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The Public Policy Exception Essay

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Introduction

            In 1958, the United Nations promulgated the Convention for the Recognition and Enforcement of Arbitral Awards,[1] the document which has become the foundation of international arbitration.   The intent of the drafters was to establish a mechanism by which parties could achieve the prompt, inexpensive, and efficient enforcement of arbitral awards throughout the world.  Since that time, 142 countries have adopted the Convention.[2]

            Unfortunately, a recurring problem in international arbitration has surfaced because courts in some countries have refused to enforce arbitration awards on the grounds that the arbitral tribunal failed to take account of their own public policies or laws, and that the awards sometimes conflict with these.

            The Convention does provide a public policy exception in Article V.2(b):[3]

“2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that:

* * *

 (b) The recognition or enforcement of the award would be contrary to the public policy of that country.

Clearly, certain provisions of the law of an enforcing state are matters of fundamental public policy, so that an arbitration award which clearly contravenes such a public policy should not be enforced, even if the involved parties did not specify that the particular country’s laws would be the laws applicable to the arbitration.

            Article V.1[4] of the New York Convention emphasizes party autonomy and the ability to settle disputes as the parties choose.  At the same time the “public policy” restriction of Article V.2 sharply limits that autonomy.

            The public policy exception threatens to make arbitration pointless.   If awards, arbitral in this instance, cannot be enforced because of this exception, what is the point of arbitration?  International commercial arbitration thus faces significant roadblocks.   Somehow, a balance needs to be reached between the conclusions of the arbitrators in a particular case and the public policies and laws of the nations involved in the arbitration process.

            This dissertation will review the tension between the international obligation to enforce arbitration awards and the variable interests of particular national courts.   The dissertation will focus on the variance between the legal interests of the United States and the United Kingdom in arbitration negotiations.   Because of the importance of the issues, matters of fraudulent or criminal agreements will be covered in some depth.   Furthermore, we will scrutinize the actions of Middle Eastern countries in response to the provisions of the New York Convention.   Fair and equitable arbitration does not take place in a vacuum, and we will analyse impediments which hinder the process.

Section A.     Aims of the Thesis

            This thesis will have three aims:

            1) To survey extant legal literature, including treaties and related documents, treatises, articles in appropriate journals, and case law.

            2) To analyse these documents to discern if there are any sound proposals that would aid in resolving the tension between the New York Convention and the public policy exception.

            3) To recommend changes to resolve impediments to the arbitration process.

 

Section B.     Methodology

            This dissertation will begin with an overview of the discussion of the problems associated with the public policy exception as given in the secondary source materials.   Numerous texts address the experiences of various nations with the New York Convention.  This review will attempt to discern the reaction of outside observers to the disputes which have arisen concerning the public policy exception, and to draw on the recommendations and criticisms of these sources as to what, if anything, can be done with regard to these exceptions.

            The dissertation will then consider the case law regarding international arbitration disputes.    Case laws and secondary sources will be analysed to determine the conflicts which impede the disposition of international commercial arbitration.   We will attempt to synthesize these sources to present a coherent and comprehensive overview of the current state of the law on this issue and to point to possible improvements to that law.

 

Section C.      Review of Literature

INTERNATIONAL INSTRUMENTS:

This dissertation will consider the following international instruments

  • Convention on the Recognition and Enforcement of Foreign Arbitral Awards, opened for signature June 10, 1958, entered into force June 7, 1959; 330 UNTS 38, <http://www.uncitral.org/pdf/english/texts/arbitration/ NY-conv/XXII_1_e.pdf> accessed 15 January 2007 [hereinafter “New York Convention” or “1958 Convention.”]  This Convention is the fundamental international agreement which established the system of international arbitrations.  It is now adhered to by most of the world’s nations, including essentially all of the major economic powers.   For the purposes of this thesis, the most important part of the Convention is Article V.2(b), which allows a court in the country in which enforcement of an arbitration award is sought to refuse to enforce an award which is contrary to “public policy” in that country.
  • Convention on Choice of Court Agreements, concluded June 30, 2005, Hague Conference on Private International Law, <http://www.hcch.net/index_en.php?act= conventions.text&cid=98>  accessed 15 January 2007.  The applicability of this Convention is limited, because by its own terms it does not apply to arbitrations.  See Article 2.4.  Nevertheless, this Convention does contain clear language establishing a public policy exception.  Article 6:  “Obligations of a court not chosen:   A court of a Contracting State other than that of the chosen court shall suspend or dismiss proceedings to which an exclusive choice of court agreement applies unless -* * * c) giving effect to the agreement would lead to a manifest injustice or would be manifestly contrary to the public policy of the State of the court seized.”  Similarly, Article 9:   “Refusal of recognition or enforcement:  Recognition or enforcement may be refused if -* * * e) recognition or enforcement would be manifestly incompatible with the public policy of the requested State, including situations where the specific proceedings leading to the judgment were incompatible with fundamental principles of procedural fairness of that State.”
  • European Convention on International Commercial Arbitration, April 21, 1961, 484 UNTS 364, <http://www.law.berkeley.edu/faculty/ddcaron/Documents/RPID%20Documents/rp04011.html>   accessed 18 January 2007.   This Convention will be considered because it contains specific references to the New York Convention.  The Preamble states that this Convention was adopted with the goal of “promoting the development of European trade by, as far as possible, removing certain difficulties that may impede the organization and operation of international commercial arbitration in relations between physical or legal persons of different European countries.”  This Convention, however, does not contain a “public policy exception” or any comparable language by which a court in the country in which enforcement is sought can block enforcement of an arbitral award.
  • European Council Regulation on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (No 44/2001, dated Dec. 22, 2000, entered into force March 1, 2002) <http://eur-lex.europa.eu/ smartapi/cgi/sga_doc?smartapi!celexplus!prod! DocNumber&lg=en&type_doc=Regulation&an_doc=2001&nu_doc=44>  17 January 2007.  This regulation will be considered, particularly in light of Article 34.A(1): “A judgment shall not be recognized: . . .  if such recognition is manifestly contrary to public policy in the Member State in which recognition is sought.”
  • UNCITRAL Model Law on International Commercial Arbitration, as adopted by the United Nations Commission on International Trade Law on 21 June 1985, UN Doc A/40/17 (Model Law) <http://www.uncitral.org/pdf/english/texts/arbitration/ml-arb/06-54671_Ebook.pdf> accessed 18 January 2007.  This Model law will be considered because of Article 34.2(b)(ii), which states a public policy exception to the enforcement of arbitral awards: (2) An arbitral award may be set aside by the court [of competent jurisdiction] only if: * * *  (b) the court finds that: * * * (ii) the award is in conflict with the public policy of this State.”
  • Vienna Convention on the Law of Treaties, opened for signature 23 May 1969, 1155 UNTS 331 (entered into force 27 January 1980)  <http://72.14.253.104/search?q=cache:hO971hUp3EYJ: untreaty.un.org/ilc/texts/instruments/english/conventions/1_1_1969.pdf+Vienna+Conve ntion+on+the+Law+of+Treaties&hl=en&gl=us&ct=clnk&cd=1&client=firefox-a>   accessed 17 January 2007.   This Convention will be considered, although it does not have a public policy exception.
  • Federal Arbitration Act, chapter 2, added by amendment of July 31, 1970, 84 Stat. 692, codified as 9 U.S.C. §§ 201-208 (2006).  Title 9, chapter 2, provides for the enforceability of agreements made pursuant to the Convention.  Section 201 declares that the New York Convention shall be enforced in the courts of the United States.  The succeeding sections exclude purely domestic disputes, set jurisdiction and venue, and make state court actions removable to federal court.  Section 206 specifically makes agreements to arbitrate enforceable, and allows the federal courts to appoint arbitrators.  The problematic section of this chapter is section 207: “The court shall confirm the award unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention.”  Since Article V.2(b) of the Convention specifically allows the courts to refuse to enforce an order under the public policy exception, this provision incorporates that exception into US  law.  Section 208 makes chapter 1 the procedural rules governing an arbitration action.

