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.
2. The term “arbitral awards” shall include not only awards made by arbitrators appointed for each case but also those made by permanent arbitral bodies to which the parties have submitted.
3. When signing, ratifying or acceding to this Convention, or notifying extension under article X hereof, any State may on the basis of reciprocity declare that it will apply the Convention to the recognition and enforcement of awards made only in the territory of another Contracting State. It may also declare that it will apply the Convention only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the national law of the State making such declaration.
Travaux préparatoires on Article I
A. Draft Convention on the Recognition and Enforcement of Foreign Arbitral Awards and Comments by Governments and Organizations
A.1. ECOSOC: Report of the Committee on the Enforcement of Foreign Arbitral Awards: 18 March 1955
- E/2704 - Report of the Committee on the Enforcement of International Arbitral Awards (Resolution of the Economic and Social Council establishing the Committee, Composition and Organisation of the Committee, General Considerations, Draft Convention)
- E/2704/Corr.1 - Report of the Committee on the Enforcement of International Arbitral Awards: Corrigendum
A.2. Comments by Governments and Organisations on the Draft Convention on the Recognition and Enforcement of Foreign Arbitral Awards: January 1956 - March 1958
- E/2822 - Report by the Secretary-General, Recognition and Enforcement of Foreign Arbitral Awards, 31 Jan 1956
- E/2822/Add.1 - General Observations, Comments on Articles 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15
- E/2822/Add.2 - Comments by Greece on Articles 1, 3, 4
- E/2822/Add.4 - Comments by the Netherlands and the UK on Articles 1, 3, 4, 8, 9
- E/2822/Add.5 - Comments by Hungary and Norway on Articles 1, 3, 4, 7
- E/2822/Add.6 - Comments by Yugoslavia on Articles 1, 4, 7, 9, 10, 11 and Suggestion of Additional Articles
- E/CONF.26/3 - Comments by New Zealand on Articles 1, 4, 5
- E/CONF.26/3/Add.1 - Comments by the Netherlands on Articles 4, 5 and Suggestion of an Additional Article
A.3. Activities of Inter-Governmental and Non-Governmental Organizations in the Field of International Commercial Arbitration: Consolidated Report by the Secretary-General - 24 April 1958
A.4. Comments on the Draft Convention on the Recognition and Enforcement of Foreign Arbitral Awards: Note by the Secretary-General: 6 March 1958
B. United Nations Conference On International Commercial Arbitration: Documents
B.2. Amendments to the Draft Convention Submitted by Governmental Delegations : 21 -28 May 1958
- E/CONF.26/7 - Poland: amendments to the title of the Convention and Articles 1, 3, 7, 8 10
- E/CONF.26/L.6 - Austria, Belgium, Federal Republic of Germany, France, Italy, Netherlands, Sweden, Switzerland: amendment to Article 1
- E/CONF.26/L.7 - United Kingdom: amendment to Article 1
- E/CONF.26/L.8/Corr.1 - Sweden: amendment to Article 1
- E/CONF.26/L.9 - Turkey: amendment to Article 1
- E/CONF.26/L.9/Rev.1 - Turkey: amendment to Article 1
- E/CONF.26/L.10 - Czechoslovakia: amendment to Article 1
- E/CONF.26/L.10/Rev.1 - Belgium, Czechoslovakia, United Kingdom: additional provisions to be included in the draft Convention
- E/CONF.26/L.12 - Yugoslavia: amendment to Article 1
- E/CONF.26/L.13 - Italy: amendment to Article 1
- E/CONF.26/L.14 - Ceylon: amendment to Article 1
- E/CONF.26/L.16 - Pakistan: amendments to Articles 1, 3, 4, 6, 12 and suggestion of an additional Article
- E/CONF.26/C.1/L.1 - Israel: amendment proposed for Article 1
- E/CONF.26/C.1/L.2 - Union of Soviet Socialist Republics: amendment to Article 1
- E/CONF.26/L.26 - Austria: proposed amendment to Article 1
- E/CONF.26/L.27 - Norway: amendments to the draft Convention
- E/CONF.26/L.28 - Norway: proposed amendment to the draft Convention
- E/CONF.26/L.29 - Yugoslavia: amendment to Article 1
- E/CONF.26/L.29/Corr.1 - Yugoslavia: amendment to Article 1
- E/CONF.26/C.1/L.6 - United Kingdom, USSR: amendment to Article 1
B.5.Further Amendments to the Draft Convention Submitted by Governmental Delegations - 29 May -3 June 1958
B.6. Reports of Working Party I: 2-4 June 1958
- E/CONF.26/L.42 - Report on Article 1, paragraph 1 and Article 2 of the draft Convention (E/2704 and Corr.1)
- E/CONF.26/L.49 - Report of Working Party No. 1 on Reservations
B.10. Text of Articles Adopted by the Conference: 4-6 June 1958
- E/CONF.26/L.46 - Text of Article 1, paragraph 1, as adopted by the Conference at its 16 th meeting
- E/CONF.26/L.58 - Text of Article 1, paragraph 2, as adopted by the Conference at its 21 st meeting
B.11. Text of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards as Provisionally Approved by Drafting Committee 6-9 June 1958
- E/CONF.26/L.61 - Text of the Convention as provisionally approved by the Drafting Committee on 6 June 1958
- E/CONF.26/8 - Text of the Convention as as provisionally approved by the Drafting Committee on 9 June 1958
B.12. New Text of Articles I (3), V (1)(a), (b), and (e) Adopted by the Conference at its 23rd Meeting - 9 June 1958
C. Summary Records of the United Nations Conference on International Commercial Arbitration, New York, 20 May - 10 June 1958
- 5 th meeting [E/CONF.26/SR.5 - E/2704 and Corr.1, E/2822 and Add.1 to 6, E/CONF.26/2, 26/3 and Add.1, 26/4, 26/7, E/CONF.26/L.6 and L.9]
- 6 th meeting [E/CONF.26/SR.6 - E/2704 and Corr.1, E/2822 and Add.1 to 6, E/CONF.26/2, 26/3 and Add.1, 26/4, 26/7, E/CONF.26/L.6 to L.12]
- 7 th meeting [E/CONF.26/SR.7 - E/2704 and Corr.1, E/2822 and Add.1 to 6, E/CONF.26/2, 26/3 and Add.1, 26/4, 26/7, E/CONF.26/L.6 to 13]
- 8 th meeting [E/CONF.26/SR.8 - E/2704 and Corr.1, E/CONF.26/L.10]
- 9 th meeting [E/CONF.26/SR.9 - E/2704 and Corr. 1, E/2822 and Add.1 to 6, E/CONF.26/2, 26/3 and Add.1, 26/4, 26/7, E/CONF.26/L.7, L.8, L.12. L.14, L.16]
- 15 th meeting [E/CONF.26/SR.15 - E/2704 and Corr.1, E/2822 and Add.1 to 6, E/CONF.26/2, 3 and Add.1, 4, 7, E/CONF.26/L.7, L.12, L.14, L.26 to L.29, L.41, L.42]
- 16 th meeting [E/CONF.26/SR.16 - E/2704 and Corr.1, E/2822 and Add. 1-6, E/CONF.26/2, 26/3 and Add.1, 26/4, 26/7, E/CONF.26/L.10/Rev.1, L.12, L.13, L.41, L.42]
- 21 st meeting [E/CONF.26/SR.21 - E/2704 and Corr.1, E/2822 and Add.1 to 6, E/CONF.26/2, 3 and Add.1, E/CONF.26/4, 7, E/CONF.26/L.16, L.28, L.49, L.52, L.55, L.56]
- 23 rd meeting [E/CONF.26/SR.23 - E/CONF.26/L.60; Adoption and signature of the Final Act and Convention (E/CONF.26/8, 9, E/CONF.26/L.28, L.49, L.58, L.61)]
- 24 th meeting [E/CONF.26/SR.24 - Adoption and signature of the Final Act and Convention (E/CONF.26/8 and 9, E/CONF.26/L.63), Report of the Credentials Committee (E/CONF.26/10)]
D. Committee on the Enforcement of International Arbitral Awards
D.1. Summary Records of the Committee on the Enforcement of International Arbitral Awards
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INTRODUCTION
1. Article I sets out in broad terms the scope of the New York Convention.10 Article I (1) provides that the New York Convention applies 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 also states that the New York Convention applies to awards that are “not considered as domestic awards in the State where their recognition and enforcement are sought”. Article I (2) provides that the term “arbitral awards” shall include not only awards made by arbitrators appointed for each case but also those made by permanent arbitral bodies to which the parties have submitted”. Finally, article I (3) allows each Contracting State, when signing, ratifying or acceding to the Convention, to restrict the scope of application of the Convention by making the reservations allowed by the Convention. The first reservation, known as the “reciprocity reservation”, allows a State to apply the Convention only to awards made in the territory of another Contracting State. The second reservation, known as the “commercial reservation”, allows a State to apply the Convention only to “differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the national law of the State making such declaration”.
10. Although article I does not refer to arbitration agreements, such agreements fall within the scope of the Convention. Because article II was a late addition, neither article I nor the other provisions of the Convention were modified to reflect this addition. See the chapter of the Guide on article II, paras. 2-3.
2. Article I of the New York Convention “marks a clear departure” from the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927 (the “1927 Geneva Convention”) in two respects.11
3. First, article I gives the New York Convention a broader scope than the 1927 Geneva Convention. Pursuant to article I (1), the New York Convention applies to awards made in any foreign State, irrespective of whether that State is a Contracting State.12 During the United Nations Conference on International Commercial Arbitration convened for the preparation and adoption of the Convention (“the Conference”), it was noted that maintaining the wording of the 1927 Geneva Convention, which provided for enforcement of only those awards that were made in a Contracting State, could give rise to the “paradoxical” situation where the award creditor and award debtor are both nationals of Contracting States, but the award cannot be enforced under the Convention because the State in which the award was made is not a party to the Convention.13 To avoid such a situation, the drafters of the New York Convention discarded the mandatory reciprocity requirement contained in the 1927 Geneva Convention and replaced it with an opt-in reciprocity reservation at article I (3).
12. Javier Rubinstein, Georgina Fabian, The Territorial Scope of the New York Convention and Its Implementation in Common and Civil Law Countries, in Enforcement of Arbitration Agreements and International Arbitral Awards: The New York Convention in Practice 91, 95 (E. Gaillard, D. Di Pietro eds., 2008).
13. Travaux préparatoires, Recognition and Enforcement of Foreign Arbitral Awards, Report by the Secretary-General, Annex II, Comments by Non-Governmental Organizations, E/2822, p. 8.
