Hostname: page-component-586b7cd67f-rdxmf Total loading time: 0 Render date: 2024-11-27T14:32:13.025Z Has data issue: false hasContentIssue false
  • English
  • Français

Enforcing Awards Annulled in their State of Origin under the New York Convention

Published online by Cambridge University Press:  17 January 2008

Georgios C. Petrochilos
Get access Rights & Permissions [Opens in a new window]

Extract

An impressive corpus of legal literature has accumulated in the last few years on the question whether it is possible or desirable to have an arbitral award enforced under the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards1 despite the award's having been annulled in the State where it was made. The issue is important not only in the context of the New York Convention, which itself is the most widely used vehicle of recognition and enforcement of foreign arbitral awards,2 but also in the context of other international documents3 or national law provisions modelled on the Convention4 and bilateral treaties that incorporate it by reference.5 The debate has largely centred on two well-known cases, Hilmarton and Chromalloy. It is the purpose of this article to analyse those cases and other relevant case law and offer a comprehensive analysis of the relevance of judicial decisions of the State of origin for purposes of enforcement under the New York Convention. In doing so this article proposes to discuss both the technical aspects of the relevant provisions of the Convention, and in particular their interrelationship, and the issues of legal policy that arise. Though the discussion will touch upon the wider doctrinal question of the degree of independence of arbitral proceedings from the law of the arbitral situs.

Type
Articles
Information
International & Comparative Law Quarterly , Volume 48 , Issue 4 , October 1999 , pp. 856 - 888
Copyright
Copyright © British Institute of International and Comparative Law 1999

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1. Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 10 June 1958), (1959) 330 U.N.T.S. 3, 38 (hereafter the “New York Convention” or simply the “Convention”).Google Scholar

2. At the time of writing there were 121 parties to the Convention; see Multilateral Treaties Deposited with the Secretary-General, status as at 28 08 1999, available at: http://www.un.org/Depts/Treaty.Google Scholar

3. See Inter-American Convention on International Commercial Arbitration (Panama, 30 01 1975), O.A.S.T.S. No.42, Art.5(1)(e)Google Scholar; UNCITRAL Model Law on International Commercial Arbitration, UN Doc.A/40/17 (1985)Google Scholar, Annex I, reproduced in (1985) 24 I.L.M. 1302, Art36(1)(a)(v).Google Scholar

4. See Arbitration Act 1996, s.103(2)(f) (England). German and Swiss law incorporate the Convention by direct reference; see Loi fédérale sur le droit international privé (“LDIP”), 1987, [1988] R.O. 1776, Art.194 (Switzerland); Zivilprozessordnung (“ZPO”), §1061(1) (Germany).Google Scholar

5. See e.g. Convention concerning the Reciprocal Recognition and Enforcement of Judicial Decisions, Arbitral Awards and Authentic Acts in Civil and Commercial Matters (Vienna, 16 June 1959) (1962) 419 U.N.T.S. 45, 60, Art.6(2) (Belgium–Austria).Google Scholar

6. The loci classici in English are Mann, F. A. “Lex facit Arbitrum”, in Sanders, P. (Ed.), International Arbitration: Liber Amicorum for Martin Domke (1967), p.157CrossRefGoogle Scholar, reprinted in (1986) 2 Arb. Int. 241Google Scholar; Paulsson, J., “Arbitration Unbound: Award Detached from the Law of its Country of Origin” (1981) 30 I.C.L.Q. 358Google Scholar; “Delocalisation of International Commercial Arbitration: When and Why it matters” (1983) 32 I.C.L.Q. 53Google Scholar; Park, W. W., “The Lex Loci Arbitri and International Commercial Arbitration” (1983) 32 I.C.L.Q. 21.Google Scholar

7. For the purposes of this article “annulment” will include both “formative” judgments (Gestaltungsurteile) annulling or “vacating” awards and judgments declaratory of the nullity of awards.

8. Sanders, P., “New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards”, (1959) 6 Neth. I.L.R. 43, 55.Google Scholar See also van den Berg, A. J.. “Annulment of Awards in International Arbitration”, in Lillich, R. B. and Brower, C N. (Eds), International Arbitration in the 21st Century: Towards “Judicializalion” and Uniformity (1992), pp.133, 161Google Scholar; Height, G. W., Convention on Recognition and Enforcement of Foreign Awards: Summary Analysis of the Record of the UN Conference (1958), p.42Google Scholar; Robert, J., L'Arbitrage: Droit Interne, Droit International Privé (5th edn, 1982), pp 343–344.Google Scholar Cf. Commonwealth Secretariat, The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1981), p.24.Google Scholar

9. The term “enforcement forum” is used here as equivalent to the technical terms “State addressed” or “juge requis”.

10. Cf. Legality of the Threat or Use of Nuclear Weapons. Advisory Opinion, I.C.J. Rep. 1996, 226, 233, para.14.Google Scholar

11. See Convention, Art.XVl(1). The other authentic versions are Chinese, Russian, and Spanish.

12. See Paulsson, J., “May or Must under the New York Convention: An Exercise in Syntax and Linguistics” (1998) 14 Arb. Int. 227, 229.Google Scholar

13. Convention on the Law of Treaties (Vienna, 22 May 1969), (1980) 1155 U.N.T.S. 331.Google Scholar

14. See Paulsson, , op. cit. supra n.12, at p.228. The Spanish text in particular reads “Solo se podrá denegar … si”.Google Scholar

15. Contra Fouchard, P., “La Portée Internationale de l'Annulation de la Sentence Arbitrale dans son Pays d'Origine” [1997] Rev. Arb. 329, 344–345, para.27.Google Scholar Professor Fouchard's opinion would seem to be corroborated by Art.27 of the Brussels Convention, which reads in English “shall not be recognized if” and in French “ne sont pas reconnues si” see Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (Brussels, 27 Sept. 1968) (1998) O.J. L27/1–27 (consolidated text), hereafter the “Brusseb Convention” See also infra n.39 and accompanying text.Google Scholar

