INTRODUCTION

ANALYSIS

• A. General principles - (V)

  • a. Meaning of “submission to arbitration”

    5. Article V (1)(c) provides that courts may refuse to recognize or enforce an award if it addresses disputes outside of the terms of the “submission to arbitration”.

    6. Courts and commentators agree that an arbitration agreement⁷⁹⁸ constitutes a “submission to arbitration” within the meaning of article V (1)(c). Consequently, where an arbitral tribunal has rendered an award which decides matters beyond the scope of the arbitration agreement, there is a ground for refusing to enforce an award under article V (1)(c).⁷⁹⁹

    798. An arbitration agreement could take the form of either an arbitral clause in a contract or a separate arbitration agreement: for a further discussion about the form of the arbitration agreement, see the chapter of the Guide on article II, paras. 36-57.

    799. Fouchard Gaillard Goldman on International Commercial Arbitration 987-88, para. 1700(E. Gaillard, J. Savage eds., 1999); Christian Borris, Rudolf Hennecke, Commentary to Article V (1)(c), in New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958—Commentary 309, 311, paras. 201-02 (R. Wolff ed., 2012); Paolo Michele Patocchi & Cesare Jermini, Article 194, in International Arbitration in Switzerland: an Introduction to and a Commentary on Articles 176-194 of the Swiss Private International Law Statute 661, para. 95 (S.V. Berti et al. eds., 2000); Ulrich Haas, The New York Convention on recognition and enforcement of foreign arbitral awards of 1958, in Practitioner’s Handbook on International Arbitration 499, paras. 39-40 (F.-B. Weigand ed., 2002); Parsons & Whittemore Overseas Co. v. Société Générale de l’Industrie du Papier (RAKTA), Court of Appeals, Second Circuit, United States of America, 23 December 1974, 508 F.2d 969 , 976, para. 11.

    7. Courts have also held that the term “submission to arbitration” can include an arbitration agreement modified, amended or supplemented by an arbitral institution’s terms of reference agreed to by the arbitrators and disputing parties. Terms of reference may indeed supplement or modify the arbitration agreement. For example, a German court of appeal held that the parties had concluded a new arbitration agreement by signing ICC Terms of Reference.⁸⁰⁰ Similarly, a decision by the English House of Lords stated that “[i]n the present case one is dealing with an ICC arbitration agreement. In such a case the terms of reference which under article 18 of the ICC rules are invariably settled may, of course, amend or supplement the terms of the arbitration agreement.”⁸⁰¹

    800. Seller v. Buyer, Oberlandesgericht [OLG] Stuttgart, Germany, 6 December 2001, 1 Sch 12/01, XXIV Y.B. Com. Arb. 742 (2004).

    801. Lesotho Highlands Development Authority v. Impreglio SpA et al., House of Lords, England and Wales, 30 June 2005, [2005] UKHL 43, para. 21.

    8. Authors and courts have also considered whether article V (1)(c) provides grounds for refusing to recognize or enforce where the arbitrator’s decision goes beyond the parties’ pleadings or prayers for relief to render an award ultra petita. Though some authors have argued that article V (1)(c) provides a second, separate ground for refusal to enforce an award rendered ultra petita,⁸⁰² courts have rejected challenges to recognition or enforcement under article V (1)(c) based on the fact that the arbitrators had exceeded their authority by deciding on issues or granting forms of relief beyond those pleaded by the parties. As one United States court observed, “[u]nder the New York Convention, we examine whether the award exceeds the scope of the [arbitration agreement], not whether the award exceeds the scope of the parties’ pleadings”.⁸⁰³ This interpretation of article V (1)(c) which distinguishes the parties’ pleadings or prayers for relief from the “submission to arbitration” referred to in article V (1)(c), is consistent with a narrow interpretation of the grounds for refusal to recognize or enforce an award.

    802. Jean François Poudret, Sébastien Besson, Comparative Law of International Arbitration 836-37, para. 913 (2007); Stefan Michael Kröll, Commentary on the German Arbitration Law (10th Book of the German Code of Civil Procedure), in Arbitration in Germany: The Model Law in Practice 541-42, para. 84 (K. H. Böckstiegel, S. Kröll, P. Nacimiento eds., 2007); Mercédeh Azeredo da Silveira & Laurent Levy, Transgression of the Arbitrators’ Authority: Article V (1)(c) of the New York Convention, in Enforcement of Arbitration Agreements and International Arbitral Awards: The New York Convention in Practice 639, 650-53 (E. Gaillard, D. Di Pietro eds., 2008).

