Overview of the New York Convention

Overview of the New York Convention
Sao Paulo, Brazil, 26 October 2017 Speakers: Prof. Marike Paulsson Des. Francisco Loureiro (TJSP) Juiz Marcelo Sacramone (TJSP) Adriana Braghetta Francisco Gonzalez de Cossio Luke Sobota Eleonora Coelho

The 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards

Presentation Outline The New York Convention
Introduction to the New York Convention Article-by-Article Analysis of the Convention Issues Specific to [Roadshow host jurisdiction] Discussion Session Closing Remarks

Introduction to the NY Convention
Objectives of the Convention History and Adherence Scope (Article I) Relationship to Domestic Law and Other Treaties (Article VII(1)) Current [hosting jurisdiction’s] Law on Enforcement and Recognition of Arbitral Awards

Objectives of the Convention: Recognition & Enforcement
The NY Convention has two objectives: The recognition and enforcement of arbitral agreements The recognition and enforcement of arbitral awards Article II(1): “Each Contracting State shall recognize an agreement in writing 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.” 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.”

Objectives of the Convention: The Convention is a Treaty
The Convention is an international treaty and thus part of public international law Engages the responsibility of Contracting States on the international plane Interpreted according to the Vienna Convention on the Law of Treaties Articles 31 and 32 provide rules of interpretation Furthers goal of uniform interpretation Pro-enforcement bias Opening of the Conference on the law of treaties, Vienna 1969

Objectives of the Convention: The Role of ICCA
ICCA is a worldwide NGO devoted to promoting the use and improving the process of arbitration, conciliation, and other forms of international dispute resolution: General membership Publications Biennial arbitration Congresses Projects (research and outreach) Young ICCA

ICCA’s Guide to the Interpretation of the 1958 New York Convention publication

NY Convention Roadshow – Colloquia for Judges on the Convention Coming up:

ICCA Yearbook: Monitors application of NYC since 1976 Over 2000 decisions from over 80 countries Available on Published annually in hard copy, with quarterly on-line updates

ICCA Handbook: Country reports on arbitration law and practice Over 75 countries Includes coverage of enforcement of awards Looseleaf, updated times per year Available on

History and Adherence: History
Pre-NY Convention Geneva Protocol on Arbitration Clauses of 1913 and Geneva Convention on the Execution of Foreign Awards of 1927 Limited field of application Burden of proof on party seeking enforcement Requirement of “double exequatur” See NY Convention ICC project and 1953 Draft convention 1955 ECOSOC Draft Convention New York Conference of 1958 “Dutch Proposal” Piet Sanders Piet Sanders, Roeland Loewe and Eric Bergsten at UNCITRAL in 1976

History and Adherence: Adherence Status Map
[156] Contracting States

History and Adherence: Adherence Regional Status Map
[Region in which roadshow takes place]

Scope – 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.

Scope – Awards: Material Scope
What is an “arbitral award?” Not defined in the Convention Scope limited to arbitration and arbitral awards What is “arbitration?” Consensual process as a substitute for litigation Leads to a final and binding resolution of the dispute What is an “award?” An award finally settles the issues that it seeks to resolve Can be final, partial, preliminary, or limited to costs, etc. The name given by the arbitrators to their decision is not determinative

Scope – Awards: Territorial Scope
Expansive territorial scope Applies to foreign and non-domestic arbitral awards Foreign awards are awards made in any State other than the State where recognition or enforcement is sought No requirement that State where award was made be a party to the Convention Generally, an award is “made” at the seat of the arbitration Non-domestic awards are defined by the State where recognition or enforcement is sought (mainly used in US) Broadens the scope of application of the Convention Convention does not apply to domestic awards Convention does not apply to setting aside of arbitral awards

Scope – Agreements Scope of application for arbitration agreements not defined Convention does not govern the recognition of domestic agreements Three situations If agreement provides for foreign seat, apply Convention If agreement provides for seat in forum State Apply Convention if future award will be non-domestic May apply Convention if international component present If agreement does not specify seat, apply Convention if it is likely that the future award will be foreign or non-domestic

Scope – Reservations Reciprocity
Contracting States may restrict application to recognition and enforcement of awards made in the territory of another Contracting State Approximately 2/3 of Contracting States have made this reservation (but no reported refusals) Commercial Nature Contracting States may restrict application to disputes that are commercial as defined by the law of the forum State Approximately 1/3 of Contracting States have made this reservation

Relationship to Domestic Law & Other Treaties
Article VII(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.

