The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly known as the New York Convention, was adopted by a

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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 award An arbitration award (or arbitral award) is a determination on the merits by an arbitration tribunal in an arbitration, and is analogous to a judgment in a court of law. It is referred to as an 'award' even where all of the claimant's claims fail ( ...

s 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 The United Nations Commission on International Trade Law (UNCITRAL) ( French: ''Commission des Nations Unies pour le droit commercial international (CNUDCI)'') is a subsidiary body of the U.N. General Assembly (UNGA) responsible for helping to f ...

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

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(ICC) produced the first draft Convention on the Recognition and Enforcement of International Arbitral Awards to the

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. 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 Oscar Schachter (1915–2003) was an American international law and diplomacy professor, and United Nations aide. Schachter was a native of New York City, graduated Phi Beta Kappa from City College of New York in 1936, and from Columbia Law School ...

, a leading figure in international law who later taught at

Columbia Law School Columbia Law School (Columbia Law or CLS) is the law school of Columbia University, a private Ivy League university in New York City. Columbia Law is widely regarded as one of the most prestigious law schools in the world and has always ranked i ...

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. 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 (China has an automatic appeal system to the highest court, so this includes all such refusals).

Summary of provisions

Under the convention, an

issued in any other state can generally be freely enforced in any other contracting state, only subject to certain, limited defenses. These defenses are: #a party to the arbitration agreement was, under the law applicable to him, under some

incapacity Legal capacity is a quality denoting either the legal aptitude of a person to have rights and liabilities (in this sense also called transaction capacity), or altogether the personhood itself in regard to an entity other than a natural person ( ...

, or the arbitration agreement was not valid under its governing law; #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; #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); #the composition of the

arbitral tribunal An arbitral tribunal or arbitration tribunal, also arbitration commission, arbitration committee or arbitration council is a panel of unbiased adjudicators which is convened and sits to resolve a dispute by way of arbitration. The tribunal may c ...

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 In conflict of laws, the term ''lex loci'' (Latin for "the law of the place") is a shorthand version of the choice of law rules that determine the '' lex causae'' (the laws chosen to decide a case).''Black's Law Dictionary'' abridged Sixth Edition ( ...

"); #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; #the subject matter of the award was not capable of resolution by arbitration; or #enforcement would be contrary to "

public policy Public policy is an institutionalized proposal or a decided set of elements like laws, regulations, guidelines, and actions to solve or address relevant and real-world problems, guided by a conception and often implemented by programs. Public p ...

". Additionally, there are three types of reservations that countries may apply: #Conventional Reservation – some countries only enforce arbitration awards issued in a Convention member state #Commercial Reservation – some countries only enforce arbitration awards that are related to commercial transactions #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 December 2021, the convention has 169 state parties, which includes 166 of the 193 United Nations member states plus the

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, the

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, and the State of Palestine. Thirty UN member states have not yet adopted the convention. In addition,

Taiwan Taiwan, officially the Republic of China (ROC), is a country in East Asia, at the junction of the East and South China Seas in the northwestern Pacific Ocean, with the People's Republic of China (PRC) to the northwest, Japan to the nort ...

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:

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, Montserrat, Saint Helena (including Ascension and Tristan da Cunha). The convention has also been extended to a number of British Crown Dependencies, Overseas Territories, Overseas departments,

Unincorporated Territories Territories of the United States are sub-national administrative divisions overseen by the federal government of the United States. The various American territories differ from the U.S. states and tribal reservations as they are not sover ...

and other subsidiary territories of sovereign states.

States which are not party to the Convention

United States issues

Under American law, the recognition of foreign arbitral awards is governed by chapter 2 of the

Federal Arbitration Act The United States Arbitration Act (, codified at ), more commonly referred to as the Federal Arbitration Act or FAA, is an act of Congress that provides for judicial facilitation of private dispute resolution through arbitration. It applies in ...

, which incorporates the New York Convention. 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." 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).''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). Based on that determination, the court held that the Convention preempted state law that sought to void arbitration clauses in international reinsurance treaties.

References

External links