Article V(2)(a)
Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that:
(a) The subject matter of the difference is not capable of settlement by arbitration under the law of that country […].
Travaux préparatoires on Article V(2)(a)
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
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.2 - Comments by Greece on Articles 1, 3, 4
- E/2822/Add.5 - Comments by Hungary and Norway on Articles 1, 3, 4, 7
- E/CONF.26/3/Add.1 - Comments by the Netherlands on Articles 4, 5 and Suggestion of an Additional Article
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/L.17 - Netherlands: amendments to Articles 3, 4, 5
- E/CONF.26/.L.32 - France: Amendment to Article 4 as proposed by the Netherlands (E/CONF.26/L.17)
B.3. Comparison of Drafts Relating to Articles III, IV and V of the Draft Convention - 29 May 1958
B.5.Further Amendments to the Draft Convention Submitted by Governmental Delegations - 29 May -3 June 1958
B.7. Text of Articles III, IV and V of the Draft Convention Proposed by Working Party III: 3 June 1958
B.10. Text of Articles Adopted by the Conference: 4-6 June 1958
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.14. Final Act and Convention on the Recognition and Enforcement of Foreign Arbitral Awards
C. Summary Records of the United Nations Conference on International Commercial Arbitration, New York, 20 May - 10 June 1958
- 11 th meeting [E/CONF.26/SR.11 - E/2704/Rev.1, E/2822 and Add.1-6, E/CONF.26/2, 6/3 and Add.1, 26/4, 26/7, E/CONF.26/L.6-L.31]
- 13 th meeting [E/CONF.26/SR.13 - 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.8 and Corr.1, L.15/Rev.1, L.16, L.17, L.22 to L.25, L.30 to L.36]
- 14 th meeting [E/CONF.26/SR.14 - E/2704 and Corr.1, E/2822, E/CONF.26/L.17, L.31, L.33/Rev.1, L.34. L.38 and L.40]
- 17 th meeting [E/CONF.26/SR.17 - E/2704 and Corr.1, E/CONF.26/L.31, L.37/Rev.1, L.43 and L.45]
- 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]
D. Committee on the Enforcement of International Arbitral Awards
- E/C.2/373 - Enforcement of international arbitral awards: statement submitted by the International Chamber of Commerce, a non-governmental organization having consultative status in category A
- E/AC.42/4 - Report of the 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 V (2)(a) of the New York Convention enables the courts of a Contracting State to refuse recognition and enforcement of an award if they find that the subject matter of the difference which led to the award is not capable of settlement by arbitration under the law of the country where recognition and enforcement is sought.
2. Article 1(b) of the 1927 Geneva Convention conditioned recognition and enforcement on a positive showing that the subject matter of the award was capable of settlement by arbitration under the law of the country where the award was relied upon.1002 By contrast, the New York Convention simply provides, in article V (2)(a), that recognition and enforcement “may” be refused if the subject matter of a difference is not capable of settlement by arbitration. This departure from the text of the 1927 Geneva Convention underlines the pro-enforcement policy of the New York Convention.
1002. Article 1(b) of the 1927 Geneva Convention refers to the “subject matter of the award” being “capable of settlement by arbitration”. The change to “subject matter of the difference” in the New York Convention has not given rise to any controversy or discussion.
3. The New York Convention also refers to the question whether the subject matter of a dispute is “capable of settlement by arbitration” in relation to the recognition of an arbitration agreement, under article II (1).1003 As noted by commentators, the meaning of the phrase “capable of settlement by arbitration” in article II (1) and article V (2)(a) should be understood in the same manner.1004
1003. Pursuant to article II (1), courts of the Contracting States shall recognize an agreement in writing under which the parties have undertaken to submit to arbitration all “differences” in respect of a legal relationship, concerning a subject which is “capable of settlement by arbitration.” See the chapter of the Guide on article II.