    803. Ministry of Defense of the Islamic Republic of Iran v. Gould, Inc.; Gould Marketing, Inc.; Hoffman Export Corporation; Gould International, Inc., Court of Appeals, Ninth Circuit, United States of America, 30 June 1992, 969 F.2d 764; see also The Ministry of Defense and Support for the Armed Forces of the Islamic Republic of Iran v. Cubic Defense Systems, Inc., District Court, Southern District of California, United States of America, 8 December 1998, Civ. Case No. 98-1165-B.

    9. A United States District Court rejected a challenge to an award in which the tribunal had ordered relief that neither party had requested, including conditional divestiture of a party’s shares and an anti-suit injunction, in connection with an arbitration agreement which specifically empowered the tribunal to “grant any remedy or relief that they deem just and equitable.” The court considered that “while an arbitrator may not award relief expressly forbidden by the [arbitration agreement], an arbitrator may award relief not sought by either party, so long as the relief lies within the broad discretion conferred by the [United States Federal Arbitration Act].”⁸⁰⁴

    804. Telenor Mobile Communications AS v. Storm LLC, District Court, Southern District of New York, United States of America, 2 November 2007, 524 F. Supp. 2d 332.

    10. The United States Court of Appeals for the Second Circuit found that explicit authority in an arbitration agreement to award costs was not necessary under the ICC Rules of Arbitration.⁸⁰⁵ The United States Court of Appeals for the Ninth Circuit later stated more broadly that “[s]ince we find the arbiters’ authority to reach the main decision was within the scope of the letter agreement, it follows the arbiters also had the authority to award costs and fees for obtaining the arbitral decision.”⁸⁰⁶

    805. Parsons & Whittemore Overseas Co. v. Société Générale de l’Industrie du Papier (RAKTA), Court of Appeals, Second Circuit, United States of America, 23 December 1974, 508 F.2d 969.

    806. Mgmt. & Tech. Consultants S.A. v. Parsons-Jurden Int’l Corp., Court of Appeals, Ninth Circuit, United States of America, 8 July 1987, 820 F.2d 1531.

    11. With respect to the award of interest, the Hamburg Court of Appeal rejected a challenge to enforcement under article V (1)(c), made on the basis that the arbitral tribunal had awarded more interest than had been claimed, considering that an “arbitral tribunal can in its discretion and on its own initiative award interest and compound interest for the time until the rendition of the award and for the time after the rendition of the award.”⁸⁰⁷

    807. Shipowner v. Time Charterer, Oberlandesgericht [OLG] Hamburg, Germany, 30 July 1998, 6 Sch 3/98, XXV Y.B. Com. Arb. 641 (2000).

  • b. Article V(1)(c) only concerns issues “beyond” the scope

    12. Leading commentators agree that article V (1)(c) does not apply to awards which fail to address all the issues submitted to the arbitral tribunal for resolution.⁸⁰⁸ Though there are no reported cases addressing whether article V (1)(c) applies to awards rendered infra petita, the view that such awards do not provide grounds for refusal of recognition or enforcement is consistent with the text and spirit of the Convention.

    808. Jean-François Poudret, Sebastien Besson, Comparative Law of International Arbitration 836-37, para. 914 (2007); Fouchard Gaillard Goldman on International Commercial Arbitration 987-88, para. 1700 (E. Gaillard, J. Savage eds., 1999); Stefan Michael Kröll, Commentary on the German Arbitration Law (10th Book of the German Code of Civil Procedure), in Arbitration in Germany: The Model Law in Practice 541-42, para. 84 (K. H. Böckstiegel, S. M. Kröll, P. Nacimiento eds., 2007).

    13. First, the pleadings and requests for relief submitted by the parties to the arbitral tribunal do not constitute a “submission to arbitration” within the meaning of article V (1)(c) and therefore cannot provide the basis for a challenge to recognition or enforcement of an award under article V (1)(c), regardless of whether the award extends beyond the pleadings or requests for relief, or fails to address all of the issues raised therein.

    14. Second, the text of article V (1)(c) only provides grounds for refusing to recognize or enforce awards that decide on issues which go “beyond” the parties’ agreement to arbitrate. Nothing in the language of article V (1)(c) grants enforcing authorities the discretion to refuse or otherwise limit the recognition or enforcement of an award which has failed to address all issues submitted by the parties, but which is otherwise enforceable as to the issues addressed.