16. See e.g. Military and Paramilitary Activities in and against Nicaragua (Jurisdiction and Admissibility), I.C.J. Rep. 1984, 392, 406–407, paras 31–32; 533, 537–539 (Sep. Op. Jennings); 558, 573–575, paras.21–23 (Diss. Op. Schwebel).Google Scholar See also James Buchanan & Co. Ltd v. Babco Forwarding and Shipping (UK) Ltd [1978] A.C. 141, 154 (per Lord Wilberforce (HL)Google Scholar discussing the meaning of “charges incurred in respect of the carriage” in the International Carriage of Goods by Road Convention, contrasting it with the French “frais encourus à l'occasion du transport”); Fothergill v. Monarch Airlines Ltd [1981] A.C. 251, 272Google Scholar(per Lord Wilberforce), [1980] 2 Lloyd's Rep. 295 (HL).Google Scholar

17. See ICC, Enforcement of International Arbitral Awards (Brochure No.174, 1953), reproduced in UN Doc.E/C.2/373 (1955): Preliminary Draft Convention. Art.IV.Google Scholar

18. See Draft Convention, UN Doc.E/2704 and Corr.1 (1955, Original: English), p.7Google Scholar, Art.IV. For a commentary see idem paras.32–33. Such a provision would be even stricter than the similar Art.1(d) of the Geneva Convention, infra n.33, whereas a central motivation behind the New York Convention was to do away with that requirement of finality; see e.g. van den Berg, A. J., The New York Arbitration Convention of 1958 (1981), pp.333–334.Google Scholar

19. See Draft Convention, idem, Art.III(b).

20. See Comments on Draft Convention, UN Doc.E/2822 and Add.1–6; see, however, e.g. the comments of the Dutch government, idem, Add.6.

21. See UN Doc.E/CONF.26/L34 (28 05 1958).Google Scholar

22. See UN Doc.E/CONF.26/L.43 (3 06 1958, Original: English).Google Scholar

23. See UN Doc.E/CONF.26/L.40 (2 06 1958, Original: French).Google Scholar

24. Though there is at least one more well-known linguistic discrepancy in the Convention. Art.II(2) reads in English “The term ‘agreement in writing’ shall include [certain forms of agreement]”, whereas the French text apparently limits the valid forms of agreement in writing to those enumerated in that Art.II(2) by providing that “On entend par ‘convention écrite’ [those forms]”. The Russian version agrees with the English one, the French. Spanish and Chinese with the French one.

25. See China Agrobusiness Development Corporation v. Balli Trading [1998] 2 Lloyd's Rep. 76, 79 (a decision on the interpretation of the Arbitration Act 1975).Google Scholar

26. See Hong Kong High Court, Qinhunangdao v. Million Basic Company (1994) 19 Y.C.A. 675, 676.Google Scholar

27. For the relevant authorities and an extensive discussion see van den Berg, A. J., “Residual Discretion and Validity of the Arbitration Agreement in the Enforcement of Arbitral Awards under the New York Convention of 1958” in Sood, K. T. et al. (Eds), Current Legal Issues in International Commercial Litigation (1997), pp.327, 330–336.Google ScholarSee also Moscow City Court, 10 02 1995Google Scholar, CLOUT case No.148, UN Doc.A/CN.9/SER.C/ ABSTR ACTS.10 (1996)Google Scholar, (1997) 22 Y.C.A. 294 (a decision on Art.34(2) of the UNCITRAL Model Law).Google Scholar

28. The two reported cases, Far Eastern Shipping Co. v. AKP Sovcomflot [1995] 1 Lloyd's Rep. 520Google Scholar, (1996) 21 Y.C.A. 699Google Scholar; Hewlett-Packard Inc v. Berg, 61 F3d 101 (1st Cir. 1995), vacating 867 F.Supp. 1126Google Scholar(D Mass. 1994)Google Scholar, deal with the question more as a matter of Art.III (effect to be given to foreign awards), but in staying enforcement the courts have doubtless exercised their discretion under Art.V(1). Note that in view of the exclusive character of the grounds for refusing and/or deferring enforcement under Arts.V and VI the precedential value of the cases is controversial; for a discussion see Horning, R. A., “Deferral of Enforcement of New York Convention Awards for ‘Prudential Reasons’” [1997] Int. A.L.R. 3.Google ScholarSee also Resort Condominiums International Inc. v. Boldwell et al. [1993] 118 A.L.R. 655 (SC QLD).Google Scholar

29. Accord: Paulsson, , op. cit. supra n.12, passim, and at p.228, n.3, with further references.Google Scholar

30. A good example is the European Convention on Human Rights (Convention for the Protection of Human Rights and Fundamental Freedoms (Rome, 4 Nov. 1950) (1955) 213 U.N.T.S. 221), which contains such general guidelines in the second para, of Arts.7–11. These paras, have been held by the European Commission and Court of Human Rights to provide a “margin of appreciation”, reviewable by the European institutions, in favour of the domestic implementing authorities.Google Scholar

31. See van den, Berg, op cit. supra n.18 at p.81.Google Scholar

32. Van den Berg, idem, pp.82–83, concludes that “any party” will in practice be the party seeking enforcement.

33. See Convention on the Execution of Foreign Arbitral Awards (Geneva, 26 Sept. 1927) (1929) 92 L.N.T.S. 301, hereafter the “Geneva Convention”.Google Scholar

34. This is the case in French and Belgian law; see Nouveau Code de Procédure Civile (“NCPC”), Art.1502 (France), Code Judiciaire, Art.1723 (Belgium).

35. Contrast Art.V(2)(b), which directly authorises refusal of recognition if it would be contrary to the public policy of the enforcement forum.