1004. Jan Paulsson, Arbitrability, Still Through a Glass Darkly, in Arbitration in the Next Decade 95, 96 (ICC Pub. No, 612E, 1999); Albert Jan van den Berg, The New York Convention of 1958: Towards a Uniform Judicial Interpretation 359 (1981); David Quinke, Article V (2)(a), in The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958—Commentary 380, 383, para. 427 (R. Wolff ed., 2012). This chapter addresses decisions of national courts that analyse the ground to refuse recognition and enforcement of an arbitral award under article V (2)(a). For cases interpreting the words “capable of settlement by arbitration” under article II (1), see the chapter of the Guide on article II.
4. The ground for refusal under article V (2)(a) may be raised by a court ex officio.1005 Nonetheless, certain courts have considered that the party opposing recognition and enforcement retains the ultimate burden to prove that the subject matter of the underlying dispute is not capable of settlement by arbitration.1006
1005. Fouchard Gaillard Goldman on International Commercial Arbitration 983, para. 169 (E. Gaillard, J. Savage eds., 1999) 3; Albert Jan van den Berg, The New York Convention of 1958: Towards a Uniform Judicial Interpretation 359 (1981).
1006. Italian Party v. Swiss Company, Court of Appeal of Zurich, Switzerland, 17 July 2003, XXIX Y.B. Com. Arb. 819 (2004); English Company X v. Spanish Company Y, Supreme Court, Spain, 10 February 1984, X Y.B. Com. Arb. 493 (1985).
5. During the deliberations on article V (2)(a), the French delegation questioned whether article V (2)(a) would allow national courts to apply local laws as a basis for refusing to recognize and enforce foreign arbitral awards.1007 The practice of courts in the Contracting States has allayed these concerns. The question of whether the subject matter of a difference resulting in an arbitral award is capable of settlement by arbitration has been raised in a relatively small number of cases, and courts of the Contracting States have exercised their discretion to refuse recognition and enforcement pursuant to article V (2)(a) in only a handful of instances.
1007. Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Record of the Eleventh Meeting E/CONF.26/SR.11, p. 7.
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ANALYSIS
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A. Concept
6. Article V (2)(a) of the Convention provides that a court “may” refuse recognition and enforcement if the “subject matter of the difference” is “not capable of settlement by arbitration”. The Convention does not define the phrases “subject matter of the difference” and “capable of settlement by arbitration”. The travaux préparatoires to the Convention do not address the wording of article V (2)(a).
7. It is generally accepted that article V (2)(a) allows national courts to refuse to recognize and enforce an arbitral award where there is a legal impediment to the resolution of the subject matter of the underlying dispute by arbitration, i.e., where the underlying dispute is not “arbitrable”.1008 In the context of article V (2)(a), arbitrability is to be understood to mean whether a subject matter can be resolved through arbitration, or is reserved for resolution by courts.1009 It should not be understood to mean whether a dispute falls within the scope of an arbitration agreement.1010
1008. See Gary B. Born, International Commercial Arbitration 948 (2014); W. Laurence Craig, William W. Park, Jan Paulsson, International Chamber of Commerce Arbitration 60 (2000). During the drafting of the Convention, the Society of Comparative Legislation proposed to replace the language “not capable of settlement by arbitration” by “not arbitrable”. The proposal was not discussed further, nor was it taken up by the Drafting Committee. Travaux préparatoires, Recognition and Enforcement of Foreign Arbitral Awards, Report by the Secretary-General, Annex II, Comments by Non-Governmental Organizations, E/2822, p. 22.
1009. W. Laurence Craig, William W. Park, Jan Paulsson, International Chamber of Commerce Arbitration 60 (2000); Gary B. Born, International Commercial Arbitration 944, fn. 3 (2014); Albert Jan van den Berg, Consolidated Commentary Cases Reported in Volumes XXII (1997) - XXVII (2002), XXVIII Y.B. Com. Arb. 666 (2003), para. 519; ICCA’s Guide to the Interpretation of the 1958 New York Convention: A Handbook for Judges 104 (P. Sanders ed., 2011).