    15. As recorded in the travaux préparatoires of the New York Convention, the omission of language in the 1927 Geneva Convention allowing postponement of recognition or enforcement, or granting enforcement subject to a guarantee, of any award that “has not covered all the questions submitted to the arbitral tribunal”, was a “significant change” from the wording of the 1927 Geneva Convention.⁸⁰⁹ The omission is particularly notable given that article V (1)(c) contains very similar language to article 2(b) of the 1927 Geneva Convention.⁸¹⁰

    809. Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Comments by Governments on the Draft Convention on the Recognition and Enforcement of Foreign Arbitral Awards, E/2822/Add. 4, p. 6.

    810. Albert Jan van Den Berg, The New York Arbitration Convention of 1958: Towards a Uniform Judicial Interpretation 320 (1981).

  • c. Interpretation of “matters”

    16. Article V (1)(c) provides grounds for refusing to recognize or enforce awards that decide on “matters” which are outside the scope of the arbitration agreement. “Matters” has broadly been defined in two ways: first, as the subject matter over which the arbitral tribunal has jurisdiction pursuant to the arbitration agreement; and second, in some jurisdictions, as the personal jurisdiction over one of the parties addressed in the award. In relation to the latter interpretation, it is notable that in any event, article V (1)(a) directly addresses consent of the parties.⁸¹¹

    811. See the chapter of the Guide on article V (1)(c), paras. 5-11.

    • i. Subject matter jurisdiction

      17. Courts and commentators have consistently considered that “matters” refers to the subject matter that is encompassed by the arbitration agreement and thus subject to the jurisdiction of the arbitral tribunal that issued the award in question.⁸¹²

      812. Gary B. Born, International Commercial Arbitration 3544 (2014); Alan Redfern, Martin Hunter et al., Redfern & Hunter on International Arbitration 645-47 (2009); Fouchard Gaillard Goldman on International Commercial Arbitration 986-87, para. 1700 (E. Gaillard, J. Savage eds., 1999); Parsons & Whittemore Overseas Co. v. Société Générale de l’Industrie du Papier (RAKTA), Court of Appeals, Second Circuit, United States of America, 23 December 1974, 508 F.2d 969, 977, para. 13.

      18. For example, pursuant to article V (1)(c), the Trento Court of Appeal in Italy refused to enforce part of an award which granted damages in connection with “technical” disputes. The arbitration clause provided that the local arbitral tribunal issuing the award only had jurisdiction over “non-technical” disputes, and any “technical” disputes were to be resolved by an international arbitral tribunal under the ICC Arbitration Rules.⁸¹³

      813. General Organization of Commerce and Industrialization of Cereals of the Arab Republic of Syria v. S.p.a. SIMER (Società delle Industrie Meccaniche di Rovereto), Court of Appeal of Trento, Civil Section, Italy, 14 January 1981, VIII Y.B. Com. Arb. 386 (1983).

      19. Parties have also successfully challenged enforcement of awards under article V (1)(c) on the grounds that an award was based on an underlying contract which was not within the subject matter of the arbitration agreement. Although an arbitration agreement may extend to contracts which are not explicitly included within its scope, such extension is by no means automatic, and depends on the intention of the parties.⁸¹⁴

      814. See Gary B. Born, International Commercial Arbitration 1369-72 (2014); Bernard Hanotiau, Complex Arbitrations: Multiparty, Multicontract, Multi-Issue and Class Actions (2005), Chapter III. See also York Airconditioning & Refrigeration Inc. v. Lam Kwai Hung T/A North Sea A/C Elect Eng. Co., High Court, Supreme Court of Hong Kong, Hong Kong, 16 December 1994, [1995] 1 HKC 287; and Four Seasons Hotels And Resorts B.V. et al. v. Consorcio Barr, S.A., District Court, Southern District of Florida, United States of America, 12 May 2009, Case No. 04-20673-CIV-MOORE/ISIMONTON.

    • ii. Personal jurisdiction

      20. Parties have brought successful challenges to enforcement of arbitral awards under article V (1)(c) in several jurisdictions on the grounds that the arbitral award addressed a party that was not bound by the arbitration agreement. Several courts have therefore considered that ratione personae is also a “matter” within the meaning of article V (1)(c) and can therefore constitute a valid basis for an article V (1)(c) challenge to recognition or enforcement of an award.

