With a few exceptions, the relevant comments indicate that the definition of ..... country where arbitration took place,
NATIONS Distr. GFIVERAL
E/CONF .26/2 6 March 1958
CIL
ORIGINAL: ENGLISH
L I I ~ ITAT3Op;rS ~ D X'IY~EREECE ?!I'( INTERNATIONAL COMmRCy1L AFBITRATION
COMMENTS ON DRAFT CONVENTION ON THE RFCCGNITION AND ENFORCWNT OF FOREIGN ARBITFAL AWARDS Note by t h e Secretary-General 1.
R e s o l u t i o n 604 (XXI) of t h e Economic and S o c i a l Council states t h a t t h e
draft Convention (E/2704, Annex) prepared by t h e Committee on t h e Enforcement of
I n t e r n a t i o n a l A r b i t r a l Awards s h a l l serve as a basis f o r t h e conclusion of a convention on t h e r e c o g n i t i o n and enforcement o f f o r e i g n arbitral awards, due account b e i n g t a k e n o f t h e comments and s u g g e s t i o n s made by Governments and nongovernmental o r g a n i z a t i o n s , as w e l l as of t h e d i s c u s s i o n a t t h e t w e n t y - f i r s t s e s s i o n (923rd meeting) o f t h e Council. the draft
The comments and s u g g e s t i o n s r e g a r d i n g
Convention are reproduced i n documents ~ / 2 8 2 2and addenda 1 t o
6,
and E/CONF .26bA/ and E/CONF. 26/4. 2.
A s t u d y of t h e comments and suggestions made by Governments and non-
governmental o r g a n i z a t i o n s i n d i c a t e s t h e i r concern with s e v e r a l n a j o r problems r e l a t i n g t o t h e d r a f t i n g o f a convention on the r e c o g n i t i o n and enforcement o f foreign a r b i t r a l awards.
These problems were a l s o raised i n t h e d i s c u s s i o n s
h e l d by t h e "Working Group on A r b i t r a t i o n " of t h e United Nat,iom Economic
Commission f o r Europe and i n some of t h e r e p l i e s r e c e i v e d from Governments i n connexion w i t h a s t u d y o f a r b i t r a t i o n f a c i l i t i e s made by t h e United Nations Economic Commission f o r Asia and t h e F a r E a s t . t h i s note t o s m a r i z e a l l t h e
While no attempt w i l l b e made i n
comments a n d suggestions t h a t were s u b m i t t e d on t h e
/...
'
E/CONF. 26/2 English Page 2 d r a f t Convention, it would n e v e r t h e l e s s seem u s e f u l t o draw t h e a t t e n t i o n o f t h e Conference t o t h e following major problems which appear t o e x i s t i n t h i s connexion :
1. 11.
k
-.
111.
IV.
Scope of t h e a p p l i c a t i o n of t h e Convention; Procedures f o r enforcement of a r b i t r a l awards; J u d i c i a l c o n t r o l o f t h e r e c o g n i t i o n and enforcement o f a r b i t r a l awards; and Relationships between any new m u l t i l a t e r a l convention and o t h e r t r e a t i e s o r laws r e l a t i n g t o t h e same s u b j e c t .
I.
Scope of t h e a p p l i c a t i o n of t h e Convention
3.
With a few exceptions, t h e r e l e v a n t comments i n d i c a t e t h a t t h e d e f i n i t i o n of
t h e scope of a p p l i c a t i o n of t h e new Convention contained i n A r t i c l e I of t h e Committee's draft i s considered p r e f e r a b l e t o t h e requirements under t h e
1927 Geneva Convention t h a t , i n o r d e r t o be enforceable, an award must have been rendered not only i n the t e r r i t o r y o f t h e Contracting S t a t e s but also between persons subject t o t h e i r J u r i s d i c t i o n .
Some of t h e comments p o i n t e d o u t , however,
that t h e provision i n t h e Committee's draft l i m i t i n g t h e a p p l i c a t i o n o f t h e new Convention s o l e l y t o awards made o u t s i d e t h e t e r r i t o r y o f t h e State o f enforcement might s t i l l be t o o r e s t r i c t i v e , and favoured a f u r t h e r broadening of t h e scope of a p p l i c a t i o n of t h e Convention so as t o i n c l u d e a l s o c e r t a i n o t h e r c l a s s e s of a r b i t r a l awards r e l a t i n g t o i n t e r n a t i o n a l commercial t r a n s a c t i o n s .
4.
Thus, it was suggested t h a t t h e new Convention should apply a l s o t o a r b i t r a l
awards rendered i n the t e r r i t o r y o f t h e S t a t e i n which t h e award i s b e i n g enforced., provided t h a t t h e dispute submitted t o a r b i t r a t i o n a r o s e between p a r t i e s domiciled ( o r having t h e i r main establishments) i n t h e t e r r i t o r i e s of d i f f e r e n t States.Z/
An extension of t h e scope of a p p l i c a b i l i t y of t h e new Convention t o
t h i s c l a s s of awards would n o t be novel, as such awards were enforceable under
the
1927 Convention,
provided. t h a t t h e y were made between persons s u b j e c t t o t h e
j u r i s d i c t i o n of t h e Contracting S t a t e s .
