Guide
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Available documents (326)
V(1) / V(1)(d) / 3. APPLICATION / A. The requirement that the composition of the arbitral tribunal accord with the governing rules / §33
33. Certain authors have considered that courts may refuse enforcement under article V(1)(d) based on the alleged bias of an arbitrator.40 This may also constitute a ground for refusal under article V(2)(b) where it is contrary to public policy.41
40. Christian Borris and Rudolf Henneke, Article V(1)(d), in NEW YORK CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS: A COMMENTARY 329, at 339 (R. Wolff ed., 2012);
41. See chapter on Article V(2).
See in context V(1) / V(1)(d) / 3. APPLICATION / A. The requirement that the composition of the arbitral tribunal accord with the governing rules / §34
34. The standard of proof for arbitrator bias under article V(1)(d) is particularly high. For example, a United States court held that the mere fact that the tribunal President and the counsel of one of the parties both served on the same board of directors and were members of the same organization was insufficient to justify a refusal, where the party bringing the challenge had provided no evidence that they had otherwise communicated with each other.42 A Hong Kong court has equally affirmed this high burden of proof, finding that the party opposing enforcement had failed to prove its allegation that the tribunal’s deliberations had been affected by the alleged bias of one member.43
42. HSN Capital LLC v. Productora y Comercializador de Television, S.A. de C.V., District Court, Middle District of Florida, Tampa Division, United States of America, 5 July 2006, 8:05-cv-1769-T-30TBM. See also Nicor International Corporation v. El Paso Corporation, District Court, Southern District of Florida, United States of America, 24 November 2003, 02-21769, where the court decided that the parties contesting enforcement had failed to prove that a sole arbitrator’s previous representations or nationality influenced his decision-making; Shaanxi Provincial Medical Health Products I/E Corporation v. Olpesa, S.A., Supreme Court, Spain, 7 October 2003, 112/2002, XXX Y.B. COM. ARB. 617 (2005)
43. Logy Enterprises Ltd v. Haikou City Bonded Area Wansen Products Trading Co., Court of Appeal, Hong Kong, 22 May 1997, No. 65 (Civil).
See in context V(1) / V(1)(d) / 3. APPLICATION / B. The requirement that the arbitral procedure accord with the governing rules / a. Criteria for procedural irregularities / §35
35. The recognition and enforcement of an award may be refused under article V(1)(d) where the arbitral procedure was not in accordance the agreement of the parties or, “failing such agreement”, with the law of the country where the arbitration took place.
See in context V(1) / V(1)(d) / 3. APPLICATION / B. The requirement that the arbitral procedure accord with the governing rules / a. Criteria for procedural irregularities / §36
36. The term “arbitral procedure” encompasses the period beginning with the filing of an action and ending when the award is rendered.44 The application of the law by a tribunal, on the other hand, goes to the actual merits of a dispute and therefore falls outside the scope of review at the recognition and enforcement stage.45
44. Christian Borris and Rudolf Henneke, Article V(1)(d), in NEW YORK CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS: A COMMENTARY 329, at 344 (R. Wolff ed., 2012); Patricia Nacimiento, Article V(1)(d), in RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS: A GLOBAL COMMENTARY ON THE NEW YORK CONVENTION 281, at 292 (H. Kronke, P. Nacimiento eds., 2010)
45. Vigel S.p.A. v. China National Machine Tool Corporation, Court of Cassation, Italy, 8 April 2004, XXXI Y.B. COM. ARB. 802 (2006). See also Venture Global Engineering, LLC v. Satyam Computer Services, Ltd., Court of Appeals, Sixth Circuit, United States of America, 15 May 2007, 062056, XXXIII Y.B. COM. ARB. 970 (2008).
See in context V(1) / V(1)(d) / 3. APPLICATION / B. The requirement that the arbitral procedure accord with the governing rules / a. Criteria for procedural irregularities / §37
37. The burden of proof for an alleged procedural irregularity is on the party opposing recognition and enforcement. The evidence must be provided46 and it must be clear.47
46. Grow Biz International Inc. v. D.L.T. Holdings Inc., and Debbie Tanton, Supreme Court of the Province of Prince Edward Island, Canada, 23 March 2001, GSC-17431, XXX Y.B. COM. ARB. 450 (2005).