      21. For example, some Chinese courts have refused to enforce arbitral awards under article V (1)(c) on the grounds that the awards dealt with parties that were not bound by the arbitration agreement.⁸¹⁵ In one case, the Supreme People’s Court overturned a lower court’s decision denying recognition of an award pursuant to article V (1)(c) and decided to enforce the award.⁸¹⁶ A United States District Court denied enforcement of part of an arbitral award under article V (1)(c) on the basis that the arbitral tribunal had “exceeded its authority when it purported to bind a non-signatory who was not expressly covered by the arbitration agreement.”⁸¹⁷

      815. Gerald Metals Inc. v. Wuhu Smelter & Refinery Co., Ltd. and Wuhu Hengxin Copper (Group) Inc., Supreme People’s Court, China, 12 November 2003, [2003] Min Si Ta Zi No. 12; First Investment Corp. (Marshall Island) v. Fujian Mawei Shipbuilding Corp. and Fujian Shipbuilding Corp., Supreme People’s Court, China, 27 February 2008, [2007] Min Si Ta Zi No. 35, XXXV Y.B. Com. Arb. 349 (2010); 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; Aoetker Germany v. Sinotrans Nanjing Co., Ltd., Supreme People’s Court, China, 11 September 2001, [2000] Jiao Ta Zi No. 11.

      816. Aoetker Germany v. Sinotrans Nanjing Co., Ltd., Supreme People’s Court, China, 11 September 2001, [2000] Jiao Ta Zi No. 11.

      817. FIAT S.p.A. v. The Ministry of Finance and Planning of the Republic of Suriname, Suriname Rice Export Company N.V. et al. v. Alvaro N. Sardi, District Court, Southern District of New York, United States of America, 12 October 1989, 1989 WL 122891, 4, para. 5.

      22. In a multiparty context, where disputes under two separate contracts were joined in one arbitration, and where both contracts were not signed by the same parties, the Federal Arbitrazh Court of the Russian Federation refused to enforce an award which determined responsibilities between two parties who were not both signatories to the same arbitration agreement, and as such had not together agreed to arbitrate their disputes.⁸¹⁸ Similarly, a Russian Federal Arbitrazh Court refused enforcement under article V (1)(c) on the grounds that no valid arbitration agreement existed, though this decision was ultimately overturned by the Highest Arbitrazh Court based on the facts.⁸¹⁹

      818. O&Y Investments Ltd. v. OAO Bummash, Federal Arbitrazh Court, Northwestern District, Russian Federation, 12 October 2005, F09-2110/05-S6, XXXIII Y.B. Com. Arb. 687 (2008).

      819. HiPP GmbH & Co. Export KG v. ZAO SIVMA, Highest Arbitrazh Court, Russian Federation, 14 June 2011, 1787/11.

      23. The Court of Appeal of England and Wales considered a challenge to enforcement under article V (1)(c) on the basis that the award addressed parties who were not bound by the arbitration agreement. The court ultimately rejected this challenge because the arbitral award, though mentioning other parties who were not bound by the arbitration agreement, did not make any award in their favour or any determination with respect to the rights of those parties.⁸²⁰

      820. Deutsche Schachtbau-und Tiefbohrgesellschaft mbH v. R’as al-Khaimah National Oil Co., Court of Appeal, England and Wales, 24 March 1987, 3 W.L.R. [1986 D No. 2196] [1987 R No. 273].

      24. Though some courts have considered that challenges to personal jurisdiction may fall under article V (1)(c), these challenges may alternatively be deemed to constitute disputes in relation to consent and the existence of a valid arbitration agreement, which fall more squarely under article V (1)(a). Indeed, some commentators consider that only the subject matter jurisdiction of the arbitral tribunal is a “matter” within the meaning of article V (1)(c), as opposed to the arbitral tribunal’s jurisdiction over a particular party.⁸²¹

