Professional Documents
Culture Documents
SUBMITTED BY:PuneetTigga
ROLL NO: - 96, SEM -9, BATCH: X
HIDAYATULLAH
NATIONAL LAW
ACKNOWLEDGEMENT
I am much indebted to my mentor Mr. S.K. Sinha who gave me a chance to work on the topic
called Inapplicability of Foreign Arbitral Award. I take the opportunity to thank her for her
assistance & comments & remarks on the project before its final draft. Throughout I have been
helped & encouraged by him.
A great debt of gratitude must be acknowledged to the Library & IT department for providing
with the valuable resources required for the making of this project.
Puneet Tigga
Batch X
Sem 9 Roll 96
CONTENTS
INTRODUCTION
01
02
02
03
05
04
CONCLUSION
12
BIBLIOGRAPHY
13
ABBREVIATIONS
Art
Article
Co
Company
ed
Edition
Govt
Government
HC
High Court
HK
Hong Kong
Ibid
Ibidieum
ICA
ICSID
Inc
Incorporated
Ltd
Limited
Mar
March
NYC
Oct
October
OLG
QB
Queens Bench
UN DOC
v.
Versus
RESEARCH QUESTIONS
How does foreign arbitral award becomes inapplicable?
What is the purpose of challenge?
What are the methods and grounds of challenge?
When an award can be refused to be recognised and enforced?
SOURCES OF DATA
The sources of data for this project are secondary in nature, including books, articles, law
journals & online resources.
INTRODUCTION
The successful party in an international commercial arbitration expects award to be performed
without delay. This is a reasonable expectation. The purpose arbitration, unlike mediation and
mostly other methods of alternative dispute resolution, is to arrive at a binding decision on the
dispute. Once this decision has been made in the form of an award, it is an implied term of every
arbitration agreement that the parties will carry it out.1
The method of recognition and enforcement to be adopted in any particular case depends on the
place where the award was made (that is to say, whether it qualifies, for example, as a NYC
award or not).2According to the NYC, an award made in any state (even if that state was not a
party to the NYC) would be recognised and enforced by any other state that was a party, so long
as the award satisfied the basic conditions set down in convention.3The NYC provides for both
recognition and enforcement of awards to which the convention applies.
A foreign arbitral award becomes inapplicable in two circumstances:
1. When the award has been successfully challenged.
2. When the award is refused to be recognised and enforced.
The project is divided in two parts; first dealing with the challenge of arbitral awards on various
grounds and second dealing with refusal of recognition and enforcement of arbitral awards on
various grounds and refusal under various regional conventions.
REDFERN AND HUNTER, LAW AND PRACTICE OF INTERNATIONAL COMMERCIAL ARBITRATION 429 (4th ed, 2004)
Ibid at 404
frequently the case with maritime and commodity arbitrations, and other forms of
arbitration established by trade associations. It is the only method of challenging ICSID
awards since as a part of the special status they enjoy under the Washington Convention,
such awards cannot be challenged in national courts6.
2. Correction and Interpretation of Awards:It is usual for there to be some provision either
in the relevant arbitration rules, or in the law governing the arbitration, for an arbitral
tribunal to correct any clerical or other errors in the award. An arbitral tribunal may be
asked to issue an interpretation of its award.
3. Recourse to the Courts: There are grounds on which an arbitral award may be challenged
before a national court at the place of arbitration.
These grounds are considered in turn, beginning with the one that is most frequently met;
namely, a plea that the arbitral tribunal lacks jurisdiction.
GROUNDS FOR CHALLENGE
Basically two grounds are discussed here. One is the Jurisdictional Issue and the second is the
other grounds which in turn include procedural grounds and substantive grounds which are
further being subdivided.
1. Jurisdictional Issue
It may include:
What matters have been submitted to arbitration in accordance with the arbitration
agreement; and
Two possibilities are open to a party wishing to challenge the jurisdiction of the arbitral tribunal.
The first is to challenge jurisdiction at the outset of arbitration and ask the tribunal to deal with
6
7
the challenge either by interim award or as a part ofits award on merits.The second is to wait
until the award is made and then challenge it, or attempt to resist enforcement on the basis that
the tribunal had no jurisdiction and so its award has no validity. Parties taking part in the
arbitration but fail to raise a jurisdiction issue when they may have been entitled to do so, risk
losing the right to object. If an objection to jurisdiction is to be taken, it should be taken without
delay.
2. Other Grounds
There are two broad grounds on which an arbitral award is likely to be challenged before a
national court at the seat of arbitration. The first is the procedural grounds and the second is the
substantive ground.
a. PROCEDURAL GROUNDS
The procedural grounds for challenge are those that are most likely to be encountered in the
international practice of arbitration like failure to give proper notice, invalid agreement to
arbitrate, lack of due process, against public policy etc. All these issues have been discussed in
the next part of the project, that is, refusal to recognise and enforce awards8.
b. SUBSTANTIVE GROUNDS
This ground is further divided into two parts:
Mistake of Law
The argument in favour of reviewing arbitral decisions in order to guard against mistakes of law
is not difficult to make. There are obvious risks in having a legal system that leaves arbitral
awards free from appeal or judicial review. However, there is no provision in Model Law for
challenging an award on the basis of mistake of fact or law. Some States with a long tradition of
arbitration have taken the view that it should be open to the parties to appeal against an
arbitration award if it contains a serious mistake of law9.