47. See e.g. Manufacturer v. Exclusive distributor, Oberlandesgericht [OLG] Schleswig, Germany, 24 June 1999, 16 SchH 01/99.
See in context V(1) / V(1)(d) / 3. APPLICATION / B. The requirement that the arbitral procedure accord with the governing rules / a. Criteria for procedural irregularities / §38
38. As with the composition of the tribunal, the threshold of proof for showing an irregular arbitral procedure under article V(1)(d) is high. One United States court observed that the Convention does not “permit reviewing courts to police every procedural ruling made by the arbitrator and to set aside the award if any violation of the … procedures is found. Such an interpretation would directly conflict with the ‘pro-enforcement bias’ of the Convention and its intention to remove obstacles to confirmation of arbitral awards.”48
48. Compagnie des Bauxites de Guinée v. Hammermills Inc., District Court, District of Columbia, United States of America, 29 May 1992, 90-0169, XVIII Y.B. COM. ARB. 566 (1993).
See in context V(1) / V(1)(d) / 3. APPLICATION / B. The requirement that the arbitral procedure accord with the governing rules / a. Criteria for procedural irregularities / §39
39. Article V(1)(d) is silent as to what types of procedural irregularities should lead to a refusal to recognize and enforce. Most courts require a substantial defect in the arbitral procedure and/or a causal nexus between the defect and the award. A range of approaches have been adopted for determining these criteria.49
49. Christian Borris and Rudolf Henneke, Article V(1)(d), in NEW YORK CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS: A COMMENTARY 329, at 344 (R. Wolff ed., 2012); Patricia Nacimiento, Article V(1)(d), in RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS: A GLOBAL COMMENTARY ON THE NEW YORK CONVENTION 281, at 292-293 (H. Kronke, P. Nacimiento eds., 2010).
See in context
4. Article V(1)(d) may be regarded as an important step forward compared to the 1927 Geneva Convention, under which an award had to comply with the parties’ agreement and, cumulatively, the law governing the arbitral procedure, in order to gain recognition and enforcement.4 The novelty of the New York Convention lies in the supremacy given to the parties under article V(1)(d) to agree on the composition of the tribunal and the procedure.5 This is consistent with the limited power of review of awards by enforcing courts under article V(1) of the Convention,6 and reduces the risk that the recognition and enforcement of awards will be refused based on grounds of procedural irregularities in national laws.
4. See article 1(c) of the Geneva Convention on the Execution of Foreign Arbitral Awards, 26 September 1927, available at https://treaties.un.org/doc/Publication/MTDSG/Volume%20II/LON/PARTII-7.en.pdf, which provided that the party seeking recognition and enforcement had to demonstrate “[t]hat the award has been made by the Arbitral Tribunal provided for in the submission to arbitration or constituted in the manner agreed upon by the parties and in conformity with the law governing the arbitration procedure.”
5. Polimaster Ltd. and NA&SE Trading Co. Ltd. v. Rae Systems, Inc., District Court, Northern District of California, United States of America, 23 January 2009, C 05-1887; Joseph Müller A. G. v. Sigval Bergesen, Federal Tribunal, Switzerland, 26 February 1982; Encyclopedia Universalis S.A., v. Encyclopedia Britannica, Inc., Court of Appeals, Second Circuit, United States of America, 31 March 2005, 04-0288-CV.
6. 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, at 5-6.
