Convention on the Recognition and Enforcement of Foreign Arbitral Awards explained

New York Convention
Long Name:Convention on the Recognition and Enforcement of Foreign Arbitral Awards
Image Alt:Parties to the convention include almost the full Americas, Europe, large parts of Asia, Oceania, and about 50% of Africa
Location Signed:New York City, United States
Date Effective:7 June 1959
Condition Effective:3 ratifications
Signatories:24
Parties:172
Depositories:Secretary-General of the United Nations
Languages:Arabic, Chinese language, English language, French language, Russian language and Spanish language
Wikisource:Convention on the Recognition and Enforcement of Foreign Arbitral Awards

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly known as the New York Convention, was adopted by a United Nations diplomatic conference on 10 June 1958 and entered into force on 7 June 1959. The Convention requires courts of contracting states to give effect to private agreements to arbitrate and to recognize and enforce arbitration awards made in other contracting states. Widely considered the foundational instrument for international arbitration, it applies to arbitrations that are not considered as domestic awards in the state where recognition and enforcement is sought.

The New York Convention is very successful. Nowadays many countries have adopted arbitration laws based on the UNCITRAL Model Law on International Commercial Arbitration. This works with the New York Convention so that the provisions on making an enforceable award, or asking a court to set it aside or not enforce it, are the same under the Model Law and the New York Convention. The Model Law does not replace the Convention; it works with it. An award made in a country which is not a signatory to the Convention cannot take advantage of the Convention to enforce that award in the 169 contracting states unless there is bilateral recognition, whether or not the arbitration was held under the provisions of the UNCITRAL Model Law.

Background

In 1953, the International Chamber of Commerce (ICC) produced the first draft Convention on the Recognition and Enforcement of International Arbitral Awards to the United Nations Economic and Social Council. With slight modifications, the council submitted the convention to the International Conference in the Spring of 1958. The Conference was chaired by Willem Schurmann, the Dutch Permanent Representative to the United Nations and Oscar Schachter, a leading figure in international law who later taught at Columbia Law School and the Columbia School of International and Public Affairs, and served as the President of the American Society of International Law.

International arbitration is an increasingly popular means of alternative dispute resolution for cross-border commercial transactions. The primary advantage of arbitration over court litigation is enforceability: an arbitration award is enforceable in most countries in the world. Other advantages of arbitration include the ability to select a neutral forum to resolve disputes, that arbitration awards are final and not ordinarily subject to appeal, the ability to choose flexible procedures for the arbitration, and confidentiality.

Once a dispute between parties is settled, the winning party needs to collect the award or judgment. If the loser voluntarily pays, no court action is necessary.[1] Otherwise, unless the assets of the losing party are located in the country where the court judgment was rendered, the winning party needs to obtain a court judgment in the jurisdiction where the other party resides or where its assets are located. Unless there is a treaty on recognition of court judgments between the country where the judgment is rendered and the country where the winning party seeks to collect, the winning party will be unable to use the court judgment to collect.

Cases and statistics

Public information on overall and specific arbitration cases is quite limited as there is no need to involve the courts at all unless there is a dispute, and in most cases the loser pays voluntarily. A review of disputed cases in China found that from 2000 to 2011, the Supreme People's Court upheld the refusal to enforce the arbitration agreement in 17 cases due to a provision in Article V of the convention (China has an automatic appeal system to the highest court, so this includes all such refusals).[2]

Summary of provisions

Under the convention, an arbitration award issued in any other state can generally be freely enforced in any other contracting state, only subject to certain, limited defenses. These defenses are:[3]

  1. a party to the arbitration agreement was, under the law applicable to him, under some incapacity, or the arbitration agreement was not valid under its governing law;
  2. a party was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings, or was otherwise unable to present its case;
  3. the award deals with an issue not contemplated by or not falling within the terms of the submission to arbitration, or contains matters beyond the scope of the arbitration (subject to the proviso that an award which contains decisions on such matters may be enforced to the extent that it contains decisions on matters submitted to arbitration which can be separated from those matters not so submitted);
  4. the composition of the arbitral tribunal was not in accordance with the agreement of the parties or, failing such agreement, with the law of the place where the hearing took place (the "lex loci arbitri");
  5. the award has not yet become binding upon the parties, or has been set aside or suspended by a competent authority, either in the country where the arbitration took place, or pursuant to the law of the arbitration agreement;
  6. the subject matter of the award was not capable of resolution by arbitration; or
  7. enforcement would be contrary to "public policy".