TREATISES:

This dissertation will examine the following treatises for information relevant to the topic:

Campbell, Dennis, &  Meek, Susan.   The Arbitration Process.  The Hague, Netherlands:  Kluwer Law International, 2002

Domke, Martin, Wilner, Gabriel, & Edmondson, Larry.  Domke on Commercial Arbitration (The Law and Practice of Commercial Arbitration)   St. Paul, Minnesota:  Thomson/West Publishing, 2003.

Lew, Julian D. M.  Applicable Law in International Commercial Arbitration:   A Study in Commercial Arbitration Awards.  Dobbs, Ferry, New York: Oceana Publication, 1974.

Lew, Julian D. M., Mistelis, Loukas, & Kröll, Stephan.  Comparative International Commercial Arbitration.  The Hague, Netherlands:  Kluwer Law International, 2003.

Lillich, Richard & Brower, Charles Nelson.  International Arbitration in the 21st Century: Towards Judicializationand Uniformity?:  Twelfth Sokol Colloquium.   Irvington, New York: Transnational Publishers, 1994.

McClendon, Stewart & Goodman, Rosabel.   International Commercial Arbitration in New York. New York, New York: World Arbitration Institute, 1986.

O’Connell, Mary.  International Dispute Settlement.  Burlington, Vermont: Ashgate/Dartmouth, 2003.

Reisman, W. Michael.  Nullity and Revisionthe Review and Enforcement of International Judgments and Awards.  New Haven Connecticut:  Yale University Press, 1971.

van den Berg, A. J.   Improving the Efficiency of Arbitration Agreements and Awards40 years of Application of the New York Convention.  Boston: Massachusetts:  Kluwer Law International, 1999.

van den Berg, A. J.  The New York Arbitration Convention of 1958Towards a Uniform Judicial Interpretation.  Denver, Colorado:  Kluwer Law and Taxation, 1981.

Weintraub, Russell.  International Litigation and ArbitrationPractice and Planning.  Durham, North Carolina:  Carolina Academic Press, 2001

JOURNAL ARTICLES:

The following journal articles have been identified as warranting review for inclusion in the discussion in this dissertation:

Carbonneau, T.  “Debating the Proper Role of National Law under the New York Arbitration Convention,”  6 Tul. J. Int’l & Comp. L. 277 (1998).

Choi, S.  “Judicial Enforcement of Arbitration Awards under the ICSID and New York Conventions,” 28 NYU J. Int’l Law & Pol175 (1995).

“Court Upholds Non-Enforcement of N. Y. Convention Award [Encyclopaedia Universalis, S.A. v. Encyclopaedia Britannica Inc.].”  60 Disp. Resol J. 9 (2005).

  1. R. Davis, “Unconventional Wisdom: A New Look at Articles V and VII of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards,” 37 Tex. Int’l L.J. 43 (2002).
  2. S. Deshpade, “‘Foreign Award’ in the 1958 New York Convention,” 9 J. of Int’l Arb. 51 (1992).

“Enforcement of A-national awards under the New York Convention of 1958,” 32 J. Int’l Law. 471 (1992).

“Enforcement of Foreign Arbitral Awards under the United Nations Convention o0f 1958: A Survey of Recent Federal Case Law,” 11 Md. J of Int’l Law & Trade 13 (1987).

  1. H. Freyer, “United States Recognition and Enforcement of Annulled Foreign Arbitral Awards – the Aftermath of the Chromalloy (Chromalloy Aeroservices v. Egypt, 939 F. Supp. 907 (D.D.C. 1996)) Case Revisited.” 17 J. Int’l Arbit. 1. (2000).
  2. H. Freyer et al. “Finality and Enforceability of Foreign Arbitral Awards: From “Double Exequatur” To The Enforcement of Annulled Awards: A Suggested Path to Uniformity amidst Diversity,” 13 ICSICRev. 101 (1998).
  3. J. Gruendel, “Domestic Law and International Conventions, the Imperfect Overlay: The FAA as a Case Study,” 75 Tul L. Rev. 1489 (2001).
  4. Hermann, “Does the World Need Additional Uniform Legislation on Arbitration?” 15 Arbit. Int’l 211 (1999).
  5. W. Hulbert, “Further Observations on Chromalloy (Chromalloy Aeroservices v. Egypt, 939 F. Supp. 907 (D.D.C. 1996)): a Case Misconstrued, a Law Misapplied, and an Opportunity Foregone.” 13 ICSID Rev. 124 (1998)
  6. L. Karamanian, “The Road to the Tribunal and Beyond: International Commercial Arbitration and United States Courts,” 34 J. Wash. Int’l L. Rev. 17 (2002).
  7. M. Murray, “Domestic Implementation of Coordinative Treaties: Formulating Rules for Determining the Seat of Arbitration under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards,” 41 Vir. J. Int’l J. 859 (2001).

