Cross-border enforcement of arbitration awards

Arbitration is often the preferred dispute resolution option in cross-border contracts. Nicole Smith explains the process for enforcing awards where the other party’s assets are outside the United Kingdom.

In the context of dispute resolution, "winning" your case can be only half the battle. If the other party does not pay the award or judgment voluntarily, you may need to proceed to enforcement. Where the other party’s assets are based outside of the United Kingdom, this may seem a daunting proposition. But it does not need to be, particularly in the case of arbitration awards.

Over 145 nations (including the major trading nations) have signed up to what is known as the " New York Convention" on enforcement of arbitral awards. The list of parties includes the Russian Federation, China, India, Indonesia, the USA and Japan. Under this convention, if the "seat" of arbitration (usually where the arbitration took place) was in a country that is a party to the New York Convention, then all other parties to the convention will enforce the award in accordance with a streamlined procedure.

The fact that so many countries have signed up to the New York Convention means that arbitration is often the preferred dispute resolution option in cross-border contracts. Where a UK based company is seeking to enforce a judgment (rather than an arbitral award) in another country, it is necessary to determine whether that other country has entered into a treaty agreeing to the reciprocal enforcement of judgments with the UK or has otherwise shown a willingness to enforce UK judgments in its courts.

The courts of countries that are parties to the New York Convention will only refuse to enforce an award under the convention on certain limited grounds. They will not allow a party seeking to resist enforcement to reargue the substance of the dispute, i.e. to claim that the tribunal got it wrong. The limited grounds upon which the courts can refuse to enforce a New York Convention award largely relate to:

• procedure – the way the proceedings were conducted;
• the appointment of the tribunal; and
• public policy.

Although each country will have its own procedural requirements as to how to go about asking its courts to assist with the enforcement of a New York Convention award, the basic process is that the applicant must:

• present the award for enforcement before the expiration of any specified limitation period;
• present a copy of the underlying arbitration agreement; and
• provide translations of the documents into the language of the relevant country.

A summary of the procedure that is required in many countries that are parties to the New York Convention can be found in the Report from the ICC Commission on Arbitration, "Guide to the National Rules of Procedure for Recognition and Enforcement of New York Convention Awards – ICC 2008 Special Supplement (the ICC Guide). It is intended that the ICC Guide will be updated from time to time as local conditions for recognition and enforcement change.

However, as is noted in the ICC Guide, it is only intended to provide an outline of the procedures to be followed in each country and it is recommended that local advice should be taken before seeking to enforce an award in a foreign jurisdiction.

Nicole Smith is on the editorial committee for the ICC Guide and is the country rapporteur for the New Zealand section of the report.

Keystone Law has a wide network of arbitration contacts in many jurisdictions and if you have an arbitration award that you wish to enforce in the UK or elsewhere, we would be delighted to assist you.