      821. Gary B. Born, International Commercial Arbitration 3544-45 (2014); Alan Redfern, J. Martin Hunter et al., Redfern & Hunter on International Arbitration 645, para. 11.76 (2009) (referring to The Arab Republic of Egypt v. Southern Pacific Properties, Court of Appeal of Paris, France, 12 July 1984, 23 ILM (1984)); Paolo Michele Patocchi & Cesare Jermini, Article 194, in International Arbitration in Switzerland: an Introduction to and a Commentary on Articles 176-194 of the Swiss Private International Law Statute 660-61, para. 94 (S.V. Berti et al. eds., 2000); Stefan Michael Kröll, Commentary on the German Arbitration Law (10th Book of the German Code of Civil Procedure), in Arbitration in Germany: The Model Law in Practice 541, para. 83 (K.H. Böckstiegel, S. Kröll, P. Nacimiento eds., 2007); Mercédeh Azeredo da Silveira & Laurent Levy, Transgression of the Arbitrators’ Authority: Article V (1)(c) of the New York Convention, in Enforcement of Arbitration Agreements and International Arbitral Awards: The New York Convention in Practice 639, 639-40 (E. Gaillard, D. di Pietro eds., 2008). But see Jean François Poudret, Sébastien Besson, Comparative Law of International Arbitration 836-37, para. 913 (2007).

  • d. Scope of the arbitration agreement versus scope of the underlying contract

    25. The language of article V (1)(c) is clear that recognition or enforcement of an award may be refused if it addresses issues which exceed the scope of the parties’ agreement to arbitrate. Following a narrow interpretation of article V (1)(c), courts have consistently distinguished between examining the scope of the arbitration agreement itself and the scope of the underlying contract.

    26. Courts have thus rejected challenges under article V (1)(c) brought by parties on the basis that an award has somehow exceeded limits imposed by the scope of the underlying contract, rather than the arbitration agreement. As stated in an often-cited decision by the United States Court of Appeals for the Second Circuit, “[a]lthough the Convention recognizes that an award may not be enforced where predicated on a subject matter outside the arbitrator’s jurisdiction, it does not sanction second-guessing the arbitrator’s construction of the parties’ agreement”.⁸²²

    822. Parsons & Whittemore Overseas Co. v. Société Générale de l’Industrie du Papier (RAKTA), Court of Appeals, Second Circuit, United States of America, 23 December 1974, 508 F.2d 969.

    27. One United States District Court found that an award for consequential damages was within the submission to arbitrate even though consequential damages were explicitly precluded by the terms of the underlying contract, in circumstances where consequential damages were included in the terms of reference and a reasoned award by the arbitral tribunal justified their application.⁸²³

    823. Fertilizer Corp. of India v. IDI Mgmt. Inc., District Court, Southern District of Ohio, United States of America, 9 June 1981, 517 F. Supp. 948.

    28. In another example, a party challenged enforcement of an arbitral award before the Svea Court of Appeal in Sweden, claiming that the award determined disputes relating to a particular product that was not in existence at the time the underlying contract was entered into, and thus could not be within the scope of the arbitration agreement contained within the contract. Considering the challenge to enforcement pursuant to Section 54(3) of the Swedish Arbitration Act, which mirrors article V (1)(c), the court found that the issue of whether the product was included in the subject matter of the relevant contract could not be resolved without an interpretation of the contract, which would go to the merits of the arbitral award, and therefore could not be considered by the court.⁸²⁴

    824. American Pacific Corp. v. Sydsvensk Produktutveckling AB, Svea Court of Appeal, Sweden, 21 March 2001, Ö 4859-00, XXVII Y.B. Com. Arb. 551 (2002).

• B. Partial recognition of an award

  29. In keeping with the pro-enforcement bias of the New York Convention, article V (1)(c) provides “that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced”, provided that matters properly within the scope of the arbitration agreement “can be separated from those not so submitted.”

  30. The limited discussion in the travaux préparatoires on this issue could be understood as suggesting that severability would be appropriate in cases where the matters in the award going beyond the scope of the agreement were “secondary” in nature or which constituted, as one delegate put it, “a small detail” in the context of the rest of the award.⁸²⁵ In practice, its application is much broader.⁸²⁶

  825. Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Records of the Seventeenth Meeting, E/CONF.26/SR.17, p. 9. See also Albert Jan van den Berg, The New York Convention of 1958: An Overview, in Enforcement of Arbitration Agreements and International Arbitral Awards: The New York Convention in Practice 59-60 (E. Gaillard, D. di Pietro eds., 2008).

  826. Mercédeh Azeredo da Silveira & Laurent Levy, Transgression of the Arbitrators’ Authority: Article V (1)(c) of the New York Convention, in Enforcement of Arbitration Agreements and International Arbitral Awards: The New York Convention in Practice 639, 676 (E. Gaillard, D. di Pietro eds., 2008).

