconvention.org/, which catalogues case law by subject matter; the ICC Enforcement Guide, which provides country-by-country information on local requirements and practices for enforcing awards; and Case Law on UNCITRAL Texts ("CLOUT"), which provides abstracts of cases and links to cases decided under the UNCITRAL Model Law.
These resources promote uniformity in application of the Convention and provide lawyers, particularly in jurisdictions with less developed arbitration case law, important and easily accessible precedent. Programs to educate judges, lawyers and educators on effective national application of the Convention now abound, with ICCA having done particularly important work in this area.
The New York Convention needs no reform
Ten years ago, on the 50th anniversary of the New York Convention, international arbitration practitioners and scholars reflected on whether efforts should be undertaken to amend the Convention. The consensus view then was that reform of the Convention would be difficult and might result in unintended, and unfortunate, consequences.2 If anything, the political and practical challenges of obtaining widespread agreement on a new treaty have increased in the last ten years, notwithstanding a couple of areas in which national court enforcement decisions are still not entirely predictable.
The first of these involves the "public policy" exception in Article V(2)(b) of the Convention, which provides that recognition and enforcement of an award may be refused if a national court where recognition or enforcement is sought finds that this "would be contrary to the public policy of that country." "Public policy" is not defined in the Convention and there is no consensus as to how it is to be determined or applied by a national court. Albert Jan van der Berg, a leading New York Convention scholar, advocated revising the Convention to substitute for "public policy" the phrase "international public policy prevailing in the country where enforcement is sought."3
However, it is not clear that this change would provide for more consistent results. For example, in the recent Belokon v. the Kyrgyz Republic, a court in Ontario, Canada refused to consider evidence of money laundering at issue in the underlying arbitration, which was seated in Paris. Applying Ontario's arbitration law, which provided for a national public policy exception, the court held that the respondent could not "repackage" its defence in the arbitration as a public policy objection to recognition and enforcement.4 However, the award was also subject to set aside proceedings in Paris, and the Paris Court of Appeal received and assessed the evidence and came to the opposite conclusion on the basis of French law applying "international public policy" – setting aside the award on the ground that its enforcement would allow the claimant to profit from illegal money laundering activities.5
Second, the Convention does not preclude national courts from enforcing an arbitration award set aside at the seat of arbitration. While courts generally refuse enforcement of such "zombie awards", this is not always the case. For example, in the recent US COMMISA v. Pemex,6 the US Court of Appeals for the Second Circuit affirmed enforcement of an arbitral award set aside by the courts in Mexico, the seat of the arbitration, on the grounds that the Mexican courts retroactively applied laws prohibiting arbitration of the subject matter of the award enacted just before the award was issued. The US Court of Appeals held that the Mexican court's decision was "repugnant" to US public policy principles, and thus not entitled to deference. Again, it is far from clear that there is any consensus among Convention state parties to preclude such outcomes.
In any event, it is clear that the Convention is in no need of being fixed as it is not broken. Indeed, in its 60th year, the Convention remains not just fit for purpose, but indispensable. In the current political climate with bilateral and multilateral trade arrangements under stress and increasing focus on state sovereignty, the continuing success of the New York Convention in its 60th year deserves wide celebration.
- Grant Hanessian is a partner at Baker McKenzie in New York. He is the US member of the ICC Court of Arbitration, chair of the Arbitration and ADR Committee of the U.S. Council for International Business (ICC-USA) and Adjunct Professor of Law at Fordham Law School. Christina Doria is an associate at Baker McKenzie in Toronto. She is an Executive Board Member of ICDR Y&I, and a Board Member of Young Canadians Arbitration Practitioners. The authors gratefully acknowledge the assistance of Karnsuda Oue-Amornrat (LL.M., Cornell Law School, 2018), an associate in the Bangkok office of Baker McKenzie.
- Emmanuel Gaillard, 'The Urgency of Not Revising the New York Convention', in Albert Jan van den Berg (ed), 50 Years of the New York Convention: ICCA International Arbitration Conference, ICCA Congress Series, Volume 14 (Kluwer Law International 2009) pp. 689 - 696; Rory Brady, 'Comments on a New York Convention for the Next Fifty Years', in Albert Jan van den Berg (ed), 50 Years of the New York Convention: ICCA International Arbitration Conference, ICCA Congress Series, Volume 14 (Kluwer Law International 2009) pp. 708 - 711.
- One of the leading authorities on the Convention, Albert Jan van den Berg, proposed a "Hypothetical Draft Convention on the International Enforcement of Arbitration Agreements and Awards." 'Hypothetical Draft Convention on the International Enforcement of Arbitration Agreements and Awards: Explanatory Note', in Albert Jan van den Berg (ed), 50 Years of the New York Convention: ICCA International Arbitration Conference, ICCA Congress Series, Volume 14 (Kluwer Law International 2009) pp. 649-666.
- Belokon v. The Kyrgyz Republic et al., 2015 ONSC 5918, at para 47. The Canadian Court relied on Article 36(1)(b)(ii)) of the UNCITRAL Model Law, which states that recognition and enforcement may be refused only if the court finds that … "the recognition or enforcement of the award would be contrary to the public policy of this State".
- Kirghizistan v Belokon, C.A. Paris, 21 février 2017, 2017 15/01650. The Paris Court of Appeal set aside the award under Art. 1520 of the French Civil Code, which states: "An award may only be set aside where: … (v) recognition or enforcement of the award is contrary to international public policy", Décret No. 2011-48, 13 January 2011, Art. 1520 NCPC. See also: Pierre Pic and Asha Rajan, 'The Public Policy Exception in International Arbitration: A Snapshot from France', Indian Journal of Arbitration Law, (Indian Journal of Arbitration Law; Centre for Advanced Research and Training in Arbitration Law, National Law University, Jodhpur 2017, Volume VI Issue 1) pp. 197 - 208; and Judith Gill and David Baker, 'The Public Policy Exception Under Article V.2(b) of the New York Convention: Lessons From Around the World', Asian Dispute Review, (Hong Kong International Arbitration Centre (HKIAC) 2016, Volume 2016 Issue 2) pp. 74 - 81.
- Corporación Mexicana de Matenimiento Integral, S De RL De CV v. Pemex-Exploración y Producción, No 13-4022 (2d Cir Aug 2, 2016) (decided under the Inter-American Convention on International Commercial Arbitration ("Panama Convention") modeled on the New York Convention, Art. 5(1)(e): , courts "may" refuse recognition and enforcement if the award "has been set aside or suspended by a competent authority in the country in which, or under the law of which, that award was made"; see also: Société Hilmarton Ltd v Société OTV, Cour de cassation, 1ere Civ. (23 March 1994); Pierre Mayer, 'Revisiting Hilmarton and Chromalloy', in Albert Jan van den Berg (ed), International Arbitration and National Courts: The Never Ending Story, ICCA Congress Series, Volume 10 (Kluwer Law International 2001) pp. 165 - 176; Carolyn B. Lamm, 'Comments on the Proposal to Amend the New York Convention', in Albert Jan van den Berg (ed), 50 Years of the New York Convention: ICCA International Arbitration Conference, ICCA Congress Series, Volume 14 (Kluwer Law International 2009) pp. 697 - 707.