36. See for that view Samuel, A., Jurisdictional Problems in International Commercial Arbitration (1989), pp.307–308.Google Scholar

37. Contrast idem, pp.301–302.

38. See Reisman, W. M., Systems of Control in International Adjudication and Arbitration (1992), Chap.4, pp.111–114 (arguing that the Convention sets forth a rule of international allocation of competence). See also infra n.44 and accompanying text.Google Scholar

39. Paris, 20 June 1980, Clair v. Berardi et Gamier et Pavec, es qual. (1982) 71 R.C.D.I.P. 768Google Scholar, [1981] Rev. Arb. 424Google Scholar, note Mezger, (1982) 7 Y.C.A. 319.Google Scholar Note in passing that, strictly speaking, the holding on the nationality of the award was superfluous; Art.V(1)(e) directly defines “nationality” for its purposes, in that it requires a decision by a competent authority of either the State of origin or the State under the law of which the award has been made. And cf. Hoge Raad, 7 Nov. 1975, Société d'Etudes et Entreprises v. The Federal Republic of Yugoslavia (1976) 1 Y.C.A. 195, 198.Google Scholar

40. See [1983] Rev. Arb. 525Google Scholar, (1984) 9 Y.C.A. 109.Google Scholar

41. OGH, 1 02 1980Google Scholar(Norsolor SA v. Pabalk Ticaret Ltd Sirketi) [1981] J.B1. 437Google Scholar, note Pfersmann, , (1982) 7 Y.C.A. 312, note Melis.Google Scholar

42. Idem, p.313, sub no.[2].

43. Ibid. sub no.[4].

44. See Convention, Art.1. Though Art.V(1)(e) makes plain that annulment is internationally opposable in terms of international jurisdiction, it is equally plain that a domestic law provision is required if a domestic court is to assume annulment jurisdiction. The contrary, erroneous interpretation was followed by the House of Lords in Hiscox v. Outhwaite [1992] 1 A.C. 562, 595–596 (per Lord Oliver of Aylmerton)Google Scholar, [1991] 3 W.L.R. 297Google Scholar, [1991] 3 All E.R. 641Google Scholar, (1992) 17 Y.C.A. 599Google Scholar, HL (a decision on the Arbitration Act 1975); see e.g. the comments of Reymond, C. (1992) 108 L.Q.R. 1.Google ScholarSee also OGH, 25 June 1992, (1992) 65 S.Z. 484Google Scholar, (1997) 22 Y.C.A. 619Google Scholar (Art.V(1)(e) contains a duty for the contracting States to provide for recourse against awards made in their territory); International Standard Electric Corporation v. Bridas Sociedad Anonima Petrolera, Industrial y Comercial, 745 F.Supp. 172, 175, (1992) 17 Y.C.A. 639Google Scholar, [1994] Rev. Arb. 739 (SDNY 1990)Google Scholar; M & C Corporation v. Erwin Behr GmbH &Co. KG, 87 F3d, 844, 848 (6th Cir. 1996).Google Scholar But see correctly Paris, 21 Feb. 1980, General National Maritime Transport Company v. Société Gotaverken Arendal AB (1980) 107 J.D.I. 660Google Scholar, note Fouchard, (1980) 69 R.C.D.I.P. 763Google Scholar, note Mezger, [1980] Rev. Arb. 524Google Scholar, note Jeantet, [1980] D. 568Google Scholar, note Robert, [1981] J.C.P. II. 19512Google Scholar, note Level; Cass. Civ. 1re, 25 May 1983, Société Maatschappij Voor Industriele Research en Ontwikkeling v. Lievremont et al. (1985) 73 R.C.D.I.P. 709Google Scholar, [1985] Rev. Arb. 415Google Scholar, note Synvet, (1987) 12 Y.C.A. 480Google Scholar; Cass. Civ. 1re, 5 May 1987, Commandement des Forces Aériennes de la République Islamique d'Iran v. Bendone Derossi International (1987) 114 J.D.I. 964Google Scholar, note Oppetit, [1988] Rev. Arb. 137Google Scholar, note Synvet, (1989) 14 Y.C.A. 627Google Scholar; High Court, Bombay, Bombay Gas Company Ltd v. Mark Victor Mascarenhas, commented on by Mody, [1998] Int. A.L.R. 178 (a decision on the Indian Arbitration and Conciliation Act 1996).Google Scholar

45. HG and OLG Vienna, judgments of 29 June 1981 and 29 Jan. 1982 respectively (Norsolor SA v. Pabalk Ticaret Ltd Sirketi) [1983] Rev. Arb. 513, 516.Google Scholar

46. OGH, 18 Nov. 1982 (Pabalk Ticaret Ltd Sirketi v. Norsolor SA), (1983) 29 R.I.W. 868Google Scholar, note Seidl-Hohenveldern, [1984] IPRax 97Google Scholar, [1983] K.T.S. 666Google Scholar, note Schlosser, (1983) 110 J.D.I. 645Google Scholar, note Seidl-Hohenveldem, [1983] Rev. Arb. 519Google Scholar, (1984) 9 Y.C.A. 159Google Scholar, note Melis. For a general commentary on the Austrian litigation see Bajons, E.-M., “Zur Nationalität internationaler Schiedssachen: Der Fall ‘Norsolor’ vor den österreichischen Gerichten”, in Rechberger, W. H. and Welser, R. (Eds), Festschrift für Winfried Kralik (1986) p.3.Google Scholar

47. TGI Paris, 4 03 1981Google Scholar, Société Pabalk Ticaret Sirketi v. Société Norsolor [1983] Rev. Arb. 466.Google Scholar

48. Paris, 19 11 1982Google Scholar, Société Norsolor v. Société Pabalk Ticaret Sirketi [1983] Rev. Arb. 466, 472Google Scholar, (1985) 24 I.L.M. 363Google Scholar, (1986) 11 Y.C.A. 484.Google Scholar

49. Cass. Civ. 1re, 9 10 1984Google Scholar, Société Pabalk Ticaret Sirketi v. Société Norsolor (1985) 112 J.D.I.Google Scholar, note Kahn, (1985) 74 R.C.D.I.P. 555Google Scholar, [1985] D. 101Google Scholar, note Robert, [1985] Rev. Arb. 431Google Scholar, note Goldman, (1985) 24 I.L.M. 360Google Scholar, (1986) 11 Y.C.A. 484Google Scholar, (1985) 2 No.2 J. Int. Arb. 67Google Scholar, note Thompson. See also Robert, J. “Retour sur l'arět Pabalk-Norsolor” [1985] D. chr. 83Google Scholar; Goldman, B., “Une Bataille Judiciaire autour de la Lex Mercatoria: L'affaire Norsolor” [1983] Rev. Arb. 379.Google Scholar

50. See Parsons & Whittemore Overseas Co. Inc. v. Société Générale de l'Industrie du Papier, 508 F.2d 969, 973 (2d Cir. 1974)Google Scholar; cf. Mitsubishi Motors Corporation v. Soler Chrysler-Plymouth Inc., 473 U.S. 614, 626–627.Google Scholar105 S.Ct. 3346, 3354 (1985).Google Scholar