  31. A United States District Court partially enforced an award that covered multiple contracts, after finding that one of the contracts was not within the scope of the arbitration agreement. The court enforced the part of the award dealing with the contracts that were covered by the arbitration agreement.⁸²⁷

  827. Four Seasons Hotels And Resorts B.V. et al. v. Consorcio Barr, S.A., District Court, Southern District of Florida, United States of America, 12 May 2009, 1:04-cv-20673-KMM.

  32. Courts have also applied article V (1)(c) in the context of multiparty arbitrations to exclude from enforcement portions of an award which address a party not bound by the arbitration agreement, but enforce the award with respect to the remaining parties. This was the case in a challenge to enforcement brought under article V (1)(c) before the Supreme People’s Court of China, which found that one of the respondents named in the award was not a party to the arbitration agreement. The court recognized only the portion of the award that dealt specifically and exclusively with the liability of the other respondent, who was a party to the arbitration agreement.⁸²⁸ Similarly, following a challenge brought under article V (1)(c), a United States District Court declined to enforce part of an arbitral award which was made against a non-signatory to the arbitration agreement, but enforced the remainder of the award against another respondent who was a party to the arbitration agreement.⁸²⁹

  828. Gerald Metals Inc. v. Wuhu Smelter & Refinery Co., Ltd. and Wuhu Hengxin Copper (Group) Inc., Supreme People’s Court, China, 12 November 2003, [2003] Min Si Ta Zi No. 12.

  829. FIAT S.p.A. v. The Ministry of Finance and Planning of the Republic of Suriname, Suriname Rice Export Company N.V. et al. v. Alvaro N. Sardi, District Court, Southern District of New York, United States of America, 12 October 1989, 1989 WL 122891.

  33. The severability provision of article V (1)(c), permitting the part of an award to be recognized and enforced where it does address issues within the scope of the submission to arbitration, is consistent with the aim of the Convention to facilitate the enforcement of arbitral awards.⁸³⁰ Some authors have gone so far as to suggest, in the same spirit, that despite the use of the word “may” in article V (1)(c), in light of the Convention’s pro-enforcement bias, courts “must” recognize those parts of an award which are recognizable.⁸³¹

  830. See Christian Borris, Rudolf Hennecke, Commentary to Article V (1)(c), in New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958—Commentary 309, 328, para. 259 (R. Wolff ed., 2012).

  831. Gary B. Born, International Commercial Arbitration 3444 (2014); Nicola Christine Port, Scott Ethan Bowers, Bethany Davis Noll, Article V (1)(c), in Recognition and Enforcement of Foreign Arbitral Awards: A Global Commentary on the New York Convention 257, 276 (H. Kronke, P. Nacimiento et al. eds., 2010).

• C. Relationship with other articles in the Convention

  • a. Article V(1)(a)

    34. Article V (1)(a) provides that courts may refuse recognition or enforcement
    of arbitral awards which are not based on a valid arbitration agreement.⁸³² Article V (1)(a) is similar in nature to article V (1)(c) in that both articles concern whether an arbitral award has been rendered on the basis of a valid arbitration agreement. Thus both articles V (1)(a) and V (1)(c) may be engaged by challenges regarding the validity of an arbitration agreement.⁸³³

    832. See the chapter of the Guide on article V (1)(a).

    833. Astro Nusantara International BV et al. v. PT Ayunda Prima Mitra et al., Court of First Instance, High Court of the Hong Kong Special Administrative Region, Hong Kong, 21 March 2012, HCCT 45/2010, para. 19.

    35. At the same time, the provisions serve distinct purposes. Where article V (1)(a) concerns the existence of a valid arbitration agreement which is binding on all the parties addressed by an award, article V (1)(c) assumes the existence of a valid arbitration agreement between the parties and is concerned instead with whether an award has gone beyond the scope of the subject matter the parties intended to submit to arbitration.

    36. However, this distinction is not always clearly made in practice. As noted above, courts in several jurisdictions have addressed the issue of whether a party has consented to be bound by an arbitration agreement as one falling under article V (1)(c) rather than V (1)(a). In practice, it is uncontroversial that a party’s lack of consent to arbitrate provides grounds for challenging recognition or enforcement of an award, regardless of which sub-paragraph of article V is invoked. However, addressing whether a party has consented to arbitrate under article V (1)(a) is ultimately consistent with the distinct purposes articles V (1)(a) and V (1)(c) that were given by the drafters of the Convention.