4. Second, the 1927 Geneva Convention applied only to arbitral awards that were rendered in proceedings “between persons who are subject to the jurisdiction of one of the High Contracting Parties”.14 Considering this requirement to be “vague and ambiguous”,15 the ad hoc Committee established by the United Nations Economic and Social Council (the “ECOSOC ad hoc Committee”) removed it from the 1955 draft Convention. The Yugoslav delegate then suggested that the requirement be reinstated,16 but this proposal was expressly rejected by the other delegates, thereby indicating that, unlike in the case of the 1927 Geneva Convention, the scope of application of the New York Convention does not depend on the nationality or residence of the parties to the arbitration proceedings.17
14. “See article 1 of the 1927 Geneva Convention. See also Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Comments on the Draft Convention on the Recognition and Enforcement of Foreign Arbitral Awards, Note by the Secretary-General, E/CONF.26/2, p. 2.
15. Travaux préparatoires, Report of the Committee on the Enforcement of International Arbitral Awards, E/2704, E/AC.42/4/Rev.1., p. 7.
16. Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Consideration of the Draft Convention on the Recognition and Enforcement of Foreign Arbitral Awards, E/CONF.26/L.12. See also Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Record of the Sixteenth Meeting, E/CONF.26/SR.16, p. 6.
17. The nationality or residence may, however, play a role in the context of “non-domestic awards”. An enforcing court may deem an award rendered in its territory “non-domestic” if one or both parties to arbitration are foreign or reside abroad. It should be noted that, in this regard, the nationality is used to enlarge the scope of the Convention, rather than to restrict it. See below paras. 53-55. See also Albert Jan van den Berg, The New York Arbitration Convention of 1958: Towards a Uniform Judicial Interpretation 15 (1981); Georgios Petrochilos, Procedural Law in International Arbitration 360, para. 8.54 (2004).
5. Article I, like the rest of the Convention, was drafted with the aim of “going further than the Geneva Convention in facilitating the enforcement of foreign arbitral awards”.18 By making the reciprocity requirement optional and doing away with the nationality or residence requirement, article I ensures that the New York Convention has a broad scope of application.
18. Travaux préparatoires, Report of the Committee on the Enforcement of International Arbitral Awards, E/2704, E/AC.42/4/Rev.1., p. 5.
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ANALYSIS
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ARTICLE I(1)
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A. Meaning of “recognition and enforcement”
6. Pursuant to article I (1), the New York Convention applies to the “recognition and enforcement” of awards which fall within its scope. The Convention does not apply to court actions seeking to set aside awards or to stay ongoing arbitration proceedings.
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a. Defining and distinguishing “recognition” and “enforcement”
7. The New York Convention does not define the terms “recognition” and “enforcement” and case law interpreting these terms is scarce. Of the few reported cases, a Colombian court has held that, while “recognition” concerns recognizing the legal force and effect of an award, “enforcement” concerns the forced execution of an award previously recognized by the same State.19
19. Drummond Ltd. v. Ferrovias en Liquidación, Ferrocariles Nacionales de Colombia S.A. (FENOCO), Supreme Court of Justice, Colombia, 19 December 2011, 11001-0203-000-2008-01760-00. As regards the meaning of “enforcement”, see also Pavan s.r.l. v. Leng d’Or, S.A., Court of First Instance, Spain, 11 June 2007, 584/06, XXXV Y.B. Com. Arb. 444 (2010).
8. Commentators are in broad agreement that “recognition” refers to the process of considering an arbitral award as binding but not necessarily enforceable, while “enforcement” refers to the process of giving effect to an award.20
20. Javier Rubinstein, Georgina Fabian, The Territorial Scope of the New York Convention and Its Implementation in Common and Civil Law Countries, in Enforcement of Arbitration Agreements and International Arbitral Awards: The New York Convention in Practice 91, 93 (E. Gaillard, D. Di Pietro eds., 2008); Bernd Ehle, Commentary on Article I, in New York Arbitration Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958 – Commentary 26, 77 (R. Wolff ed., 2012).
9. A closely related issue to that of the definition of the terms “recognition” and “enforcement” is whether a party must seek recognition and enforcement together or whether it can independently seek the recognition of an award.
10. In a 1981 decision, the German Supreme Court construed “recognition and enforcement” to mean that the two actions were interrelated and could not be sought separately.21
21. Compagnia Italiana di Assicurazioni (COMITAS) S.p.A., Società di Assicurazioni Gia Mutua Marittima Nazionale (MUTUAMAR) S.p.A. and others v. Schwartzmeer und Ostsee Versicherungsaktiengesellschaft (SOVAG), Bundesgerichtshof [BGH], Germany, 8 October 1981, VIII Y.B. Com. Arb. 366 (1983).
11. Courts from other jurisdictions have considered that recognition can be requested on its own. For example, the Indian Supreme Court held that recognition may be requested “as a shield against re-agitation of issues with which the award deals”.22 The same court found that the successful party to an award could rely on the award where proceedings were brought against it in respect of a matter which had already been dealt with in the award.
12. Similarly, courts from other jurisdictions, including Portugal23 and the United States,24 have held that recognition can be sought separately from enforcement.
13. This approach finds support in the travaux préparatoires to the Convention25 and in commentary.26
25. Travaux préparatoires, Committee on the Enforcement of International Arbitral Awards, Summary Record of the First Meeting, E/AC.42/SR.1, p.7. Commenting on the title of an early draft proposed by the ICC, the delegate of Belgium remarked that the purpose of the Convention “would be made clearer” if the title of the ICC draft was amended to refer to “recognition and enforcement of arbitral awards”, rather than referring to the enforcement of awards only.
26. Fouchard Gaillard Goldman on International Commercial Arbitration 966, para. 1667 (E. Gaillard, J. Savage eds., 1999). See also Javier Rubinstein, Georgina Fabian, The Territorial Scope of the New York Convention and Its Implementation in Common and Civil Law Countries, in Enforcement of Arbitration Agreements and International Arbitral Awards: The New York Convention in Practice 91, 93 (E. Gaillard, D. Di Pietro eds., 2008); Albert Jan van den Berg, The New York Arbitration Convention of 1958: Towards a Uniform Judicial Interpretation 243-45 (1981).
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b. Non-applicability of the Convention to setting aside proceedings
14. The Convention does not apply to setting aside proceedings. This has been confirmed by national courts. For instance, a Hong Kong court has held obiter that “various decisions have made clear that the Convention is not applicable for setting aside awards”.27 Similarly, numerous United States decisions have noted that while a petitioner’s request for recognition of an award was properly brought under the New York Convention, a respondent’s cross-motion to set aside the award was governed by domestic law on arbitration and not the New York Convention.28
28. Yusuf Ahmed Alghanim & Sons, W.L.L. v. Toys “R” Us, Inc., Court of Appeals, Second Circuit, United States of America, 10 September 1997, 126 F.3d 15. See also Federal Insurance Company, as subrogee of Transammonia, Inc. v. Bergesen D.Y. ASA OSLO, as agents of the Norwegian Flag LP G/C “Hugo N” and its owner, General Gas Carrier Corporation, Limited, District Court, Southern District of New York, United States of America, 7 September 2012, 12 Civ. 3851 (PAE); ESCO Corporation v. Bradken Resources PTY Ltd., District Court, District of Oregon, Portland Division, United States of America, 31 January 2011, 10-788-AC.
15. In the same vein, French courts29 and Indian courts30 have held that the New York Convention does not apply to setting aside applications.
29. SNC Facciano Giuseppe v. Société Coopérative Agricole Nouricia, Court of Appeal of Paris, France, 9 June 2011, 10/11062. See also Commandement des Forces Aériennes de la République Islamique d’Iran v. Société Bendone Derossi International Limited Partnership, Court of Cassation, France, 5 May 1987, 85-13.162; Société Maatschappij Voor Industríele Research en Ontwikkeling v. M. Lievremont et autres, Court of Cassation, France, 25 May 1983, 82-11.699; General National Maritime Transport Company v. Société Götaverken Arendal A.B., Court of Appeal of Paris, France, 21 February 1980.
30. See, e.g., Compagnie Saint Gobain Pont-à-Mousson v. Fertilizer Corporation of India Ltd., High Court of Delhi, India, 28 August 1970, ILR 1970 Delhi 927.
16. Commentators are in agreement that the New York Convention does not apply to an application to set aside an award.31
31. Albert Jan van den Berg, The New York Arbitration Convention of 1958: Towards a Uniform Judicial Interpretation 20 (1981); Javier Rubinstein, Georgina Fabian, The Territorial Scope of the New York Convention and Its Implementation in Common and Civil Law Countries, in Enforcement of Arbitration Agreements and International Arbitral Awards: The New York Convention in Practice 91, 94 (E. Gaillard, D. Di Pietro eds., 2008).
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c. Non-applicability of the Convention to actions to stay arbitration proceedings
17. The Convention does not apply to actions to stay arbitration proceedings. This has been confirmed by the scarce case law that exists on this issue. A United States court has held that the New York Convention makes “no mention of actions to restrain a pending or ongoing arbitration” and that, on that basis, the Convention does not apply to actions to stay arbitration proceedings.32
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B. Meaning of “arbitral awards”
18. The Convention does not define “arbitral awards”. During the negotiation of article I, the Austrian delegate noted that “it will depend on the law of the State in which an award is to be enforced whether a particular decision is to be regarded as an arbitral award”.33 This suggests that it is up to the courts of the Contracting States where recognition and enforcement is sought to determine when a decision can be characterized as an “arbitral award” under the New York Convention.
33. Travaux préparatoires, Recognition and Enforcement of Foreign Arbitral Awards, Report by the Secretary-General, Annex I, Comments by Governments, E/2822, p. 10.
19. Several courts have held that, in determining what is meant by the term “arbitral award”, consideration must be given to the object and purpose of the New York Convention.34 For example, a Colombian court has held that the term “arbitral award” is to be construed in accordance with the spirit of the New York Convention.35
34. Compania Italiana di Assicurazioni (COMITAS) S.p.A., Società di Assicurazioni Gia Mutua Marittima Nazionale (MUTUAMAR) S.p.A. and others v. Schwartzmeer und Ostsee Versicherungsaktiengesellschaft (SOVAG), Bundesgerichtshof [BGH], Germany, 8 October 1981, VIII Y.B. Com. Arb. 366 (1983); Merck & Co. Inc., Merck Frosst Canada Inc., Frosst Laboratories Inc. v. Tecnoquimicas S.A., Supreme Court of Justice, Colombia, 26 January 1999, E-7474.
20. Courts have generally accepted that the determination whether a decision is an award depends on its nature and content, not on the label given to it by the arbitrators.36 For example, a United States court has held that a decision need not be titled “award” for it to be enforceable under the New York Convention.37 Similarly, it would not suffice for arbitrators to label a decision “award” to make it an award within the meaning of the Ne
20. Courts have generally accepted that the determination whether a decision is an award depends on its nature and content, not on the label given to it by the arbitrators.36 For example, a United States court has held that a decision need not be titled “award” for it to be enforceable under the New York Convention.37 Similarly, it would not suffice for arbitrators to label a decision “award” to make it an award within the meaning of the New York Convention.38
w York Convention.38
36. Blackwater Security Consulting LLC et al. v. Richard P. Nordan, District Court, Eastern District of North Carolina, Northern Division, United States of America, 21 January 2011, 2:06-CV-49-F; Merck & Co. Inc., Merck Frosst Canada Inc., Frosst Laboratories Inc. v. Tecnoquimicas S.A., Supreme Court of Justice, Colombia, 26 January 1999, E-7474; Publicis Communication v. Publicis S.A., True North Communications Inc., Court of Appeals, Seventh Circuit, United States of America, 14 March 2000, 206 F.3d 725; Bundesgerichtshof [BGH], Germany, 18 January 2007, III ZB 35/06.