2/
O f f i c i a l Records ECOSOC, 2 l s t session, agenda i t e m 8, annexes: Document ~/2822, pp. 5 (Switzerland), 11-12 ( I n t e r n a t i o n a l Chamber of Commerce).
I...
E/CONF. 26/2 English Page 3
5.
It was also
s u g g e s t e d t h a t t h e scope of t h e ap9lication o f t h e Convention
should be f u r t h e r extended t o a t h i r d class of arbitral awards, comprising a l l a r b i t r a l awards "made i n disputes involving l e g a l r e l a t i o n s h i p s implemented i n h
whole or i n p a r t i n t h e t e r r i t o r i e s of different s t a t e s " , i r r e s p e c t i v e of whether
or not such awards were rendered abroad, and regardless of t h e domicile of t h e p a r t i e s between which a r b i t r a t i o n took place.?/
I n t h e ECE Working Group on
A r b i t r a t l o n , several delegations expressed their preference f o r a similar proposal providing i n a r b i t r a t i o n cases for an exemption from ordinary
national
j u r i s d i c t i o n "for a l l disputes r e l a t i n g t o foreign t r a d e , on t h e understanding t h a t f o r e i g n t r a d e would be taken t o mean a movement of goods, services or currencies across f r o n t i e r s " .
The ECE Worlring Group on Arbitration f e l t , however, t h a t t h i s
proposal should f i r s t be given close examination by Governments.
me
Conference may wish t o consider the respective merits of t h e s e a l t e r n a t i v e s both
from t h e p o i n t of view of b e s t s a t i s f y i n g t h e requirements of i n t e r n a t i o n a l 1
commerce and o f compatibility with t h e e x i s t i n g p r i n c i p l e s of relevant n a t i o n a l procedural laws.
6.
The comments on t h e provisions of t h e second paragraph of A r t i c l e I i n d i c a t e
t h a t s e v e r a l countries would be prepared t o accede t o t h e Convention only i f t h e y could apply it on t h e b a s i s o f reciprocity.?/
On t h e other hand, s e v e r a l
Governments and organizations pointed out t h a t t h e place where t h e a r b i t r a l t r i b u n a l meets i s o f t e n chosen without relevance t o t h e object of a r b i t r a t i o n but only as a matter of convenience, and s t r e s s e d t h e d e s i r a b i l i t y of a provision which would make it possible t o apply t h e Convention t o arbitral awards rendered i n any State, r e g a r d l e s s of whether it was a Party t o t h e Convention or not.g/
-3 /
=a.,
-4/ -5/
TRADE/55, paragraph 16.
6/
In
p. 1 2 ( I n t e r n a t i o n a l Chamber o f Commerce).
"Report of the Working Group on i t s Fourth SesBion", ECE document O f f i c i a l Records, ECOSOC, 21st session, agenda item 8, annexes, Docunent ~ / 2 8 2 2 , pp. 4 (Lebanon, Mexico), 18 (Egypt), 21 (United Kingdom) and 25 (Yugoslavia). Ibid. pp. 4 (Austria, Japan), 5 (SQitzerland), 1 2 ( I n t e r n a t i o n a l Chamber o f Commerce, Societd Belge drEt;udes e t d'Expansion); see a l s o Report of Committee on t h e Enforcement o f International. A r b i t r a l Avards, document E/2704, paragraph 22.
/...
E/COI!TF.26/2 English Page 4
view o f t h e s e d fferences of opinion, t h e s o l u t i o n proposed &n t h e d r a f t Convention, namely, t o open t h e way f o r enforcement of awards r e n d e r e d i n -the t e r r i t o r y o f any f o r e i g n S t a t e but a t t h e same t i m e t o pro,vide e x p r e s s l y f o r t h e p o s s i b i l i t y of r e s e r v a t i o n s l i m i t i n g t h e a p p l i c a t i o n of t h e Convention on a r e c i p r o c a l basis, nay be t h e one which would r e c e i v e ixost g e n e r a l acceptance. 11. Procedures f o r enforcement of a r b i t r a l awards
Some o f t h e Governments and o r g a n i z a t i o n s p o i n t e d o u t t h e d e s i r a b i l i t y o f
7.
supplementing A r t i c l e 11 of t h e Con,vention e i t h e r ( a ) by i n c l u d i n g i n it s t a n d a r d p r o c e d u r a l r u l e s t h a t would be a p p l i c a b l e t o t h e enforcement o f f o r e i g n a r b i t r a l awards, ( b ) by providing t h a t a r b i t r a l awards should be e n f o r c e d by a "sirnary procedure", o r ( c ) by s t i p u l a t i n g t h a t the a r b i t r a l awards r e c o g n i z e d p u r s u a n t t o t h e Convention should be enforceable by t h e same procedure as t h a t a p p l i e d t o domestic a r b i t r a l awarc3s.U
The o b j e c t of such p r o v i s i o n s would be t o preclude
t h e p o s s i b i l i t y t h a t t h e enforcement o f f o r e i g n awards may be d e l a y e d o r r e n d e r e d i m p r a c t i c a l because o f unduly complicated enforcement p r o c e d u r e s .