1010. See in particular the terminology used by the United States Supreme Court in First Options of Chicago, Inc. v. Manuel Kaplan, et ux. and MK Investments, Inc., Supreme Court, United States of America, 22 May 1995, 514 United States 938. This broader understanding of arbitrability is not generally used in international practice; see, e.g., in the context of negotiation of UNCITRAL Model Law on Arbitration, Howard M. Holtzmann and Joseph E. Neuhaus, A Guide To The Uncitral Model Law on International Commercial Arbitration—Legislative History and Commentary 135 et seq. (1989).
8. “Arbitrability” is not a concept that is unique to the New York Convention. Rather, arbitrability forms part of a wider range of tools, such as the mandatory rules of the forum, which override party autonomy and enable a national court to protect the core interests of the legal order to which it belongs.
9. The drafters of the Convention rejected a proposal by the French delegation that article V (2)(a) be deleted on the grounds that it unduly attributed international importance to domestic rules, and that it would be sufficient that an award comply with international public policy under what is now article V (2)(b).1011 Instead, the final text of the Convention followed the approach of the 1927 Geneva Convention, which treated public policy ground (article 1(e)) and arbitrability ground (article 1(b)) in separate subsections, and maintained article V (2)(a) and article V (2)(b) as distinct grounds.
1011. Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Record of the Eleventh Meeting E/CONF.26/SR.11, p. 7. The later, tri-state proposal of France, the Netherlands and the Federal Republic of Germany also contemplated the deletion of what is now article V (2)(a): Travaux préparatoires, United Nations Conference on International Commercial Arbitration, Summary Record of the Fourteenth Meeting E/CONF.26/SR.14, p. 2. The Greek delegation proposed a re-wording “in such a way that the fact that a foreign award was incompatible with fundamental principles of law (ordre public) would be sufficient grounds for refusing recognition”. Travaux préparatoires, Recognition and Enforcement of Foreign Arbitral Awards, Report by the Secretary-General, Annex I Comments by Governments, E/2822/Add. 2, p. 2.
10. Furthermore, while the ground for refusal set forth at article V (2)(a) may sometimes coincide with that at article V (2)(b), in other cases it does not. For instance, certain family law issues which also touch upon financial matters, such as the resolution of financial arrangements between spouses, are in some jurisdictions not capable of settlement by arbitration,1012 while allowed in others to be settled by arbitration1013 without falling under the concept of international public policy.
1012. See, e.g., Article 806 of the Italian Code of Civil Procedure, which allows parties to elect for dispute settlement through arbitration apart from disputes concerning, inter alia, “issues of personal status and marital separation”; Article 2060 of the French Civil Code, which provides inter alia that “[o]ne may not enter into arbitration agreements in matters [...] relating to divorce and judicial separation”. Although this text does not apply to international arbitration, it nevertheless reveals the importance that the French legislature attaches to these issues.
1013. See, e.g., Article 177 of the Swiss Private International Law Statute, under which “[a]ny dispute of financial interest may be the subject of an arbitration”, i.e., any dispute which can be assessed in monetary terms, is capable of settlement by arbitration.
11. In line with the approach of the New York Convention to differentiate arbitrability and public policy, courts of the Contracting States have consistently addressed the grounds in articles V (2)(a) and V (2)(b) separately, without questioning whether they refer to the same concept.1014
1014. See, e.g., 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, 975; Angel v. Bernardo Alfageme, S.A., Supreme Court, Civil Chamber, First Section, Spain, 20 March 2001, XXXI Y.B. Com. Arb. 821 (2006); Hemofarm DD, MAG International Trade Holding DD, Suram Media Ltd. v. Jinan Yongning Pharmaceutical Co. Ltd., Supreme People’s Court, China, 2 June 2008, Min Si Ta Zi No. 11; Javor v. Francoeur, Supreme Court of British Columbia, Canada, 6 March 2003, BCSC 2003 350; Bobbie Brooks Inc. v. Lanificio Walter Banci s.a.s., Court of Appeal, Florence, Italy, 8 October 1977, IV Y.B. Com. Arb. 289 (1979); KM v. JSC, Supreme Court, Lithuania, 21 February 2011, XXXVIII Y.B. Com. Arb. 414 (2013); 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.