38. See in the context of setting aside proceedings, Braspetro Oil Services Company - Brasoil v. The Management and Implementation Authority of the Great Man-Made River Project, Court of Appeal of Paris, France, 1 July 1999, XXIV Y.B. Com. Arb. 296 (1999). In this case, the court held that the “qualification of [a decision as an] award does not depend on the terms used by the arbitrators or by the parties.” As a result, the court held that a decision by which the tribunal resolved in a final manner the dispute between the parties was an award, notwithstanding the fact that the tribunal characterized its decision as an “order”.
21. Courts have found that only those decisions made by arbitrators that determine all or some aspects of the dispute, including jurisdiction,39 in a final and binding manner, can be considered “arbitral awards” within the meaning of the New York Convention.40 Accordingly, courts have found that in order for a decision to be considered an “arbitral award” under the New York Convention it needs to (i) be made by arbitrators, (ii) resolve a dispute or part thereof in a final manner, and (iii) be binding.41
39. See the chapter of the Guide on article I, paras. 28-32.
40. For a discussion of the effect of article I (2) and the notion of arbitral award within the meaning of the New York Convention, see the chapter of the Guide on article I, paras. 65-68.
41. See the chapter of the Guide on article V (1)(e), paras. 5-19.
22. First, reported case law shows that only decisions made by arbitrators are to be considered “awards” within the meaning of the New York Convention. For example, a United States court has held that a decision by the Permanent Court of Arbitration (“PCA”) denying a request for arbitration on the basis of a prima facie screening of the documentation submitted by the parties did not constitute an award within the meaning of the New York Convention. The court added that the decision of the PCA could not be regarded as an “award” because “no arbitrators were ever appointed to adjudicate the parties’ dispute”.42 Similarly, a United States court has held that a decision made by a third party determining a company’s share price was not an award made by arbitrators and the New York Convention was therefore inapplicable.43 Commentators are in broad agreement that decisions rendered in valuation and expert determination proceedings are not “awards made by arbitrators” and cannot be recognized and enforced under the New York Convention.44
42. Marks 3- Zet-Ernst Marks GmbH & Co. KG v. Presstek, Inc., District Court, District of New Hampshire, United States of America, 9 August 2005, Civ.05-CV-121-JD, XXXI Y.B. Com. Arb. 1256 (2006). See also in the context of setting aside of an award, Société Opinter France v. Société Dacomex, Court of Appeal of Paris, France, 15 January 1985, 1986 Rev. Arb. 87.
43. Frydman v. Cosmair Inc., District Court, Southern District of New York, United States of America, 25 July 1996, 94 Civ. 3772 LAP.
44. Fouchard Gaillard Goldman on International Commercial Arbitration 19, para. 25 (E. Gaillard, J. Savage eds., 1999); Bernd Ehle, Commentary on Article I, in New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards—Commentary 26, 37 (R. Wolff ed., 2012); Domenico Di Pietro, What Constitutes an Arbitral Award Under the New York Convention, in Enforcement of Arbitration Agreements and International Arbitral Awards: The New York Convention in Practice 139, 145 (E. Gaillard, D. Di Pietro eds., 2008); Charles Jarrosson, La notion d’arbitrage 123, 158, 162 (1987).
23. Second, reported case law shows that decisions that finally resolve a dispute, either in whole or in part, are considered to be “awards” within the meaning of the Convention.45 For example, an Australian court held that for a decision to be an “arbitral award” within the meaning of the New York Convention, it needs to finally determine all or at least some of the matters submitted to the arbitral tribunal.46 Similarly, a United States court held that for a decision to be regarded as an “award”, it needs to finally and definitely dispose of a separate independent claim.47 In construing the “finality” requirement, a Colombian court held that awards are final “not because they put an end to the arbitration or to the tribunal’s function, but because they settle in a final manner some of the disputes that have been submitted to arbitration”.48
45. See the chapter of the Guide on article I, paras. 26-40.
46. Resort Condominiums International Inc. v. Ray Bolwell and Resort Condominiums, Pty. Ltd., Supreme Court of Queensland, Australia, 29 October 1993, XX Y.B. Com. Arb. 628 (1995).
47. Hall Steel Company v. Metalloyd Ltd., District Court, Eastern District of Michigan, Southern Division, United States of America, 7 June 2007, 492 F. Supp. 2d 715, XXXIII Y.B. Com. Arb. 978 (2008).
48. Drummond Ltd. v. Instituto Nacional de Concesiones—INCO et al., Supreme Court of Justice, Colombia, 19 December 2011 and 3 May 2012, XXXVII Y.B. Com. Arb. 205 (2012) (with English translation). See also Resort Condominiums International Inc. v. Ray Bolwell and Resort Condominiums, Pty. Ltd., Supreme Court of Queensland, Australia, 29 October 1993, XX Y.B. Com. Arb. 628 (1995).
24. Third, reported case law shows that only a decision that is binding on the parties can be regarded as an “arbitral award” within the meaning of the New York Convention.49 For example, a German court has held that an award was binding because it was not subject to appeal either before another arbitral tribunal or a national court.50 Applying a similar approach, the French Court of Cassation refused to enforce an award on the ground that it was not binding because one of the parties was seeking review of the award before another arbitral tribunal.51
49. See the chapters of the Guide on article IV, paras. 68-72, and article V (1)(e), paras; 13-14 The burden of proving that an award has not become binding is on the party opposing enforcement.
50. See Bundesgerichtshof [BGH], Germany, 18 January 1990, III ZR 269/88.
51. La Société Diag v. The Czech Republic, Court of Cassation, France, 5 March 2014, 12-29.112.
25. Courts have applied the above two criteria—namely, the finality and the binding effect of an award—to decisions made by arbitrators when determining whether particular decisions qualify as “arbitral awards” under the Convention.
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a. Procedural orders
26. Courts have held that if a procedural order resolves an issue between the parties in a final manner, such order can be characterized as an “award” capable of being enforced under the New York Convention. For instance, the United States Court of Appeals for the Seventh Circuit held that a procedural order by which a tribunal directed one party to turn over certain tax records to the other was “final” and thus subject to recognition under the New York Convention.52 Another United States court has decided that a “Termination Order” ending arbitration proceedings for failure of the parties to pay the arbitration fees was a final award and enforceable under the Convention.53
52. Publicis Communication v. Publicis S.A., True North Communications Inc., Court of Appeals, Seventh Circuit, United States of America, 14 March 2000, 206 F.3d 725.
27. An Australian court has refused enforcement of an “Interim Arbitration Order and Award” by which the tribunal enjoined—until the final conclusion of the arbitration—a party from carrying out certain activities relating to a licence contract, such as, inter alia, entering into a similar contract with another party or falling to carry out provisions of the licence contract. The court found that the “Interim Arbitration Order and Award” did not amount to an enforceable award as it was of an “interlocutory and procedural nature” and did not attempt to finally solve the dispute between the parties.54
54. Resort Condominiums International Inc. v. Ray Bolwell and Resort Condominiums, Pty. Ltd., Supreme Court of Queensland, Australia, 29 October 1993, XX Y.B. Com. Arb. 628 (1995).
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b. Awards on jurisdiction
28. An issue that has arisen before courts is whether awards on jurisdiction are enforceable under the Convention. Reported case law on this issue is scarce and concerns the recognition and enforcement of awards that deal with both jurisdiction and the allocation of costs incurred during the jurisdictional phase of the proceedings.
29. Of the few reported cases, a United States court has held that an “Interim Final Arbitration Award” affirming jurisdiction and containing an assessment of costs was not enforceable under the New York Convention on the ground that arbitration proceedings were still ongoing and that the party seeking confirmation did not show that the enforcement of the award on jurisdiction was necessary to “preserve the status quo”.55 However, relying on previous case law, the court noted that an award need not conclusively resolve all matters in dispute for it to be eligible for recognition under the Convention, provided that the party seeking recognition and enforcement is able to identify an immediate need for relief.
55. Hall Steel Company v. Metalloyd Ltd., District Court, Eastern District of Michigan, Southern Division, United States of America, 7 June 2007, 492 F. Supp. 2d 715, XXXIII Y.B. Com. Arb. 978 (2008).
30. The Supreme Court of Queensland, Australia, has held that an interim award refusing jurisdiction and containing a decision on costs is enforceable under the New York Convention. The court noted that the fact that “there was no determination [...] on the merits can have no relevance to the ability of the Respondent [...] to enforce the interim award [...] with respect to the costs”.56
56. Austin John Montague v. Commonwealth Development Corporation, Supreme Court of Queensland, Australia, 27 June 2000, Appeal No. 8159 of 1999, DC No. 29 of 1999, XXVI Y.B. Com. Arb. 744 (2001). See also Bundesgerichtshof [BGH], Germany, 18 January 2007, III ZB 35/06; Hanseatisches Oberlandesgericht [OLG] Hamburg, Germany, 14 March 2006, 6 Sch 11/05.
31. In one case, a Colombian court refused to grant enforcement of an “Interlocutory Award on Jurisdiction” on the ground that an award affirming the jurisdiction of a tribunal does not “substantially put an end to the arbitral proceedings and settle the dispute” and thus cannot be considered as falling under the New York Convention.57
32. Commentators have taken the view that awards on jurisdiction can be considered as genuine “awards” capable of recognition and enforcement under the New York Convention.58
58. Fouchard Gaillard Goldman on International Commercial Arbitration 739, para. 1357 (E. Gaillard, J. Savage eds., 1999); Domenico Di Pietro, What Constitutes an Arbitral Award Under the New York Convention, in Enforcement of Arbitration Agreements and International Arbitral Awards: The New York Convention in Practice 139, 153 (E. Gaillard, D. Di Pietro eds., 2008); Gary B. Born, International Commercial Arbitration 2935-36 (2014).
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c. Interim or partial awards
33. Courts have considered whether interim or partial awards are enforceable under the Convention. For example, a Bulgarian court has held that a partial award requiring one party to pay certain sums to the other was not enforceable under the Convention because it did not finally settle the dispute between the parties. The court added that the lack of finality was further demonstrated by the fact that the arbitration proceedings were still pending.59
59. ECONERG Ltd. v. National Electricity Company AD, Supreme Court of Appeal, Civil Collegium, Fifth Civil Department, Bulgaria, 23 February 1999, 356/99, XXV Y.B. Com. Arb. 678 (2000).