8.
Each o f t h e above proposals may g i v e r i s e t o some d i f f i c u l t i e s :
( a ) it may
not be c o n s i d e r e d p r a c t i c a l t o attempt s p e l l i n g o u t t h e a p p l i c a b l e enforcement procedures i n a l l d e t a i l i n t h e t e x t of t h e Convention i t s e l f ; ( b ) a refc= r e n c e t o
"smary'' enforcement procedures may not b e given an i d e n t i c a l meaning i n c o u n t r i e s w i t h d i f f e r e n t procedurcl. law systems; and ( c ) t h e procedures a p p l i c a b l e t o t h e enforcement of domestic a r b i t r a l awards may c o n t a i n elements which, i f applied t o f o r e i g n awards, would make t h e enforcement t o o cumbersome o r time-consuming.
A
p o s s i b l e s o l u t i o n of t h e s e d i f f i c u l t i e s may be t o provide i n A r t i c l e I1 of t h e d r a f t Convention t h a t a r b i t r a l awards recognized pursuant t o t h e Convention should be enforced i n accordance with a s i m p l i f i e d a n d e x p e d i t i o u s proceldure i c h , i n any event, should not be more onerous t h a n t h a t a p p l i e d t o domestic
rbitral awards
7/
O f f i c i a l Records ECOSOC, 21st s e s s i o n , agenda i t e m 8, annexes, document 3/2822, pp. 5 ( F e d e r a l Republic of Germany), S3 ( T n t e r n a t i l m a l Law Association, Society of Comparative L e g i s l a t i o n ) .
/...
,
.
E/CONF. 26/2 English
111 Judicial c o n t r o l o v e r t h e e n f o r c e a b i l i t y of a r b i t r a l awards
9,
One of t h e c e n t r a l problems o f t h e proposed Convention i s t o define t h e
conditions under which t h e competent a u t h o r i t i e s o f t h e country where t h e recognition and enforcement of a n a r b i t r a l award i s sought may refuse t o g r a n t such a request. It seems g e n e r a l l y a g r e e d t h a t , on one hand, courts should remain f r e e t o refuse t h e enforcement of a f o r e i g n a r b i t r a l award i f such a c t i o n should be necessary t o safeguard t h e b a s i c rights o f t h e ' l o s i n g p a r t y or i f t h e award would impose o b l i g a t i o n s clearly incompa%ible w i t h t h e g u b l i c policy of t h e country of enforcement.
On t h e o t h e r hand, i f t h e enforcing a u t h o r i t i e s were
t o proceed i n each case w i t h a f u l l re-examination of such awards, and, i n
p a r t i c u l a r if such re-examination would a l s o d e a l with t h e substance of t h e awards, t h e purpose of the Convention might be defeated:
i n many cases, the enforcing a u t h o r i t i e s c o u l d n o t be expected t o complete a f u l l j u d i c i a l examination o f t h e award w i t h i n reasonable t i m e - l i m i t s r e q u i r e d t o make t h e Convention a p r a c t i c a l expedient i n i n t e r n a t i o n a l commercial l i f e ,
Also, where
the a r b i t r a l proceedings encompass s e v e r a l j u r i s d i c t i o n s or where the d i f f e r e n c e s submitted t o a r b i L r a t i o n have l e g a l effects i n a number o f countries, it might be impossible t o avoid i n c o n s i s t e n c i e s between d i f f e r e n t judgements based on a variety of n a t i o n a l l e g a l systems.
The e x t e n t of j u d i c i a l control over t h e recognition and enforcement o f a r b i t r a l awards must be defined with p r e c i s i o n , s o as t o avoid t h e p o s s i b i l i t y Ghat a l o s i n g p a r t y could invoke without adequate
justification
a m u l t i p l i c i t y o f p o s s i b l e grounds f o r objections i n order t o f r u s t r a t e t h e enforcement o f awards rendered a g a i n s t it. 10. The conditions f o r e n f o r c e a b i l i t y of a r b i t r a l awards a r e d e a l t w i t h i n
Articles I11 and IV of the d r a f t Convention. The provisions of t h e s e two a r t i c l e s seem t o be l a r g e l y intea-dependent, and before proceeding t o t h e d r a f t i n g o f t h e t e x t s , the Conference m i g h t wish t o examine f i r s t t h e main aspects of the problem of j u a c i a l c o n t r o l over t h e enforcement of a r b i t r a l awards.
11. From t h e comments submit-ted on the d r a f t Convention by Governments and organizations, it i s c l e a r t h a t t h e y are well aware o f t h e considerations o u t l i n e d
i n paragraph 9 above. While some of t h e comments do contain suggestions t o t h e effect t h a t c e r t a i n a d d i t i o n a l o r a l t e r n a t i v e conditions should .be f u l f i l l e d before foreign a r b i t r a l awards can be recognized and enforced, t h e general tendency of I
/...
I
1'.