51. See op. cit. supra n.18.

52. See Tribunal Fédéral, 14 03 1984Google Scholar, Denysiana SA v. Jassica SA (1984) 110 B.G.E. lb 191Google Scholar; President, Rechtbank Amsterdam, 24 04 1991Google Scholar (v/o Tractoexport v. Dimpex Trading BV), (1992) 17 Y.C.A. 572Google Scholar; Bundesgerichtshof, 26 Feb. 1991, (1991) 37 R.I.W. 420Google Scholar, (1992) 17 Y.C.A. 513.Google Scholar

53. See infra n.110 and accompanying text.

54. Cass. Civ. 1re, 10 03 1993Google Scholar, Société Polish Ocean Line v. Société Jolasry (1993) 120 J.D.I. 360Google Scholar, note Kahn, [1993] Rev. Arb. 255Google Scholar, note Hascher, (1994) 19 Y.C.A. 662.Google Scholar

55. See e.g. Soleh Boneh International Ltd v. Government of the Republic of Uganda [1993] 2 Lloyd's Rep. 208, 212–213 (CA).Google ScholarSee also Supreme Court of Sweden, 13 08 1979Google Scholar, General National Maritime Transport Co. v. Götaverken Arendal Aktiebolag, translated in Appendix to Paulsson, J., “The Role of Swedish Courts in Transnational Commercial Arbitration” (1981) 21 Va. J.I.L. 211, 244Google Scholar; Fertilizer Corporation of India et al. v. IDI Management Inc., 517 F.Supp. 948, 957–958Google Scholar, (1982) 7 Y.C.A. 282Google Scholar (SD Ohio 1981); Ukrvneshprom State Foreign Economic Enterprise v. Tradeway Inc., 1996 WL 107285, at 3Google Scholar, (1997) 22 Y.C.A. 983 (SDNY 1996).Google ScholarSee also President, Rechtbank Amsterdam, 12 July 1984, SPP (Middle East) Ltd v. Arab Republic of Egypt [1988] N J. 67Google Scholar, (1985) 24 I.L.M. 1040Google Scholar, (1985) 10 Y.C.A. 487Google Scholar, [1986] Rev. Arb. 101, 3 I.C.S.I.D. Rep. 92.Google Scholar

56. But cf., erroneously, Gharavi, H. G., “Enforcing Set Aside Arbitral Awards: France's Controversial Steps beyond the New York Convention” (1996) 6 J. Transnat'l L. & P. 93, 106–107.Google Scholar

57. Paris, 12 Feb. 1993, Société Unichips Finanziaria v. Gesnouin [1993] Rev. Arb. 255Google Scholar, note Hascher, (1994) 19 Y.C.A. 658.Google Scholar

58. See Tribunal Fédéral, 1 July 1991, U v. Époux G (1991) 117 II A.T.F. 346.Google Scholar

59. Though the exact provision of French law on which the respondent was relying does not appear on the decision as reported, it may be presumed that the basis was a general rule on “préclusion” or good faith.

60. See for a similar case Supreme Court, Durban and Coast Local Division, Laconian Maritime Enterprises Ltd v. Agromar Lineas Ltd [1986] 3 S.A.L.R. 511Google Scholar, (1989) 14 Y.C.A. 693.Google Scholar For the notions generally see DSV Silo- und Verwaltungsgesellschaft mbH v. Owners of the Sennar and thirteen other ships, The Sennar [1985] 1 W.L.R. 490Google Scholar, [1985] 2 All E.R. 104, HLGoogle Scholar; Alfadda et al. v. Fenn et al., 996 F.Supp. 1317, 1325–1332 (SDNY 1997) (containing a discussion of the US law judicial and academic authorities).Google Scholar

61. Leurent has argued, implausibly, that Art.VII should function in such cases as a mechanism to ensure that the situs law prevails: if an award has been validated or not annulled by the courts there, Art.VII(1) should make situs law apply and render control by Art.V(1) inapplicable; see Leurent, B., “Reflections of the International Effectiveness of Arbitration Awards”, (1996) 12 Arb. Int. 269, 283.Google Scholar (For the original in French see [1994] Tr. Com. Fr. D.I.P. 95.)Google Scholar

62. In any event, an order of enforcement, as distinct from a confirming declaration, at the State of origin would not under normal principles qualify as a “judgment” for purposes of recognition; see Hascher, D. T., “Recognition and Enforcement of Arbitration Awards and the Brussels Convention” (1996) 12 Arb. Int. 233, 237–241.Google ScholarFor an exception see Treaty Concerning the Reciprocal Recognition and Enforcement of Judicial Decisions and other Executory Instruments (Oslo, 17 June 1977), (1983) 1320 U.N.T.S. 37, 61, Art. 1(3) (Federal Republic of Germany-Norway).Google Scholar

63. See e.g. Fouchard, op. cit. supra n.15. at pp.338–340Google Scholar; Gaillard, E., “L'Exécution des Sentences Annulées dans leur Pays d'Origine” (1998) 125 J.D.I. 645, 651–653.Google Scholar

64. See ICC 5622/1988, [1993] Rev. Arb. 327Google Scholar, (1994) 19 Y.C.A. 105.Google Scholar

65. See Concordat sur l'arbitrage, 1969, [1969] R.O. 1117, Art.36(f).Google Scholar For the text and comment see Poudret in Lalive, P., Poudret, J.-F. and Reymond, C., Le Droit de l'Arbitrage Interne et International en Suisse (1989), p.200 at pp.212–213.Google Scholar

66. See Cour de Justice, Canton of Geneva, 17 11 1989Google Scholar, Société Hilmarton v. Société OTV; Tribunal Fédéral, 17 04 1990Google Scholar, Société OTV v. Société Hilmarton [1993] Rev. Arb. 315Google Scholar, (1994) 19 Y.C.A. 214.Google Scholar Hilmarton subsequently obtained recognition of the annulling judgment in France; see TGI Nanterre, 22 Sept. 1993, Société Hilmarton v. Société OTV (1995) 20 Y.C.A. 194.Google Scholar