Note, “Chromalloy (Chromalloy Averoservices v. Egypt, 939 F. Supp. 907 (D.D.C. 1996)): United States Law and International Arbitration at the Crossroads,” 73 N.Y.U. L.  Rev. 1650 (1998).

Note, “The Enforceability of Annulled Foreign Arbitral Awards in the United States:  A Critique of Chromalloy (Chromalloy Averoservices v. Egypt, 939 F. Supp. 907 (D.D.C. 1996)),” 17 B.Y.U. Int’l  L.R. 141 (1999).

Note, “Industrial Risk Insurers v. M.A.N. Gutehoffnungshutte GmbH (141 F.3d 1434 (11th Cir.)): International Arbitration and Its Enforcement under the New York Convention,” 24 N.C.J. Int’l Comm. Reg. 727 (1999).

Phoenix Aktiengesellschaft v. Ecoplas, Inc.18 N.Y. Int’l  L.R. .175 (2005).

“Recognition and Enforcement of International Arbitral Awards under the United Nations Convention of 1958: the “Refusal” Provisions,” 24 The Int’l Law R. 487 (1980).

  1. M. Senger-Weiss, “Enforcing Foreign Arbitration Awards,” 53 Dispute Resolution J. 70 (1998).
  2. Wahl, “Enforcement of Foreign Arbitral Awards Set Aside in Their Country of Origin: The Chromalloy (Chromalloy Averoservices v. Egypt, 939 F. Supp. 907 (D.D.C. 1996)) Case Revisited,” 16 J. Int’l Arbit. 131 (1999).
  3. Wang, “Interpreting the New York Convention: A U.S. Perspective,” 61 Disp. Resol J. 78 (2006).
  4. C. Zuckerman, “SDNY Declines Enforcement of NY Convention Award.” 59 Disp. Resol. J . 8 (2004).

CASES:

This dissertation will examine cases found to be pertinent to the subject of international commercial arbitration.   The following cases have been identified as a preliminary listing.

 

Cases:  United Kingdom:

Enderby Town Football Club Ltd. V. The Football Association Ltd., [1971] Ch 591.

House of Spring Gardens Ltd. V. Waite, [ 1996] 2 All ER 990.

Lemenda Trading Co Ltd. V. African Middle East Petroleum Co., [1988] 1 All ER 513.

Minmetals Germany GMBH v. Ferco Steel Ltd., [1999] 1 All ER (Comm) 315.

Owens Bank Ltd v. Bracro, [1992] 2 All ER 193.

Soleimany v. Soleimany, [1999] 3 All ER 847.

Westacre Investments Inc. v. Jugoimport-SPDR Holding Co Ltd., [1999] QB 740.

Westacre Investments Inc v. Jugoimport-SPDR Holding Co Ltd., [1999] 3 All ER 864.

 

Cases:  United States:

AAOT Foreign Economic Association (VO) Technostroy Export v. International Development & Trade Services Inc., 139 F.3d 980 (2d Cir, 1998).

Baker Marine (Nig.) Ltd. v Chervon (Nig.) Ltd., 191 F.3d 194 (2d Cir, 1999).

Baxter International Inc v. Abbott Laboratories, 315 F.3d 829 (7th Cir, 2003).

Biotronik Mess- und Therapiegerate GmBH & Co v. Medford Medical Instrument Co,, 415 F. Supp. 133 (D.N.J. 1976).

Brandeis Intsel Ltd. v. Calabrian Chemicals Corp. 656 F. Supp. 160 (S.D.N.Y. 1987).

Chromalloy Aeroservices Inc v. Arab Republic of Egypt, 939 F. Supp. 907 (D.D.C. 1996).

Circuit City Stores Inc v Adams, 532 U.S. 105 (2001).

Europcar Italia S.P.A. v Maielllano Tours Inc. 156 F 3d 310 (2nd Cir, 1998).

Indocomex Fibres Pty Ltd. v. Cotton Company International Inc., 916 F. Supp. 721 (W.D. Tenn. 1996).

International Standard Electric Corp. v. Bridas Socidad Anonima Petrolera, 745 F. Supp. 172 (S.D.N.Y. 1990).

Iran Aircraft Industries v. Avco Corporation, 980 F.2d 141 (2d Cir, 1992).

M & C Corporation v. Erwin Behr GmBH & Co., 87 F.3d 844 (6th Cir, 1996).

Mitsubishi Motors Corp v. Soler Chrysler-Plymouth Inc., 473 U.S. 614 (1985).

Monesgasque de Reassurances SAM v. State of Ukraine, 311 F.3d 488 (2d Cir, 2002).

National Oil Corp. v. Libyan Sun Oil, 733 F. Supp. 800 (D. Del, 1990).

Parsons & Whittemore Overseas Co. v. Societe Generale de I’Industrie du Papier, 508 F.2d 969 (2d Cir, 1974).

Phoenix Aktiengesellschaft v. Ecoplas, Inc., 391 F.3d 433 (2d Cir. 2004).

Scherk v Alberto-Culver, 417 U.S. 506 (1974).

Sea Dragon Inc v. Gebr Vam Weelde Scheepvaartakntoor BV, 574 F. Supp. 367 (S.D.N.Y. 1983).

Spier v. Calzaturificio Tecnica S.P.A., 71 F. Supp. 2d 279 (S.D.N.Y. 1999).

Waterside Ocean Navigation Co v. International Navigation Ltd., 737 F.2d 150 (2d Cir, 1985).

Yusuf Ahmed Alghanim & Sons v. Toys ‘R’ Us Inc., 126 F.3d 15 (2d Cir, 1997).

Section D.     Organization of the Thesis

            This dissertation will proceed with the following chapters:  Chapter 2 discusses The Public Policy Exception to the Enforcement of Foreign Arbitral Awards.  Chapter 3 on the other hand examines the Characteristics of Public Policy.  Chapter 4  focuses on Public policy versus Mandatory Rules.  Chapter 5 discusses in more detail The Public Policy Paradox of the New York Convention.  Chapter 6 presents an overview on How the Public Policy Exception Is Applied in Enforcement Proceedings.  Chapter 7 covers Public Policy and the Annulment of Arbitral Awards.  Chapter 8 contains the Conclusion for this thesis.