See in context V(1) / V(1)(d) / 3. APPLICATION / B. The requirement that the arbitral procedure accord with the governing rules / a. Criteria for procedural irregularities / §40
40. One approach is to ascertain whether the alleged irregularity substantially prejudiced one of the parties.
See in context V(1) / V(1)(d) / 3. APPLICATION / B. The requirement that the arbitral procedure accord with the governing rules / a. Criteria for procedural irregularities / §41
41. In one case, an English court enforced an award where the tribunal applied a revised set of procedural rules that had superseded those provided for in the parties’ agreement, holding the party opposing enforcement had not suffered sufficient prejudice to justify a refusal.50 In another case where the arbitration was held at a different place than the agreed place of arbitration and a party had refused to participate, an English court held that the different location did not affect the fairness of the proceedings or prejudice that party. The court reasoned that the wording of the arbitration agreement had not made it clear that the parties regarded the venue as critically important.51 The courts of the United States have similarly considered that the “appropriate standard of review would be to set aside an award based on a procedural violation only if such violation causes substantial prejudice to the complaining party.”52
50. China Agrobusiness Development Corporation v. Balli Trading, High Court of Justice, Queen’s Bench Division, England and Wales, 20 January 1997, XXIV Y.B. COM. ARB. 732 (1999).
51. Tongyuan International trading Group v. Uni-Clam Limited, High Court of Justice, England and Wales, 19 January 2001, 2000 Folio No 1143.
52. Compagnie des Bauxites de Guinée v. Hammermills Inc., District Court, District of Columbia, United States of America, 29 May 1992, 90-0169, XVIII Y.B. COM. ARB. 566 (1993). See also, P.T. Reasuransi Umum Indonesia v. Evanston Insurance Company, Utica Mutual Insurance Company and others, District Court, Southern District of New York, United States of America, 21 December 1992, 92 Civ. 4623 (MGC), XIX Y.B. COM. ARB. 788 (1994).
See in context V(1) / V(1)(d) / 3. APPLICATION / B. The requirement that the arbitral procedure accord with the governing rules / a. Criteria for procedural irregularities / §42
42. Another approach is to require a party opposing enforcement to prove that the outcome of the case would have been different had the alleged irregularity not occurred. As noted above, this approach has also been followed in challenges based on the composition of the tribunal.53
53. See e.g. Creditor under the award v. Debitor under the award, Oberlandesgericht [OLG] Karlsruhe, Germany, 14 September 2007, 9 Sch 02/07, where the court required that the party arguing that a three-member tribunal had been appointed by the wrong authority was required to demonstrate that a different appointment procedure would have led to a different ruling.
See in context V(1) / V(1)(d) / 3. APPLICATION / B. The requirement that the arbitral procedure accord with the governing rules / a. Criteria for procedural irregularities / §43
43. For example, in a 2004 decision, a German court enforced an award that was rendered five months after the time limit set in the parties’ agreement. The Court found that the party opposing enforcement had not proven that the tribunal would have decided differently had the tribunal respected the time limit.54 Other German courts have followed this approach.55
54. K Trading Company v. Bayerischen Motoren Werke AG, Bayerisches Oberstes Landesgericht [BayObLG], Germany, 23 September 2004, 4 Z Sch 05/04.
55. Exclusive distributor v. Manufacturer, Oberlandesgericht [OLG] Munich, Germany, 22 June 2009, 34 Sch 26/08; SpA Ghezzi v. Jacob Boss Söhne, Bundesgerichtshof [BGH], Germany, 14 April 1988, XV Y.B. COM. ARB. 450 (1990).
See in context V(1) / V(1)(d) / 3. APPLICATION / B. The requirement that the arbitral procedure accord with the governing rules / a. Criteria for procedural irregularities / §44
44. The distinction between the varying approaches may be more apparent than real, and in many cases may lead to the same outcome particularly since not all courts distinguish between them and/or refer to them simultaneously.56 Of the few decisions where a foreign award has been refused enforcement pursuant to the second alternative of article V(1)(d), the party opposing enforcement brought evidence of fundamental or unjustifiable procedural defects that one could consider would have met the criteria of both approaches. For instance, in a 1968 case, a Swiss court refused to issue an enforcement order on the grounds that the arbitral tribunal had not complied with the agreement of the parties that “all disputes should be settled in one and the same arbitral proceedings” and instead conducted the arbitration in two stages.57 In a 2001 case, the Italian Supreme Court enforced a first award but not a second award made with respect to the same dispute. The Court held that the second award was contrary to the parties’ agreement that contemplated only one arbitration, depending on which party commenced arbitration first.58
56. Christian Borris and Rudolf Henneke, Article V(1)(d), in NEW YORK CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS: A COMMENTARY 329, at 347 (R. Wolff ed., 2012); Patricia Nacimiento, Article V(1)(d), in RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS: A GLOBAL COMMENTARY ON THE NEW YORK CONVENTION 281, at 298 (H. Kronke, P. Nacimiento eds., 2010)
57. Firm in Hamburg (buyer) v. Corporation (A.G.) in Basel (seller), Court of Appeal of the Canton of Basel-Stadt, Switzerland, 6 September 1968, I Y.B. COM. ARB. 200 (1976).