Relationship to Domestic Law & Other Treaties
Article VII(1) permits a party seeking recognition and enforcement to rely on rules that are more favorable than those found in the Convention No cherry-picking (all or nothing) Widely understood to apply to arbitration agreements Bomar Oil N.V. v Etap (France 1993) UNCITRAL 2006 Recommendation

Relationship to National Law
Three situations: Convention Supersedes The Convention governs if the Convention and national law address the same issue and the Convention is more favorable. National Law Supplements If the Convention has no rule on the issue, national law is used to supplement. This is particularly true with respect to procedure. Express Reference to National Law The Convention incorporates national law explicitly. See Articles I, III, and V.

Current [host]’s Law on Enforcement and Recognition of Arbitral Awards
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Current [host]’s Law on Recognition and Enforcement of Arbitral Awards
Placeholder Slide 2

Article-By-Article Analysis of the Convention
The NY Convention Article-By-Article Analysis of the Convention

Scope – 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.

Article II: Arbitration Agreements
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.

Article II: Arbitration Agreements
Obligation to Recognize Agreement Presumption of Validity Scope of Agreement Fiona Trust & Holding Corp v. Yuri Privalov (UK 2007) Parties to the Agreement General principle: privity of contract Binding non-signatories? Implied consent Other theories, e.g., alter ego, estoppel Arbitrability Mitsubishi Motors Corp v Soler Chrysler-Plymouth (USA 1985)

Article II: Writing Requirement
Article II(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.

Article II: Writing Requirement
Comparatively liberal substantive rule as a “maximum standard” Application of more demanding domestic law is precluded Not a minimum standard; see 2006 UNCITRAL Recommendation Pro-enforcement approach and liberal interpretation of the requirement Practical issues Tacit acceptance Incorporation by reference Standard terms and conditions No signature but subsequent performance Exchange of electronic communications

Article II: Existence and Validity of Agreement
Article II(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 II: Existence and Validity of Agreement
Mandatory referral to arbitration Stay of court proceedings or dismissal Three exceptions “Null and Void” Invalid from the outset Fraud, fraudulent inducement, illegality, mistake “Inoperative” Valid at one time but has ceased to have effect Waiver, revocation, repudiation, or termination “Incapable of Being Performed” Arbitration cannot proceed due to legal impediment E.g. Optional clause, concurrent jurisdiction of courts, inaccurate designation of rules or institution, blank clauses

Article III: Enforcement of Arbitral Award
Article III: Each Contracting State shall recognize arbitral awards as binding and enforce them 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 III: Enforcement of Arbitral Award
Pro-enforcement bias: obligation to enforce awards Pragmatic, flexible, and non-formalistic approach Rules of procedure v. conditions Domestic law provides rules of procedure Convention governs conditions for enforcement Not “substantially more onerous” than parity with domestic arbitrations (e.g., fees)

Article IV: The Applicant’s Requirements
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 shall produce a translation of these documents into such language. The translation shall be certified by an official or sworn translator or by a diplomatic or consular agent.