CHAPTER 2

The Public Policy Exception to the Enforcement of Foreign Arbitral Awards

            As international trade has become essential for survival in an increasingly global economy, international contracts, and thus disputes arising from these international contracts, have become increasingly frequent as well.   Much of these disputes revolve around the issue of international arbitration, particularly with recognizing and enforcing foreign arbitral awards.[5]

            One of the biggest hindrances in effectively enforcing a foreign arbitral award is the State party’s resort of raising the defence of being exempted from recognizing the foreign arbitral award on the ground of public policy, or ordre public.    In general, the difficult arises from the fact that the definition of public policy differs from State to State.  For instance, what may be against public policy for one State may well be within the realms of public policy for another State.  As a result, application of the public policy exception has led to much uncertainty and unpredictability.  A party who has received an unfavourable judgment from a foreign arbitral court would typically raise the defence of public policy in order to resist enforcement of the foreign arbitral award.

            The public policy exception to the enforcement of foreign arbitral awards is deemed as an acknowledgment of the right of the State and its courts to exercise ultimate control over the arbitral process, despite the fact that it is submitted to an international arbitration tribunal.[6]

            This exception is specifically embodied in Article V.2 of the New York Convention and Article 36 of the UNCITRAL Model Law.  Other enforcement conventions will be examined as well to provide an overview of the public policy exception to the enforcement and recognition of foreign arbitral awards.

Section A.     Key Theories and Terms

Res Judicata

Recognition of a foreign arbitral awards means that when a state court, or an arbitral tribunal, is asked to decide an issue in a dispute between parties, it may be that in an earlier dispute between the same parties, the exact same issue had already been decided on by an arbitral tribunal having jurisdiction over the dispute under the Convention.  The state court must then grant recognition to the foreign arbitral award that already decided the issue as res judicata.  This means that the state court must decline jurisdiction over the same issue.  If the dispute is a new issue, but the foreign arbitral award already decided an issue that is now a preliminary issue before the state court, then it must take the foreign arbitral tribunal’s decision as it stand on its preliminary issue which it cannot reopen.   The requirements for recognition of a foreign arbitral award must thus be the same requirements as those for granting enforcement of a foreign arbitral award.[7]

Lex Arbitri

In many jurisdictions, the lex arbitri grounds to set aside foreign arbitral awards are almost identical with the grounds for non-recognition and non-enforcement of the Convention.  The question as to what is meant by lex arbitri was posed rhetorically by a distinguished English Judge Steyn:

“What then is the law governing the arbitration? It is, as the present authors trenchantly explain, a body of rules which sets a standard external to the arbitration agreement, and the wishes of the parties, for the conduct of the arbitration.  The law governing the arbitration comprises the rules governing interim measures (e.g. Court orders for the preservation or storage of goods), the rules empowering the exercise by the Court of supportive measures to assist an arbitration which has run into difficulties (e.g. filling a vacancy in the composition of the arbitral tribunal if there is no other mechanism) and the rules providing for the exercise by the Court of its supervisory jurisdiction over arbitrations (e.g. removing an arbitrator for misconduct).[8]

The arbitration law of each state is likely to be different from that of another state, so that matters which one state considers as falling within its lex arbitri may not be so regarded by another state.  For instance, in some states it is said that if the proper law of the contract has not been chosen by the parties, it is to be determined by the conflict of law rules of the lex arbitri.[9]   This used to be the position under English law. However, the more modern rule was adapted in 1996, that the lex arbitri does not restrict choice in this way.  If there is no choice or agreement by the parties, the tribunal will apply the law “determined by the conflict of law rules which it considers applicable.”[10]

Subject to Section 46 (3) of the English Arbitration Act of 1996,  the lex arbitri is likely to extend to such matters as:

  • whether a dispute is capable of being referred to arbitration (that is to say, whether it is “arbitrable” under the local law);
  • time-limits for commencing an arbitration;
  • interim measures of protection;
  • the conduct of the arbitration, including (possibly) rules concerning the disclosure of documents, the evidence of witnesses and so on;
  • the powers of the arbitrators, including any powers to decide as “amiable compositeurs”;
  • the form and validity of the arbitration award; and
  • the finality of the award, including any right to challenge it in the courts of the place of arbitration.[11]

These are important aspects of international commercial arbitration that may arise in practice and involves three essential points worth examining.  First, the list enumerated above will show that there is an obvious prospect of conflict between the lex arbitri and a different system of law that may be equally relevant.  The concept of arbitrability – whether or not the subject-matter of the dispute is capable of being resolved by arbitration – is basic to the arbitral process.  The Convention and the UNCITRAL Model Law refer explicitly to disputes that are “capable of being resolved by arbitration,” which impliedly recognises that as a matter of law, some disputes may not be capable of being so resolved.  This is in effect a matter of public policy, but it is a matter on which states may well differ, with some states taking on a more restrictive attitude than others.  Thus, a claim may be arbitrable under the law governing the arbitration agreement and under the lex arbitri, but not under the law of the place of enforcement.  The arbitral award, although considered valid pursuant to the lex arbitri[12], may be unenforceable under the Convention.

            The second point is that the effective conduct of an international commercial arbitration may depend upon the provisions of the law of the place of arbitration.  Even if the arbitrators have the power to order interim measures of protection, such orders are merely for the preservation and inspection of property.  They are unlikely to have the power to enforce such orders especially if the property in question is in the possession of a third party.  In this case, the international arbitrator would need to turn to national courts for assistance.[13]

            Lastly, the third point is that the choice of a particular place of arbitration may have important and unintended consequences since the law of that place may confer powers on the courts or on the arbitrators that were not expected by the parties.  To illustrate, the power of the court or arbitral tribunal  to consolidate two or more arbitrations involving the same basic issues of fact or law may exist under the lex arbitri, and may come as a disagreeable surprise to a party who does not wish to have other parties joined in its own arbitration.[14]

Theory of Party Autonomy

            The principal starting point of this proposition is that the basis of which all arbitrations rest is the theory of party autonomy.  Many writers, especially in France, have regarded this underlying idea as having a generative force of its own and have sought to deduce further propositions and rules from it.  They have formulated theories to the effect that the international arbitral process is autonomous and independent of the laws of national jurisdictions, and have launched the modern concept of a modern lex mercatoria. [15]

            Lex Mercatoria

            The lex mercatoria, or “law merchant,” is a governing law that has no direct connection to any national law, but rather represents a combination of “rules of law which are common to all or most of the States engaged in international trade.”[16]