E/CONF. 26/2 English Page G the
comments i s t o seek a reduction of t h e grounds on which recognition and
enforcement of an a r b i t r a l award can be refused, and t o obtain g r e a t e r c l a r i t y and simplicity i n t h e provisions of A r t i c l e s I11 and IV of t h e draft Convention. F i r s t of a l l , it may be noted t h a t a l l Governments and organizations which
12.
submitted comments on t h i s point concurred t h a t it would be desirable t o eliminalie
! . V I sub-paragraph ( f ) of A r t i c l e /
This provision t h a t t h e enforcement of an
award may be refused i f it i s "so vague and i n d e f i n i t e a s t o be incapable of
recognition o r enforcement " w a s generally considered t o be superfluous; and apprehension was expressed that such a provision may give t h e defendant an excuse f o r delaying t a c t i c s , while a t t h e same time imposing on t h e enforcing a u t h o r i t i e s an undue burden of i n t e r p r e t a t i o n which could l e a d t o a r e v i e w o f t h e
arbitral awara as t o i t s substance.
13. A number o f comments a l s o concurred on t h e need t o c l a r i f y t h e provisions of A r t i c l e IV ( g ) .
Objections were r a i s e d against t h e requirement t h a t t h e
agreement o f t h e p a r t i e s as t o t h e composition o f the arbitral a u t h o r i t y and t h e
a r b i t r a l procedure need t o be i n accordance w i t h t h e laws of t h e country where a r b i t r a t i o n took place.9I
It was pointed out t h a t t h i s provision could cause
t h e f r u s t r a t i o n o€ awards i f any differences , however small and i n s i g n i f i c a n t a r e found t o occur between t h e a r b i t r a t i o n procedure agreed upon between t h e p a r t i e s and t h e laws prevailing i n t h e t e r r i t o r y where t h e a r b i t r a t o r s a c t u a l l y m e t . It considered thzb
5.
W;~S
p r o v i s l o n h v i n s such an cifec-l; vouici bc, a i ' o r t i o r i u n j u s t i i i e d
as i n many cases t h e choice of t h e country where t h e a r b i t r a t i o n t r i b u n a l gave i t s award may have been simply a matter o f coincidence, without relevance t o t h e
object o f t h e a r b i t r a t i o n , and unlrnown t o t h e p a r t i e s a t t h e t i m e when t h e y concluded t h e a r b i t r a t i o n agreement and s t i p u l a t e d t h e applicable procedures.
14.
Another provision which was commented upon as requiring omission o r a t least
further clarification
-8/ .I
'9/
I
'IES
t h e p o s s i b i l i t y foreseen i n A r t i c l e IV ( h ) t h a t
O f f i c i a l Records, ECOSOC, 21st session, agenda item 8, Annexes, document ~ / 2 8 2 2 , pp. 7 (Austria, Belgium), 8 (Federal Republic o f Germany, Japan, Switzerland, USSR) 1.5 (International Chamber of Comerce), 16 (Society of Comparative L e g i s l a t i o n ) , 18 (Sweden). O f f i c i a l Records ECOSOC, 21st session, agenda i t e m 8, annexes, document ~ / 2 8 2 2 , pp. 7 ( A u s t r i a ) , 8 (Federal Republic of Germany, Yrence, Switzerland) , S5 ( I n t e r n a t i o n a l Chamber o f Comnerce) 16 ( I n t e r n a t i o n a l Law Association , Society of Comparative Legislation) 19 (Greece).
I.**
E/CONF. 26/2 English Page 7
enforcement of an award may be refused. i f it w a s "incompatible
. .. w i t h
fundamental p r i n c i p l e s o f t h e l a w " o f t h e country where t h e award i s being r e l i e d
It w a s p o i n t e d o u t t h a t compatibility w i t h "public policy" was a
upon.
s u f f i c i e n t l y broad c r i t e r i o n and t h a t the additional requirements of compatibility w i t h fundamental p r i n c i p l e s of t h e l a w may give r i s e t o d i f f i c u l t i e s of
i n t e r p r e t a t i o n and open t h e question of a revision o f t h e award. as t o i t s substance 10/
.--
15.
Several Governments and organizations foresaw p r a c t i c a l d i f f i c u l t i e s i n
applying t h e p r o v i s i o n s of A r t i c l e I T 1 ( b ) requiring t h e party seeking enforcement of an a r b i t r a l award t o show t h a t i n t h e country where t h e award was made it has become " f i n a l and o p e r a t i v e " and t h a t i t s enforcement has not been suspended.
F i r s t of a l l , it would be normally impossible f o r t h e p a r t y seeking enforcement
t o submit a n e g a t i v e proof t h a t t h e enforcement of t h e award has not - been no a p p e a l h a s been lodged against t h e award, and it seemed suspended o r t h a t t h e r e f o r e i l l o g i c a l t o impose t h e burden of such a proof on t h e person seeking enforcement.
Objections were a l s o r a i s e d against t h e requirement of showing
t h a t the award had become "operative", i n p a r t i c u l a r i n view of t h e f a c t t h a t
'''
t h e d r a f t Convention combines t h i s requirement w i t h t h a t of t h e f i n a l i t y of t h e award.-
It w a s stressed t h a t u n l e s s t h i s provision was f u r t h e r c l a r i f i e d , t h e
enforcement a u t h o r i t i e s might i n t e r p r e t it as requiring a p r i o r exequatur or other form of r a t i f i c a t i o n o f t h e award by t h e competent j u d i c i a l a u t h o r i t i e s of t h e country where a r b i t r a t i o n took place, and t h u s make it necessary t o duplicate enforcement a c t i o n both i n t h e country where t h e award was made and i n t h e i
country where t h e award is t o be r e l i e d upon.
