Revisiting Arbitral Award

An award is a written instrument, drafted and signed by the arbitrator(s),

stating the tribunals final decision on particular claims or disputes.

a decision of the arbitral tribunal on the substance of the dispute and includes
any final, interim or partial award and any award on costs or interest but does
not include interlocutory orders

The decision or determination rendered by arbitrators or commissioners, or

other private or extra-judicial deciders, upon a controversy submitted to them;
also the writing or document embodying such decision (Blacks Law)

Award must be: well-founded, follows the form, complete, certain, final
and enforceable.
 The New York Convention states that foreign arbitral
awards shall be enforced by the New York Convention
member states, and enforcement may only be refused in
a limited number of enumerated exceptions.

Article V sets forth the grounds for refusal of enforcement

of arbitral award:
(a) The parties to the agreement were under some incapacity, or the
said agreement is not valid under the law to which the parties have
subjected it
(b) Lack of due process
(c) The award is not within the terms of the submission to arbitration,
or it contains decisions on matters beyond the scope of the
submission to arbitration
(d) The arbitral process was not in accordance with the agreement of
the parties or not in accordance with the law of the seat
(e) The award has not yet become binding on the parties, or has
been set aside or suspended by a competent authority of the country
where the arbitration took place
(f) Non-arbitrable matter in the country of enforcement
(b) The recognition or enforcement of the award would be contrary to
the public policy of that country.
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; or
(b) The recognition or enforcement of the award would be contrary to the
public policy of that country.
Reminder
Art. V provides that recognition and
enforcement of the award may be
refused only if one of specified
exceptions applies
The English language of Art. V is
unmistakenly permissive providing
states may refuse recognition of an
award
Same goes with Russian, Chinese texts
French text is ambiguous tho but it does not
compel states to to refuse recognition of
awards

Gary Born
Do you think the award set aside by the court of the seat of
arbitration is still enforceable in other countries? State your
observations.