67. Paris, 19 Dec. 1991, Société Hilmarton v. Société OTV [1993] Rev. Arb. 300Google Scholar, (1993) 46 R.T.D. Comm. 646, note Loquin.Google Scholar

68. Idem, p.301. For the arbitration clause see [1993] Rev. Arb. 317.Google Scholar

69. Cass. Civ. 1re, 23 Mar. 1994, Société Hilmarton v. Société OTV (1994) 121 J.D.I. 701Google Scholar, note Gaillard, (1995) 84 R.C.D.I.P. 356Google Scholar, note Oppetit, [1994] Rev. Arb. 327Google Scholar, note Jarrosson, (1994) 47 R.T.D. Comm. 702Google Scholar, note Dubarry and Loquin, (1995) 20 Y.C.A. 663.Google Scholar Leave to enforce was subsequently granted by the English courts, where the annulment point did not arise; see OTV v. Hilmarton Ltd, judgment of 24 05 1999 (Q.B.). The parties reached a settlement after that judgment.Google Scholar

70. The formulation is borrowed from Professor Goldman; see Goldman, [1983] Rev. Arb. 379, 389.Google Scholar

71. See e.g. Oppetit, (1995) 84 R.C.D.I.P. 358, 360–361.Google Scholar

72. See Paris, 14 Jan. 1997, République Arabe d'Egypte v. Société Chromalloy Aero Services (1998) 125 J.D.I. 750Google Scholar, note Gaillard, , [1997] Rev. Arb. 395Google Scholar, note Fouchard, , (1997) 22 Y.C.A. 691.Google Scholar

73. This is redolent of the Kyocera case, where it was held that the courts should enforce an agreement of the parties providing for a heightened standard of scrutiny of their award in comparison to federal law; see Lapine Technology Corporation v. Kyocera Corporation, 130 F.3d 884, (1998) 23 Y.C.A. 210Google Scholar (9th Cir. 1997), followed with reservations by New England Utilities v. Hydro-Quebec, 10 F.Supp.2d 53 (D Mass 1998)Google Scholar, discussed in UHC Management Co. Inc. v. Computer Sciences Corporation, 148 F.3d 992, 997–998Google Scholar (8th Circ.1998). Cf. Ringer, J. R. and Seidel, M. L., “Judicial Review Clauses in Transnational Arbitration Agreements” (1998) 12(5) Inside Litigation 6, 9–10Google Scholar; and see further Raghavan, V.. “Heightened Judicial Review of Arbitral Awards” (1998) 15 No.3 J. Int. Arb. 103.Google Scholar

74. See Versailles, 29 June 1995, Société OTV v. Société Hilmarton (1997) 123 J.D.I. 120Google Scholar, note Gaillard, , [1995] Rev. Arb. 639Google Scholar, note Jarrosson, , (1995) 48 R.T.D. Comm. 758Google Scholar, (1996) 21 Y.C.A. 524. The court made two decisions, concerning the recognition of the second award and the Swiss Federal Court annulling decision respectively.Google Scholar

75. See Cass. Civ. 1re, 10 June 1997, Société OTV v. Société Hilmarton (1997) 124 J.D.I. 1034Google Scholar, note Gaillard, , [1997] Rev. Arb. 376Google Scholar, note Fouchard, , (1997) 22 Y.C.A. 697.Google Scholar

76. See Du Pont v. Agnew [1987] Lloyd's Rep. 585, 589 (per Bingham LJ, CA).Google Scholar

77. See for that aspect of renvoi Briggs, A., “In Praise and Defence of Renvoi” (1998) 47 I.C.L.Q. 877.Google Scholar

78. Scherk v. Alberto-Culver Co., 417 U.S. 506, 520, 94 S.Ct. 2449, 2457 (1974).Google Scholar

79. See the discussion by the Court of Final Appeal, Hong Kong Special Administrative Region in Hebei Import and Export Corporation v. Polytec Engineering Company Ltd, judgment of 9 02 1999, available at http://www.info.gov.hk/jud.Google Scholar

80. See Brussels, Convention, supra n.15; Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (Lugano, 16 Sept.) (1988), (1988) OJ. L319/9–48.Google Scholar

81. See Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters (The Hague, 1 Feb. 1971), (1979) 1144 U.N.T.S 249, hereafter the “Hague Convention” Arts 4, 10–12.Google Scholar

82. Contrast the European Convention on International Commercial Arbitration (Geneva, 21 Apr. 1961), (1964) 484 U.N.T.S 349Google Scholar, hereafter the “European Convention” Art.IX(1). See on that provision, OGH, 20 Oct. 1993 (Radenska v. Kajo) [1998] Rev. Arb. 419, note Lastenouse and Senkovic.Google Scholar

83. See In the Matter of the Arbitration between Chromalloy Aeroservices v. The Arab Republic of Egypt, 939 F.Supp. 907, (1996) 35 I.L.M. 1359Google Scholar, (1997) 22 Y.C.A. 1001 (DDC 1996). Note that the provisions of the Convention were incorporated into US law in 1970 by Chapter 2 of the Federal Arbitration Act; see US Code, Title 9 (hereafter “9 USC”), Chapter 2, §§ 201–208.Google Scholar

84. See (1996) 11 (8) Mealey's Int. Arb. Rep. C–1Google Scholar, [1997] Rev. Arb. 439.Google Scholar

85. See 939 F.Supp. 907, 912.

86. The court nullified the award on the ground that the tribunal had failed properly to apply the administrative law of Egypt, based on Art.53(1)(d) of the Law Concerning Arbitration in Civil and Commercial Matters (Law 27/1994, text in [1994] Rev. Arb. 763). The provision allows for annulment if “la sentence a ecarté l'application au fond du litige de la loi convenue par les parties”.