10/
It was a l s o pointed out t h a t i n
~
pp. 7 ( A u s t r i a ) , 8 (Jasan, USSR), 15 ( I n t e r n a t i o n a l Chamber of Commerce), 16 ( I n t e r n a t i o n a l Law Association, Societe Belge, Society for ComparatTve L e g i s l a t i o n ) 18 (Sweden) 22 (United Kingdom). Ibid
--*3
,
11/ O f f i c i a l Records ECOSOC, 21st session, agenda item 8, annexes, document
z
5 ( A u s t r i a , Belgium), 6 (Federal Republic of Germany, Switzerland), 13-14. ( I n t e r n a t i o n a l Chamber of Commerce, I n t e r n a t i o n a l Law A s s o c i a t i o n , S o c i e t y of Com-garative Legislation), 22 (United Kingdom). ~ / 2 8 2 2 ,pp.
/...
' \.
//
E / C O ~ 2. 6 / 2 English Page 8
practice -the determination by enforcement a u t h o r i t i e s a s t o whether or not an award was f i n a l might require t h e exmination of a possibly complex set of l e g a l provisions o f a f o r e i g n country under which actions f o r appeal from, o r annulment of , a r b i t r a l awards may be taken; and t h a t t h e t i m e - l i m i t s f o r such actions may be so extensive t h a t t h e need t o wait u n t i l a l l opportunities for appeals lapse and the award becomes " f i n a l and operative" may e f f e c t i v e l y preclude any p r a c t i c a l a p p l i c a t i o n of t h e enforcement Eachinery under the Convention.
16. Should t h e Conference f i n d these objections j u s t i f i e d , it may
wish t o
re-examine t h e language of A r t i c l e s I11 and I V of t h e draft Convention and look
f o r possible a l t e r n a t i v e s by which t h e above-described d i f f i c u l t i e s could be avoided. One such a l t e r n a t i v e might be t o provide t h a t t h e s o l e j u d i c i a l control over the r e g u l a r i t y of an a r b i t r a l award t o which t h e Convention
i
F l i P e would b e
exercised by t h e competent a u t h o r i t i e s of t h e country of enforcement.
A second
a l t e r n a t i v e may be t o divide t h e j u d i c i a l control between t h e a u t h o r i t i e s of t h e I
countries where t h e awardvos rendered and where it i s being r e l i e d upon, by enumerating t h e grounds on which an award could be, respectively, annulled before t h e f i r s t forum o r refused enforcement before t h e second forum.
A third
a l t e r n a t i v e could provide that t h e competent a u t h o r i t i e s of t h e country of enforcement would r e t a i n f u l l j u d i c i a l control over t h e r e g u l a r i t y of arbitral awards t o which t h e Convention applies, but t h a t under c e r t a i n circumstances some of t h e grounds for 'voiding t h e award ,may be presumed not t o be applicable unless
they had been invoked within a s e t t i m e - l i m i t before t h e courts of t h e country where t h e award w a s rendered.
17.
Taking i n t o account t h e comments submitted by Governments and by the
i n t e r e s t e d organizations, a s w e l l a s t h e ,views of governmental experts who p a r t i c i p a t e d i n t h e ECE Working Group on Arbitration and o f other a u t h o r i t i e s on t h e subject, consideration should be given t o , a t l e a s t , t h e following grounds on which t h e recognition and enforcement of a r b i t r a l awards t o which t h e Convention applies should be refused: ( a ) If t h e Tarties have not agreed i n writing t o submit t o a r b i t r a t i o n t h e matters dealt with i n t h e award. (b)
If t h e composition of t h e a r b i t r a l authority or t h e a r b i t r a l
procedure was not i n accordance with t h e written agreement of t h e
I...
E/CONF. 26/2 English Page 9 p a r t i e s o r , f a i l i n g such agreement, with t h e a p p l i c a b l e laws of t h e country where a r b i t r a t i o n took p l a c e . (c)
If t h e p a r t y a g a i n s t whom t h e award i s invoked was n o t given
n o t i c e o f t h e appointment of the a r b i t r a t o r o r o f t h e a r b i t r a t i o n proceedings i n s u f f i c i e n t t i m e t o enable him t o present h i s case o r i f , being under l e g a l i n c a p a c i t y , he was not p r o p e r l y r e p r e s e n t e d .
(a)
If t h e s u b j e c t matter of t h e award i s not capable of s e t t l e m e n t
by a r b i t r a t i o n under t h e laws of t h e country i n which t h e award i s sought ' t o be relied upon.
x C corngelling t h e ( e ) If t h e a r b i t r a l award would have t h e e f f e c t c p a r t i e s t o a c t i n a manner c o n t r a r y t o p u b l i c p o l i c y i n t h e c o u n t r y of enforcement.
18.