12. It has been suggested that the fact that a particular matter is not capable of settlement by arbitration under a national law should not necessarily entail that it will not give rise to an enforceable award under the New York Convention. In Parsons, a United States Appeals court considered that “it may well be that the special considerations and policies” underlying international arbitration “call for a narrower view of non-arbitrability in the international than the domestic context”.1015 A number of commentators have also considered that the Convention’s pro-enforcement policy requires courts to apply an international, rather than a domestic, notion of which subject matters are to be capable of settlement by arbitration.1016
1015. 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, 975. The Court of Appeal found that there was no special national interest in the judicial, rather than arbitral, resolution of a breach of contract claim that would justify a refusal to recognize and enforce the ensuing award pursuant to article V (2)(a), and that it need not reach any distinction between the domestic and international arbitrability of the award. In a different context, courts in the United States have also confirmed that disputes involving issues of American antitrust law, which are normally subject to the jurisdiction of domestic courts, are capable of settlement by arbitration within the meaning of article II of the Convention. See, e.g., Mitsubishi Motors Corp v. Soler Chrysler-Plymouth, Supreme Court, United States of America, 20 December 1983, 473 United States 614, XI Y.B Com. Arb. 555 (1986), where the Supreme Court affirmed that it is “necessary for national courts to subordinate domestic notions of arbitrability to the international policy favouring commercial arbitration”.
1016. Fouchard Gaillard Goldman on International Commercial Arbitration 995, para. 1707 (E. Gaillard, J. Savage eds., 1999); W. Laurence Craig, William W. Park, Jan Paulsson, International Chamber of Commerce Arbitration 62-63 (2000); Gary B. Born, International Commercial Arbitration 3697-98 (2014); Albert Jan van Den Berg, The New York Arbitration Convention of 1958: Towards a Uniform Judicial Interpretation 152-53 (1981); ICCA’s Guide to the Interpretation of the 1958 New York Convention: A Handbook for Judges 105 (P. Sanders ed., 2011); David Quinke, Article V (2)(a), in The New York Convention on the recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958—Commentary 380, 388-89, paras. 438-40 (R. Wolff ed., 2012).
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B. Application
13. Article V (2)(a) provides that a court may refuse to recognize and enforce an award where the subject matter of the dispute which gave rise to the award is not capable of settlement by arbitration.
14. The Convention does not identify the types of subject matters that are capable of settlement by arbitration. The wording of article V (2)(a) specifically directs the enforcing court to determine whether the subject matter of the dispute is capable of settlement by arbitration “under the law of that country” where recognition and enforcement is sought. In accordance with this wording, courts of the Contracting States have consistently applied their national laws to assess whether a dispute is capable of settlement by arbitration, and not the law of the country where the arbitration took place or any other law.1017
1017. See, e.g., Société O.A.O. NPO Saturn v. Société Unimpex Entreprises, Court of Appeal of Paris, France, October 2009, 07/17049; Bankruptcy estate of Kommandiittiyhtiö Finexim O. Ivanoff (Finexim) v. Ferromet Aussenhandelsunternehmen, Supreme Court, Finland, 27 February 1989, S88/310; ED & F Man (Hong Kong) Co., Ltd. v. China National Sugar & Wines Group Corp., Supreme People’s Court, China, 1 July 2003, Min Si Ta Zi No. 3; Aloe Vera of America, Inc. v. Asianic Food (S) Pte Ltd. and Another, Supreme Court of Singapore, High Court, Singapore, 10 May 2006, OS 762/2004, RA 327/2005, XXXII Y.B. Com. Arb. 489 (2007); Construction Company Z v. State X, Kammergericht [KG] Berlin, Germany, 11 June 2009, 20 Sch 04/07.