Additionally, there are three types of reservations that countries may apply:[4]

  1. Conventional Reservation – some countries only enforce arbitration awards issued in a Convention member state
  2. Commercial Reservation – some countries only enforce arbitration awards that are related to commercial transactions
  3. Reciprocity reservation – some countries may choose not to limit the convention to only awards from other contracting states, but may however limit application to awards from non-contracting states such that they will only apply it to the extent to which such a non-contracting state grants reciprocal treatment.

States may make any or all of the above reservations. Because there are two similar issues conflated under the term "reciprocity", it is important to determine which such reservation (or both) an enforcing state has made.

Parties to the Convention

As of January 2023, the convention has 172 state parties, which includes 169 of the 193 United Nations member states plus the Cook Islands, the Holy See, and the State of Palestine. Twenty-four UN member states have not yet adopted the convention. In addition, Taiwan has not been permitted to adopt the convention (but generally enforces foreign arbitration judgments) and a number of British Overseas Territories have not had the Convention extended to them by Order in Council. British Overseas Territories to which the New York Convention has not yet been extended by Order in Council are: Anguilla, Falkland Islands, Turks and Caicos Islands, Montserrat, Saint Helena (including Ascension and Tristan da Cunha).

State Date of AdoptionState Date of Adoption
30 November 2005 27 June 2001
7 February 1989 19 June 2015
6 March 2017
2 February 1989 14 March 1989
29 December 1997 26 March 1975
2 May 1961 29 February 2000
20 December 2006 6 April 1988
6 May 1992 16 March 1993
15 November 1960 18 August 1975
15 March 2021
16 May 1974 25 September 2014
28 April 1995 1 September 1993
20 December 1971 7 June 2002
25 July 1996 10 October 1961
23 March 1987 23 June 2014
5 January 1960 19 February 1988
12 May 1986 22 March 2018
15 October 1962
4 September 1975 22 January 1987
25 September 1979 5 November 2014
28 April 2015 26 October 1987
1 February 1991 12 January 2009
26 July 1993 30 December 1974
29 December 1980 30 September 1993
22 December 1972 14 June 1983
28 October 1988 11 April 2002
3 January 1962 9 March 1959
10 June 1958 30 August 1993
24 August 2020 26 December 2010
19 January 1962 26 June 1959
15 December 2006 2 June 1994
30 June 1961 9 April 1968
16 July 1962 21 March 1984
23 January 1991 25 September 2014
5 December 1983 14 May 1975
3 October 2000 5 March 1962
24 January 2002 13 July 1960
7 October 1981 15 October 2001
11 November 2021 12 May 1981
5 January 1959 31 January 1969
10 July 2002 20 June 1961
15 November 1979 20 November 1995
10 February 1989 8 February 1973
28 April 1978 18 December 1996
17 June 1998 14 April 1992
11 August 1998 13 June 1989
16 September 2005 14 March 1995
5 October 2011 9 September 1983
10 March 1994 16 July 1962
5 November 1985 4 March 2021
17 September 2019 8 September 1994
22 June 2000 21 December 2006
30 January 1997 19 June 1996
14 April 1971 18 September 1998
2 June 1982 24 October 1994
23 October 2006 12 February 1959
11 June 1998 16 April 2013
4 March 1998 24 April 1964
6 January 1983 24 September 2003
14 October 1964 17 March 1970
14 March 1961 25 February 1999
14 July 2005 31 March 2020
2 January 2015 10 October 1984
17 July 2019 8 October 1997
7 July 1988 6 July 1967
3 October 1961 18 October 1994
30 December 2002 13 September 1961
24 August 1960 31 October 2008
12 September 2000 17 May 1979
20 November 2012 19 April 1994
17 October 1994 12 March 2001
3 February 2020 28 October 2020
21 August 1986 28 May 1993
6 July 1992 3 May 1976
12 May 1977 9 April 1962
26 March 2018 28 January 1972
10 November 2022
1 June 1965 9 March 1959
13 October 1964 Tajikistan14 August 2012
21 December 1959 17 January 2023
Tonga12 June 2020 14 February 1966
17 July 1967 2 July 1992
4 May 2022 12 February 1992
10 October 1960 21 August 2006
24 September 1975 30 September 1970
30 March 1983 7 February 1996
8 February 1995 12 September 1995
14 March 2002 26 September 1994