If t h e f i r s t of t h e a l t e r n a t i v e s r e f e r r e d t o i n paragraph
16 above was
adopted,
t h e competent a u t h o r i t i e s of t h e country where t h e award i s being r e l i e d upon could r e f u s e t o g r a n t i t s r e c o g n i t i o n and enforcement on any of t h e above grounds ( o r f o r such o t h e r reasons as may be s e t f o r t h i n t h e Convention).
But i f they
found t h a t none o f t h e grounds f o r r e f u s a l of enforcement s t i p u l a t e d i n t h e Convention were p r e s e n t , t h e y would not need t o examine f u r t h e r whether or n o t t h e award has been duly s a n c t i o n e d and has become o p e r a t i v e i n accordance w i t h t h e
laws o f t h e c o u n t r y where a r b i t r a t i o n took p l a c e .
If t h e award s a t i s f i e s t h e
yFLL1ps'i
f o r i t s enforcement would be
g r a n t e d w i t h o u t r e q u i r i n g a proof t h a t no f u r t h e r
o p p o r t u n i t i e s for appeal o r
c o n d i t i o n s set f o r t h i n t h e Convention, a
annulment proceedings a g a i n s t the award e x i s t i n t h e c o u n t r y where it was rendered.
Such a s o l u t i o n would take i n t o account t h e c o n s i d e r a t i o n s t h a t a n
arbitral t r i b u n a l does n o t n e c e s s a r i l y meet and r e n d e r i t s award i n a coun'wy where a n y o f t h e l e g a l r e l a t i o n s h i p s involved i n t h e d i s p u t e t h a t gave rise t o a r b i t r a t i o n are t o be implemented; that arbitral t r i b u n a l s are not j u d i c i a l organs o f t h e State where t h e y meet and do n o t d e r i v e t h e i r a u t h o r i t y from i t s
laws; a n d that an a r b i t r a l award may be o f no i n h e r e n t p u b l i c i n t e r e s t t o t h e c o u n t r y i n which it was rendered u n l e s s it i s also t o be given l e g a l e f f e c t i n that country,
19. The c o n c e n t r a t i o n o f j u d i c i a l c o n t r o l i n t h e hands of t h e competent a u t h o r i t i e s of t h e country of enforcement woula a v o i d any n e e d , t o d u p l i c a t e enforcement a c t i o n both i n t h e c o u n t r y where t h e award was made a n d i n t h e countr
.
E/CONF.2G/2 English Page 10 where t h e award i s t o be relied uson> and would obviate t h e danger t h a t an
arbitral award may be refused recognition because it had not become " f i n a l and
operative" i n t h e country where it was rendered f o r
reasons which may be
i r r e l e v a n t f o r t h e recognition o f t h e award i n the counLry where it i s t o be given l e g a l effect.
!This a l t e r n a t j - v e solution would a l s o avoid t h e u n c e r t a i n t i e s
and delays t h a t could arise i f the enforcement of an award depended. on %he proof
that the l o s i n g p a r t y has exhausted a l l opportunities for appeal i n the country where the a r b i t r a l t r i b u n a l m e t . 20.
While from t h e p r a c t i c a l p o i n t of v i e w of f a c i l i t a t i n g t h e settlement of
disputes by a r b i t r a t i o n t h e concentration of j u d i c i a l control of awards i n the country o f enforcement would undoubtedly present important advantages, t h i s a l t e r n a t i v e would a l s o have t h e e f f e c t of withholding f r o m t h e a u t h o r i t i e s of the country where -the award was rendered t h e r i g h t o f s c r u t i n y over t h e award (except i n cases where enforcement o f the award was a l s o applied f o r i n t h a t country)
I n the ECE Working Group on Arbitration , where s e v e r a l governmental
experts had s t r e s s e d t h e advantages o f t h i s a l t e r n a t i v e , g / some delegations r a i s e d objections against it f o r t h a t very reason. 21.
Under t h e second alternative solution r e f e r r e d t o i n paragraph
an a r b i t r a l award would be c o n t e s t a b l e i n t h e country where it
mfi
16 above, rendered on
t h e "procedural" grounds covered by paragraph 17(a) t o ( c ) above, i . e . t h a t t h e a r b i t r a t o r was incompetent t o hear the dispute o r t h a t t h e a r b i t r a t i o n procedure
was i r r e g u l a r .
I n t h e country of enforcement, the recognition of t h e a r b i t r a l
award could then be refused only on t h e grounds r e f e r r e d t o i n paragraph
17 (a)
and ( e ) above, namely, t h a t i n t h e country where t h e award i s sought t o be r e l i e d upon t h e s u b j e c t matter o f t h e award i s not capable of settlement by a r b i t r a t i o n , o r t h a t t h e effects of t h e award would be contrary t o public policy i n t h e country of enforcement.
I n t h e opinion o f some governmental experts, such a s o l u t i o n would reduce "the e x i s t i n g inconveniences of t h e system of double control
.., by t h e
d i f f e r e n t i a t i o n between t h e matters which could be covered by
the respective controls e x e r c i s e d i n %he country o f o r i g i n and i n the country
12/
Report of t h e ECE Working Group on Arbitration on i t s 4th session, ECE document TRADE/55, paragraphs 27-29,
/...