15. Courts applying article V (2)(a) have adopted different approaches to delineate which disputes are capable of settlement by arbitration under their laws. For instance, the Supreme Court of Lithuania, when deciding whether a dispute arising out of a contract between a basketball player and a local club was capable of settlement by arbitration, considered whether the dispute fell within the scope of Article 11(1) of the Commercial Arbitration Law of the Republic of Lithuania, which provides that certain disputes, such as employment and labor disputes, cannot be submitted to arbitration.1018 Courts in other jurisdictions have applied article V (2)(a) by reference to similar provisions in their national laws.1019
1018. KM v. JSC, Supreme Court, Lithuania, 21 February 2011, XXXVIII Y.B. Com. Arb. 414 (2013).
1019. See, e.g., Quaglia v. Daros, Court of Genoa, Italy, 30 April 1980, referring to Article 806 of the Italian Code of Civil Procedure, which provides as a default rule that parties may submit their disputes to arbitration, with the exception of disputes concerning issues of personal status and marital separation, and disputes concerning labour and social security issues; Hemofarm DD, MAG International Trade Holding DD, Suram Media Ltd. v. Jinan Yongning Pharmaceutical Co. Ltd., Supreme People’s Court, China, 2 June 2008, Min Si Ta Zi No. 11, referring to Article 2 of the Arbitration Law of China, which provides that only disputes between citizens, legal persons and other organisations concerning contractual and commercial matters are capable of settlement by arbitration.
16. Courts of Contracting States which do not specifically define in their legislation which disputes are arbitrable have adopted a different approach. In one reported case, the Supreme Court of Singapore determined whether the underlying difference, which concerned whether a person was the “alter ego of a company”, was capable by settlement by arbitration by considering whether it touched on an element of public interest. The Court held that that there was no special public interest in such a dispute and dismissed the appeal of the order by a lower court granting the award enforcement.1020
1020. Aloe Vera of America, Inc. v. Asianic Food (S) Pte Ltd. and Another, Supreme Court of Singapore, High Court, Singapore, 10 May 2006, OS 762/2004, RA 327/2005, XXXII Y.B. Com. Arb. 489 (2007).
17. In the United States, courts have resolved challenges to recognition and enforcement based on article V (2)(a) by reference to the implied legislative intent of entering into the New York Convention, namely to promote the use of international arbitration.1021
1021. Mitsubishi Motors Corp v. Soler Chrysler-Plymouth, Supreme Court, United States of America, 20 December 1983, 473 United States 614, XI Y.B Com. Arb 555 (1986); McDermott International Inc. v. Underwriters at Lloyd’s, United States District Court, E.D. Louisiana, May 29 1996, Civ.A. No. 91—841; Saudi Iron And Steel Co. v. Stemcor USA Inc, United States District Court, Southern District of New York, 17 October 1997, 97 CIV. 5976 (DLC), XXIII Y.B. 1082 Com. Arb. (1998); 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, 975; Shaheen Natural Resources Company Inc. v. Société Nationale pour la Recherche, la Production and others, United States District Court, Southern District of New York, 585 F. Supp. 57; United States Court of Appeals, Second Circuit, 15 November 1983, 733 F. Supp. 2d 260, X Y.B. Com. Arb. 540 (1985); VRG Linhas Aereas S.A. v. Matlin Patterson Global Opportunities Partners II L.P, United States Court of Appeals, Second Circuit, Docket No. 12-593-cv, 3 June 2013.
18. Regardless of the approach followed, courts of the Contracting States have set very few limits on the types of disputes that are capable of settlement by arbitration in the application of article V (2)(a). This reflects the trend of reserving only a small category of disputes solely to the jurisdiction of courts and the growing confidence of most jurisdictions in arbitration. In the words of one United States Court, “the incapable of settlement by arbitration exception has been narrowly construed in light of the strong judicial interest in encouraging the use of arbitration”.1022
1022. Saudi Iron And Steel Co. v. Stemcor USA Inc, United States District Court, Southern District of New York, 16 October 1997, No. 97 CIV. 5976 (DLC), XXIII Y.B. 1082 Com. Arb. (1998).
19. The types of disputes which have been analysed in the limited case law on article V (2)(a) may be separated into two broad categories, namely those that concern commercial matters, and those types of non-commercial disputes which courts have, in exceptional circumstances, considered incapable of settlement by arbitration under their national laws.
