Lecture 5 The new York convention

The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards
1958, also known as the “New York Arbitration Convention” or the “New York Convention”, is
one of the key instruments in international arbitration. The New York Convention applies to the
recognition and enforcement of foreign arbitral awards and the referral by a court to
arbitration.

OBJECTIVES OF
THE CONVENTION
OBJECTIVES OF THE CONVENTION

Recognition and enforcement

The NY Convention has two objectives: 1:-The recognition and enforcement of arbitral agreements

2:-The recognition and enforcement of arbitral awards

Provisions:

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.”

The convention is 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.

HISTORY AND ADHERENCE

History:- Pre-NY Convention

1-Geneva Protocol on Arbitration Clauses of 1913

2-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” (double exequatur
meant that a party seeking enforcement of an award had to prove that it had become ‘final’ in the
country it was made, and the country in which enforcement was sought. This could only be proven by
obtaining an exequatur (i.e., leave for enforcement) in both countries.

Decisions

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.

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 which 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 which can be final, partial,
preliminary, or limited to costs, etc. The name given by the arbitrators to their decision is not
determinative.

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. 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 agreement:- Scope of application for arbitration agreements not defined. Convention does not
govern the recognition of domestic agreements.

Three situations

Apply Convention If agreement provides for foreign seat

If agreement provides for seat in forum State (the state that is conducting the hearing or proceeding)
If future award will be non-domestic

May apply Convention if international component present

If agreement does not specify seat,

If it is likely that the future award will be foreign or non-domestic

Reservation 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).

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 and 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. 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.