The convention has also been extended to a number of British Crown Dependencies, Overseas Territories, Overseas departments,Unincorporated Territories and other subsidiary territories of sovereign states.

Territory Date of RatificationTerritory Date of Ratification
24 April 1964
14 November 1979
24 April 1964
25 May 2014 26 March 1975
26 November 1980 26 March 1975
24 April 1964
10 February 1976
26 June 1959
24 September 1975
10 February 1976
30 September 1970 19 April 1985
22 February 1979
19 April 1985
26 June 1959
24 April 1964
24 April 1964 24 April 1964

States which are not party to the Convention

formerly Swaziland
Niue
Somalia
Tuvalu
Yemen

United States issues

Under American law, the recognition of foreign arbitral awards is governed by chapter 2 of the Federal Arbitration Act, which incorporates the New York Convention.[5]

Therefore, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "Convention") preempts state law. In Foster v. Neilson, the Supreme Court held "Our constitution declares a treaty to be the law of the land. It is, consequently, to be regarded in courts of justice as equivalent to an act of the Legislature, whenever it operates of itself without the aid of any legislative provision."[6] Thus, over a course of 181 years, the United States Supreme Court has repeatedly held that a self-executing treaty is an act of the Legislature (i.e., act of Congress).

With specific regard to the New York Convention, at least one court discussed, but ultimately avoided, the issue of whether the treaty is self-executing. The court nonetheless held that the convention was, at the least, an implemented non-self-executing treaty that still had legal force as a treaty (as distinguished from an Act of Congress).[7] Based on that determination, the court held that the Convention preempted state law that sought to void arbitration clauses in international reinsurance treaties.

See also

External links

Notes and References

  1. Argen. Robert. 2015-01-01. Ending Blind Spot Justice: Broadening the Transparency Trend in International Arbitration. 2393188. Rochester, NY. Social Science Research Network.
  2. "Implementation of the New York Convention in China" by Xiaohong Xia. Arbitration Brief. January 2011. 1. 1. 2016-03-21. Xia. Xiaohong.
  3. Web site: "Enforcement of Arbitral Awards under the New York Convention – Practic" by Joseph T. McLaughlin and Laurie Genevro. scholarship.law.berkeley.edu. 2016-03-21.
  4. Web site: New York Convention, 1958: Reservations . 2014-05-14 . dead . https://web.archive.org/web/20130620215224/http://interarb.com/nyc/reservations . 20 June 2013 . New York Convention, 1958 – Reservations
  5. Web site: New York Arbitration. CMS Legal. 21 May 2012.
  6. Foster v. Neilson, 27 U.S. 253, 314 (1829). See also Valentine v. U.S. ex rel. Neidecker, 57 S.Ct. 100, 103 (1936); Medellin v. Dretke, 125 S.Ct. 2088, 2103 (2005); Sanchez-Llamas v. Oregon, 126 S.Ct. 2669, 2695 (2006).
  7. Safety National Casualty Corp. v. Certain Underwriters at Lloyd's, London, 587 F.3d 714 (5th Cir. 2009) (en banc), cert. den'd, 562 U.S. 827 (2010).

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