The concept of lex mercatoria is that of rules of law which have been developed by the international business community so as to regulate commercial activities within that community.  Among the rules of the lex mercatoria is the basic rule that contracts should be enforced according to their terms – pacta sunt servanda.[17]  However, this may be qualified by the principle that, in respect to certain long-term contracts, circumstances may alters cases (rebus sic stantibus).  Other principles include the requirement that contracts should be performed in good faith; that a state entity cannot evade the enforcement of its obligations by denying its capacity to make a binding arbitration agreement; that failure to carry out an obligation by one party may release the other (the principle of exemptio non adimplenti contractus); and that a part must act promptly to enforce its rights otherwise these rights are considered waived.[18]

The lex mercatoria has made an impact upon the law of international commercial arbitrations in that it serves to remind both parties to international commercial arbitration, and the arbitral tribunals as well, that they are operating at an international level and that different elements may come to into play from those found in purely national or domestic arbitrations.[19]

            According to Professor E. Gaillard:

The most fundamental answer to the criticism arising from the difficulty of determining the content of transnational rules is that recourse to such rules is simply a method, not a list.  This method calls upon elements of comparative law, rules of international law (such as model laws and international treaties) and, in particular, arbitration case law.  The parties can adapt the method to their needs, either by choosing the so-called tronc commun system or by specifying that the applicable rules will be, for example, those of a given part of the world.[20]

            Within the context of an international commercial dispute, these “applicable rules” serves as a reminder that parties and arbitrators are not concerned with establishing a universal theory of law but in finding the particular rules which bear upon the specific dispute with which they are concerned.[21]

Where parties to an international  commercial contract have agreed to allow the lex mercatoria to settle any dispute that may arise between them, then two key questions are usually raised.  First, will a national court enforce the agreement of the parties, if called upon to do so?  Second, will such a court enforce an award made in conformity with this agreement, if called upon to do so?  Ideally, and theoretically, the answer to both these questions should be a “yes.”  Once the parties agreed to a certain method of dispute resolution, there is nothing left for the court to do but to enforce that agreement on normal contractual principles.  Since the parties have stipulated their choice as to a dispute resolution method, the parties should simply implement it. There would seem to be no reasons why a court should refuse to enforce the award.[22]

The resolutions adapted by the International Law Association, at its conference in Cairo in April 1992, express the position that should be taken:

“The fact that an international arbitrator has based an award on transnational rules (general principles of law, principles common to several jurisdictions, international law, usages of trade, etc.) rather than on one law of a particular State should not itself affect the validity or enforceability of the award:

  • where the parties have agreed that the arbitrator may apply transnational rules; or
  • where the parties have remained silent concerning the applicable law.”[23]

The resolution indicates the position taken by the different national courts, including the English Court of Appeals, the Austrian Supreme, and the French Court.  The decision of the English Court arose from an ICC arbitration which took place in Geneva regarding an oil and gas exploration agreement.  The arbitrators determined the proper law governing the substantive obligations of the parties to be internationally accepted principles of law governing contractual relations.  The recognition and enforcement of the award was sought in London.  It was however argued in the English Court of Appeal that it would be contrary to public policy to enforce an award which determined the rights of the parties, not on the basis of any particular but “upon some unspecified, and possibly ill-defined, internationally acceptable principles of law.”[24]    That argument was rejected by the English Court of Appeal as provided:

“Considerations of public policy can never be exhaustively defined, but they should be approached with extreme caution.  As Burrough J. remarked in Richardson v. Mellish (1824) 2 Bing. 229 at 252, [1824-34] All E.R. 258 at 266: ‘It is never argued at all, but when other points fail.’  It has to be shown that there is some element of illegality or that the enforcement of the award would be clearly injurious to the public good or, possibly, that enforcement would be wholly offensive to the ordinary reasonable and fully informed member of the public on whose behalf the powers of the state are exercised.

Asking myself these questions, I am left in no doubt that the parties intended to create legally enforceable rights and liabilities and that the enforcement of the award would not be contrary to public policy.  That only leaves the question of whether the agreement has the requisite degree of certainty.  By choosing to arbitrate under the rules of the ICC and, in particular, Article 13.3, the parties have left the proper law to be decided by the arbitrators and have not in terms confined the choice to national systems of law.  I can see no basis for concluding that the arbitrators’ choice of proper law – a common denominator of principles underlying the laws of the various nations governing contractual relations – is outwith the scope of the choice which the parties left to the arbitrators.”[25]

The lex mercatoria is often selected as a governing law by parties to an international agreement as a method to avoid being subjected to an undesirable foreign law when the parties cannot mutually decide upon another governing law. This situation often arises where one of the parties is a state or state-dominated enterprise, but is not necessarily limited to those circumstances.[26] The use of the lex mercatoria is highly controversial and many have even questioned its very existence.[27] However, for every detractor, there are those who steadfastly believe in the existence of the lex mercatoria,[28] and, in fact, it has been employed as the governing law in various international contracts.[29]

The major problem with the use of the lex mercatoria in international arbitration is the uncertainty over its exact definition and parameters. Notwithstanding this uncertainty, it is clear that the lex mercatoria does exist, and increasingly international treaties, model laws, and private organizations specializing in codifying international trade norms are continuing to diminish this uncertainty by formulating and refining generally accepted norms of commercial trade. [30]

            Negative Decision Public Policy

The concept of public policy has been much debated on in the subject of conflict of laws in private international law.   In general, conflict of laws provide for the application of a particular law, but when the application of that particular law would result in a decision which is fundamentally repugnant to the fundamental concepts of the legal system then, by way of exception, the court would be required not to apply the law designated by the conflict of laws rule.    Instead, what would be applied will be the substantive law of the forum, or the lex fori.   This classic concept under conflicts of law still applies, but has become more widely known as the “negative decision international public policy.”[31]  It is dubbed as “negative” since it results in not applying the law normally called for by private international law.  It refers to “decision” public policy because it is applied by a decision maker – a court or arbitral tribunal – when making a decision.  It is “international” public policy since the concept is quite different from national mandatory law, also called in French as lois d’ordre public.   What is applicable in the conflict of laws is principles, not just laws, and these principles must be absolutely fundamental – not merely mandatory.  It must be seen in an international, not just national, context.[32]

In international arbitration, the international arbitral tribunal is the primary decision maker.  Public policy considerations that such an international tribunal must apply are not those that a state court would apply as the negative public policy of the forum in international cases.  An international arbitral tribunal must apply, regardless of where it is, a “truly transnational” negative decision public policy.