34. Other courts have held that an interim or partial award amounts to an “award” within the meaning of the Convention, if it finally determines at least part of the dispute referred to arbitration.60 For example, a German court held that an interim award containing a binding decision on some of the claims advanced is capable of recognition and enforcement under the New York Convention.61 Similarly, the Supreme Court of Justice of Colombia held that a “Partial Award” amounted to an “award” within the meaning of the New York Convention. In so doing, the court noted that the award settled in a final manner “several of the (counter-) claims”.62 Similarly, a United States court held that “an interim award that finally and definitely disposes of a separate, independent claim may be confirmed notwithstanding the absence of an award that finally disposes of all claims that were submitted to arbitration”.63 Noting that a partial award decided claims that were severable from the rest of the claims in the pending arbitration proceedings, the court granted recognition of the partial award under the New York Convention.
60. Resort Condominiums International Inc. v. Ray Bolwell and Resort Condominiums, Pty. Ltd., Supreme Court of Queensland, Australia, 29 October 1993, XX Y.B. Com. Arb. 628 (1995).
61. Oberlandesgericht [OLG] Thüringen, Germany, 8 August 2007, 4 Sch 03/06.
62. Drummond Ltd. v. Instituto Nacional de Concesiones—INCO et al., Supreme Court of Justice, Colombia, 19 December 2011 and 3 May 2012, XXXVII Y.B. Com. Arb. 205 (2012) (with English translation).
63. Alcatel Space, S.A. v. Alcatel Space Industries, S.A. and others, District Court, Southern District of New York, United States of America, 25 June 2002, 02 Civ.2674 SAS, XXVIII Y.B. Com. Arb. 990 (2003).
35. In an obiter dictum, the Italian Court of Cassation noted that a partial award on liability could be enforced in Italy under the New York Convention.64 The Court of Cassation added that a final award on the level of damages can be considered separately from an interim award on liability for the purposes of enforcement.
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d. Consent awards
36. The Convention is silent on the question of its applicability to decisions that record the terms of a settlement between parties. During the Conference, the issue of the application of the Convention to such decisions was raised, but not decided upon.65 Reported case law does not address this issue.
65. Travaux préparatoires, Recognition and Enforcement of Foreign Arbitral Awards, Report by the Secretary-General, Annex I, Comments by Governments, E/2822, pp. 7, 10; Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Consideration of the Draft Convention on the Recognition and Enforcement of Foreign Arbitral Awards, E/CONF.26/L.26. See also Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Activities of Inter-Governmental and Non-Governmental Organizations in the Field of International Commercial Arbitration, Consolidated Report by the Secretary-General, E/CONF.26/4, p. 26.
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e. Lodi Irrituali
37. The question of whether an award rendered in an arbitrato irrituale (informal arbitration) falls within the scope of the New York Convention has also arisen. An arbitrato irrituale is based on the parties’ intentions and results in an award which is essentially a contract. Awards rendered in such proceedings bind the parties as soon as they are rendered, but can only be enforced after being confirmed by a competent court.66
38. The German Supreme Court held that the Convention applies neither to the recognition nor the enforcement of a lodo irrituale, i.e., an award rendered in an arbitrato irrituale. The court noted that a lodo irrituale can be compared to an interlocutory decision “because it offers the possibility of obtaining a judgment thereon by which it becomes a final judgment”.67 A similar view has been taken by another German court that has held that an award which has the effect of a contract and not a judgment cannot be enforced under the New York Convention.68
67. Compagnia Italiana di Assicurazioni (COMITAS) S.p.A., Società di Assicurazioni Gia Mutua Marittima Nazionale (MUTUAMAR) S.p.A. and others v. Schwartzmeer und Ostsee Versicherungsaktiengesellschaft (SOVAG), Bundesgerichtshof [BGH], Germany, 8 October 1981, VIII Y.B. Com. Arb. 366 (1983) (with English translation).
39. On the other hand, in the context of proceedings in which one party sought a referral to arbitration pursuant to article II of the Convention, the Italian Court of Cassation noted obiter that a lodo irrituale falls within the scope of the Convention.69 The court reasoned that the fact that the New York Convention refers to “an arbitral award which has a binding force between the parties, [...] does not signify as such that the binding force must necessarily operate on the judicial level”.70 The court added that the New York Convention has eliminated the double exequatur requirement, and that therefore there is no need to obtain an exequatur decision in the State where a lodo irrituale was rendered in order for it to be enforceable under the Convention.71 In a further decision, also in the context of referral proceedings, the Italian Court of Cassation stated obiter that the New York Convention should be interpreted “as broadly as possible”, by taking into account “the difference in law and mentality in the various Contracting States”.72 The court reasoned that differences between a regular arbitration (i.e., arbitrato rituale) and an informal arbitration (i.e., arbitrato irrituale) should be irrelevant for the purposes of enforcement under the New York Convention.
69. Gaetano Butera v. Pietro e Romano Pagnan, Court of Cassation, Italy, 18 September 1978, 4167, IV Y.B. Com. Arb. 296 (1979); Colella Legnami S.p.A. v. Carey Hirsch Lumber Company, Court of Cassation, Italy, 6 July 1982, 4039, IX Y.B. Com. Arb. 429 (1984).
70. Gaetano Butera v. Pietro e Romano Pagnan, Court of Cassation, Italy, 18 September 1978, 4167, IV Y.B. Com. Arb. 296 (1979) (with English translation).
71. Id.
72. Colella Legnami S.p.A. v. Carey Hirsch Lumber Company, Court of Cassation, Italy, 6 July 1982, 4039, IX Y.B.Com. Arb. 429 (1984) (with English translation).
40. Commentators are generally of the view that a lodo irrituale does not amount to an “arbitral award” under the New York Convention.73
73. See Bernd Ehle, Commentary on Article I, in New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958—Commentary 26, 40 (R. Wolff ed., 2012); Albert Jan van den Berg, The New York Arbitration Convention of 1958: Towards a Uniform Judicial Interpretation 47 (1981); Domenico Di Pietro, What Constitutes an Arbitral Award Under the New York Convention, in Enforcement of Arbitration Agreements and International Arbitral Awards: The New York Convention in Practice 139, 148 (E. Gaillard, D. Di Pietro eds., 2008); contra Gary B. Born, International Commercial Arbitration 2925 (2014).
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C. Arbitral awards falling within the scope of the Convention
41. In the 1955 draft of the Convention, article I provided that the Convention applied to the “recognition and enforcement of arbitral awards made in the territory of a State other than the State in which such awards are relied upon”. The 1955 draft of the Convention adopted a “territorial criterion” for determining the application of the Convention, focusing on the place where the award was rendered. The application of this territorial criterion excluded from the scope of the Convention awards that were rendered in the State where recognition and enforcement was sought. This made the 1955 draft of the Convention more restrictive than the 1927 Geneva Convention.74
74. Pursuant to article 1, the 1927 Geneva Convention applied to awards rendered “in the territory of one of the High Contracting Parties”. This wording did not exclude from the scope of the 1927 Geneva Convention awards rendered in the States where enforcement was sought, provided that they were made between persons “subject to the jurisdiction of the Contracting States”. See also Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Comments on the Recognition and Enforcement of Foreign Arbitral Awards, Note by the Secretary-General, E/CONF. 26/2, p. 2.
42. Delegates from several countries considered that the narrow territorial approach taken by the ECOSOC ad hoc Committee placed undue emphasis on the seat of arbitration, which was often chosen “as a matter of convenience”75 and could be “fortuitous and artificial”.76 For these reasons, delegates from Austria, Belgium, Germany, France, Italy, Netherlands, Sweden and Switzerland jointly proposed a draft amendment to article I (1), pursuant to which the Convention would apply to awards “other than those considered as domestic in the country in which they are relied upon”.77
75. Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Comments on Draft Convention on the Recognition and Enforcement of Foreign Arbitral Awards, Note by the Secretary-General, E/CONF.26/2, p. 3.
76. Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Record of the Fifth Meeting, E/CONF.26/SR.5, p. 8.
77. Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Consideration of the Draft Convention on the Recognition and Enforcement of Foreign Arbitral Awards - Austria, Belgium, Federal Republic of Germany, France, Italy, Netherlands, Sweden, Switzerland: amendment to article I, paragraph 1, of the draft Convention, E/CONF.26/L.6.
43. The matter was referred to a working party composed of representatives of ten States, which was tasked with reconciling the views of those “favouring the principle of the place of arbitration and those favouring the principle of the nationality of the arbitral award”.78 The working party proposed a text of article I, which was later adopted by the Conference that included both the “territorial” and the “non-domestic” criteria.79 The Convention thereby recognizes that Contracting States may want to consider factors other than the seat of the arbitration when determining whether an award falls within the scope of the Convention.80
78. Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Consideration of the Draft Convention on the Recognition and Enforcement of Foreign Arbitral Awards , Report of Working Party No. 1 on article I, paragraph 1 and article II of the draft Convention (E/2704 and Corr.1), E/CONF.26/L.42. The Working Group was composed of: Colombia, Czechoslovakia, the Federal Republic of Germany, France, India, Israel, Italy, Turkey, the Union of Soviet Socialist Republics and the United Kingdom.
79. See also Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Record of the Sixth Meeting, E/CONF.26/SR.6, p. 8.
80. Phillipe Fouchard, Quand un arbitrage est-il international?, 1970 Rev. Arb. 59, 65. For the approach adopted under chapter 8 of the UNCITRAL Model Law on International Commercial Arbitration, see paragraph 50 of the Explanatory Note by the UNCITRAL secretariat on the Model Law, available on the Internet at www.unictral.org.
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a. Awards “made in the territory of a State other than the State where the recognition and enforcement of such awards are sought”
44. Pursuant to the first sentence of article I (1), the New York Convention applies to awards “made in the territory of a State other than the State where the recognition and enforcement of such awards are sought”. Unless a State has made a reciprocity reservation pursuant to article I (3),81 the Convention applies to awards made in any State, whether or not a Contracting State.82
81. See the chapter of the Guide on article I, paras. 70-82.
82. Black Sea Shipping Co. v. Italturist SpA, Court of Appeal of Milan, Italy, 4 October 1991, 1618, XVIII Y.B. Com. Arb. 415 (1993); Oberlandesgericht [OLG] Stuttgart, Germany, 18 October 1999, 5 U 89/98, XXIX Y.B. Com. Arb. 700 (2004); R S.A. v. A Ltd., Court of Justice of Geneva, Switzerland, 15 April 1999; Cadena de Tiendas Venezolanas S.A. - Cativen v. GMR Asesores SL Inmomercado and others, Court of Appeal of Madrid, Spain, 1 April 2009, 63/2009 (Section 10), XXXV Y.B. Com. Arb. 448 (2010). See also Bernd Ehle, Commentary on Article I, in New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958—Commentary 26, 56 (R. Wolff ed., 2012); Javier Rubinstein, Georgina Fabian, The Territorial Scope of the New York Convention and Its Implementation in Common and Civil Law Countries, in Enforcement of Arbitration Agreements and International Arbitral Awards: The New York Convention in Practice 91, 95 (E. Gaillard, D. Di Pietro eds., 2008); Albert Jan van den Berg, The New York Arbitration Convention of 1958: Towards a Uniform Judicial Interpretation 12 (1981).
