Author: Sergia Carias-Borjas**
Published: October 1991
Enforcement of Arbitral Awards
Description: The viability of any international commercial arbitration system depends on whether the arbitral award can be enforced against the losing party, Therefore, it is of the utmost importance that effective enforcement measures be made available to the winning party.
On June 11, 1991, the Cour de Cassation, which is the highest court in France, in rendering its decision in Société Ouest Africaine des Bétons Industriels (SOABI) v. Republic of Senegal, confirmed the effectiveness of arbitration under the auspices of the International Center for Settlement of Investment Disputes (“ICSID” or the “Center”). The issue raised in that case concerned the enforcement of the award rendered in the ICSID arbitration SOABI v. Senegal.
ICSID is an international institution created by the Washington Convention (the “Convention” or the “ICSID Convention”) on March 18, 1965. ICSID administers an arbitration system for resolving disputes between foreign investors and host governments or governmental entities. The subject-matter jurisdiction of ICSID’s arbitral tribunal is limited to investment disputes.
The Center was created under the auspices of the World Bank, with which ICSID is closely associated and shares common goals. The Center seeks to create an impartial and reliable dispute resolution system in order to encourage direct foreign investment in developing countries.
The mixed nature of the parties involved in foreign investments often creates certain tensions, and is of particular importance in the selection of a tribunal to resolve disputes that arise out of such investments. The disputes involve on the one hand a State, subject to public law, and on the other hand an investor, subject to private law. States are often unwilling to litigate in the courts of other States, while foreign investors often fear partiality if they litigate in the party-State’s own courts.
The Convention contains certain provisions that take into account the interests of both parties, and that are aimed at increasing the effectiveness of ICSID arbitration. In particular, the Convention provides a unique set of rules, embodied in Articles 53 to 55, concerning the enforcement of ICSID awards. Domestic courts have encountered difficulties in implementing these specific provisions of the Convention. The enforcement of the SOABI v. Senegal award in France is illustrative of these difficulties.
This decision deserves particular attention because it is one of the few court decisions concerning the implementation of the ICSID Convention. Although ICSID has been functional since 1966, few cases have arisen to test the enforcement system provided by the Convention. SOABI v, Senegal reveals that the mechanisms instituted by the Convention are not easily implemented. Courts have experienced difficulties in distancing themselves from domestic concepts in order to apply the specific provisions of the Convention.
It is necessary to briefly examine the background of SOABI v. Senegal before analyzing the Cour de Cassation decision in that case.
*Arbitral & Judicial Decisions
**Associate, White & Case, New York, New York.