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a. Commercial disputes
20. There is broad agreement among courts of the Contracting States that a dispute whose subject matter is of a commercial nature is capable of being settled by arbitration, and an arbitral award that results from a commercial difference should not be refused enforcement pursuant to article V (2)(a).
21. Courts in Germany,1023 Switzerland,1024 Italy,1025 Spain,1026 Colombia,1027 the United States1028 and Singapore1029 have all expressly held that a difference arising out of a commercial matter should not be refused enforcement pursuant to article V (2)(a).
1023. Oberlandesgericht [OLG] Hamm, Germany, 2 November 1983, 20 U 57/83; Oberlandesgericht [OLG] München, Germany, 23 February 2007, 34 Sch 31/06.
1024. Italian party v. Swiss company, High Court of Zurich, Switzerland, 17 July 2003, XXIX Y.B. Com. Arb. 819 (2004).
1025. Società La Naviera Grancebaco S.A. v. Ditta Italgrani, Court of Naples, Italy, 30 June 1976, IV Y.B. Com. Arb. 277 (1979); Renault Jacquinet v. Sicea, Court of Appeal, Milan, Italy, 3 May 1977, IV Y.B. Com. Arb. 284 (1979); Bobbie Brooks Inc. v. Lanificio Walter Banci s.a.s., Court of Appeal, Florence, Italy, 8 October 1977, IV Y.B. Com. Arb. 289 (1979); Efxinos Shipping Co. Ltd. v. Rawi Shipping Lines Ltd., Court of Appeal, Genoa, Italy, 2 May 1980, VIII Y.B. Com. Arb. 381 (1983).
1026. English Company X v. Spanish Company Y, Supreme Court, Spain, 10 February 1984, X Y.B. Com. Arb. 493 (1985); Thyssen Haniel Logistic International GmbH v. Barna Consignataria S.L., Supreme Court, Spain, 14 July 1998, XXVI Y.B. Com. Arb. 851 (2001); Angel v. Bernardo Alfageme, S.A., Supreme Court, Civil Chamber, First Section, Spain, 20 March 2001, XXXI Y.B. Com. Arb. 821 (2006).
1027. Sunward Overseas S.A. v. Servicios Marítimos Limitada Semar (Ltda.), Supreme Court of Justice, Colombia, 20 November 1992, XX Y.B. Com. Arb. 651 (1995); 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.
1028. Seven Seas Shipping Ltd. v. Tondo Limitada, District Court, Southern District of New York, United States of America, 25 June 1999, 99 CIV. 1164 (DLC), XXV Y.B. Com. Arb. 641 (2000); Stellar Lines, S.A. v. Euroleader Shipping and Trading Corp., District Court, Southern District of New York, United States of America, 16 August 1999, 99 CIV. 4073 (DLC), XXV Y.B. Com. Arb. 641 (2000).
1029. Aloe Vera of America, Inc. v. Asianic Food (S) Pte Ltd. and Another, Supreme Court of Singapore, High Court, Singapore, 10 May 2006, OS 762/2004, RA 327/2005, XXXII Y.B. Com. Arb. 489 (2007).
22. Breach of contract claims are the most frequently reported example of differences found to be commercial in nature and, therefore, capable of settlement by arbitration. For instance, an Italian Court of Appeal found that a dispute concerning a product quality issue was capable of settlement by arbitration.1030 Courts in Spain1031 and China1032 have reached similar conclusions when deciding applications to enforce arbitral awards deciding differences arising out of sale of goods contracts.
1030. Renault Jacquinet v. Sicea, Court of Appeal, Milan, (Sez. I), Italy, 3 May 1977, IV Y.B. Com. Arb. 284 (1979). See also Bobbie Brooks Inc. v. Lanificio Walter Banci s.a.s., Court of Appeal, Florence, Italy, 8 October 1977, IV Y.B. Com. Arb. 289 (1979).
1031. Angel v. Bernardo Alfageme, S.A., Supreme Court, Civil Chamber, First Section, Spain, 20 March 2001, XXXI Y.B. Com. Arb. 821 (2006).