45. In certain jurisdictions, the criterion expressed in the first sentence of article I (1) is the only one used to determine whether or not an award falls within the scope of the Convention. Thus, in several jurisdictions—including Australia,83 Brazil,84 Cameroon,85 England,86 Germany,87 Luxembourg,88 the Netherlands89 and Spain90—an award falls within the scope of the New York Convention only when it is made in a State other than the State where recognition and enforcement is sought.
83. FG Hemisphere Associates LLC v. Democratic Republic of Congo, Supreme Court of New South Wales, Australia, 1 November 2010, [2010] NSWSC; Uganda Telecom Ltd. v. Hi-Tech Telecom Pty Ltd., Federal Court, Australia, 22 February 2011, NSD 171 of 2010. See also Section 3 of the 1974 Australian International Arbitration Act, amended in 2011 (“Foreign award means an arbitral award made, in pursuance of an arbitration agreement, in a country other than Australia, being an arbitral award in relation to which the Convention applies”).
84. Nuovo Pignone SPA and others v. Petromec Inc. and Marítima Petróleo e Engenharia Ltda, Superior Court of Justice, Brazil, 24 May 2011, Special Appeal 1.231.554. See Article 34 of the 1996 Brazilian Arbitration Act (“A foreign arbitral award is an award made outside of the national territory”).
86. Yukos Oil Co. v. Dardana Ltd., Court of Appeal, England and Wales, 18 April 2002, [2002] EWCA Civ 543; IPCO v. Nigerian National Petroleum Corp., High Court of Justice, England and Wales, 17 April 2008, [2008] EWHC 797 (Comm). See also Section 100(1) of the 1996 English Arbitration Act (“‘[a] New York Convention award’ means an award made, in pursuance of an arbitration agreement, in the territory of a state (other than the United Kingdom) which is a party to the New York Convention”).
87. German courts initially held that an award falls within the scope of the Convention when a foreign procedural law governs the arbitration proceedings, irrespective of the place where the award is made. After the adoption of the 1998 German Arbitration Act, German courts have held that the only relevant criterion to be taken into account when determining whether an award is domestic or falls within the scope of the Convention, is the geographical location where the award was rendered. See Oberlandesgericht [OLG] München, Germany, 28 November 2005, 34 Sch 019/05; Kammergericht [KG] Berlin, Germany, 17 April 2008, 20 Sch 02/08, XXXIV Y.B. Com. Arb. 510 (2009).
88. Kersa Holding Company Luxembourg v. Infancourtage, Famajuk Investment and Isny, Court of Appeal, Luxembourg, 24 November 1993, XXI Y.B. Com. Arb. 617 (1996).
89. LoJack Equipment Ireland Ltd. v. A, Voorzieningenrechter, Court of First Instance of Amsterdam, Netherlands, 18 June 2009, 411230/KG RK 08-3652, XXXIV Y.B. Com. Arb. 715 (2009). See also article 1075 of the 2004 Netherlands Arbitration Act (“An arbitral award made in a foreign State to which a treaty concerning recognition and enforcement is applicable may be recognized and enforced in the Netherlands”).
90. Cadena de Tiendas Venezolanas S.A. - Cativen v. GMR Asesores SL Inmomercado and others, Audiencia Provincial, Court of Appeal of Madrid, Spain, 1 April 2009, 63/2009 (Section 10), XXXV Y.B. Com. Arb. 448 (2010). See also article 46 (1) of the 2003 Spanish Arbitration Act as amended in 2011 (“A foreign award is an award which has been issued outside of Spanish territory”).
46. The Indian Supreme Court initially held that awards rendered in the territory of another State under Indian procedural law were domestic awards and did not fall within the scope of the New York Convention.91 More recently, the Indian Supreme Court has reversed this approach and held that awards rendered in the territory of another State “would only be subject to jurisdiction of Indian courts when [they] are sought to be enforced in India” in accordance with the legislative provisions implementing the New York Convention. The Court added that this holding would be applicable ex nunc “to all arbitration agreements executed [after 6 September 2012]”.92
47. In China, courts have held that an award falls within the scope of the Convention when it is rendered under the auspices of a foreign arbitral institution. In one case, a court held that an award rendered in Paris fell within the scope of the New York Convention because it was rendered by “the arbitral tribunal of the International Chamber of Commerce” (“ICC”).93 In another case, a court held that an award rendered in Mongolia was subject to enforcement under the Convention, because it “was made by a Mongolian institution”.94 Chinese courts have further held that awards rendered in ad hoc arbitration proceedings are enforceable under the New York Convention provided that the seat of the arbitration is in a country other than China.95
93. Hemofarm DD, MAG International Trade Holding DD, Suram Media Ltd. v. Jinan Yongning Pharmaceutical Co. Ltd., Supreme People’s Court, China, 2 June 2008, [2008] Min Si Ta Zi No. 11 (unofficial translation).
94. Aiduoladuo Co., Ltd. v. Zhejiang Zhancheng Construction Group Co., Ltd., Supreme People’s Court, China, 8 December 2009, [2009] Min Si Ta Zi No. 46 (unofficial translation).
48. With respect to jurisdictions—including Belgium, France, Panama, Peru, Sweden, Switzerland, and Tunisia—that allow parties, in certain circumstances, to opt out of setting aside actions altogether,96 the question has arisen whether an award would still be enforceable under the New York Convention if the parties had availed themselves of this possibility. Although there is no reported case law on this issue, commentators have generally taken the view that the waiver does not have any bearing on the enforceability of the award under the Convention,97 and that a party may nevertheless seek the enforcement of such award, pursuant to the first sentence of article I (1) of the New York Convention.98 Indeed, the Convention applies to awards made in the territory of another Contracting State, without requiring that a certain level of control be exercised in the territory of that State.99
96. See, e.g., article 1718 of the 2013 Belgian Judicial Code, article 1522 of the 2011 French Civil Code of Procedure; article 36 of the 2006 Panama Legislative Decree; article 63(8) of the Peruvian 2008 Legislative Arbitration Decree; article 51 of the 1999 Swedish Arbitration Act; article 192 of the 1987 Swiss Private International Law Act; article 78(6) of the 1993 Tunisian Arbitration Code.
97. Adam Samuel, Jurisdictional Problems in International Commercial Arbitration: A Study of Belgian, Dutch, English, French, Swedish, Swiss, United States and West German Law 296 (1989).
98. See, e.g., Markus Wirth, Chapter 12 PILA—Is it Time for Reform? If Yes, What Shall be Its Scope, in New Developments in International Commercial Arbitration 51, 72 (C. Muller, A. Rigozzi eds., 2011); Bernard Hanotiau, Olivier Caprasse, Introductory Report, in The Review of International Arbitral Awards, IAI Series on International Arbitration No. 6, 7, 84 (E. Gaillard ed., 2010); Jan Paulsson, Arbitration Unbound in Belgium, 2(1) Arb. Int’l 72-73 (1986); Emmanuel Gaillard, The Enforcement of Awards Set Aside in the Country of Origin, 14 ICSID Rev. 16, 34 (1999); Domitille Baizeau, Commentary on Chapter 12 PILS, Article 192: Waiver of annulment, in Arbitration in Switzerland: The Practitioner’s Guide 283, 291 (M. Arroyo ed., 2013); Elliott Geisinger, Alexandre Mazuranic, Challenge and Revision of the Award, in International Arbitration in Switzerland: A Handbook for Practitioners 223, 258 (E. Geisinger, N. Voser eds., 2nd ed. 2013).
99. The same conclusion applies with respect to the “non-domestic criterion” set out in the second sentence of article I (1) of the Convention. See, e.g., Federal Tribunal, Switzerland, 31 October 2005, 4P/198/2005/sza. Article 192(2) of the Swiss Private International Law Act provides that “if the awards are to be enforced in Switzerland, the New York Convention of June 10, 1958 on the Recognition and Enforcement of Foreign Arbitral Awards applies by analogy”. See also article 78(6) of the 1993 Tunisian Arbitration Code, article 51 of the 1999 Swedish Arbitration Act and article 1522 (2) of the 2011 French Civil Code of Procedure.
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b. Awards “not considered as domestic awards in the State where their recognition and enforcement are sought”
49. Pursuant to the second sentence of article I (1), the New York Convention also applies to awards “not considered as domestic” in the State where recognition and enforcement is sought. This “non-domestic” criterion is in addition to the “territorial criterion” set out in the first sentence of article I (1) of the Convention. Accordingly, courts in the United States have applied, in addition to the “territorial criterion”,100 the “non-domestic criterion” to determine whether an award falls within the scope of the New York Convention.101 Similarly, relying on the “non-domestic” criterion, a Chinese court held that an award rendered in Beijing pursuant to the ICC Arbitration Rules was not considered as domestic in China.102
100. See Gulf Petro Trading Company Inc., et al. v. Nigerian National Petroleum Corporation, et al., Court of Appeals, Fifth Circuit, United States of America, 7 January 2008, 512 F.3d 742; GSS Group Ltd. (Global Security Seals Group Ltd) v. National Port Authority, District Court, District of Columbia, United States of America, 25 May 2012, 680 F.3d 805.
101. See, e.g., Jacada Ltd. v. International Marketing Strategies, Inc., Court of Appeals, Sixth Circuit, United States of America, 18 March 2005, 03-2521; Yusuf Ahmed Alghanim & Sons, W.L.L. v. Toys “R” Us, Inc., Court of Appeals, Second Circuit, United States of America, 10 September 1997, 126 F. 3d 15.
102. Duferco S.A. v. Ningbo Arts & Crafts Import & Export Co., Ltd., Ningbo Intermediate People’s Court, China, 22 April 2009, [2008] Yong Zhong Jian Zi No. 4.
50. The New York Convention does not define the term “domestic”. As a result, Contracting States have discretion to decide, in accordance with their own law, what constitutes a non-domestic award.103 A United States court has held that “the definition appears to have been left out deliberately in order to cover as wide a variety of eligible awards as possible [...].”104
103. Republic of Argentina v. BG Group PLC, District Court, District of Columbia, United States of America, 7 June 2010, 715 F. Supp. 2d 108. The court held that the second sentence of article I (1) refers to awards “that are issued within the borders of the nation where enforcement is sought, yet are sufficiently foreign in character as to not be considered “domestic awards” in that country”.
104. Sigval Bergesen, as Owners of the M/T Sydfonn and others v. Joseph Müller Corporation, Court of Appeals, Second Circuit, United States of America, 17 June 1983, 710 F.2d 928.