E/CONF .26/2 English Page 11
-
of enforcement. tf13/ The question may a r i s e , however, whether t h e Contracting P a r t i e s would be p r e p a r e d , on a world-wide basis, t o accept as conclusive and f i n a l t h e d e c i s i o n s made by a u t h o r i t i e s of another country on t h e questions of a r b i t r a t o r s and the correctness of t h e a r b i t r a t i o n procedure, and whether a l l C o n t r a c t i n g P a r t i e s would be w i l l i n g t o undertake t o enforce
t h e competence
Or
foreign arbi-bral awards without r e t a i n i n g the r i g h t t o examine themselves these a s p e c t s o f the r e g u l a r i t y of the award. 22.
The solution of divided j u d i c i a l control would. n o t by i t s e l f avoid t h e
difficul-tiea and d e l a y s which,may be caused by the uncertainty as t o whether a l l t h e o p p o r t u n i t i e s f o r appeal on t h e grounds involsable i n t h e country where t h e award was rendered- had a l r e a d y been exhausted.
Consequently, t h e members who
favoured this solu-tion o f t h e ECE Worliing Group on Arbitration linked it w i t h a proposal -I;o p r o v i d e , i n a multilateral convention, t h a t a n a r b i t r a l award could be contested in t h e country where it was made only during a short time-limit and t h a t It
on t h e e x p i r i n g OC t h i s t i m e - l i m i t
competenk judge would become f i n a l
&I award which was not s e t aside by t h e and could be enforced i n all t h e Contracting
S t a t e s , excep-l; w h e r e t h e award had t h e effect of compelling the P a r t i e s t o a c t
- A similar contrary t o the p u b l i c p o l i c y o f t h e country of enforcemnt. J-'~/ s o l u t i o n f o r a v o i d i n g t h e danger that "an unsuccessful p a r t y might i n d e f i n i t e l y delay t h e eiif'orcemen-1; o f a n award by Lodging purely obstructive appeals", i s a l s o included among the
comments submitted on t h e d r a f t Convention. One o f t h e Governments propose d t h a t "an award should become enforceable e i t h e r when the t i n e fixed for appeals by t h e domestic law has passea o r a f t e r , say, two months from t h e aeli,ver;y o f t h e awara ( u n l e s s proceedings have been i n s t i t u t e d t o upset o r a m n d t h e award) 23.
, whichever
happens f i r s t .
-
1115/
Thus, a t h i r d & L t c m a t i v e s o l u t i o n t o t h e d i f f i c u l t i e s mentioned i n
paragraph
15
above could be t o provide i n A r t i c l e s I11 and I V of t h e Convention
Ibid., p a r a g r a p h 32. Rcport of the E C E Working Group on Arbitration on i-ts 4th session, ECE do c-Lment TRADEI55, paragraph 32
-
O f f i c i a l R e c o r d s ECdSOC, 21st seesion, agenda item 8, annexes , document E/22822. p. 22 (United Kingdom), paragraph 8.
/...
E/CONF. 26/2 English Fage 1 2 t h a t the competent a u t h o r i t i e s o f t h e country where t h e award i s sought t o be relied upon may refuse i t s recognition and enforcement i f t h e y satisfy themselves
t h a t any of t h e f i v e grounds r e f e r r e d t o i n paragraph 17 above ( o r such o t h e r grounds as may be s t i p u l a t e d i n the Convention) are p r e s e n t ; p r o v i d e d t h a t i n t h e case of awards rendered i n t h e t e r r i t o r y of another Contracting P a r t y , t h e y would presume t h a t t h e grounds r e f e r r e d t o under paragraph
S7
( a ) t o ( c ) above
are not applicable i f t h e v a l i d i t y of t h e award has n o t been set aside on t h e s e grounds by t h e competent a u t h o r i t i e s of t h e country where t h e award h-as rendered
o r i f no appeal on t h e s e grounds was lodged by t h e l o s i n g p a r t y w i t h i n t h e t i m e - l i m i t s e t f o r t h i n t h e Convention. 24. Should a proposal along these l i n e s f i n d general acceptance, t h e p a r t y
claiming t h a t t h e a r b i t r a l award should be set aside because o f lack o f competence of t h e a r b i t r a t o r s or i r r e g u l a r i t i e s i n t h e a r b i t r a t i o n procedure could appeal within t h e time-limit provided for i n t h e Convention t o t h e c o u r t s of the country where'the award was made and seek t o o b t a i n i t s annulment.
If
no such appeal was lodged within t h e period set f o r t h i n t h e Convention (which should be counled as from t h e time when t h e award was communicated t o t h e l o s i n g p a r t y ) o r i f t h e v a l i d i t y of t h e award was not set a s i d e , t h e a r b i t r a l award could be presumed t o have become f i n a l ; i t s enforcement i n t h e t e r r i t o r y o f any other
Contracting S t a t e could then be r e f u s e d only i f i n t h e c o u n t r y where t h e '
award i s sought t o be r e l l e a upon the subject matter of t h e award i s n o t capable o f settlement by a r b i t r a t i o n , or i f the e f f e c t of t h e award would be c o n t r a r y t o
p u b l i c p o l i c y i n t h e country of enforcement. Such a s o l u t i o n would c o n s i d e r a b l y shorten and simplify enforcement proceedings without, it would seem, s u b s t a n t i a l l y d e t r a c t i n g from the j u d i c i a l safeguards available to t h e l o s i n g party o r from t h e c o n t r o l s over th'e consistency of an a r b i t r a l award w i t h p u b l i c
p o l i c y of the country of enforcement.