58. Tema Frugoli SpA, in liquidation v. Hubei Space Quarry Industry Co. Ltd, Court of Cassation, Italy, 7 February 2001, XXXII Y.B. Com. Arb. 390 (2001).
See in context V(1) / V(1)(d) / 3. APPLICATION / B. The requirement that the arbitral procedure accord with the governing rules / b. Tribunal’s discretion to organize and control the arbitral proceedings / §45
45. In assessing challenges to recognition and enforcement under article V(1)(d), courts have recognized the broad discretion of arbitral tribunals to organize and control the arbitral proceedings.
See in context V(1) / V(1)(d) / 3. APPLICATION / B. The requirement that the arbitral procedure accord with the governing rules / b. Tribunal’s discretion to organize and control the arbitral proceedings / §46
46. For instance, a United States court rejected an argument that the tribunal had deviated from the parties’ agreement by consolidating claims arising out of two separate contracts. In the Court’s view, the decision to consolidate the claims was within the tribunal’s discretion, and this decision was reached after a careful interpretation of the parties’ contract.59 In another decision, a United States court held that there was no deviation from the rules of the American Arbitration Association agreed to by the parties where the tribunal had considered a belatedly submitted technical report, adding that “[a]rbitration proceedings are not constrained by formal rules of procedure or evidence.”60
59. Karaha Bodas Co. (Cayman Islands) v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (Indonesia), Court of Appeals, Fifth Circuit, United States of America, 23 March 2004, 02-20042, 03-20602.
60. Industrial Risk Insurers v. M.A.N. Gutehoffnungshutte GmbH, Court of Appeals, Eleventh Circuit, United States of America, 22 May 1998, 94-2982, 94-2530. See also, Compagnie des Bauxites de Guinée v. Hammermills Inc., District Court, District of Columbia, United States of America, 29 May 1992, 90-0169, XVIII Y.B. COM. ARB. 566 (1993), concerning the tribunal’s application of the ICC Arbitration Rules; China National Metal Products Import/Export Company v. Apex Digital, Inc., Court of Appeals, Ninth Circuit, United States of America, 16 August 2004, 03-55231, XXX Y.B. COM. ARB. 908 (2005), concerning the tribunal’s application of the CIETAC Rules.
See in context V(1) / V(1)(d) / 3. APPLICATION / B. The requirement that the arbitral procedure accord with the governing rules / b. Tribunal’s discretion to organize and control the arbitral proceedings / §47
47. Courts have similarly held that a tribunal’s adjudication of a case based on documentary evidence without an oral hearing does not justify a refusal under article V(1)(d). A German court reached this decision where the provisions of the 1996 English Arbitration Act agreed to by the parties granted discretion to the tribunal to schedule an oral hearing.61 A United States court held that a tribunal’s decision of an issue of contract interpretation based solely on documentary evidence was not fundamentally unfair where the parties had not agreed on the applicable procedure. In this instance, the tribunal assessed the issue by reference to the laws of the United States, where the arbitration had taken place.62
61. Hanseatisches Oberlandesgericht [OLG] Hamburg, Germany, 30 July 1998, 6 Sch 3/98. See also, Hanseatisches Oberlandesgericht [OLG] Bremen, Germany, 30 September 1999, (2) Sch 04/99.