51. National courts have considered whether an award could be deemed a “non-domestic award” under article I in a number of situations.
52. First, courts have held an award to be non-domestic, within the meaning of article I, when it is made in the State where recognition and enforcement is sought under the procedural law of another State. For example, a United States court has held that an award rendered in the United States was non-domestic, inter alia, because it was made pursuant to a foreign procedural law and the ICC Arbitration Rules.105 This application of the non-domestic criterion finds support in the travaux préparatoires.106
105. RZS Holdings AVV (United States) v. PDVSA Petroleos S.A. et al., District Court, Eastern District of Virginia, Alexandria Division, United States of America, 5 February 2009, 598 F. Supp. 2d 762.
106. Travaux préparatoires, Recognition and Enforcement of Foreign Arbitral Awards, Report by the Secretary-General, Annex I, Comments by Governments, E/2822, pp. 5, 6. The German delegate stated that “the nature of the arbitral award is determined by reference to the rules of procedure which are applicable, in toto or else as subsidiary rules, to the award”. See also Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Record of the Fifth Meeting, E/CONF.26/SR.5, p. 10. In support of the German delegate’s observations, the Turkish delegate proposed that the “criterion for determining the nationality of an award should be the municipal procedural law under which the award was made”.
53. Second, courts have held an award to be non-domestic when it is made in the State where recognition and enforcement is sought but concerns a dispute involving one or more international elements. For example, pursuant to Section 202 of the United States Federal Arbitration Act (“FAA”), which broadly defines what constitutes a “non-domestic” award in the United States,107 courts have held that “the citizenship of the parties, the location of property involved in the dispute, where the agreement was to be performed or enforced, or whether the award contains another reasonable relation with a foreign country [...]”, all impact whether or not an award is to be considered “non-domestic”.108
107. See Sigval Bergesen, as Owners of the M/T Sydfonn and others v. Joseph Müller Corporation, Court of Appeals, Second Circuit, United States of America, 17 June 1983, 710 F.2d 928 (“Inasmuch as it was apparently left to each state to define which awards were to be considered nondomestic, [...] Congress spelled out its definition of that concept in section 202”). Section 202 provides for the Convention to govern recognition and enforcement of awards arising out of a relationship, whether contractual or not, that involves a party that is not a citizen of the United States or that “involves property located abroad, envisages performance or enforcement abroad, or has some other reasonable relation with one or more foreign States”. See 9 United States Code Chapter II—Convention on the Recognition and Enforcement of Foreign Arbitral Awards, Section 202.
54. Some United States courts have held that an award is non-domestic when one109 or both110 parties to the arbitration are non-United States nationals or have their principal place of business outside of the United States. For example, the United States Court of Appeals for the Second Circuit held that an award rendered in the United States pursuant to New York law was a foreign award, because the arbitration involved two parties that both had their principal place of business outside the enforcing jurisdiction.111 Similarly, the United States District Court for the Northern District of California held that, despite the fact that the arbitral award was made in the United States under California law, the award fell under the New York Convention because one of the parties had its principle place of business in Japan.112
109. Ocean Partners Holdings LIMITED and Ocean Partners USA, Inc. v. Doe Run Resources CORP., District Court, Eastern District of Missouri, Eastern Division, United States of America, 12 March 2012, 4:11-CV-173 (CEJ); Anthony N. LaPine v. Kyocera Corporation, District Court, Northern District of California, United States of America, 22 May 2008, C 07-06132 MHP; Trevino Hernandez, S. de R.L. de C.V. v. Smart & Final Inc., District Court, Southern District of California, United States of America, 17 June 2010, 09-cv-2266 BEN (NLS); Liberty Re Ltd. v. Transamerica Occidental Life Insurance Company, District Court, Southern District of New York, United States of America, 20 May 2005, 04 Civ 5044 (NRB); Industrial Risk Insurers v. M.A.N. Gutehoffnungshutte, Court of Appeals, Eleventh Circuit, United States of America, 22 May 1998, 141 F.3d 1434.
110. Sigval Bergesen, as Owners of the M/T Sydfonn and others v. Joseph Müller Corporation, Court of Appeals, Second Circuit, United States of America, 17 June 1983, 710 F.2d 928; Trans Chemical Limited v. China National Machinery Import and Export Corporation, District Court, Southern District of Texas, Houston Division, United States of America, 7 July 1997, 978 F. Supp. 266; Continental Grain Company, et al. v. Foremost Farms Incorporated, et al., District Court, Southern District of New York, United States of America, 23 March 1998, 98 Civ. 0848 (DC).
111. Sigval Bergesen, as Owners of the M/T Sydfonn and others v. Joseph Müller Corporation, Court of Appeals, Second Circuit, United States of America, 17 June 1983, 710 F.2d 928.
55. Other United States courts have used a combination of factors set out in Section 202 of the FAA to determine whether or not an award is “non-domestic”.113 In one case, a United States court held that an award was “non-domestic” on the grounds that the assets and property in dispute were located abroad, one of the parties was incorporated outside the United States and the contract envisaged performance exclusively overseas.114 In another case, a United States court held that an award was non-domestic on the grounds that two of the three disputing parties were non-domestic and the contract was performed in the Middle East.115
113. Yusuf Ahmed Alghanim & Sons, W.L.L. v. Toys “R” Us, Inc., Court of Appeals, Second Circuit, United States of America, 10 September 1997, 126 F. 3d 15; Republic of Argentina v. BG Group PLC, District Court, District of Columbia, United States of America, 7 June 2010, 715 F. Supp. 2d 108; Jacada Ltd. v. International Marketing Strategies, Inc., Court of Appeals, Sixth Circuit, United States of America, 18 March 2005, 03-2521; Mayer Zeiler v. Joseph Deitsch, Court of Appeals, Second Circuit, United States of America, 23 August 2007, 500 F.3d 157.
56. In a situation where the award creditor’s action for recognition and enforcement and the award debtor’s action for setting aside are brought before the same court—a scenario that may occur when the award creditor brings its action for recognition and enforcement under the second sentence of article I (1)—courts are in broad agreement that the New York Convention only applies to the action for recognition and enforcement, while domestic law on arbitration applies to the setting aside proceedings.116 Commentators support the view that an award rendered in the State where recognition and enforcement is sought is capable of being regarded as a non-domestic award for the purposes of enforcement and as domestic award for the purposes of setting aside.117
116. Id. See also Federal Insurance Company, as subrogee of Transammonia, Inc.v. Bergesen D.Y. ASA OSLO, as agents of the Norwegian Flag LP G/C “Hugo N” and its owner, General Gas Carrier Corporation, Limited, District Court, Southern District of New York, United States of America, 7 September 2012, 12 Civ. 3851(PAE); ESCO Corporation v. Bradken Resources PTY Ltd., District Court, District of Oregon, Portland Division, United States of America, 31 January 2011, 10-788-AC.
117. Michael Pryles, Foreign Awards and the New York Convention, 9(3) Arb. Int’l 259, 264 (1993). See also V.S. Deshpande, Jurisdiction Over ‘Foreign’ and ‘Domestic’ Awards in the New York Convention, 7(2) Arb. Int’l 123, 127 (1991).
57. The issue of whether or not awards rendered in proceedings that are considered not to be governed by any national law—sometimes referred to as “a-national” or “non-national” awards—fall within the scope of New York Convention has arisen before national courts.
58. An early draft of the Convention prepared by the ICC, in which the term “international awards” was used, arguably included “a-national” awards within the scope of the Convention.118 This draft was not adopted by the ECOSOC ad hoc Committee which was “reluctant to accept the idea put forward by the ICC that ‘international awards’ should be ‘completely independent of national law’“.119 However, similar language to the one employed in the ICC draft appears in article V (1)(d) of the Convention as adopted.120 Although dealing with one of the grounds on which recognition and enforcement may be refused, article V (1)(d) can be deemed to imply that an award need not be rendered pursuant to a domestic procedural law to be enforceable under the Convention.
118. See Travaux préparatoires, Enforcement of International Arbitral Awards, Statement Submitted by the International Chamber of Commerce, E/C.2/373, p. 13.
119. See Travaux préparatoires, Report of the Committee on the Enforcement of International Arbitral Awards, E/2704, E/AC.42/4/Rev.1., p. 11.
120. Article V (1)(d) provides that recognition and enforcement may be refused if “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”. For a detailed analysis of this provision, see the chapter of the Guide on article V (1)(d).
59. Courts have often relied both on the text of article I and the text of article V (1)(d) of the Convention to hold that “a-national awards” fall within the scope of the New York Convention. For example, the Dutch Supreme Court found that the “intention of the Convention [was] to recognize as arbitral awards also those [awards] which [...] cannot be deemed to be connected with the law of any specific country”.121 In finding that “a-national” awards fall within the scope of the Convention, the court overruled The Hague Court of Appeal’s decision, which had previously held that an award must be based on “some national law”.122
121. Société Européenne d’Etudes et d’Entreprises (S.E.E.E.) v. Federal Republic of Yugoslavia, Supreme Court, Netherlands, 7 November 1975, I Y.B. Com. Arb. 195 (1976).
122. Société Européenne d’Etudes et d’Entreprises (S.E.E.E.) v. Federal Republic of Yugoslavia, Court of Appeal of The Hague, Netherlands, 8 September 1972, I Y.B. Com. Arb. 195 (1976).
60. Similarly, the United States Court of Appeals for the Ninth Circuit, referring to the Dutch Supreme Court decision above, held that “the fairest reading of the Convention itself appears to be that it applies to the enforcement of non-national awards”.123 Noting that article V (1)(d) of the New York Convention allows a party to resist enforcement if “the arbitral procedure was not in accordance with the agreement of the parties”, the court ruled that an award need not be made under national law to be enforced under the New York Convention. On this basis, the court found an award made by the Iran-United States Claims Tribunal to fall within the scope of the Convention.
61. French courts have also held that the New York Convention applies to “a-national” awards. For example, the Court of Appeal of Rouen found that an award rendered on the basis of an arbitration clause that expressly excluded the application of any national procedural law and regulated the procedure itself, fell within the scope of the New York Convention.124
124. Société Européenne d’Etudes et d’Entreprises (S.E.E.E.) v. République Socialiste Fédérale de Yougoslavie, Court of Appeal of Rouen, France, 13 November 1984, 982/82. See also Société Aksa v. Société Norsolor, Court of Appeal of Paris, France, 9 December 1980,1981 Rev. Arb. 306.
62. Although the issue has been debated for some time,125 the position that “a-national” awards fall within the scope of the Convention finds support in commentary.126
125. Albert Jan van den Berg, The New York Arbitration Convention of 1958: Towards a Uniform Judicial Interpretation 34-40 (1981); Pieter Sanders, Commentary, I Y.B. Com. Arb. 207 (1976); Bernd Ehle, Commentary on Article I, in New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958—Commentary 26, 61 (R. Wolff ed., 2012).