Since an international arbitral tribunal does not have a lex fori, then the arbitration law at the seat, or the lex arbitri, may contain its own private international law rules, different from those applicable by the state courts at its seat.[33]

Positive Decision Public Policy

Within the ambit of the public policy applicable when making decisions, a positive public policy may also be applied to ensure that certain fundamental concepts in different jurisdictions around the world are implemented, once certain requirements are fulfilled.  These requirements are similar to the requirements that lead to the applications of negative decision public policy.  State courts will apply international concepts that have their basis in the law of the forum, and thus result in international positive decision public policy of the forum.  An international arbitral tribunal at the seat does not owe any particular allegiance to the mandatory rules or substantive legal system at the seat, and thus can only apply a truly transnational public policy when applying positive decision public policy.[34]

 

Section B.     Enforcement Conventions

The most important ground for non-recognition of foreign arbitral awards is a violation of public policy.   Article V.2(b) of the Convention and Article 36 of the UNCITRAL Model Law provide for the primary basis for the public policy exception in enforcement of foreign arbitral awards.

            New York Convention 1958

            To provide for a uniform procedure for the enforcement of international arbitration awards, most of the industrialized nations in the world entered into the Convention on the Recognition and Enforcement of Foreign Arbitral Awards,[35] which was ratified on September 30, 1970.   The treaty was opened for signature at the United Nations Conference on International Commercial Arbitration in New York in 1958, and thus became known as the New York Convention. The Convention provides that signatory nations will enforce international arbitration awards issued in the territory of another signatory state, subject to limited exceptions provided in the treaty, and so long as the arbitration agreement on which the award is based falls under the provisions of the Convention.

            The intention behind the Convention is for pro-enforcement of the arbitral awards, as one court has noted:

“[a] parochial refusal by the courts of one country to enforce an international arbitration agreement would not only frustrate these purposes, but would invite unseemly and mutually destructive jockeying by the parties to secure tactical litigation advantages…  [T]he dicey atmosphere of such a legal no-man’s-land would surely damage the fabric of international commerce and trade, and imperil the willingness and ability of businessmen to enter into international commercial agreements.”[36]

            Article V of the Convention provides seven grounds on which an international arbitration award may be refused recognition by the State party.   Most of these grounds revolve around due process arguments, relating to unfairness in the manner in which the arbitration was conducted, or dealing with the issue of legitimacy of the arbitration itself.   For instance, some of these procedural exemptions in the Convention with regard to enforcement involve lack of adequate notice of the arbitration proceedings, incapacity of the parties, or improper composition of the arbitration process.  The seventh ground of the exceptions for enforcement under the Convention however stands apart, and allows a State party to refuse to recognize or enforce an international arbitration award when the arbitral award is contrary to the public policy of that country. [37]

            This public policy exception under the Convention is contained in Article V.2(b) thereof, which provides:

“Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that:

(a) …

 (b) the recognition or enforcement of the award would be contrary to the public policy of that country.”

            This provision refers to “the public policy of that country.”  As such, the drafters of the Convention did not overtly intend to harmonize policy or to establish a common international standard.  This is where the problem of enforcement comes in, as the Convention did not seek to define the term “public policy” and thus opens it up to numerous interpretations by the different signatories to the Convention.

It has been widely recognized however that pursuant to the Convention, the public policy that is applicable is the public policy of the recognizing state.

            According to the Report of the Drafting Committee for the Convention, it intended to limit the application of the public policy exception to cases where recognition or enforcement would be “distinctly contrary to the basic principles of the legal system of the country where the award is invoked.”[38]  The intention behind the Convention thus is to provide for a more narrow concept of public policy, despite lack of a definition of what exactly “public policy” encompasses in the Convention.[39]

            It should be noted that when a valid arbitration agreement exists between parties, domestic courts have no jurisdiction over any disputes covered by the arbitration agreement, and that is exactly what the Convention provides.   When the Convention provides that certain foreign arbitral awards must be recognized and enforced, it means such arbitral awards that were rendered by arbitral tribunals whose jurisdiction was based on an arbitration agreement which fulfils the requirements of the Convention.   At the same time, however, the Convention does not prohibit domestic jurisdictions from recognizing and enforcing arbitral awards rendered by arbitral tribunals on the basis of arbitration agreements which do not fulfil the strict requirements of the Convention.[40]

            Thus, the state courts in the recognition jurisdiction may decide to refuse recognition and enforcement if the foreign arbitral award violated the public policy of the recognizing jurisdiction.  By providing for this, the Convention makes it clear that the public policy applied by the recognizing may be different from the public policy applied the international arbitral tribunal and by the state courts at the seat of the arbitration on judicial review.   Under the lex arbitri, an arbitral jurisdiction has jurisdiction, but the award is not enforceable in some other jurisdictions which fail to meet the form requirements of the New York Convention.  The arbitral award thus may also not be enforceable since it was rendered in a matter that under the lex arbitri was arbitrable but which under the law of the recognizing jurisdiction was not arbitrable.  It is also conceivable however that an arbitral award is valid and enforceable under the lex arbitri and enforceable in some other jurisdictions, but may be denied enforcement in a particular country of enforcement due to a violation of the special public policy of that particular jurisdiction.[41]

            UNCITRAL Model Law

            UNCITRAL was established in 1966 by a resolution of the United Nations General Assembly as a specialized body dealing with international trade law.  In December 1985, the General Assembly reaffirmed the mandate of UNCITRAL.

“[A]s the core legal body within the United Nations system in the field of international trade law, to coordinate legal activities in this field in order to avoid duplication of effort and to promote efficiency, consistency and coherence in the unification and harmonization of international trade law.”[42]

            While the Convention was a way of enhancing the effectiveness of arbitration in international trade, it was realized within UNCITRAL that there was a need for a more unified approach to arbitration proceedings.  The need for a more unified approach arose due to ad hoc arbitrations, where it became necessary to regulate the steps to be taken in arbitration, so that the parties may be reasonably sure of obtaining an award which would be enforceable under the Convention.  The aim was to establish a procedural framework which, if properly adhered to, would ensure general international acceptance of the result of the arbitration process, particularly under the Convention.[43]

            In attempting to shed uniformity as to the definition of an international transaction, the UNCITRAL Model Law[44] defines “international” as follows:

An arbitration is international if:

  • the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in different States; or
  • one of the following places is situated outside the State in which the parties have their places of business:
    • the place of arbitration if determined in, or pursuant to, the arbitration agreement;
    • any place where a substantial part of the obligations of the commercial relationship is to be performed or the place with which the subject matter of the dispute is more closely connected; or
  • the parties have expressly agreed that the subject-matter of the arbitration agreement relates to more than one country.[45]

            The definition combines the two criteria.  The primary criterion of internationality is related to the parties, arising from their having places of business in different states.[46]  But there is also the secondary criterion of the internationality of the dispute itself in that, for instance, the place with which the subject matter of the dispute is most closely connected may be foreign to the parties.  Finally, there is the element of internationality, which may arise from the choice of a foreign place of arbitration.