  • b. Extended application of the partial enforcement principle established by article V(1)(c)

    37. Article V (1)(c) is the only article in the Convention which expressly states that courts may partially enforce an award when there are grounds for refusing to recognize or enforce some aspects of the award.⁸³⁴ Courts have referred to the principle for partial enforcement expressed in article V (1)(c) to partially enforce awards in connection with challenges brought under other provisions of the Convention. For example, some courts have partially recognized or enforced awards which would otherwise be refused enforcement on public policy grounds.⁸³⁵

    834. Article V (1)(c) provides that where grounds for refusal of recognizing or enforcing an award exist with respect to only part of an arbitral award, “that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced”, provided that matters properly within the scope of the arbitral agreement “can be separated from those not so submitted.” See the chapter of the Guide on article V (1)(c), paras.29-33.

    835. See, e.g., J. J. Agro Industries (P) Ltd. v. Texuna International Ltd., High Court, Supreme Court of Hong Kong, Hong Kong, 12 August 1992, HCMP000751/1992; Buyer (Austria) v. Seller (Serbia and Montenegro), Supreme Court, Austria, 26 January 2005, 3 Ob 221/04b. See also Gary B. Born, International Commercial Arbitration 3445-46 (2014).

    38. Further, where an application to set aside the arbitral award was pending before a court at the seat of the arbitration, the Court of Appeal of England and Wales considered that the partial enforcement provisions of article V (1)(c) could be applied to enforce the parts of the award that were not subject to challenge.⁸³⁶

    836. Nigeria (NNPC) v. IPCO (Nigeria) Ltd., Court of Appeal, England and Wales, 21 October 2008, [2008] EWCA Civ 1157. See also IPCO (Nigeria) Ltd. v. Nigerian National Petroleum Corp., High Court of Justice, England and Wales, 17 April 2008, [2008] EWHC 797 (Comm).

• D. Procedural aspects

  • a. Standing

    39. Article V (1) provides that it is the party against whom the award is invoked that may raise a challenge with respect to the grounds for refusal set forth in article V (1).

    40. Courts have consistently confirmed this in relation to article V (1)(c).⁸³⁷ For example, the United States Court of Appeals for the Fifth Circuit denied a party’s attempt to raise a challenge under article V (1)(c) to oppose an order compelling arbitration, that is, before the arbitral proceedings had even taken place.⁸³⁸ The court noted that the provision could only be invoked by a party opposing enforcement of an award, which was not possible in circumstances where no award had been issued, and also unlikely where the party raising the challenge was the claimant in the would-be arbitration, and thus not the party who would be in a position to challenge any resulting arbitral award absent any counterclaims.⁸³⁹

    837. Ernesto Francisco v. Stolt Achievement MT; Stolt Achievement, Inc.; Stolt-Nielsen Transportation Group, Ltd.; Stolt Parcel Tankers, Inc., Court of Appeals, Fifth Circuit, United States of America, 4 June 2002, 293 F.3d 270; Odfjell SE v. OAO PO Sevmash, Highest Arbitrazh Court, Russian Federation, 26 May 2011 VAS-4369/11; Not indicated v. Not indicated, Hanseatisches Oberlandesgericht [OLG] Bremen, Germany, 30 September 1999, (2) Sch 04/99, XXXI Y.B. Com. Arb. 640 (2006).

    838. Ernesto Francisco v. Stolt Achievement MT; Stolt Achievement, Inc.; Stolt-Nielsen Transportation Group, Ltd.; Stolt Parcel Tankers, Inc., Court of Appeals, Fifth Circuit, United States of America, 4 June 2002, 293 F.3d 270.

    839. Id.

  • b. Standard of review

    41. Though the language of article V (1)(c) does not explicitly impose any particular standard of review, any decision by the arbitral tribunal as to its own subject matter jurisdiction and the scope of the submission to arbitration cannot be binding on the enforcing court, as this would render article V (1)(c) otiose. Accordingly, a Swiss court specified that it was not bound by the arbitral tribunal’s decisions with respect to the scope of the submission to arbitration, nor by that of authorities in other States, though following its own determination of the issue, the court ultimately rejected the challenge to enforcement.⁸⁴⁰

    840. Debt Collection and Bankruptcy Chamber of the Court of Appeal, Switzerland, 16 September 2002, 14.2002.00042.

    42. Similarly, though noting that United States Federal Arbitration Act has established a general “presumption that an arbitral body has acted within its powers”, the United States Court of Appeals for the Ninth Circuit clarified that it would “review de novo a contention that the subject matter of the arbitration lies outside the scope of a contract.”⁸⁴¹

    841. Mgmt. & Tech. Consultants S.A. v. Parsons-Jurden Int’l Corp., Court of Appeals, Ninth Circuit, United States of America, 8 July 1987, 820 F.2d 1531.