87. It has been argued that this is untenable as a matter of US law, because there, unlike e.g. in France, the New York Convention (9 USC §§201–208) is the common law for the enforcement and recognition of foreign awards. See Gharavi, H. G. “The Legal Inconsistencies of Chromalloy” (1997) 12(5) Mealey's Int. Arb. Rep. 21Google Scholar; Schwartz, E. A., “A Comment on Chromalloy:. Hilmarton, à l'américaine” (1997) 14 No. 2 J. Int. Arb. 125, 132Google Scholar; Hulbert, R. W.. “Further Observations on Chromalloy: A Contract Misconstrued, a Law Misapplied, and an Opportunity Forgone” (1998) 13 1 ICSID Rev.—F.I.L.J. 124, 135–140. This, however, is a point which hinges on the interpretation of US law (in particular 9 USC §§9, 10, and 208) and thus need not concern this analysis.Google Scholar

88. See for that ground First Options of Chicago v. Kaplan, 514 VS. 938, 115 S.Ct. 1920 (1995); and for previous authorities see USCA, Title 9, Chapter 1, ¶¶11–16.Google Scholar

89. See 939 F.Supp. 907, 912.

90. See LDIP, Arr.192(1) (text and comment in Lalive et al op. cit. supra n.65 at pp.446–450Google Scholar (Switzerland)) Code Judiciaire, Art.1717(4), as amended by Act of 19 May 1998 (Moniteur Belge, 7 Aug. 1998) (Belgium); Arbitration Code (Law No.93–42), Art.78(2)(II) (6) (Tunisia) (text in Annex I to Malouche, H., “Tunisia”, in Sanders, P. and van den Berg, A. J. (Eds) International Handbook of Commercial Arbitration (1994))Google Scholar; cf. Arbitration Act 1952, as amended, s.34(1) (Malaysia) (text in (1981) 6 Y.C.A. 194).Google Scholar

91. See e.g. Kerr, M., “Arbitration and the Courts: The UNCITRAL Model Law” (1985) 34 I.C.L.Q. 1, 2, 15–16.Google Scholar

92. See supra n.90. Under s.34(1) of the Malaysian Act, however, exclusion would be mandatory and automatic for ICSID and UNCITRAL Rules proceedings.

93. See supra n.86, Art.54(1).

94. Gary Sampliner, counsel for Chromalloy, is sanguine: “Egypt was not selected as the seat of arbitration for fortuitous reasons. It clearly was the country with the strongest nexus to the contract at issue”; see Sampliner, G. H., “Enforcement of Foreign Arbitral Awards after Annulment in their Country of Origin” (1996) 11 Mealey's Int. Arb. Rep. 22, 26.Google Scholar

95. Sec 939 F.Supp. 907, 914. The court assumed, however, that the Egyptian decision was xy6proper under applicable domestic law”: ibid.

96. Cf. Ostrowski, S. T. and Shany, Y., “Chromalloy: United States Law and International Arbitration at the Crossroads” (1998) 73 N.Y.U.L.Rev. 1650, 1671.Google Scholar

97. See e.g. Nariman, F. S., “Some Thoughts on the Fiftieth Anniversary of the New York Convention, 1958” [1998] Int. A.L.R. 163, 165.Google Scholar

98. So the district court in Chromalloy erred in saying that “Article VII does not eliminate all consideration of Article V”; see 939 F.Supp. 907, 914.

99. It would be more accurate from a technical point of view to speak in terms of “denial of res judicata” but under most national laws the conditions for granting recognition and res judicata substantially overlap, at least in so far as money judgments are concerned.

100. For a comparative overview of grounds for refusal of recognition see Permanent Bureau of the Hague Conference on Private International Law, Note on the Recognition and Enforcement of Decisions in the Perspective of a Double Convention with Special Regard to Foreign Judgments Awarding Punitive or Excessive Damages (Enforcement of Judgments: Prel. Doc. No.4, (1996)) pp.8–17.Google Scholar

101. Cf. Park, op. cit. supra n.34, at p.134Google Scholar (discussing the possibility of biased or corrupt judiciaries), and “National Law and Commercial Justice: Safeguarding Procedural Integrity in International Commercial Arbitration” (1989) 63 Tul. L.R. 647Google Scholar, reprinted as “Judicial Controls in the Arbitral Process” (1989) 5 Arb. Int. 230, 262 (referring to “dishonestly annulled” awards).Google Scholar

102. Cf. the Brussels Convention, Art.27(3); Hague Convention, Art.5(3)(b). That case is sometimes considered to fall under the general ground of contrariety to public policy, see e.g. Convention on the Reciprocal Recognition of Judicial Decisions (Athens, 4 Nov. 1961), Act 4305/1963, [1963] Official Gazette of the Hellenic Republic, No.A78, Art.3(1)(a) (Federal Republic of Germany-Greece).Google Scholar

103. For the principle see op. cit. supra n.100, at p.10.Google Scholar

104. See Petrochilos, G. C. “Note: The Legal Relevance of ‘Foreign’ Mandatory Procedural Rules in the Context of International Commercial Arbitration” (1998) 51(2) R.H.D.I. (forthcoming) with further references (discussing moratorium laws). For concrete examples of pre-labelled mandatory rules see Brussels Convention, Art.27(4) and Hague Convention, Art.7(2).Google Scholar

105. See Sampliner, G. H. “Enforcement of Nullified Arbitral Awards: Chromalloy Revisited (1997) 14 No.3 J. Int Arb. 141, 161.Google Scholar

106. See Brussels Convention, Art.28. And e.g. in France Cass. Civ. 1re, 6 Feb. 1985, Fairhurst v. Simitch (1985) 112 J.D.I. 460Google Scholar, note Huet, , (1985) 74 R.C.D.I.P. 369Google Scholar, note Francescakis, at 243, [1985] D. 469, note Massip.Google Scholar

107. See e.g. Indian Supreme Court, Oil & Natural Gas Commission v. Western Company of North America [1987] A.I.R. S.C 674Google Scholar, (1988) 13 Y.C.A. 473Google Scholar; National Thermal Power Corporation v. The Singer Company et al. [1993] A.I.R. S.C. 998Google Scholar, (1993) 18 Y.C.A. 403Google Scholar; Sumitomo Heavy Industries Ltd v. ONGC Ltd et al [1998] A.I.R. S.C. 825Google Scholar, [1998] Int. A.L.R. N–84 (all decided under the regime of the now abrogated Foreign Awards Act 1961).Google Scholar

108. Van den, Berg, op. cit. supra n.18 at p.351 has suggested that the problem is resolved by application of Art.III of the Convention and ordinary domestic law procedural rules; cf. on conflicting decisions the Hague Convention, Art.5(3)(c). This is an unlikely scenario, but cf. Waterside Navigation Co. v. International Navigation Ltd, 737 F.2d 150, 153 (2d Cir. 1984), where the court noted that confirmation had been requested in three countries.Google Scholar