            The UNCITRAL Model Law has not been without criticism.  Among those are some experienced in arbitrations in London which continues to be the location for arbitration of many international trade disputes.  The suitability of the UNCITRAL Model Law for adoption by legislation in England, Wales, and Northern Ireland was considered by a Departmental Advisory Committee chaired by Lord Justice Mustill.  The Committee reached a negative conclusion in its 1989 report:

“Judged on its intrinsic merits the Model Law has some features which could be of some benefit, principally as statutory statements of existing common law principles.  But it does not offer a regime which is superior to that which presently exists in these law districts.  A number of the provisions of the Model Law would be detrimental, and others of doubtful benefit, to the law and practice of arbitration there.  The arguments in favour of enacting the Model Law in the interests of harmonization, or of thereby keeping in step with other nations, are of little weight.  The majority of trading nations, and more notably those to which international arbitration have tended to gravitate, have not chosen thus to keep in step.  There would in our judgment be undoubted disadvantages in introducing a new and untried regime for international commercial arbitration, with all the transitional difficulties that this would entail, and at the same time retaining the present regime for domestic arbitration.”[47]

However, a Scottish Advisory Committee on arbitration law, chaired by Lord Dervaird, reached a contrary conclusion in relation to Scotland adopting the UNCITRAL Model Law in its report.  The Dervaird Committee, after noting that the adoption or otherwise of the Model Law in England, Wales and Northern Ireland, was not decisive of the position in Scotland, observed that:

“[T]he Model Law has been adopted, or proposal for its adoption have been made, in Australia, Cyprus, Hong Kong and New Zealand, also substantial common law jurisdiction.  It appears to the Committee therefore that having already established that there would be no significant detriments to the existing law of arbitration arising from the adoption of the Model Law, the decisions taken in those countries and the likelihood of the widespread availability of the Model Law in important commercial countries represent another reason for its adoption in Scotland.”[48]

            Like the Convention, the Model Law includes public policy as a ground for setting aside an arbitral award by the courts at the seat of the arbitration,[49] and as a ground for refusing recognition and enforcement of a foreign award,[50] in essence reflecting Article V.2 of the Convention.  And like the Convention, the Model Law also does not provide for a definition of “public policy.”

            Article 34.2(b)(ii) of the UNCITRAL Model law has been subject to much debate in various national jurisdictions.  In the UK, the concern is that “public policy” may not cover all cases of procedural injustice, and as to whether the requirements of equality of treatment,[51] and of giving the parties a full opportunity to present their respective cases, would be covered under the public policy exception.[52]  The debates focused on the difference between the English Common Law concept of public policy and the Civil Law concept of ordre public, which would undoubtedly encompass breaches of procedural justice.   It was eventually decided that the list of grounds for setting aside an arbitral award based on the public policy exception will not be expanded, but that the position should be clarified.  Thus, the Report of the United Nations Commission on International Trade Law provided:

“It was understood that the term ‘public policy,’ which was used in the 1958 New York Convention and many other treaties, covered fundamental principles of law and justice in substantive as well as procedural respects.  Thus, instances such as corruption, bribery and fraud and similar serious cases would constitute a ground for setting aside.  It was noted, in that connection, that the wording ‘the award is in conflict with the public policy of the State’ was not to be interpreted as excluding instances or events relating to the manner in which it was arrived at.”[53]

            Article 36 of the Model Law, like Article V.2(b) of the Convention, refers to the public policy of the State in which enforcement is sought.   Again, similar with the Convention, there was no overt attempt to harmonize the definition or application of public policy.  Article 36.1(b)(ii) of the Model Law, on the grounds for refusing recognition or enforcement of foreign arbitral awards, provides:

“Recognition or enforcement of an arbitral award, irrespective of the country in which it was made, may be refused only:

(b) if the court finds:

(ii) the recognition or enforcement of the award would be contrary to the public policy of this State.”

            Criticisms aside, the Model Law began with a proposal to reform the New York Convention and has been largely considered successful.  The text goes through the arbitral process from beginning to end, in a simple and readily understandable form.  It has been adopted by many states, either as it stands or with minor changes, and it is a text that any state proposing to adopt a modern law of arbitration is bound to take into consideration.[54]

            OHADA Uniform Act

            L’Organisation pour l’Harmonisation en Afrique du Droit des Affaires (OHADA) was created by the treaty relating to the Harmonisation of Laws in Africa, signed on  October 17, 1993, in Port-Louis. On March 11, 1999, the Council of Ministers of OHADA adopted a Uniform Arbitration Law. Article 31 of such law provides that recognition and enforcement shall be refused if the “award is manifestly contrary to a rule of international public policy of the member States”. The Cour Commune de Justice et d’Arbitrage, based in Abidjan, Côte d’Ivoire, is to supervise the application and interpretation of the Law, and a decision not to allow enforcement may be appealed to that court. This is the first attempt, of which I am aware, to harmonise public policy within several sovereign States. It also notable that it is to be “international public policy” that should be applied.[55]

            Other Conventions

            The 1927  Geneva Convention stated that an award would be enforceable unless  “contrary to the public policy or to the principles of the law of the country in which it is sought to be relied upon.”[56]

            The 1975 Panama Convention makes reference to the “public policy of that State.” The 1979 Montevideo Convention goes further by requiring that the award be “manifestly contrary to the principles and laws of the public policy [‘orden publico’] of the exequatur State.”[57]

            The 1983 Riyadh Convention provides that enforcement may be refused if the award is “contrary to the Moslem Shari’a, public policy or good morals”[58] of the signatory State where enforcement is sought.  On the other hand, the 1987 Amman Convention refers simply to “public policy.”[59]

            The Convention on Choice of Court Agreements,[60] which was concluded on June 30, 2005 during the Hague Conference on Private International Law may not specifically apply to arbitration and related proceedings.[61]  Nevertheless, the Convention on Choice of Court Agreements does contain clear language establishing a public policy exception.  Article 6(c) of the Convention, on “Obligations of a court not chosen,” provides:

“A court of a Contracting State other than that of the chosen court shall suspend or dismiss proceedings to which an exclusive choice of court agreement applies unless –

  1. c) giving effect to the agreement would lead to a manifest injustice or would be manifestly contrary to the public policy of the State of the court seized.”