1032. English Company X v. Spanish Company Y, Supreme Court, Spain, 10 February 1984, X Y.B. Com. Arb. 493 (1985); ED & F Man (Hong Kong) Co., Ltd. v. China National Sugar & Wines Group Corp., Supreme People’s Court, China, 01 July 2003, Min Si Ta Zi No. 3.
23. Courts have found other types of contractual disputes capable of settlement by arbitration. For instance, the Supreme Court of Colombia held that a dispute concerning the performance of a contract for the transportation of coal was capable of settlement by arbitration.1033 Courts in the United States,1034 Colombia,1035 Italy,1036 and Spain1037 have also consistently held that differences arising out of charter parties were capable of settlement by arbitration within the meaning of article V (2)(a).
1033. 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.
1034. Seven Seas Shipping Ltd. v. Tondo Limitada, District Court, Southern District of New York, United States of America, 25 June 1999, 99 CIV. 1164 (DLC), XXV Y.B. Com. Arb. 641 (2000); Stellar Lines, S.A. v. Euroleader Shipping and Trading Corp., District Court, Southern District of New York, United States of America, 16 August 1999, 99 CIV 4073 (DLC), XXV Y.B. Com. Arb. 641 (2000).
1035. Sunward Overseas S.A. v. Servicios Marítimos Limitada Semar (Ltda.), Supreme Court of Justice, Colombia, 20 November 1992, XX Y.B. Com. Arb. 651 (1995).
1036. Società La Naviera Grancebaco S.A. v. Ditta Italgrani, Court of Naples, Italy, 30 June 1976, IV Y.B. Com. Arb. 277 (1979); Efxinos Shipping Co. Ltd. v. Rawi Shipping Lines Ltd., Court of Appeal, Genoa, Italy, 2 May 1980, VIII Y.B. Com. Arb. 381 (1983).
1037. Thyssen Haniel Logistic International GmbH v. Barna Consignataria S.L., Supreme Court, Spain, 14 July 1998, XXVI Y.B. Com. Arb. 851 (2001).
24. In another case, a Swiss court held that an award rendered in a dispute arising under a licence agreement concerning monetary claims can be subject to arbitration under Swiss law, and found that enforcement should not be denied under article V (2)(a).1038 Disputes arising under services contracts have also been held to be of a commercial nature, and therefore capable of settlement by arbitration within the meaning of article V (2)(a).1039
1038. Italian party v. Swiss company, High Court of Zurich, Switzerland, 17 July 2003, XXIX Y.B. Com. Arb. 819 (2004).
1039. See, e.g., 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, 975; Oberlandesgericht [OLG] München, Germany, 23 February 2007, 34 Sch 31/06.
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b. Non-commercial disputes
25. Different categories of non-commercial disputes have been analysed in the case law on article V (2)(a). As discussed above, the wording of article V (2)(a) directs national courts to determine the arbitrability of a particular dispute in accordance with their national law.
26. Concerning employment and labor disputes, the laws of some jurisdictions allow such disputes to be submitted to arbitration, while others do not.1040 In the only reported case on article V (2)(a) that concerns an employment law dispute,1041 the Supreme Court of Lithuania reversed an order of a lower court that refused recognition and enforcement of an award that had decided a dispute involving a local sports club, on the ground that it was an employment dispute that was incapable of settlement by arbitration under Lithuanian law. The Supreme Court reasoned that professional sports agreements are underpinned by the principle of freedom of contract and that there was no impediment to submitting disputes arising under those contracts to arbitration.1042
1040. For instance, the United States legislature has favoured the arbitration of many types of labour disputes. See §1 of the United States Federal Arbitration Act, which excludes from the Act’s coverage agreements arising from only a limited range of employment relations involving “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” Switzerland has also taken a liberal stance on the arbitration of labour and employment disputes. See Alexandra Johnson, Isabelle Wildhaber, Arbitrating Labor Disputes in Switzerland, 27(6) J. Int’l Arb. 631-55 (2010). In other jurisdictions such as Germany, an arbitration agreement between an employer and individual employees regarding the employment contract is invalid. Jean-Francois Poudret, Sébastien Besson, Comparative Law of International Arbitration 313 (2007).