Article IV: The Applicant’s Requirements
Facilitates enforcement Submission of two documents only (agreement and award) Authentication Signatures on award are confirmed as genuine Certification Copy of the award is identical to the original Translation Pragmatic approach

Article V: Grounds for Refusal
No review on the merits Respondent bears the burden Exhaustive grounds for refusal Narrow interpretation Limited discretionary power of the court to grant recognition and enforcement even if one of the grounds applies Article V(1) Five grounds to be proven by respondent Article V(2) Court raises sua sponte

Article V: Grounds to be Proven by Respondent
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 proof that:

Article V(1)(a): Incapacity or Invalidity
V(1)(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.

Article V(1)(a): Incapacity or Invalidity
Mental incompetency, physical incapacity, and lack of authority to act or power to contract. Invalidity Competence-competence does not imply that the arbitration tribunal’s competence is exclusive Dallah Real Estate & Tourism Holding Co v Pakistan (UK 2009) Defenses under this ground include: no agreement “in writing”; no agreement at all; illegality, duress, or fraud (controversial)

Article V(1)(b): Lack of Notice and Due Process
V(1)(b): The party against whom the award is invoked was not give proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case.

Article V(1)(b): Lack of Notice and Due Process
Fair Hearing: Minimum requirements of fairness standard Adequate notice Usually hearing on the evidence Impartial decision by the arbitration tribunal Ability to present one’s case Iran Aircraft Industries v Avco Corp (USA 1992)

Article V(1)(c): Outside or Beyond Scope
V(1)(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. Arbitral tribunal may only consider matters the parties have agreed to submit to it Language of arbitration agreement is important (to determine scope) Partial enforcement of award possible

Article V(1)(d): Composition of the Tribunal
V(1)(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. Composition of arbitration tribunal Have the parties agreed on composition? Has an agreement been violated? Minor procedural deviation is not sufficient Arbitration procedure If no agreement, court should apply law of arbitral seat

Article V(1)(e): Award Not Yet Binding/Set Aside
V(1)(e): The award has not yet becoming 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. Not yet binding Party entitled to apply for recognition and enforcement of award once issued by arbitration tribunal No double exequatur Courts differ as to when an award becomes “binding” Set aside (also known as vacatur or annulment) at the seat Application to set aside does not suffice Courts in some jurisdictions have granted enforcement of an award set aside outside of the Convention regime (France is best-known example) and inside the Convention regime (NL)

Article V(2): Ex Officio Refusal by the Court
Article V(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:

Article V(2)(a): Not Arbitrable
V(2)(a): The subject matter of the difference is not capable of settlement by arbitration under the law of that country. Dispute involves subject matter reserved for courts, e.g., Divorce Child custody Property entitlements Wills and Estates Bankruptcy Winding up of companies Criminal matters Modern trend is for this category to shrink

Article V(2)(b): Contrary to Public Policy
V(2)(b): The recognition or enforcement of the award would be contrary to the public policy of that country. No definition of “public policy” Domestic principles of public policy International concept of public policy Narrower than domestic principles Most national courts have adopted this approach 2002 ILA Recommendations regarded as best practice Fundamental principles of justice or morality Rules serving essential political, social, or economic interests of State Duty of State to respect its obligations

Article VI: Adjournment of Enforcement Decision
Article VI: If an application for 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 VII: More-favourable- right provision
Article VII(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 the award is sought to be relied upon.

Issues Specific to [host jurisdiction]
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Discussion & Questions
[Submitted question 1] [Submitted question 2] [Submitted question 3] [Submitted question 4]

Discussion & Questions
Questions from the audience?

ICCA Virtual Forum for Judges

Overview of New York Convention Roadshows
Closing Remarks Overview of New York Convention Roadshows

Closing Remarks Key Points
The New York Convention provides for the recognition and enforcement of arbitration agreements and awards As an international treaty, it is binding on Contracting States and their courts Courts should seek to promote the Convention’s uniform interpretation, always keeping in mind its pro-enforcement bias The New York Convention provides a maximum and not a minimum level of control; less favorable provisions of domestic law are superseded by the Convention; but it is always possible to apply more favorable provisions of domestic law [point specific to host jurisdiction?]

Thank You!

Overview of the New York Convention

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