New York Convention of 1958 Summary Albert Jan van den Berg (Brussels and Amsterdam) ajvandenberg@hvdb.com

1. New York Convention of 1958SummaryAlbert Jan van den Berg(Brussels and Amsterdam)ajvandenberg@hvdb.com World Bank Institute Poverty Reduction and Economic Management Team Global Development Learning Network – GDLN Course for Commercial and Trade Law for Jordan 23 March – 25 May 2005

2. Two Actions • Enforcement of foreign arbitral award: Articles I, III – VII. • Enforcement of international arbitration agreement: Article II(3). • Articles VIII – XVI are typical treaty provisions.

3. Article I – Field of Application (Arbitral Award) • Arbitral award made in another State. • Article I(1), 1st sentence (purely territorial). • Convention does not apply to enforcement of award made in home state. • Convention does not apply to setting aside (exclusive jurisdiction of courts of home state). • Arbitral award made in another Contracting State. • Article I(3) – applies if reciprocity reservation is made (two thirds of the States). • Now almost irrelevant as more than 130 countries are Party to the Convention. • Arbitral award considered as non domestic: exceptional. • Article I(1), 2nd sentence (academic invention). • Only relevant in United States. • Commercial reservation. • Article I(3) – does not play a role in practice (with a few exceptions): almost all cases are considered “commercial.”

4. Article II – Arbitration Agreement • Must be in writing. • Definition of writing in Article II(2). • Option 1: arbitration agreement contained in a signed contract. • Option 2: arbitration agreemeent contained in an exchange of written communications (signature not required). • Although tacit acceptance is not included, it is not readily accepted that there was not an exchange in writing (e.g., subsequent reference to contract). • General Conditions: reference to them should be clear regarding the arbitration clause. • Applies in both actions. • Enforcement of arbitral award: see Article V(1)(a). • Enforcement of arbitration agreement: see Article II(3).

5. Article III – Procedure for Enforcement • International (treaty) obligation for Contracting States to recognize a foreign arbitral award. • International (treaty) obligation for Contracting States to enforce a foreign arbitral award “in accordance with its rules of procedure”. • Applies only to procedure for enforcement, not to conditions for enforcement set forth in the Convention (they override domestic law). • No more onerous conditions than for enforcement of domestic arbitral awards.

6. Distinction between Articles IV and V • Simple scheme to facilitate enforcement of foreign arbitral awards. • Article IV: What the petitioner needs to do. • Needs to submit only the arbitration agreement and arbitral award (original, or authenticated or certified copy), and if applicable, a translation. • Together with the request, those documents entitle the petitioner to a grant of enforcement, unless Article V applies as mentioned below. • Article V(1): What the respondent can do. • The respondent asserts and proves a ground for refusal of enforcement listed in Article V(1). • Article V(2): What the enforcement court may do on its own motion (public policy). • The enforcement court applies on its own motion the grounds for refusal listed in Article V(2) (i.e., public policy). That rarely occurs (see Slide # 15).

7. Article V Features of Grounds for Refusal of Enforcement • Grounds are limitatively set forth in Article V. • Grounds are construed narrowly. • In particular, grounds do not include a review of the merits by an enforcement court. • Respondent has the burden of proof with respect to the grounds listed in Article V(1).

8. Article V(1) Grounds to be Proven by Respondent • (a) Invalidity of the arbitration agreement. • (b) Violation of due process (fair hearing; unable to present case). • (c) Excess by arbitral tribunal of its authority. • (d) Irregularity in the composition of the arbitral tribunal or the arbitral procedure. • (e) Award not binding, or suspended or set aside by court in home country. • Courts almost never accept these defences (only in serious cases).

9. Article V(2) – Public Policy • Court may apply on its own motion, but it rarely occurs in practice. • Article V(2)(a): Arbitrability (capable of settlement by arbitration) is considered to form part of public policy. • Article V(2)(b): Public policy. • Substantive and procedural. • Public policy of the law of the enforcement court applies, but distinction between domestic and international public policy is widely accepted by the courts. • What is against public policy in domestic relations is not necessarily a violation of public policy in international relations.

10. Article VI – Adjournment of Enforcement Decision • Applies if action for setting aside is pending in the home country. • Courts in home country have exclusive jurisdiction over setting aside of arbitral award (foreign court can only grant or refuse enforcement). • Setting aside has extra-territorial effect (because of ground for refusal of enforcement listed in Article V(1)(e)). • Refusal of enforcement (wherever) has a territorial effect only (i.e., it applies within the jurisdiction of the enforcement court only). • Does not apply if the award has been set aside by a court in the home country. • If the award has been set aside, enforcement must be refused (see Article V(1)(e)). • Enforcement court has discretionary power to adjourn enforcement decision. • Test: more likely than not that the award will be set aside in the home country. • Adjournment can be conditioned on the respondent providing security.

11. Article VII(1) – More-Favorable-Right Provision • If other treaty or local law provides for more favorable enforcement of foreign arbitral awards, a petitioner can rely thereon rather than on the Convention. • Other treaties are rarely more favorable. • Some local laws contain a separate regime for the enforcement of foreign arbitral awards that is more favorable than the Convention. • If so, a petitioner has the interest, and is allowed, to rely on such local law.

12. Application of the Convention by the Courts • More than 1,000 cases reported in the Yearbook: Commercial Arbitration (1976 – 2004). • Also accessible online: www.kluwerarbitration.com. • The Convention is incredibly successful. • Enforcement is refused in approximately 10% of the cases only.