Developing Views on What Constitutes a “Foreign Arbitration Agreement” and a “Foreign Award” Under the New York Convention – Vol. 1 No. 3

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AuthorLawrence F. Ebb*

Published: October 1990

Description: A question that seems to be recurring with increasing frequency is what constitutes a “foreign” arbitral award and a “foreign” arbitration agreement for purposes of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (“New York Convention” or “Convention”) and its national implementing legislation. Moreover, what difference does it make whether an award is characterized as “domestic” or “foreign” (or otherwise “non-domestic”)? The most obvious practical effect of this distinction is that the protections of the New York Convention’s recognition and enforcement provisions apply only to foreign arbitral awards. The Convention provides that a foreign arbitral award must be enforced by the courts of any signatory country where enforcement is sought. (The courts of a non-signatory country may, of course, enforce a convention award.) Enforcement in a Convention country can be denied only on the basis of seven grounds, six of which are very narrow. A domestic award, on the other hand, may be challenged as broadly as domestic legislation allows, and frequently may be subject to general supervisory judicial review.

To use specific illustrations, the Convention itself sets no time limit for the filing of an enforcement action, leaving that period to be established by the “rules of procedure of the territory where the award is relied upon.” The American implementing statute provides a three-year limitation period for the enforcement of foreign arbitral awards, whereas domestic awards are subject to a one-year limitation period. Again, if a conservatory order is sought in an American court while an arbitration is pending, the responsiveness of the court may depend on whether the court considers the arbitration to be domestic or foreign, although this differentiating factor may be rapidly disappearing.

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*Attorney and Arbitrator. Formerly Professor and Director of the International Legal Studies Program, Stanford University Law School. Retained Counsel for General Electric Company, Washington, D.C., for international arbitration.