126. Philippe Fouchard, Commentary of General National Maritime Transport Co. v. Götaverken Arendal A.B., 107 J.D.I. 660, 669 and 673 (1980); Javier Rubinstein, Georgina Fabian, The Territorial Scope of the New York Convention and Its Implementation in Common and Civil Law Countries, in Enforcement of Arbitration Agreements and International Arbitral Awards: The New York Convention in Practice 91, 137 (E. Gaillard, D. Di Pietro eds., 2008); Tihilo Rensmann, Anational Arbitral Awards: Legal Phenomenon or Academic Phantom, 15(2) J. Int’l Arb. 37, 64 (1998); Aida B. Avanessian, The New York Convention and Denationalised Arbitral Awards (With Emphasis on the Iran-United States Claims Tribunal), 8(1) J. Int’l Arb. 5, 22 (1991); ICCA’s Guide To the Interpretation of the 1958 New York Convention: A Handbook for Judges 23 (P. Sanders ed., 2011).
63. The importance of the issue should however not be overestimated. The plain language of article I suggests that all awards which comply with either of the two criteria set out therein fall within the scope of the Convention irrespective of whether the law applicable to the arbitration proceedings was national or not.127 Relying on the language of article I, the United States Court of Appeals for the Ninth Circuit held that article I does not “[c]ontain a separate jurisdictional requirement that the award be rendered subject to a ‘national law’“.128
127. See Adam Samuel, Jurisdictional Problems in International Commercial Arbitration: A Study of Belgian, Dutch, English, French, Swedish, Swiss, United States and West German Law 294 (1989); Hans van Houtte, La loi belge du 27 mars 1985 sur l’arbitrage international, 1986 Rev. Arb. 29.
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D. Meaning of “arising out of differences”
64. Article I (1) provides that the New York Convention applies to the recognition and enforcement of arbitral awards “arising out of differences” between persons, whether physical or legal. Very few reported cases have addressed the meaning of the term “differences”. Of those that have, the Supreme Court of Queensland, Australia, held that the term “differences” has a “clear meaning when used in connection with arbitration proceedings” and that it refers to a dispute.129
129. Resort Condominiums International Inc. v. Ray Bolwell and Resort Condominiums, Pty. Ltd., Supreme Court of Queensland, Australia, 29 October 1993, XX Y.B. Com. Arb. 628 (1995).
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ARTICLE I(2)
65. Article I (2) provides that the term “arbitral awards” includes both “awards made by arbitrators appointed for each case” and awards “made by permanent arbitral bodies to which the parties have submitted”
66. Although the importance of a specific reference to awards made by permanent arbitral bodies was questioned during the Conference,130 it was eventually inserted at the behest of the Soviet and Czechoslovak delegates, who considered that the inclusion of the provision would “strengthen the Convention” and avoid certain difficulties “which had been encountered in the past and might arise again in the future”.131
130. The delegate of France noted that “during all the years of the application of the 1923 Geneva Protocol and the 1927 Convention, no suggestion had ever been made that the term ‘arbitral award’ did not include an award made by a private permanent arbitral body”. See Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Record of the Eight Meeting, E/CONF.26/SR.8, p. 4. The Chairman of the Conference similarly stated that there was “no need to state that the convention would apply to awards made by permanent arbitral bodies, for their awards were no different from those made by specially appointed arbitrators” See Travaux préparatoires, Committee on the Enforcement of International Arbitral Awards, Summary Record of the Third Meeting, E/AC.42/SR.3, p. 4.
131. Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Record of the Eight Meeting, E/CONF.26/SR.8, p. 6-8.
67. In this respect, the Italian Court of Cassation held that, pursuant to article I (2), the Convention applies not only to awards rendered by arbitrators appointed for a specific case, but also to awards rendered by permanent arbitral tribunals, such as, in the instant case, an arbitration panel sitting under the auspices of the Court of Arbitration at the Chamber of Commerce in Sofia.132
132. Eugenio Menaguale v. Intercommerce (as legal successor of State Enterprise Balet), Court of Cassation, Italy, 17 April 1978, 1842, IV Y.B. Com. Arb. 282 (1979).
68. As an illustration, courts in reported cases have found that the term “permanent arbitral bodies” includes the following institutions: the Iran-United States Claims Tribunal,133 the ICC International Court of Arbitration,134 the Singapore International Arbitral Centre,135 the Commercial Arbitration Centre in Sweden,136 the Court of International Commercial Arbitration at the Chamber of Commerce and Industry of Ukraine,137 the Arbitration Institute of the Central Chamber of Commerce of Finland,138 and the Vienna Commodity Exchange Arbitration Board.139
137. Oberlandesgericht [OLG] Brandenburg, Germany, 2 September 1999, 8 Sch 01/99.
138. Oberlandesgericht [OLG] Brandenburg, Germany, 13 June 2002, 8 Sch 02/01.
139. Holzindustrie Schweighofer GmbH v. Industria Legnami Trentina - ILET srl., Court of Appeal of Florence, Italy, 3 June 1988, XV Y.B. Com. Arb. 498 (1990).
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ARTICLE I(3)
69. During the drafting of article I, the delegates of Israel and Bulgaria considered that a general reservation clause, “permitting any State to make such reservations as it saw fit”, should be included in the text of the Convention in order to facilitate the accession of as large a number of States as possible.140 Other delegates were of the opinion that the greatest possible number of accessions should not be obtained “at the price of the Convention’s usefulness”.141 In this context, the Turkish delegate noted that a significant number of reservations “would lessen the practical value of the Convention”.142 The matter was referred to a working group which reported that most of its members were opposed to including any reservation.143 Nevertheless, the final text of article I (3) allows Contracting States to restrict the application of the Convention to awards made in the territory of another Contracting State and/or awards arising out of legal relationships considered to be commercial under the law of the State where recognition and enforcement is sought.
140. Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Record of the Twenty-first Meeting, E/CONF.26/SR.21, pp. 10-11.
141. Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Record of the Twenty-first Meeting, E/CONF.26/SR.21, p. 11.
142. Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Record of the Fifteenth Meeting, E/CONF.26/SR.15, p. 3.
143. Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Record of the Fifteenth Meeting, E/CONF.26/SR.15, p. 3.
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A. Reciprocity reservation
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a.The territorial criterion and the reciprocity reservation
70. Pursuant to article I (3), Contracting States may declare that they will apply the Convention to the “recognition and enforcement of awards made only in the territory of another Contracting State”.
71. Courts have held that when a Contracting State makes the reciprocity reservation, it will apply the New York Convention only to awards rendered in the territory of a State which is a party to the Convention.144
144. Norsolor S.A. v. Pabalk Ticaret Limited Sirketi, Court of Appeal of Paris, France, 19 November 1982, I I0I92; Bundesgerichtshof [BGH], Germany, 14 April 1988, III ZR 12/87; GSS Group Ltd. (Global Security Seals Group Ltd) v. National Port Authority, District Court, District of Columbia, United States of America, 25 May 2012, 680 F.3d 805; Oberlandesgericht [OLG] Hamburg, Germany, 15 April 1964, II Y.B. Com. Arb. 232 (1977); Yukos Oil Co. v. Dardana Ltd., Court of Appeal, England and Wales, 18 April 2002, [2002] EWCA Civ 543.
72. In those cases, courts have consistently held that the nationality of the parties is irrelevant for the purposes of establishing reciprocity.145 What matters is that reciprocity exists between the State where the award was rendered and the State where recognition and enforcement is sought.146 For example, the Luxembourg Court of Appeal held that the fact that the two claimants had the nationality of a State that was not a party to the New York Convention was irrelevant, as the State where the award was rendered was a Contracting State.147
145. Gas Authority of India Ltd. v. Spie Capag S.A. and others, High Court of Delhi, India, 15 October 1993, Suit No. 1440, IA No. 5206; La Société Nationale Pour La Recherche, La Production, Le Transport, La Transformation et la Commercialisation Des Hydrocarbures v. Shaneen Natural Resources Company, Inc., District Court, Southern District of New York, United States of America, 15 November 1983, 585 F. Supp. 57; Société Européenne d’Etudes et d’Entreprises (S.E.E.E.) v. République Socialiste Fédérale de Yougoslavie, Court of Appeals of Rouen, France, 13 November 1984, 982/82.
146. Kersa Holding Company Luxembourg v. Infancourtage, Famajuk Investment and Isny, Court of Appeal of Luxembourg, Luxembourg, 24 November 1993, XXI Y.B. Com. Arb. 617 (1996); Oberlandesgericht [OLG] Hamm, Germany, 6 July 1994, XXII Y.B. Com. Arb. 702 (1997).
147. Kersa Holding Company Luxembourg v. Infancourtage, Famajuk Investment and Isny, Court of Appeal of Luxembourg, Luxembourg, 24 November 1993, XXI Y.B. Com. Arb. 617 (1996).
73. In certain States that have made the reciprocity reservation, the legislation implementing the Convention provides that, if the Official Gazette of that State does not indicate a given State’s ratification of or accession to the Convention, the latter State cannot be considered to have acceded to the Convention. Therefore, as a result of the reciprocity reservation, an award rendered in such State will be unenforceable.148 In one case, a court in India—where reciprocity is required—refused to refer the parties to arbitration in South Africa on the ground that the Indian Official Gazette did not mention South Africa’s accession to the Convention, despite the fact that South Africa had acceded at that time.149
148. Gas Authority of India Ltd. v. Spie Capag S.A. and others, High Court of Delhi, India, 15 October 1993, Suit No. 1440, IA No. 5206; Brace Transport Corporation of Monrovia, Bermuda v. Orient Middle East Lines Ltd. and ors., Supreme Court, India, 12 October 1993, Civil Appeals Nos 5438-39 of 1993.
74. In Malaysia, a court initially held that a foreign award may only be enforced under the Convention if it appears from an order in the Malaysian Official Gazette that the State where the award was made is a Contracting Party to the Convention.150 The Federal Court of Malaysia subsequently reversed this position, holding that an Order in the Official Gazette had only evidentiary value and that “the issue whether a State is a party to the New York Convention can be proved by adducing such other evidence as may be appropriate”.151
150. Sri Lanka Cricket v. World Sport Nimbus Pte Ltd., Court of Appeal of Putrajaya, Malaysia, 14 March 2006, W-04-964- 2004, XXXIII Y.B. Com. Arb. 607 (2008).
151. Lombard Commodities Limited v. Alami Vegetable Oil Products SDN BHD, Federal Court, Malaysia, 3 November 2009, Civil Appeal No. 02(f)-37-2008(W), XXXV Y.B. Com. Arb. 420 (2010). In so holding, the court relied on the relevant provision of the 1996 English Arbitration Act which provides that: “If Her Majesty by Order in Council declares that a state specified in the Order is a party to the New York Convention, or is a party in respect of any territory so specified, the Order shall, while in force, be conclusive evidence of that fact” See also IPCO v. Nigerian National Petroleum Corp., High Court of Justice, England and Wales, 17 April 2008, [2008] EWHC 797 (Comm).
