The Panama Convention and its Implementation Under the Federal Arbitration Act – Vol. 11 No. 1-2

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Author: John P. Bowman

Published: February 2000

Commercial Disputes
Inter-American Convention on International Commercial Arbitration
New York Convention

Description: Twenty-five years have passed since the Inter-American Convention on International Commercial Arbitration, known as the Panama Convention, was promulgated at the conclusion of the First Specialized Inter-American Conference on Private International Law sponsored by the Organization of American States(“OAS”). And ten years have passed since President George Bush signed into law the bill implementing the Panama Convention that became Chapter 3 of the Federal Arbitration Act. Yet it is still not unusual to encounter attorneys engaged in representing clients in international transactions and disputes involving Latin American parties who are unfamiliar with the Panama Convention and Chapter 3 of the federal act. This lack of familiarity can have surprising and even drastic consequences for companies doing business in Latin America. Of greater concern, more often than not the decisions of United States courts in regard to this Convention reveal both a lack of familiarity with its terms and a lack of attention to basic Convention issues, such as its field of application. Accordingly, given the Panama Convention’s “double” anniversary in the year 2000 (as well as the start of a new century), the apparent need among bar, bench, and business to know and understand the Convention better, and its continuing importance for arbitration involving Latin America and the United States, this seems an especially appropriate time to attempt a broad review of the Convention’s provisions, its implementing law in the United States, and its limited, but provocative, jurisprudence.

This Article begins by describing the historical context of the Panama Convention and the primary deficiencies of the national arbitral regimes existing in 1975 to which the Convention responded. Very briefly, it identifies the Convention’s main features, as these features will be fully explored in the Sections that follow. The Article’s first Section concludes on a sober, but realistic note, emphasizing that the Panama Convention cannot be considered a cure for all the problems and challenges which confront international commercial arbitration in Latin America.

This Article next addresses in detail the similarities and differences between the Panama Convention and the principal international treaty on commercial arbitration, the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, known as the New York Convention. This comparative approach highlights significant elements of the Panama Convention against the backdrop of the older and better known provisions of the New York Convention. Important differences include the Panama Convention’s requirements concerning arbitral procedure, the Conventions’ respective fields of application, the absence of express language in the Panama Convention requiring a court seized of an action subject to an arbitration agreement to refer the parties to arbitration, and even potentially significant variations in the Conventions’ provisions concerning the grounds for refusing recognition and enforcement of foreign arbitral awards.

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