109. Cf. Paris, 23 10 1997Google Scholar, Inter-Arab Investment Guarantee Corporation v. Banque Arabe et Internationale d'Investissement SA [1998] Rev. Arb. 143, 146Google Scholar, note Fouchard, ; CA Brussels, 24 01 1997Google Scholar, Compagnie Inter-Arabe de Garantie des Inveslissements v. Société Banque Arabe et Internationale d'Investissement [1998] Rev. Arb. 181, 185–187Google Scholar, note Linsmeau, , affirming TPI Brussels, 15 01 1996Google Scholar, Compagnie Inter-Arabe de Garantie des Investissements v. Société Banque Arabe el Internationale d'Investissement [1997] J.T. 6, note Hanotiau and Duquesne, idem, p.305.Google Scholar

110. See Sampliner, op. cit. supra n.105, at pp.162–163.Google Scholar

111. Cf. the purpose of the requirement of exhaustion of local remedies applicable in diplomatic protection proceedings; see the Ambatielos arbitration (1956) 23 I.L.R. 306, 12 R.I.A.A. 83Google Scholar (Greece v. UK, ad hoc 1956). See also e.g. Art 35(1) of the European Convention on Human Rights, supra n.30 (as amended by Protocol No.11 of 1994).Google Scholar

112. See e.g. LCIA Rules (1998), Art.32(1)Google Scholar; Rules of the Arbitration Institute of the Stockholm Chamber of Commerce (1988), §24.Google Scholar

113. See Code of Civil Procedure, Art.1076(2) (Netherlands); Code Judiciaire, Art.1704 (4) (Belgium). See further Hebei Import and Export, supra n.79, (per Justice Litton PJ, discussing whether the concept of estoppel may properly apply to the Convention provisions).

114. See supra n.26.

115. Paris, 24 Feb. 1994, Ministère tunisien l'Equipment v. Société Bee Frères [1995] Rev. Arb. 275Google Scholar, note Gaudemet-Tallon, , (1997) 22 Y.C.A. 682.Google Scholar

116. Cf. Cass. Civ. 1re, 2 May 1966, Trésor Public v. Galakis (1966) J.D.I. 648Google Scholar, note Level, (1967) R.C.D.I.P. 553Google Scholar, note Goldman, , [1966] D 575, note Robert.Google Scholar

117. See Cass. Civ. 1re, 24 Mar. 1998, Société Excelsior Film TV, SRL v. Société UGC-PH (1999) 126 J.D.I. 155Google Scholar, note Kahn (the case concerned the exception d'ordre public of Arts. 1502(5) NCPC and V(2)(b) of the Convention). Cf. also Paris, 2 Apr. 1998, Technip v. Asmidal, summarised and commented on by Gaillard, [1998] Int. A.L.R. N–80 (cumulatively applying French law and the Convention).Google Scholar

118. Op. cit. supra n.18 at pp.85–86, with further references.Google Scholar

119. There is, however, US case law to the effect that there may exist “non-domestic” Convention awards which are at the same time subject to the scrutiny of domestic courts by the FAA standards; see Yusuf Ahmed Alghanim & Sons, WLL v. Toys ‘R’ Us Inc., 126 F.3d 15 (2d Cir. 1997).Google Scholar This paradoxical result is due to an interpretation of decisions like Bergesen v. Joseph Muller Corp., 710 F.2d 928 (2d Cir. 1983)Google Scholar; Lander Co. Inc. v. MMP Investments Inc., 107 F.3d 476 (7th Cir. 1997)Google Scholar; Trans Chemical Limited v. China National Machinery Import and Export Corporation, 978 F.Supp. 266 (SD Texas 1997)Google Scholar, which interpret the notion of “non-domestic” awards. The matter is discussed by van den Berg, A. J., “When is an Arbitral Award Non-domestic under the New York Convention of 1958?” (1985) 6 Pace L.R. 25Google Scholar, reprinted as “Non-domestic Arbitral Awards under the 1958 New York Convention” (1986) 2 Arb. Int. 191Google Scholar; and Rau, A. S., “The New York Convention in American Courts” (1996) 7 Am. Rev. Int. Arb. 213.Google Scholar

120. See supra nn.95–96 and accompanying text.

121. See e.g. Maridakis, G. S., Enforcement of Foreign Judgments (in Greek) (3rd edn, 1971), p.65Google Scholar; and in the context of the Brussels Convention see Gothot, P. and Holleaux, D., La Convention de Bruxelles du 27.9.1968 (1985) sub no.256. Cf. Tribunal Fédéral, 9 Nov. 1998Google Scholar, LSA v. V (1998) 16 Bull. A.S.A. 634, 643.Google Scholar

122. See Sampliner, , op. cit. supra n.105 at pp.163–165.Google Scholar

123. See TPI Brussels, 6 Dec. 1988, Sonatrach v. Ford, Bacon and Davis, Inc. [1993] J.T. 685Google Scholar, (1989) 7 Bull. A.S.A. 213Google Scholar, (1990) 15 Y.C.A. 370Google Scholar, affirmed, CA Brussels, 9 Jan. 1990 (cited by Park, W. W., “Illusion and Reality in International Forum Selection” (1995) 30 Tex. Int. L.J. 135, 180, n.274.Google Scholar

124. See idem, sub nos.[15], [19].

125. See Convention, Art.III.

126. See Paulsson, J., “Enforcing Arbitral Awards Notwithstanding a Local Standard Annulment (LSA)” (1998) 9(1) ICC Bull. 14, 17Google Scholar; Carbonneau, T., “Debating the Proper Role of National Law under the New York Arbitration Convention” (1998) 6 Tul. J. Int. & Comp. L. 277, 281.Google Scholar

127. See e.g. Leurent, B. and Meyer-Fabre, N., “La Reconnaissance en France des Sentences rendues à l'Etranger, l'Exemple Franco Suisse” (1995) 13 Bull. A.S.A. 118Google Scholar; Gharavi, H. G.. “Chromalloy: Another View” (1997) 12(1) Mealey's Int. Arb. Rep. 21.Google Scholar And see Poudret, J.-F., “Quelle Solution pour en finir avec l'affaire Hilmarton?” [1998] Rev. Arb. 8, 15–21 (suggesting that the Brussels/Lugano Conventions mechanism be extended to judicial decisions on arbitral awards).Google Scholar

