Sunday, 23 December 2018

Critically evaluate the incorporation into the New York Convention of the restriction that only the courts of the seat of an arbitration can annul an award. Are the policies of the Convention served by this limitation, and what would be the consequences if no such limitation existed?

Article V of the New York Convention states that one ground for an award not being recognised is that “The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made”. Therefore, an annulment by a court not of the seat of arbitration would, under this ground, still be valid. 

The aim of the New York Convention is to promote the enforcement of arbitration awards in different countries to where the arbitration award was made. This is necessary for international arbitration to work. I will now consider the aforementioned restriction in Article V in the light of this aim of the Convention.
Positive aspects to the restriction:
1.     The role of foreign courts is to enforce not to annul:
In order for international arbitration to work, foreign courts must uphold the arbitration awards made in other jurisdictions. If they didn’t then the arbitration award would be undermined. However, a foreign court annulling an arbitration award goes far beyond this and actually results in foreign arbitration awards being undermined, which is the opposite of what is intended.
2.     It prevents ‘annulment shopping’:
If the restriction was not in place, a party could apply to different foreign courts for annulment until they found one willing to annul the award. This would undermine the finality of arbitration awards and thus international arbitration itself.
3.     It respects the parties’ intentions:
It is arguable that the parties impliedly chose to subject themselves to the law of the country where the arbitration took place, as this is the law which conferred power on the arbitrators. Thus, the only law which can annul the award is that law which was chosen.

Negative aspects to the restriction:
1.     A denationalised view of awards:
Some are of the view that the law of the country in which the arbitration award was made has no special claim to the arbitration agreement, and it is free for other legal systems to give recognition to such agreements, and confirm of annul them in their laws as they see fit. It is true that they can do this, but this is not an argument against why they should be restricted from doing this by the New York Convention.
2.     Fairness:

One could argue that a foreign court should be able to annul the award if it is manifestly unfair. However, this is a separate issue from the one at hand, and should be dealt with elsewhere. It should simply be the case that such annulments are ineffective from the start, and so the question of subsequent annulment does not even arise.

Tuesday, 4 December 2018

Critically compare the doctrines of competence-competence adopted by American and French courts. Which is superior?

The principle of competence competence in arbitration law is the principle that arbitrators have power to rule on their own jurisdiction. It has a positive and a negative aspect; the positive aspect to the principle is that an arbitrator can proceed with an arbitration and rule on its own jurisdiction even if the validity of the arbitration agreement is challenged in court. The negative aspect is that the courts should not make a judgement regarding the arbitrators’ jurisdiction until the arbitrators have had the opportunity to do so.
I will take the question of ‘which doctrine of competence competence is stronger?’ to mean ‘under which legal system does the arbitrator have the most power to rule on its own jurisdiction?’.

The doctrine of competence-competence is not mentioned in the US Federal Arbitration Act. It is a doctrine developed by the judiciary, and is intrinsically linked to the doctrine of separability, which is also a construct of the judiciary.
The doctrine of separability in the arbitration context holds that an arbitration clause in a contract is a distinct entity from the rest of the contract. The case of Rent-A-Center, West, Inc. v. Jackson used this concept to shape the current doctrine of competence competence in the USA. In this case, Jackson argued that an arbitrator could not logically be empowered to review its jurisdiction by the very agreement that was being contested. It was held that the arbitration or ‘delegation’ clause was separate to the rest of the contract, and a clause which empowered the arbitrator to determine its own authority would remain valid unless it was this clause and not rest of the agreement which was challenged as being invalid. This case was a strong affirmation of the positive aspect to the principle of competence competence.

In France, Article 1448 of the Civil Procedure Code was introduced by decree in 2011 and this article affirmed the existence of a principle of competence competence with both a positive and negative aspect. It held that an arbitrator has priority over a judge to determine his own jurisdiction, with the judge being unable to do this unless the arbitration agreement is manifestly void or the arbitral tribunal is not yet in existence. The parties are not able to alter this position by agreement; it is a compulsory rule of law. Article 1465 confirms this position by stating that “The arbitral tribunal has exclusive jurisdiction to rule on objections to its jurisdiction”.

Which doctrine is superior?
The French doctrine is superior as it has a positive and negative aspect, a dual effect, which clearly gives the arbitrator more power to determine its jurisdiction than the courts, whereas the US doctrine does not give the arbitrators as much power as this to determine its own jurisdiction.

Thursday, 22 November 2018

Should arbitral awards annulled at the seat of the arbitration be enforced by the courts of other countries?

Article V of the New York Convention could be interpreted as stating that if an award has been annulled by the court of the seat of arbitration, then the courts of other countries must not recognise or enforce the award. This would then be in conflict with Article VII which states that courts must apply domestic law which is more favourable to enforcement of awards. The question is which one of these provisions is more desirable, and I will argue that very different lines of thought concerning enforcement of awards underlie them.
Arguments in favour of enforcing an annulled award: Article VII:
1.     The Convention:
One could argue that one argument in favour of enforcing is that Article VII requires it; however we know that the requirements of the New York Convention are problematic here, and I will be considering more substantive arguments in favour.
2.     Promotes enforcement:
This results in more enforcement, which is the aim of the New York Convention.
3.     Denationalised view of awards:
The argument would be that the law of the home state has no special claim to the award, and so the other countries’ courts are free to enforce an award annulled in foreign courts. This is true in legal theory, but the point is that the Convention has given the home court this special claim, and the question is whether this is justified, rather than whether it is possible.

Arguments against enforcing an annulled award: Article V:
1.     The Convention:
See above
2.     Preserves finality:
If other courts could enforce awards annulled by the home court, then the parties could simply apply to foreign courts for enforcement until one granted it. This would mean that no annulment would ever be final, and would therefore undermine international arbitration. This argument is not necessarily in favour of the home court’s decision being final, but there needs to be some decision which is recognised internationally as final.
3.     The implied choice of the parties:
As above, their needs to be some court decision which is regarded as final regarding the enforceability of the arbitration award. One could argue that the court which has this decision should be determined by the parties. One could argue that the parties have impliedly done this when they chose to submit themselves to arbitration which derives its legal force from the legal system of the country the arbitration takes place in. This should, however, mean that if the parties explicitly choose a different law to determine the final decision, then this should be given effect to.
At the moment, the New York Convention has held that the court with the final say as to the enforceability of an arbitration agreement is the court of the seat of arbitration. There needs to be a court with a final say for international arbitration to work, and it is arguable that this choice gives effect to the implied intentions of the parties, which is a fundamental concern in arbitration law.