62. InterCarbon Bermuda, Ltd. v. Caltex Trading and Transport Corporation, District Court, Southern District of New York, United States of America, 12 January 1993, 91 Civ. 4631 (MJL), XIX Y.B. COM. ARB. 802 (1994).
See in context V(1) / V(1)(d) / 3. APPLICATION / B. The requirement that the arbitral procedure accord with the governing rules / c. Failure to state reasons / §48
48. Certain national laws expressly require an arbitral tribunal to provide the reasons for its final decision.63 The same is true of certain institutional rules that the parties may choose to govern their dispute.64 If the parties’ agreement, or the agreed upon arbitration rules or national law, require the award to contain reasons, the failure to provide reasons may be a ground for refusal under article V(1)(d).65 Courts have observed the limited scope of review of arbitral awards at the enforcement stage when examining these types of challenges.66
63. For instance, the laws of Australia, Belgium, England, France, Germany, Italy, Ireland, the Netherlands and Switzerland all expressly require arbitrators to state the reasons for their decision in their award.
64. For instance, Article 31(2) of the UNCITRAL Model Law presumes that, in the absence of any indication to the contrary, the parties’ intention is that the arbitrators should state the grounds for their awards.
65. See however Food Services of America, Inc. v. Pan Pacific Specialties Ltd., Supreme Court of British Columbia, Canada, 24 March 1997, A970243, XXIX Y.B. COM. ARB. 581 (2004), where the court held that an arbitrator’s failure to state reasons, as required by the rules of the American Arbitration Association agreed upon by the parties, was not considered part of the arbitral procedure.
66. Oberlandesgericht [OLG] Bremen, Germany, 30 September 1999, (2) Sch 04/99. See also Inter-Arab Investment Guarantee Corp. v. Banque Arabe et Internationale d’Investissements, Court of Appeal of Brussels, Belgium, XXII. Y.B. COM. ARB. 643 (1997).
See in context V(1) / V(1)(d) / 3. APPLICATION / B. The requirement that the arbitral procedure accord with the governing rules / c. Failure to state reasons / §49
49. Where an arbitration agreement or award falls within the field of application of both the New York Convention and the 1961 European Convention on International Commercial Arbitration, the requirement to state reasons will be assessed in light of the provisions of the European Convention. Article VIII of the European Convention provides that the parties to an arbitration shall be presumed to have agreed that reasons shall be given for the award unless they expressly declare otherwise, or have assented to an arbitral procedure under which it is not customary to give reasons, provided that neither party requests before the end of the hearing or the making of the award that reasons be given.67
67. European Convention on International Commercial Arbitration, Geneva, 21 April 1961, Article VIII: “The parties shall be presumed to have agreed that reasons shall be given for the award unless they (a) either expressly declare that reasons shall not be given; or (b) have assented to an arbitral procedure under which it is not customary to give reasons for awards, provided that in this case neither party requests before the end of the hearing, or if there has not been a hearing then before the making of the award, that reasons be given.”
See in context
5. Although article V(1)(d) moves beyond the text of the 1927 Geneva Convention, it is not as liberal as certain arbitration statutes, which attach even less importance than the New York Convention to the law of the country where the arbitration took place at the recognition and enforcement stage.7 As explained in the chapter on article VII,8 the Convention sets only a “ceiling”, or the maximum level of control, which courts of the Contracting States may exert over foreign arbitral awards. A court will not breach the New York Convention by applying more liberal rules than article V(1)(d), in accordance with article VII(1).
7. For instance, article 1520 of the New French Code of Civil Procedure provides that an award should not be recognized where “the arbitral tribunal was not properly constituted”. Under this provision, as well as the equivalent provision of the former French Code of Civil Procedure, the composition of the arbitral tribunal is measured against the will of the parties. Where the alleged irregularity resulted solely from a violation of the law of the place of the arbitration, recognition and enforcement would not be refused unless that law had been chosen by the parties to govern their procedure. FOUCHARD GAILLARD GOLDMAN ON INTERNATIONAL COMMERCIAL ARBITRATION (E. Gaillard, J. Savage eds., 1999), at 989, para. 1701