128. This is sometimes overseen, hence the criticism for legal imperialism and the like; see e.g. Besson, S. and Pittet, L., “La Reconnaissance à l'Etranger d'une Sentence Annullée dans son État d'Origine—Reflexions à la suite de l'Affaire Hilmarton” (1998) 16 Bull. A.S.A. 498, 510.Google Scholar

129. See Reisman, , op. cit. supra n.38 at p.114.Google Scholar

130. A good, if somewhat obscure, example is provided by the Guatemalan Code of Civil and Commercial Procedure, which provides as a mandatory requirement that the time accorded to the parties for the submission of their claims cannot exceed one fourth of the time provided for the duration of the whole of the arbitration proceedings in the arbitration agreement; see Art.288(1) juncto 287 quoted by Born, G. B., International Commercial Arbitration in the United Stales: Commentary & Materials (1994), pp.167–168.Google Scholar

131. See Meyer, P., “L'Insertion de la Sentence dans l'Ordre Juridique française”, in Derains, Y. (Ed.), Droit el Pratique de l'Arbitrage International en France (1984), p.81, at pp.82–84.Google Scholar

132. See e.g. Gailard, op. cit. supra n.63, at pp.672–674; “Enforcement of a Nullified Foreign Award” N.Y.L.J.; 2 Oct. 1997.Google Scholar

133. Switzerland, however, applies a strict requirement of connection when execution is sought against a State; see Tribunal Fédéral, 19 June 1980, Sozialistische Libysche Volks-Jamahiriya v. LIAMCO (1980) 106 Ia B.G.E. 142Google Scholar, (1982) 62 I.L.R. 228Google Scholar, (1981) 20 I.L.M. 151, introductory note Delaume and the references there.Google Scholar

134. Cf. Goldman, [1983] Rev. Arb. 379, 390.Google Scholar

135. Van den, Berg, op. cit. supra n.8 at p.81 suggests that the “unilateralist” French school of private international law might have exercised a strong influence in the shaping of such conceptions. This may well be correct if “unilateral” is loosely construed, but it has to be borne in mind that technically speaking rules of recognition and enforcement are by definition unilateral.Google Scholar

136. Cf. Newman, L. W. and Burrows, M., “Setting Aside Arbitral Awards under the New York Convention” N.Y.L.J., 18 11 1997.Google Scholar

137. Under German law, §1061(3) (formerly §1044(4)) ZPO, a “declaration of enforceability” may be set aside if the award has been aside abroad after enforcement was granted in Germany. See e.g. OLG Frankfurt am Main, 10 Nov. 1993, (1994) 40 R.I.W. 686Google Scholar, (1997) 22 Y.C.A. 699.Google Scholar

138. See e.g. Arab Business Consortium International Finance and Investment v. Banque Franco-Tunisienne [1996] Lloyd's Rep. 485, 492 (CA).Google Scholar

139. Cf. OLG Dusseldorf, 10 Jan. 1996, [1997] I.L.Pr. 320Google Scholar, (1996) 2 Int. L. Update 110 (a decision on an anti-suit injunction).Google Scholar

140. In addition to the authorities cited supra n.127, see van den Berg, A. J., “Enforcement of Annulled Awards” (1998) Bull. 9(2) ICC Bull. 1, 5–6Google Scholar, and op. cit. supra n.18, at p.351.Google Scholar

141. See supra n.3.

142. See supra n.4. Indeed, some laws unequivocally provide that enforcement must be refused if annulment has taken place at the State of rendition; see Code of Civil Procedure, Art. 1076(1)(A) (Netherlands); Code of Civil Procedure, Art.840(5) (Italy) (text in Annex I to Berini, G., “Italy”, in International Handbook of Commercial Arbitration (1994)); Act Concerning Foreign Arbitration Agreements and Awards, Art.7(5) (Sweden) (Act 1929:147, text in Annex II to U. Holmbäck and N. Mangård. “Sweden” idem (1984)).Google Scholar

143. See Art.36(2)(a)(v). The proposal was made during the drafting of the Model Law to abandon the New York Convention Model for that of Art.IX(1) of the European Convention (supra n.82). It was dismissed as “too ambitious and difficult to apply”; see the comments and preparatory materials in Holtzmann, H. M., and Neuhaus, J. E., A Guide to the UNCITRAL Model Law on International Commercial Arbitration (1989), pp.1061, 1079–1080.Google Scholar

144. See van den, Berg, op. cit. supra n.140, at p.6.Google Scholar

145. Such would be the situation in English law before the admission of “amiable composition” awards; see Private International Law Committee, Recognition and Enforcement of Foreign Arbitral Awards (Cmd 1515, 1959), para.16.

146. In fact, this was an anticipated effect of the 1981 reform of French law; see Fouchard, P., “L'Arbitrage International en France après le Décret du 12 mai 1981” (1982) 109 J.D.I. 374, 419.Google Scholar That level of certainty should be acceptable for planning business decisions: see further Hayek, F. A., The Road to Serfdom (1944) Chap.VI; J. Raz, “The Rule of Law and its Virtue” (1977) 93 L.Q.R. 195, 198, 204, 210.Google Scholar

147. See Paulsson, , op. cit. supra n.126. That paper elaborates on a theme discussed in two previous ones: “The Case for Disregarding LSAs (Local Standard Annulments) under the New York Convention” (1996) 7 Am. Rev. Int. Arb. 99Google Scholar; “Rediscovering the New York Convention: Further Reflections on Chromalloy” (1997) 12(4) Mealey's Int. Arb. Rep. 20.Google Scholar

148. Cf. European Convention, Art.IX(2).

149. Ct Posner, R. A., “The Jurisprudence of Skepticism” (1988) 86 Mich. L. Rev. 827, 881.Google Scholar

150. Seaford Court Estates v. Asher [1949] 2 K.B. 481, 499 (per Denning LJ, CA).Google Scholar

151. But see Union Nationale des Coopératives Agricoles de Céréales v. Robert Catterall & Co. Ltd [1959] 2 Q.B. 44, 53–54, (CA).Google Scholar