Enforcement of Annulled Arbitral Awards under the New York Convention
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TL;DR
- Annulment at the arbitral seat does not always preclude enforcement under the New York Convention.
- France permits enforcement of annulled arbitral awards if statutory conditions are met.
- England allows it in limited cases, mainly where annulment contradicts English public policy.
- Italy generally refuses enforcement of annulled awards under its strict statutory framework.
- US courts may enforce annulled awards in exceptional circumstances, relying on international comity and public policy.
Overview
The enforcement of arbitral awards that have been annulled at the seat of arbitration varies across major jurisdictions. Article V(1)(e) of the New York Convention provides that recognition and enforcement of an award may be refused if it has been set aside by a competent authority at the seat, but this is discretionary. Jurisdictions such as France, England, Italy, and the United States apply distinct approaches to the enforcement of such awards.
What Happened
The report examines how courts in different countries approach the enforcement of awards that have been annulled at the arbitral seat.
France permits the enforcement of annulled awards if domestic statutory requirements are met, treating arbitral awards as independent from the legal order of the seat.
English courts allow enforcement of such awards in exceptional cases, such as when the foreign annulment is incompatible with English public policy, but generally defer to the seat's annulment if the judgment must be recognized.
Italian law generally prohibits the enforcement of annulled arbitral awards, not distinguishing between total or partial annulments.
US courts exercise discretion, sometimes enforcing annulled awards if the annulment is deemed repugnant to US public policy, but the threshold is high and the practice is inconsistent.
Context
Article V(1)(e) of the New York Convention uses permissive language, giving enforcing courts discretion in recognizing annulled awards. National laws and court practices shape how this discretion is exercised. While France and, to a lesser extent, England may allow enforcement in certain circumstances, Italy maintains a restrictive approach. In the US, courts weigh international comity and public policy in determining whether to enforce annulled awards.
These differences illustrate the lack of harmonization in international arbitration enforcement, with outcomes depending on the jurisdiction where recognition is sought.
Why It Matters
- The divergence in national practice affects parties' strategies for international arbitration, especially concerning enforcement of awards.
- Understanding the approaches in key jurisdictions is essential for anticipating enforcement risks when awards are annulled at the seat.