1041. The arbitrability of employment and labour disputes has more often arisen at the pre-award stage. See the chapter of the Guide on article II.
1042. KM v. JSC, Supreme Court, Lithuania, 21 February 2011, XXXVIII Y.B. Com. Arb. 414 (2013). The Supreme Court referred the case back to the Court of Appeal to decide the separate ground of whether the award was contrary to public policy and should be refused recognition and enforcement under article V (2)(b).
27. At this time, there are no reported cases analysing whether an arbitral award that decides matters of competition law should be refused recognition and enforcement pursuant to article V (2)(a). In a different context, the United States Supreme Court held in the 1983 Mitsubishi Motors decision that statutory antitrust claims arising out of an “international transaction” was validly subject to the New York Convention, and that an agreement to arbitrate those claims should be enforced under article II. In reaching its decision, the Supreme Court noted that at the time of acceding to the Convention, the United States Congress did not expressly exclude any matters from the scope of the Convention’s application, and that “[t]he utility of the Convention in promoting the process of international commercial arbitration depends upon the willingness of national courts to let go of matters they normally would think of as their own.”1043
1043. Mitsubishi Motors Corp v. Soler Chrysler-Plymouth, Supreme Court, United States of America, 20 December 1983, 473 United States 614, XI Y.B Com. Arb 555 (1986).
28. It is generally accepted that the authority to commence and administer bankruptcy proceedings rests solely with national courts.1044 Different conclusions have been reached concerning whether bankruptcy law related disputes are capable of settlement by arbitration under article V (2)(a). For instance, the Supreme Court of Finland held that claims concerning debts of an insolvent company were capable of settlement by arbitration.1045 In a different context, the Court of Appeal of Lithuania held that a dispute between two companies was not capable of settlement by arbitration because the legal status of their relationship had changed after one company had entered into insolvency. The Court concluded that the arbitration agreement in the original contract could not be relied on, and refused enforcement pursuant to article V (2)(a).1046
1044. See Gabrielle Kaufmann-Kohler, Laurent Lévy, International Commercial Arbitration, Insolvency and International Arbitration, in The Challenges of Insolvency Law Reform in the 21st Century 257, 262-63 (H. Peter, N. Jeandin, J. Kilborn eds., 2006); Fernando Mantilla-Serrano, International Arbitration and Insolvency Proceedings, 11 Arb. Int’l 51, 65 (1995) (quoting from unpublished award: “only those issues that have a direct connection with the insolvency proceedings, that is the issues that arise out of the application of rules particular to those proceedings” are nonarbitrable); Adam Samuel, Jurisdictional Problems in International Commercial Arbitration: A Study of Belgian, Dutch, English, French, Swedish, Swiss, United States and West German Law 143 (1989) (“an arbitrator cannot officially declare someone bankrupt”).
1045. Bankruptcy estate of Kommandiittiyhtiö Finexim O. Ivanoff (Finexim) v. Ferromet Aussenhandelsunternehmen, Supreme Court, Finland, 27 February 1989, S88/310.
1046. Shipping Services A/S v. RAB Sevnaučflot, Fishery Group, Court of Appeal, Lithuania, 13 May 2011, 2-1545/2011.
29. In one reported case concerning issues of succession, the Supreme People’s Court of China refused to recognize and enforce an award involving a wife’s inheritance of her deceased husband’s share in a company. The Court referred to Article 3 of the Arbitration Law of the People’s Republic of China, which provides that matters of succession cannot be submitted to arbitration.1047 Although there are no further reported cases on the issue at the time, it is noteworthy that the laws of some of the Contracting States, such as Switzerland,1048 do not prohibit the settlement by arbitration of disputes relating to monetary issues between heirs.
1047. Wu Chunying v. Zhang Guiwen, Supreme People’s Court, China, 2 September 2009, Min Si Ta Zi No. 33.
1048. Article 177 of the Swiss Private International Law Statute, under which “[a]ny dispute of financial interest may be the subject of an arbitration”, i.e., any dispute which can be assessed in monetary terms, is capable of settlement by arbitration.
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