QUESTION:
Confusion
Article V (e) The award has
not yet become binding on
the parties, or has been set
aside or suspended by a
competent authority of the
country where the
arbitration took place
Article VII Most Favorable Clause
The provisions of the present
Convention shall not affect the
validity of multilateral or bilateral
agreements concerning the
recognition and enforcement of
arbitral awards entered into by the
Contracting States nor deprive
any interested party of any right
he may have to avail himself of
an arbitral award in the manner
and to the extent allowed by the
law or the treaties of the country
where such award is sought to
be relied upon.
 Two views:
Territorial Approach
The annulment of the award by the court
of the seat of arbitration renders such as
unenforceable or an inexistent award. To
be precise, it loses legal effect.
Reason: National laws give life to
arbitration proceedings, hence awards
are valid and given legal effects through
adherence to it. By choosing a particular
country the parties to arbitration must
also submit to the arbitration laws of that
country.
Delocalized Approach
In case the arbitration award has been set aside
at the place of arbitration but not in the place of
enforcement, then the award stands.
Hence, if the local annulment standards set by
the applicable domestic law on the enforcement
of arbitral awards would not result in the set aside
of the award, then the award may be enforced by
the enforcement judge.
The approach finds justification in the wording of
Article V which leaves discretion to the courts.
French court practices Delocalized approach.
Socit Pabalk Trcaret vs.
Socit Norsolor (1984)
French company Norsolor and Turkish company Pabalk entered into an agency
agreement.
Later, a dispute arose and an award was rendered in Vienna on 26 October 1979 in
favor of Pabalk amounting to 800,000 French Francs.
Vienna Court of Appeal partially set aside the award.
Nevertheless, Pabalk sought its enforcement in France.
Lower Court of France granted the enforcement against Norsolor despite the
annulment of the award by the Vienna court.
Subsequently, Norsolor appealed to Paris Court of Appeal, wherein the court overruled
the enforcement relying on Article V(e)
Finally, French Supreme Court ruled that Paris Court of Appeal violated Article VII of
the New York Convention by simply refusing enforcement on the basis of Article V (e)
without scrutiny to whether Pabalk deprived of most favourable French law.
French SC emphasized that enforcement of a nullified award may not be refused
merely on the basis of Article V(e), but rather if even the French Law provides a
justifiable ground for refusal.
Most favorable clause was not a privilege of the parties but an obligation for the courts
to examine and apply their domestic law.
Socit Hilmarton Ltd v Socit Omnium
de traitement et de valorisation (OTV),
Cour de Cassation, 23 March 1994.
An English company, Hilmarton, provided assistance to OTV in a bid to acquire and
perform a contract in Algeria. Dispute arose.
Hilmartion initiated ICC arbitration in Geneva governed by Swiss Law against a French
Company
The ICC tribunal rejected Hilmartons claim and OTV sought to have the decision
enforced in France.
Simultaneously, Hilmarton sought to set the award aside in Switzerland.
Hilmarton appealed the French decision on the basis of the annulment in Switzerland.
Geneva court granted the appeal finding that the award was arbitrary.
Hilmarton initiated a new arbitration proceeding in Switzerland while OTV sought the
enforcement of the original award in Franch, which later on was granted by CFI Paris
and affirmed by Paris Court of Appeals.
The lower court relied upon the more favorable rights provision in Article VII of the
Convention, arguing that a French judge could not refuse enforcement unless
prescribed in domestic law.
In addition, Article 1502 of the New Code of Civil Procedure of France states that the
setting aside of an award was not listed as a ground for non-recognition. The Supreme
Court affirmed the reasoning, holding that the award existed despite of its annulment in
Switzerland and that enforcement in France was not contrary to international public
policy.
Other notable cases
Perusahan Pertambangan Minyak Dan Venture Global Engineering v.
Gas Bumi Negara v. Karaha Bodas Satyam Computer Services
Company LLC Limited, Supreme Court of India,
10 January 2008.
the District Court in Central
When the award creditor
Jakarta, Indonesia, set aside an
attempted to enforce the award
award where the place of
against Pertaminas assets in the
arbitration was in Switzerland,
United States, the US Court of
even though there was no
Appeals for the Fifth Circuit
indication that the parties had
disregarded the Indonesian
agreed on the law of the
courts decision and injunction,
arbitration being other than that of
holding that under the New York
the Swiss seat. The Indonesian
Convention, it had discretion to
court also took the unusual step
recognize and enforce the
of issuing an anti-suit injunction
award. Also, in 2008, Indias
prohibiting the award creditor
Supreme Court allowed the
from enforcing the award abroad.
challenge of an award rendered
in London in an LCIA arbitration.
Suffice to say that certain countries
have enforced awards which were
set aside in other countries, but the
more common position is that an
award that has been set aside
cannot be enforced anywhere.
Philippines?
Based on Rule 39, Sec. 48
Foreign Judgements are only presumptive
Applicant must prove in court the foreign judgement in the
Philippine Court
 Conclusion
No court decision = not
enforceable? Today, No. It may be
enforced.
Dr. Peter Binder While remaining
as purely academic scenario for
many years, the Hilmarton and
Chromalloy cases gave the
discussion immediate practice.
In these cases, awards which has
been set aside in the country of
origin were consequently enforced
by foreign court the discretion
awarded by the New York
Convention
 Sources
New York Convention of 1958
UNCITRAL Model Law
Stephen Leonard, Recognition and enforcement of foreign arbitral awards under the New
York Convention of 1958: Is there uniformity of interpretation or is there need for reform?,
available at
http://bora.uib.no/bitstream/handle/1956/7743/115998657.pdf;jsessionid=87AA37950DAA
E38856A7F62B0C5E25B5.bora-uib_worker?sequence=1, accessed on Sept. 20, 2017
Emmanuel Gaillard, The Enforcement of Awards Set Aside in the Country of Origin,
available at
http://www.shearman.com/~/media/Files/NewsInsights/Publications/1999/01/The-
Enforcement-of-Awards-Set-Aside-in-the-Count__/Files/View-Full-
Text/FileAttachment/IA_Enforcement-of-Awards-Set-Aside-in-Country-of__.pdf, accessed
on Sept. 20, 2017
Ariel Ye & James Rowland, Should Arbitral Awards That Have Been Set Aside Be
Enforced in a Different Jurisdiction?,
published by King & Wood Mallesons on May 22, 2012, accessed at
http://www.chinalawinsight.com/2012/05/articles/corporate/should-arbitral-awards-that-
have-been-set-aside-be-enforced-in-a-different-jurisdiction/, accessed on Sept. 20, 2017
Born G., International Commercial Arbitration Vol. II p. 2714-2721, published by Wolters
Kluwer Law & Business
Binder P., International Commercial Arbitration and Conciliation in UNCITRAL Model Law
Jurisdiction p. 424, 3rd Ed., published by Sweet & Maxwell