Author: Elsa A. Paparemborde*
Published: December 2014
I. INTRODUCTION: THE BUILDING BLOCKS OF THIS STUDY
A. Resituating the New York Convention: Its Framework, History and Goals
International commercial arbitration has many merits, chief among which are predictability and flexibility. Parties can pre-emptively devise their own method of dispute resolution in their contracts to best suit their respective needs and preferences. This allows them to find a mutually agreed upon procedure, applicable law, seat of arbitration and set of adjudicators. However, this ability to take control of the adjudicative process outside of national courts is only useful if, in turn, the “necessary legal framework can be internationally secured.”
The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) is an essential piece of this legal framework, in place to ensure that parties’ commitment to arbitrate is enforceable and that arbitral awards can be recognized and executed in a variety of nations. The use of the New York Convention is not prompted in every arbitral proceeding. In fact, the vast majority of arbitral awards are executed voluntarily. Nevertheless, this treaty is arguably the “most important convention in the field of arbitration,” its magna carta. It enshrines the commitment of its 148 signatories to the process of arbitration and to the recognition and enforceability of its results across borders.
The scope of the New York Convention is rather large. As was just hinted, it is not only concerned with the international recognition of arbitral awards but also with their enforcement. Those two notions must be clearly differentiated. Recognition is usually used as a defensive tool when national courts are asked to grant a remedy with regard to a matter already arbitrated. It is a shield of sorts, a means of avoiding re-litigation of adjudicated matters. In contrast, enforcement focuses on the carrying out of an award, to give it a practical effect in a foreign forum. To continue with the same analogy, it is the sword to recognition’s shield and much more commonly argued in national courts under the New York Convention. The greater popularity of enforcement is probably due, in part, to the perceived limited utility of recognition, although some authors have suggested, and we will come back to it towards the end of this study, that recognition should be resorted to in a broader set of circumstances than just in matters of re-litigation.
The success of the New York Convention framework, whether it is to recognize or enforce, is completely contingent on national cooperation and participation. Ultimately, the Convention is interpreted and applied by local courts. It is those courts that will determine how efficient and reliable the global enforcement system is. Nevertheless, the drafters of the Convention did their best to create a text, at the onset, that would facilitate the local courts’ task, providing a clear and broad pro-enforcement mandate.
The text of the New York Convention did not come about in a vacuum. After the First World War, the increasing globalization of business prompted the proliferation of international commercial arbitration proceedings. This eventually led to the passing of the Geneva Protocol on Arbitration Clauses by the League of Nations in 1923 and then the Geneva Convention on the Execution of Foreign Awards (“Geneva Convention”) in 1927. Both of those treaties focused their attention on the international enforceability of arbitral awards but failed to provide an efficient mechanism to facilitate it. The main pitfall of the Geneva Convention was its requirement of double exequatur. This meant that, for a foreign award to be enforceable in a Geneva Convention contracting state, it had to have been finalized and approved in its country of origin, posing a costly…
*Elsa Papremborde is an Associate at Quinn Emanuel Urquhart & Sullivan in Paris, France. Her practice focuses on commercial and investment arbitration. Prior to joining Quinn Emanuel, Elsa Papremborde studied at Harvard University and the McGill Faculty of Law. She also participated in the 2014 session of the Arbitration Academy in Paris, France, and was, in the same year, awarded the Quebec Bar’s Annual Prize in Participative Justice. This article was selected as a finalist for the 2014 Napper Prize in International Arbitration. The guidance of Prs. Andrea K. Bjorklund and Frédéric Bachand is gratefully acknowledged.