    43. However, courts have consistently held that article V (1)(c) must be construed narrowly, and as such, does not permit under any circumstances that an enforcing court review the merits of a dispute, as this would run contrary to the spirit and purpose of the Convention.⁸⁴²

    842. Lesotho Highlands Development Authority v. Impreglio SpA et al., House of Lords, England and Wales, 30 June 2005, [2005] UKHL 43. See also Kersa Holding Co. Luxembourg v. Infancourtage, Famajuk Investment and Isny, Superior Court of Justice, Luxemburg, 24 November 1993, XXI Y.B. Com. Arb. 617 (1996).

    44. In this vein, courts have resisted attempts, advanced as challenges under article V (1)(c), by parties to reopen an examination on the merits. For example, the Spanish Supreme Court was faced with a challenge by a party claiming that the arbitral tribunal had not taken into account all relevant factors presented to the arbitral tribunal, which would have led to a different result. The court considered that the challenge failed under its own terms as the challenging party did not suggest that the decision was outside the scope of the arbitration agreement, but rather that it disagreed with the “basis and reasons for the decision”. The court concluded that such a challenge “undoubtedly falls without the scope of [...] Article V (1)(c) of the New York Convention”.⁸⁴³

    843. Saroc S.p.A. v. Sahece, S.A., Supreme Court, Spain, 4 March 2003, XXXII Y.B. Com. Arb. 571 (2007).

    45. Similarly, a United States District Court found that a party’s argument that the arbitral tribunal had impermissibly acted as amiable compositeur was “a not especially elegant masque that [sought] to conceal the fatal weakness” of that party’s case on the merits, noting that the court was “forbidden under the Convention to reconsider factual findings of the arbitral panel.”⁸⁴⁴

    844. Standard Elec. Corp. v. Bridas Sociedad Anonima Petrolera, Industrial y Comercial, District Court, Southern District of New York, United States of America, 24 August 1990, 745 F. Supp. 172.

  • c. Waiver/preclusion

    46. The language of article V (1)(c) does not explicitly impose any requirements that the challenges invoked under article V (1)(c) must be raised at any particular time during the arbitral procedure or thereafter.

    47. In practice, some courts have held that a failure to raise appropriate objections during the arbitral proceedings would impair a party’s ability to raise a challenge under article V (1)(c) during enforcement proceedings. For example, the Paris Court of Appeal rejected a challenge to enforcement in which a party argued that the arbitral tribunal had disregarded the “submission to arbitration” by refusing to hold a third hearing following the submission of an expert report. The arbitral award noted that this decision was taken with the agreement of the parties, and the party opposing enforcement had not reserved it rights at the time of the decision or following receipt of letters confirming the decision. The court concluded that the party had therefore “impliedly but unequivocally waived their right to a third hearing”, and as such its objection under article V (1)(c) should be dismissed.⁸⁴⁵

    845. Société Unichips Finanziaria SpA and Société Unichips International Bv Beslotene Venootschap v. François Gesnouin and Michèle Gesnouin, Court of Appeal of Paris, France, 12 February 1993, XIX Y.B. Com. Arb. 658 (1994).

    48. Similarly, though without specific reference to waiver or preclusion, the Moscow Arbitrazh Court, in rejecting a challenge to enforcement under article V (1)(c) (and other provisions), took into account the fact that the party did not object to examination of the case by the tribunal, filed a statement of defence recognizing jurisdiction of the tribunal and filed counterclaims for offset.⁸⁴⁶ A United States District Court also rejected a challenge under article V (1)(c), finding that where the challenging party had requested, agreed to submit and briefed the question whether certain matters should be decided by the arbitrators, and the arbitrators had made a determination on that basis, the party could not later claim that the issue was outside the scope of submission.⁸⁴⁷

    846. Ansell S.A. v. OOO MedBusinessService-2000, Moscow Arbitrazh Court, Russian Federation, 15 April 2010, A40-24208/10-63-209.

    847. Halcot Navigation Limited Partnership v. Stolt-Nielsen transportation Group, BV and Anthony Radcliffe Steamship Co. Ltd, District Court, Southern District of New York, United States of America, 11 June 2007, 491 F. Supp. 2d 413.