8. See Chapter on article VII.
See in context V(1) / V(1)(d) / 3. APPLICATION / B. The requirement that the arbitral procedure accord with the governing rules / c. Failure to state reasons / §50
50. In a case concerning an application for enforcement that was subject to both the New York Convention and the European Convention, the Italian Court of Cassation decided that enforcement should be denied where the presumption under Article VIII had not been rebutted because one party seeking enforcement had expressly requested during the arbitral proceeding that reasons be given for the award. This was notwithstanding the fact that the Arbitration Rules of the Sugar Association of London, which the parties agreed would govern the arbitral procedure, did not require that reasons for an award be provided.68
68. Fratelli Damiano s.n.c. v. August Tropfer & Co., Court of Cassation, Italy, 8 February 1982, 722, IX Y.B. COM. ARB. 418 (1984).
See in context V(1) / V(1)(d) / 3. APPLICATION / C. Procedural issues in raising a challenge based on article V(1)(d) / §51
51. The question has arisen whether a party may be estopped from raising the defence to enforcement under article V(1)(d), where it has failed to do so before the arbitral tribunal. A number of courts have held that a complaint concerning the composition of the tribunal or the arbitral procedure will not be entertained at the enforcement stage if it existed at the time of the arbitral proceedings and could have been raised before the tribunal.
See in context V(1) / V(1)(d) / 3. APPLICATION / C. Procedural issues in raising a challenge based on article V(1)(d) / §52
52. A German court has held that, even where it was shown that the tribunal was irregularly composed, the party raising the challenge was precluded from relying on article V(1)(d) because it had been aware of the defect but nonetheless participated in the arbitration without raising any objection.69 The courts of China70 and Italy71 have also held that a party that has failed to raise an irregularity during the arbitral proceeding, although it could have done so, has waived its right to do so at the enforcement stage.
69. Manufacturer v. Supplier, in liquidation, Oberlandesgericht [OLG] Munich, Germany, 15 March 2006, 34 Sch 06/05.
70. DMT S.A. v. Chaozhou City Huayi Packing Materials Co., Ltd. Chaoan County Huaye Packing Materials Co., Ltd., Supreme People’s Court, China, 12 October 2010, [2010] Min Si Ta Zi No. 51.
71. Conceria G. De Maio & F. snc v. EMAG AG, Court of Cassation, Italy, 20 January 1995, XXI Y.B. COM. ARB. 602 (1996)
See in context V(1) / V(1)(d) / 3. APPLICATION / C. Procedural issues in raising a challenge based on article V(1)(d) / §53
53. A refusal to uphold a challenge under article V(1)(d) that could have been raised during the proceedings has been linked by some courts to the principle of good faith. The Supreme Court of Hong Kong has considered that “there is indeed a duty of good faith which in the circumstances of this case required the defendant to bring […] its objections to the formation of this particular arbitral tribunal. Its failure to do so and its obvious policy of keeping this point up its sleeve to be pulled out only if the arbitration was lost, is not one that I find consistent with the obligation of good faith nor with any notions of justice and fair play.”72
72. China Nanhai Oil Joint Service Corporation Shenzen Branch v. Gee Tai Holdings Co. Ltd., High Court, Supreme Court of Hong Kong, Hong Kong, 13 July 1994, 1992 No. MP 2411. See also X AG v. Y AS, Federal Tribunal, Switzerland, 4 October 2010, 4A 124/2010, XXXVI Y.B. COM. ARB. 340 (2011).
See in context V(1) / V(1)(d) / 3. APPLICATION / C. Procedural issues in raising a challenge based on article V(1)(d) / §54
54. Courts have similarly considered that a party will be barred from invoking a defence under article V(1)(d) based on an irregular procedure at the exequatur stage if it failed to object to the irregular arbitral proceedings during the course of the arbitration. In Chrome Resources SA v Leopold Lazarus Ltd, the Swiss Federal Tribunal rejected a challenge that the arbitral tribunal had consulted an expert in the absence of the parties, finding that the party’s attempt to raise this objection at the enforcement stage was in bad faith and constituted an abuse of rights.73 Courts in England,74 Germany,75 Greece,76 and the United States77 have similarly barred a party from asserting any defect of the arbitral procedure at a later stage if it had the opportunity to raise a reservation in a timely manner during the arbitral proceedings.