75. There are only a handful of cases in which the enforcement of an award was refused on the basis of the reciprocity reservation. For example, in a decision rendered before Switzerland withdrew its reciprocity reservation in 1989, the Swiss Federal Tribunal held that an award rendered in London could not be enforced under the Convention as, at the time the award was rendered, the United Kingdom was not a party to the Convention.152
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b. The non-domestic criterion and the reciprocity reservation
76. An argument has been made before United States courts that the reciprocity reservation excludes not only awards made in non-Contracting States from the scope of the New York Convention, but, also awards made in the enforcing State.153 This argument is based on the expression “another Contracting State” in article I (3). United States courts have rejected this interpretation of article I (3). In so doing, they have held that the reciprocity reservation is distinct from the non-domestic provision contained in article I (1) and that it only concerns the inapplicability of the Convention to awards rendered in States that are not a party to the Convention.154
154. See Republic of Argentina v. BG Group PLC, District Court, District of Columbia, United States of America, 7 June 2010, 715 F. Supp. 2d 108. See also Trans Chemical Limited v. China National Machinery Import and Export Corporation, District Court, Southern District of Texas, Houston Division, United States of America, 7 July 1997, 978 F. Supp. 266.
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c. Meaning of “Contracting State”
77. When a State has made the reciprocity reservation under article I (3), that State will apply the Convention to the recognition and enforcement of awards made only in the territory of another “Contracting State”.155
155. GSS Group Ltd. (Global Security Seals Group Ltd) v. National Port Authority, District Court, District of Columbia, United States of America, 25 May 2012, 680 F.3d 805; JCD (Japan) v. Zhongshan Gangyuan Industry Company Ltd., Zhongshan Intermediate People’s Court, China, 22 October 2008, [2005] Zhong Zhong Fa Min Si Chu Zi No. 111; Court of Justice of Geneva, Switzerland, 14 April 1983, 187. The question of when a State becomes a party to the Convention has arisen in certain jurisdictions. For instance, the Supreme Court of Austria held that the Convention enters into force when a country has deposited its instruments in accordance with article IX. See Supreme Court, Austria, 17 November 1965, I Y.B. Com. Arb. 182 (1976).
78. A question that has arisen with respect to the temporal application of the Convention is whether the State where the award is made must be a party to the Convention at the time the award is rendered and/or at the time recognition and enforcement is sought.
79. A Belgian court has refused to apply the Convention to an award rendered in a State that was not a party to the Convention at the time the award was made.156
156. Société Nationale pour la Recherche, le Transport et la Commercialisation des Hydrocarbures (Sonatrach) v. Ford, Bacon and Davis Inc., Court of First Instance of Brussels, Belgium, 6 December 1988, XV Y.B. Com. Arb. 370 (1990).
80. Other courts have held that the question of whether a State is a party to the New York Convention is to be determined at the time recognition and enforcement is sought rather than at the time the award is rendered. For example, the House of Lords held that “an arbitration award made in the territory of a foreign state is enforceable in the United Kingdom [...] if the State in which the award was made is a party to the Convention at the date when proceedings to enforce the award begin, even if it was not a party at the date when the award was made”.157 Similarly, the Supreme Court of Austria granted enforcement of an award that was made in a State that was not a party to the Convention at the time the award was rendered, but had become a party by the time the enforcement proceedings were initiated.158
158. Supreme Court, Austria, 17 November 1965, I Y.B. Com. Arb. 182 (1976).
81. Courts in other jurisdictions including, Germany159 and Hong Kong,160 have adopted the same approach.
159. Oberlandesgericht [OLG] Köln, Germany, 10 June 1976, IV Y.B. Com. Arb. 258 (1979); Hanseatisches Oberlandesgericht [OLG] Hamburg, Germany, 27 July 1978, IV Y.B. Com. Arb. 266 (1979).
82. While the 1927 Geneva Convention provided that it was only applicable to arbitral awards made “after the coming into force of the [1923] Protocol on Arbitration Clauses”, the New York Convention is silent on the question of its temporal application. Although not containing a specific reference as to the time at which a State becomes a Contracting State, the travaux préparatoires of the Convention indicate that the application of the New York Convention is not subject to any temporal limitation.161
161. Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Record of the Twenty-first Meeting, E/CONF.26/SR.21, p. 4.
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B. Commercial reservation
83. The second reservation available to States under article I (3) is the commercial reservation. A Contracting State may declare that it will apply the Convention “only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the national law of the State making such declaration”.162
162. If an award did not arise out of a legal relationship considered as commercial, such award will not benefit from the regime established by the New York Convention, but the enforcement of such award will be governed by domestic law. See Philippe Fouchard, La levée par la France de sa réserve de commercialité pour l’application de la Convention de New York, 1990 Rev. Arb. 571, 574, 579.
84. In the course of the drafting of article I, the ECOSOC ad hoc Committee considered whether the Convention should be limited to arbitral awards arising out of commercial disputes, as was envisaged in the early draft of the Convention prepared by the ICC.163 After noting that certain countries do not differentiate between civil and commercial matters, the Committee decided not to limit the applicability of the New York Convention to commercial disputes. However, at the suggestion of the Dutch delegate on the penultimate day of the Conference, the commercial reservation was added.164
163. Travaux préparatoires, Report of the Committee on the Enforcement of International Arbitral Awards, E/2704, E/AC.42/4Rev.1., p. 8.
164. The Dutch delegate argued that the text of the Convention which prevented States from limiting the application of the Convention to commercial disputes, would cause great difficulties to countries in which commercial law was distinct from civil law, such as France, Belgium and Turkey. See Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Record of the Twenty-third Meeting, E/CONF.26/SR.23, pp. 7, 12.
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a. Meaning of “legal relationships considered as commercial under the national law of the State making such declaration”
85. When a State has made a commercial reservation, that State applies the New York Convention only to disputes arising out of “legal relationships considered as commercial under the national law of the State making such declaration”. Courts have interpreted the scope of this phrase to be broad.165 For example, a court in India has construed the phrase as being of the “largest import” encompassing “all the business and trade transactions in any of their forms”.166 A United States court has similarly held that the notion of “commercial relationship” is broad, noting that its purpose is only “to exclude matrimonial and other domestic relations awards, political awards, and the like”.167
165. Michael Pryles, Reservations Available to Member States: The Reciprocal and Commercial Reservations, in Enforcement of Arbitration Agreements and International Arbitral Awards: The New York Convention in Practice 161, 178-79 (E. Gaillard, D. Di Pietro eds., 2008).
166. Union of India and ors v. Lief Hoegh & Co. and ors., High Court of Gujarat, India, 4 May 1982.
167. Island Territory of Curacao v. Solitron Devices, Inc., Court of Appeals, Second Circuit, United States of America, 14 February 1973, 356 F. Supp. 1.
86. By way of example, the following legal relationships have been deemed to be commercial: a cereal purchase contract,168 a charter-party,169 a contract for provision of consulting services,170 a contract for the shipment of goods,171 an agreement for the division of property and businesses,172 a joint venture agreement to establish and operate a chain of stores,173 a seamen’s employment contract,174 a contract for the reorganization of a company and buyout of shareholders,175 a contract for the construction of a nitrophosphate plant,176 and a dispute between corporate shareholders regarding the proceeds of a stock transaction.177
170. R.M. Investments & Trading Co. v. Boeing Co., Supreme Court, India, 10 February 1994, 1994 AIR 1136.
174. Nurettin Mayakan v. Carnival Corporation, District Court, Middle District of Florida, Orlando Division, United States of America, 8 April 2010, 6:09-cv-2099-Orl-31DAB; Aggarao v. MOL Ship Management Company Ltd., Nissan Motor Car Carrier Company, Ltd., trading as Nissan Carrier Fleet World Car Careers, Court of Appeals, Fourth Circuit, United States of America, 16 March 2012, 675 F.3d 355; Bautista v. Star Cruises and Norwegian Cruise Line, Ltd., District Court, Southern District of Florida, United States of America, 14 October 2003, 286 F. Supp. 2d 1352; Ernesto Francisco v. Stolt Achievement MT, Court of Appeals, Fifth Circuit, United States of America, 4 June 2002, 293 F.3d 270; contra Wilfredo Jaranilla v. Megasea Maritime Ltd., Prankar Maritime S.A., Greece and Kouros Maritime Enterprises, District Court, Eastern District of Louisiana, United States of America, 12 October 2001,171 F. Supp. 2d 644.
177. Louise Henry v. Patrick J. Murphy, District Court, Southern District of New York, United States of America, 8 January 2002, M-82 (PART I JFK), XXVII Y.B. Com. Arb. 863 (2002).
87. Conversely, in one case, an Indian court held that a contract for the supply of technical know-how in return for a fee was not a commercial contract.178 In another case, a Tunisian court held that a contract for an architectural plan for a resort was not commercial under Tunisian law.179 In yet a further case, a United States court held that a dispute arising out of proceedings to disqualify counsel was non-commercial.180
179. Taieb Haddad v. Hans Barett, Société d’Investissement Kal, Supreme Court, Tunisia, 10 November 1993, XXIII Y.B. Com. Arb. 770 (1998).
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b. Meaning of “whether contractual or not”
88. An issue that has arisen before courts is whether the expression “whether contractual or not” includes claims in tort.
89. Courts have found that the expression “whether contractual or not” does cover torts. For example, the Court of Appeal of Alberta, Canada, held that the Convention “extend[s] [its] scope to liability in tort so long as the relationship that creates liability is one that can fairly be described as commercial”. The Court found that the claim that a corporation had conspired with its subsidiaries to cause harm to a person concerned a dispute “arising out of a commercial legal relationship, whether contractual or not”.181
90. Similarly, the High Court of Delhi held that the Convention applies to “disputes arising out of legal relationships whether stricto sensu contractual or not provided they are considered as commercial under the domestic law of the State making such a declaration”.182
91. The case law is fully consistent with the travaux préparatoires.183
183. In the course of the drafting of the commerciality reservation, the Greek delegate proposed to include, “in addition to disputes arising out of commercial contracts, disputes arising out of commercial obligations ex delictu and quasi ex delictu”. See Travaux préparatoires, Recognition and Enforcement of Foreign Arbitral Awards, Comments by Governments on the draft Convention on the Recognition and Enforcement of Foreign Arbitral Awards, E/2822/Add.2, Annex I, p. 1. The Italian delegate proposed to use the term “relations” instead of the term “contract” so as to “cover both contractual and non-contractual disputes”. See Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Record of the Twenty-first Meeting, E/CONF.26/SR.21, p. 16. The delegate from the United Kingdom proposed a further amendment to include the wording “whether contractual or not” after the wording “legal relationship”, which was accepted by the Conference. See Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Record of the Twenty-third Meeting, E/CONF.26/SR.23, p. 11.
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