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A basic guide to
international arbitration
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Norton Rose Fulbright LLP NRF20889 02/15 (UK) Extracts may be copied provided their source is acknowledged.
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Iraq
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Guinea
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Togo
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NRF20634
Enforcement
Arbitration awards can be easier to enforce internationally
than the judgments of national courts. The United Nations
Convention on the Recognition and Enforcement of Foreign
Arbitral Awards 1958 known as the New York Convention
has been ratified by 154 countries. This means that, in
principle, an arbitration award can be enforced in any of
those countries. By contrast, court judgments are generally
only enforceable in countries where there are reciprocal
enforcement arrangements in place.
So, for example, whilst an English court judgment can
be enforced easily in any EU state through the Brussels
Finality
The parties can, subject to the applicable procedural law,
agree that an arbitration award is final and binding, and
cannot be appealed to a court. In many jurisdictions, awards
(particularly those in domestic arbitration) will not be set
aside on the ground of errors of fact or will only be set aside
in very exceptional circumstances. Whilst most jurisdictions
permit the parties to agree not to appeal to the courts on a
point of law, in many jurisdictions the right to appeal on
grounds of serious procedural irregularity is mandatory and
cannot be excluded, even by agreement. The ability to restrict
appeals on points of law means that arbitration proceedings
can be concluded more quickly than court proceedings.
Choice
In arbitration, the parties have considerable choice over the
way in which their dispute is conducted. They can choose in
which country, city and, even, in which building they wish
to hold their arbitration (although, unlike court proceedings,
they will have to pay for the venue).
The parties are also free to select the arbitrators themselves.
This can be helpful where the dispute is of a technical
nature, since they can ensure that the arbitrators have
particular technical skills or expertise. (Bear in mind,
however, that, unlike judges, arbitrators must be paid by the
parties.) It is important to agree to the appointment of an odd
number of arbitrators (either a sole arbitrator or a panel of
three): if two, or four, arbitrators are selected, the panel may
be unable to reach a decision due to deadlock.
04 Norton Rose Fulbright February 2015
The nature and scope of the law of the seat of the arbitration
determines the procedure for the arbitration. Clients will
often require that the place at which any arbitration is to
take place is a place that is neutral to all parties. It is vitally
important to ensure that, when selecting a seat for the
arbitration, the requirements and scope of the laws of that
place of arbitration are understood. Different countries
can import different requirements into their own law and,
to be effective, an award will have to comply with all the
mandatory requirements imposed by the law of the seat of
the arbitration.
Location of assets
Identify where the other partys assets are located now
and where they are likely to be located after any award
is obtained. If they are located in the country where the
award will be obtained, can the local courts be relied upon
to enforce the award? If the assets are located outside the
jurisdiction in which the award will be obtained, seek
advice on the recognition and enforcement of arbitration
awards against assets in that country, both in theory and in
practice. An arbitration award is of no value unless it can be
effectively enforced.
Type of arbitration
Decide whether the arbitration should be institutional and
administered according to the rules of the institution (and if
so which institution) or ad hoc with no formal administration
agency, where the parties create their own rules and procedures.
Choice of seat
Before choosing a particular seat, consider the extent
to which the local courts will support the arbitration
proceedings (by, for example, providing interim relief
such as injunctions or conservatory measures).
Model clauses
Most arbitration institutions provide recommended model
arbitration clauses. These make a good starting point when
drafting arbitration clauses. Variations to a model clause
can lead to undesirable results if not carefully drafted. The
meaning of a poorly drafted arbitration clause can be the
subject of separate proceedings, leading to increased costs
and delay. In the worst case, the clause may be found to be
ineffective. It is also important to consider how an arbitration
clause will be viewed by the state in which the award will be
enforced. A poorly drafted clause can lead to problems with
enforcement.
Mandatory
Protection
Interim measures
The ability to apply to the arbitral tribunal or national courts
for interim relief depends on the chosen procedural law
and the powers given to the arbitrators under any agreed
rules governing the arbitration and the arbitration clause
itself. It is important to consider this issue when drafting the
arbitration clause and, if necessary, to extend the powers of
the arbitrators.
Optional
Ad hoc arbitration
Institutional arbitration
UNCITRAL
IBA
Enforcement
One advantage of arbitration over other forms of dispute
resolution is the ease with which awards can be enforced in
other states. The New York Convention is the primary tool for
enforcement and has been ratified by (to date) 154 countries.
The wide acceptance of the New York Convention across the
worlds industrialised countries is recognised as one of the
greatest achievements of public international law.
Refusal to enforce
The party against whom the award was made was not
given proper notice of the proceedings.
The award deals with a difference which does not fall
within the terms of the submission to arbitration.
The arbitration procedure was not in accordance with the
agreement, or was not in accordance with the laws
of the country in which the arbitration took place.
The award has not yet become binding on the parties, or it
has been set aside or suspended by a competent authority
of the country in which the award was made.
In addition, recognition and enforcement may be refused
if the competent authority in the country of enforcement
finds that the subject matter of the dispute is not capable
of settlement under the arbitration laws of that country;
or finds that the recognition or enforcement of the award
is contrary to the public policy of that country.
Public policy is one of the most common grounds for
enforcement of an arbitral award to be refused. Although
most industrialised countries are signatories to the New York
Convention, the way that it is applied varies from jurisdiction
to jurisdiction.
Investment treaties
Bilateral
Multilateral
Contact
If you would like further information please contact:
Brett C. Govett
Partner, Dallas
Norton Rose Fulbright US LLP
Tel +1 214 855 8118
brett.govett@nortonrosefulbright.com
James Rogers
Partner, Hong Kong
Norton Rose Fulbright Hong Kong
Tel +852 3405 2323
james.rogers@nortonrosefulbright.com
Shea R. Haass
Senior Associate, Dallas
Norton Rose Fulbright US LLP
Tel +1 214 855 8114
shea.haass@nortonrosefulbright.com