73. Chrome Resources S.A. v. Léopard Lazarus Ltd., Federal Tribunal, Switzerland, 8 February 1978, XI Y.B. COM. ARB. 538 (1986).
74. China Agrobusiness Development Corporation v. Balli Trading, High Court of Justice, Queen’s Bench Division, England and Wales, 20 January 1997, XXIV Y.B. COM. ARB. 732 (1999).
75. Manufacturer v. Exclusive distributor, Oberlandesgericht [OLG] Schleswig, Germany, 24 June 1999, 16 SchH 01/99.
76. Greek Company v. FR German Company, Court of Appeal of Athens, Greece, 4458, 1984, XIV Y.B. COM. ARB. 638 (1989).
77. Shaheen Natural Resources Company Inc. v. Société Nationale pour la Recherche, la Production and others, Court of Appeals, Second Circuit, United States of America, 15 November 1983, X Y.B. COM. ARB. 540 (1985); Imperial Ethiopian Government v. Baruch Foster Corporation, Court of Appeals, Fifth Circuit, United States of America, 19 July 1976, II Y.B. COM. ARB. 251 (1977); Karaha Bodas Co. (Cayman Islands) v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (Indonesia), Court of Appeals, Fifth Circuit, United States of America, 23 March 2004, 02-20042, 03-20602
See in context V(1) / V(1)(d) / 3. APPLICATION / C. Procedural issues in raising a challenge based on article V(1)(d) / §55
55. The same result has been reached in cases where the party opposing enforcement has alleged that the arbitral procedure was irregular, but at the same time chose not to participate in the proceedings. In a 1995 decision, a Singapore court held in a case where a party chose deliberately not to participate in an arbitration, that it had waived its rights to criticize the way in which the arbitration proceeding had been conducted.78 Similarly, an English court decided that “in view of the fact that the sellers chose to take no part in the proceedings, it is impossible […] to submit that any failure to comply with the agreement of the parties as to venue had any prejudicial effect as far as [the party] is concerned.”79 A German court has also considered that the participation of a party in an arbitration without raising any objection may be construed as an implicit agreement with the procedural rules applied by the tribunal.80
78. Hainan Machinery Import and Export Corporation v. Donald & McArthy Pte Ltd, High Court, Singapore, 29 September 1995, 1056 of 1994, XXII Y.B. COM. ARB. 771 (1997)
79. Tongyuan International Trading Group v. Uni-Clam Limited, High Court of Justice, England and Wales, 19 January 2001, 2000 Folio No 1143
80. Manufacturer v. Supplier, in liquidation, Oberlandesgericht [OLG] Munich, Germany, 15 March 2006, 34 Sch 06/05.
See in context
6. In the vast majority of reported cases, parties have been unsuccessful in proving the grounds for non-enforcement under article V(1)(d). It rarely occurs that the composition of a tribunal deviates from the parties’ agreement or the applicable rules. Further, courts have taken into account the wide discretion vested in arbitral tribunals to organize and control the arbitral proceedings.9
9. See e.g. K Trading Company v. Bayerischen Motoren Werke AG, Bayerisches Oberstes Landesgericht [BayObLG], Germany, 23 September 2004, 4 Z Sch 05/04; Industrial Risk Insurers v. M.A.N. Gutehoffnungshutte GmbH, Court of Appeals, Eleventh Circuit, United States of America, 22 May 1998, 94-2982, 94-2530. See also Martin Platte, Multi-party Arbitration: Legal Issues Arising out of Joinder and Consolidation, in ENFORCEMENT OF ARBITRATION AGREEMENTS AND INTERNATIONAL ARBITRAL AWARDS: THE NEW YORK CONVENTION IN PRACTICE 481, at 491 (E. Gaillard, D. Di Pietro eds., 2008); ALBERT JAN VAN DEN BERG, THE NEW YORK ARBITRATION CONVENTION OF 1958: TOWARDS A UNIFORM JUDICIAL INTERPRETATION, (2nd eds., 1994), at 323.