8
9
Ibid at 411
Ibid at 425
Mistake of Fact
The principal justification for allowing an appeal from the award of an arbitral tribunal on
questions of law is that it is in the public interest. There can be no such general interest in
findings of fact of a particular case. They may be wrong, even badly wrong, but that is likely to
be of interest only to the parties. Accordingly, almost all states with developed laws of
arbitration refuse to allow appeals from arbitral tribunals on issue of fact10.
Most of the States are broadly content to restrict the challenge of arbitral awards to excess of
jurisdiction and lack of due process.
10
Ibid at 426
11
Report of the Committee on the Enforcement if International Arbitral Awards, UN DOC E/2704,
E/AC.42/4/Rev.1 (Mar. 28, 1955) at 9
12
Ibid
13
ULRICH HASS, PRACTITIONERS HANDBOOK ON INTERNATIONAL ARBITRATION 401 (Frank-Bernd Weigand ed
2002)
14
OLG Stuttgart (decided Dec 18, 1999) 700 at 704 (Stuttgart Court of Appeal, Germany)
15
Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Das Gas Bumi Negara, 364 F.3d 274 (5th Circuit 2004)
16
HERBERT KRONKE, PATRICIA NACIMIENTO, DIRK OTTO AND NICOLA CHRISTINE PORT, RECOGNITION AND
ENFORCEMENT OF FOREIGN ARBITRAL AWARDS: A GLOBAL COMMENTARY ON NYC 219 (2010)
OLG Naumburg, Intl Arb. L. Rev. 2006, N-61 (Naumburg Court of Appeal)
OLG Celle (decided May 31, 2007) 524 (Celle Court of Appeal, Germany)
decision, even if such decision is only provisional. The reason for this is that only a court
decision provides an indication of any doubts that the courts of the country of origin might have
toward an award.
11. Non-arbitrability of dispute[Art V(2)(a)]
The issue of arbitrability touches on the specific national interest of a state in allowing or
disallowing arbitration of certain disputes. The law of place of arbitration is not relevant. If a
certain dispute is not considered to be arbitrable under the law of place of arbitration, the courts
at such place may either set aside the award or refuse to recognise an arbitration agreement under
Art II(3) of the NYC.
12. Violation of Public Policy [Art V(2)(b)]
Public Policy is never argued at all but when other points fail. 22 The provision refers to the
public policy of the country where the enforcement is sought. The public policy of the country
where the arbitration took place is thus not relevant under Art V nor does the public policy of
any other country play a role. If the tribunal itself has considered an allegedly illegal act or facts
giving rise to the public policy defense, this does not preclude a court of enforcement from
deciding the issue itself. The arbitrators award does not prevent a defendant from raising the
public policy defense at the enforcement stage23.
PARTIAL RECOGNITION AND ENFORCEMENT
Where enforcement of only certain elements of a foreign award would violate the enforcing
states public policy, then the remaining part of the award may be enforced, provided that
separating the award into harmful and harmless elements is possible24.
22
Richardson v. Melish, (1824) 2 Bing. 228 (252) (Court of Common Pleas, England)
Soleimany v. Soleimany, (1999) QB 785, at 803 (Court of Appeal, England)
24
J.J. Agro Industries (P) Ltd v. Texuna International Ltd, (1993) 396 (HC, HK)
23
CONCLUSION
A foreign award becomes inapplicable when a successful challenge has been made to it or the
award has been refused to be recognised or enforced. There are various grounds as discussed
above to make a foreign award inapplicable.
There are three ways to challenge an award and there are numerous grounds to do so. These
grounds are somewhat similar to the grounds on the basis of a foreign award may refused to be
recognised or enforced.
The grounds are lack of jurisdiction, lack of due process, award being against public policy,
mistake of law, mistake of fact; award violates public policy, lack of proper notice, incapacity of
parties, invalid arbitration agreement, improper composition of arbitral tribunal etc.
An award can be partially recognise, enforce, challenge or set aside. Thus, one can say that
though an arbitral award is final and binding, its finality is limited to the extent of grounds
mentioned. An award can easily be challenged on any ground but the hard part is to prove so and
make the award inapplicable.
10
BIBLIOGRAPHY
Books:
DOMENICO DI PIETRO
AND
OF
INTERNATIONAL
AND
ENFORCEMENT
AND
OF
REDFERN
AND
HUNTER, LAW
AND
PRACTICE
OF
INTERNATIONAL COMMERCIAL
11
ON INTERNATIONAL
ARBITRATION (Frank-