Vhile t h e country where t h e award was
rendered would r e t a i n j u d i c i a l c o n t r o l over those a s p e c t s o f t h e r e g u l a r i t y of t h e award which can be a p p r o p r i a t e l y examined i n t h a t form, t h e a u t h o r i t i e s o f
t h e country of enforcement would also maintain the r i g h t t o s c r u t i n i z e .the competence of t h e a r b i t r a l t r i b u n a l and i t s procedures i n t h o s e i n s t a n c e s where it could not be presumed tha t t h e absence o f grounds f o r r e f u s a l of enforcement of t h e award on these accounts has been conclusively establ-ished.
'
E/CONF 2 6 / 2 English Page 13 \ and other t r e a t i e s IV. Relationships between any new 9 m u l t i l a t e r a l convention or laws r e l a t i n g t o the same s u b j e c t
25.
The 1927 Geneva Convention on the Execution of Foreign A r b i t r a l Awards, i n
f o r c e a t p r e s e n t , applies o n l y t o awards made pursuant t o a r b i t r a t i o n agreements covered by the 1923 Protocol on A r b i t r a t i o n Clauses which i n turn provides f o r the recognition of v a l i d i t y o f a r b i t r a l agreements and f o r the exemption o f disputes s u b j e c t t o such agreements from the n o m a l j u r i s d i c t i o n of courts.
Moreover, the
1927 Convention i s open f o r s i g n a t u r e s o l e l y to p a r t i e s t o the 1923 Protocol. The new d r a f t Convention does n o t contain any express reference t o the 1923 Protocol, and some Governments commented on t h e omission i n the d r a f t Convention o f a provision which would recognize the v a l i d i t y o f a r b i t r a t i o n agreements or which would prevent a p a r t y t o an arbi-bration agreement from "sabotaging" t h a t agreement by bringing the d i s p u t e before a regular court o f justice.- 16/ m e r e m i g h t , however, be some d i f f i c u l t y i n including a clause containing provisions
along t h e s e lines i n t c t h e context of t h e draft of the new Convention.
It may be r e c a l l e d t h a t a proposal t o reproduce i n the d r a f t Convention the substance of
the provision contained i n A r t i c l e I of t h e
1923 Protocol
had been placed before
t h e A d Koc Committee on t h e Recognition and Enforcement of Arbitral Awards, and t h a t the Committee was divided on t h i s i s s u e . 26.
w .
Should the Conference come t o the conclusion t h a t it would not be appropriate
t o include i n the new Convention a provision affirming the v a l i d i t y of a r b i t r a t i o n agreements and exempting the d i s p u t e s covered by such agreements from the normal j u r i s d i c t i o n of courts, but nevertheless consider t h a t a more general recognition o t h e p r i n c i p l e s embodied i n t h e 1923 Protocol could increase the effectiveness of a r b i t r a t i o n i n the settlement of p r i v a t e l a w disputes, i t may wish t o deal with these problems under i t e m 5 o f i t s Provisional Agendd, with a view of making a recomnendation on t h i s s u b j e c t t o those S t a t e s which a r e not P a r t i e s
t o the
1923 Protocol.
16/ - O f f i c i a l Records ECOSOC, 2 1 s t session, agenda item 8, annexesg document ~ / 2 8 2 2 ,pp. 3 (Japan), 9 ( A u s t r i a ) , 18 (Sweden), 19 (Greece), 23 (United Kingdom) , 24 (Norway)
17/
I
"Report of the C o d i t t e e on Enforcement of International A b r i t r a l Awards", O f f i c i a l Records ECOSOC, 1 9 t h session, agenda item 14, annexes,. document , E/2704, paragraphs 18-19.
E/coNF.~~/~ English Page 14 2 7 . The view was a l s o expressed t h a t the new Convention should contain a provision terminating. t h e 1927 Geneva Convention on the Execution of Foreign A r b i t r a l Awards, and t h a t there i s a need t o define more c l e a r l y t h e r e l a t i o n s h i p between the o b l i g a t i o n s a r i s i n g from these two instruments.
w
I n a more general
way, t h e same problem may a r i s e i n connexioii with the application of o t h e r i n t e r n a t i o n a l agreements.
While no objection was r a i s e d against t h e p r i n c i p l e
embodied i n A r t i c l e V I of the d r a f t t h a t the Convention s h a l l not deprive art i n t e r e s t e d p a r t y o f any relevant r i g h t s available t o it under e x i s t i n g n a t i o n a l
laws or t r e a t i e s , some Governments and orGanizcGloL;s ~ ~ 1.i;l.,at - t t;le pyese1i.l; ~.ang,uage P