See in context
7. Courts are usually not formalistic in their approach to article V(1)(d) and as a result have applied it in a restrictive manner.10 This is consistent with the general discretion of courts to refuse challenges under article V(1) of the Convention, which provides that a court “may” refuse recognition and enforcement.11
10. See e.g. Al Haddad Bros. Enterprises Inc. v. M/S “Agapi” and Diakan Love S.A., District Court, District of Delaware, United States of America, 9 May 1986, 635 F. Supp. 205; China Nanhai Oil Joint Service Corporation Shenzen Branch v. Gee Tai Holdings Co. Ltd., High Court, Supreme Court of Hong Kong, Hong Kong, 13 July 1994, 1992 No. MP 2411.
11. Sigvard Jarvin, Irregularity in the Composition of the Arbitral Tribunal and the Procedure, in ENFORCEMENT OF ARBITRATION AGREEMENTS AND INTERNATIONAL ARBITRAL AWARDS: THE NEW YORK CONVENTION IN PRACTICE 729, at 734 (E. Gaillard, D. Di Pietro eds., 2008).
See in context
8. Article V(1)(d) has some interaction and overlap with article V(2)(b) of the Convention, which provides that a court may refuse to recognize or enforce an award if the award “would be contrary to the public policy of that country.” It is not unusual for parties to raise both provisions in their attempt to challenge recognition and enforcement. However, a defence based on article V(1)(d) must be raised by “the party against whom [the award] is invoked”, whereas courts may raise sua sponte possible grounds based on article V(2)(b). In practice, most courts have considered that the grounds for non-enforcement under each provision are distinct and have analyzed them separately.12
12. See e.g. Oberlandesgericht [OLG] Schleswig, Germany, 24 June 1999, 16 SChH 01/99; Bundesgerichtshof [BGH], Germany, 14 April 1988, III ZR 12/87; Goldtron Limited v. Media Most B.V., Court of First Instance of Amsterdam, Netherlands, 27 August 2002, XXVIII Y.B. COM. ARB. 814 (2003); Eddie Javor v. Fusion-Crete, Inc. and others, Supreme Court of British Columbia, Canada, 6 March 2003, L022829, XXIX Y.B. COM. ARB. 596 (2004).
See in context
9. Article V(1)(d) expressly affirms the supremacy of the parties’ agreement concerning the composition of the tribunal and arbitral procedure, and that the law of the place of arbitration should apply only “failing such agreement.”13 Courts have consistently recognized that the grounds enumerated in article V(1)(d) must be measured, in the first instance, against the agreement of the parties.14
13. Travaux préparatoires, Draft Convention on the Recognition and Enforcement of Foreign Arbitral Awards and Comments by Governments and Organizations, Report by the Secretary-General, Recognition and Enforcement of Foreign Arbitral Awards, E/2822, Annex II, at 18-19; FOUCHARD GAILLARD GOLDMAN ON INTERNATIONAL COMMERCIAL ARBITRATION (E. Gaillard, J. Savage eds., 1999), at 454, para. 756.
14. See e.g. Polimaster Ltd., NA&SE Trading Co., Limited v. RAE Systems, Inc., Court of Appeals, Ninth Circuit, United States of America, 28 September 2010, 08-15708, 09-15369; Rederi Aktiebolaget Sally v. S.r.l. Termarea, Court of Appeal of Florence, Italy, 13 April 1978, IV Y.B. COM. ARB. 294 (1979) (emphasis added); Deiulemar Compagnia di Navigazione, S.p.A. v. Transocean Coal Company, Inc. and others, District Court, Southern District of New York, United States of America, 30 November 2004, 03 Civ. 2038 (RCC), XXX Y.B. COM. ARB. 990 (2005); Hanseatisches Oberlandesgericht [OLG] Bremen, Germany, 30 September 1999, (2) Sch 04/99.
See in context