            Another public policy exception is also provided in Article 9(e) of the Convention on Choice of Court Agreements, which provides the grounds for refusal of recognition or enforcement:

“Recognition or enforcement may be refused if –

  1. e) recognition or enforcement would be manifestly incompatible with the public policy of the requested State, including situations where the specific proceedings leading to the judgment were incompatible with fundamental principles of procedural fairness of that State[.]”

            The European Council Regulation Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters,[62] which entered into force on March 1, 2002, also provides for a public policy exception.  Article 34.1 of said Regulation provides that, as to enforcement of judgments in civil and commercial matters:

“A judgment shall not be recognized:

  1. if such recognition is manifestly contrary to public policy in the Member State in which recognition is sought.”

            As seen can be seen from the enforcing conventions and regulations discussed here, the New York Convention and other conventions leave open the possibility for enforcement courts to apply public policy widely or narrowly, although the drafters of the Convention preferred a narrow application.[63]

CHAPTER 3

Characteristics of Public Policy

Neither the Convention nor the Model Law provide for a definition of the term “public policy”, or express provisions on how the term should be interpreted.[64]  When considering the application of public policy, it is important to distinguish between public policy, international public policy, national public policy, and transnational public policy.[65]

            The term “public policy” as used in this dissertation refers to those moral, social, or economic considerations which are applied by courts as grounds for refusing enforcement of an arbitral award, whether domestic or foreign.[66]

Section A.     Domestic Public Policy

            Secondary literature provides that public policy, or ordre public, is the body of fundamental principles that underpin the operation of legal system in each state, and addresses the social, moral, and economic values which tie a society together.   These values differ in various cultures and may change over time.  The function of law is to regulate behaviour either by reinforcing existing social expectations or encouraging constructive change.  Over time, these policies evolve and become not only more clearly defined, but also more deeply embedded in the legal system of a state.[67]

            In 1853, the English House of Lords defined public policy as “that principle of law which holds that no subject can lawfully do that which has a tendency to be injurious to the public, or against public good.”[68]

            “Policy” on its own, on the other hand, is the proposed course of action of a person, group or government within a given environment providing obstacles and opportunities to reach a goal or to realize an objective or purpose.[69]

            Some characteristics of public policy are:[70]

  • developed by some form of government body
  • directed toward some goal
  • involves some action over time
  • all emerge in response to policy demands
  • may be positive (involve action) or negative (decisions to do nothing)
  • has an authoritative, legally coercive quality

The classification by where policy is made is as follows:[71]

  • Administrative: made by individuals working in public agencies responsible for implementing public policy.
  • Legislative: development of statute law.
  • Executive: policy made by elected officials who carry out legislative policy.
  • Judicial: interpretation of existing law in the courts.

Domestic arbitration involves only one nation, and citizens of only that one nation.  When this is the case, an enforcing court needs to only take of national public policy nations.  The standard of review is whether the arbitral award would violate local standards of morality and justice.  However, the outside limit of domestic public policy is the parties’ freedom of contract under the interested nation’s laws.[72]

Section B.     International Public Policy

            “International public policy,” or ordre public international, is that public policy applied by State courts to foreign awards rather than domestic awards.  It is understood to be more narrow in scope than domestic public policy: not every rule of law which belongs to the domestic public policy is necessarily part of international public policy.[73]

            As opposed to domestic arbitration, an international arbitration involves two or more nations, and citizens of two or more nations.  In this case, an enforcing court needs to take cognisance not only of its own public policy, but also the public policy of other interested nations and the special needs of international commerce.   In other words, international public policy involves national public policy concerns which should be applied in an international context.[74]

            One nation’s public policy should only prevail if it is warranted by the nature of the dispute, statute, or public policy objective involved.  This is determined by comparing the connections existing between the case at hand and each of the nations involved in the dispute.[75]  Thus, international public policy involves balancing the interests between the different nations involved and the needs of international commerce for an equitable resolution of international arbitration disputes.   [76]

            Practically every major nation involved in international trade and commerce considers and employs international public policy, explicitly or impliedly, when deciding whether to enforce a foreign arbitral award.[77]  For instance, French jurisprudence specifically delineates between domestic and international public policy.[78]  American jurisprudence on the other hand views the international aspect of an arbitration as a mitigating factor in deciding whether a foreign arbitral award is enforceable.[79]

International public policy also includes both substantive and procedural principles.   Substantive public policy (ordre public au fond) refers to the recognition of rights and obligations by a tribunal or enforcement court in connection with the subject matter of the award, as opposed to procedural public policy, which goes to the process by which the dispute was adjudicated.   A common example of a substantive fundamental principle is the principle of good faith and prohibition of abuse of rights (especially in civil law countries). Other examples that are cited by courts and commentators include: pacta sunt servanda; prohibition against uncompensated expropriation; and prohibition against discrimination.  The category of fundamental principles also includes the proscription against activities that are contra bonos mores, such as: piracy; terrorism; genocide; slavery; smuggling; drug trafficking; and paedophilia.  On the other hand, an example of a procedural fundamental principle is the requirement that tribunals be impartial. Other examples that are given are: the making of the award was induced or affected by fraud or corruption; breach of the rules of natural justice; and the parties were on an unequal footing in the appointment of the tribunal.[80]

It is also widely accepted that procedural public policy should not include mistake as to the law or the facts by the tribunal (unaccompanied by some serious procedural irregularity).[81]

            Annulling an international arbitral award on the ground of public policy is difficult, whether or not the court specifically differentiates between national and international policy.

Only where a foreign arbitral forum and foreign choice-of-law clause operate as a tandem for a prospective waiver of a party’s right to pursue statutory remedies will a court rule on an arbitral award as being contrary to public policy.[82]

            The International Law Association (ILA) identified various categories of international public policy and cited examples based on various case law from different countries.[83]   According to the ILA, the international public policy of any State includes:[84]

  • Fundamental principles, pertaining to justice or morality, that the State wishes to protect even when it is not directly concerned.
  • Rules designed to serve the essential political, social, or economic interests of the States, these being known as the “lois de police” or “public policy rules.”
  • The duty of the State to respect its obligations towards other States or international organizations.

Section C.      Transnational or Truly International Public Policy

            The third type of public policy, “transnational public policy,” refers to those principles that represent an “international consensus as to universal standards and accepted norms of conduct that must always apply and provide limitations to public as well as private international relationships and transactions.”[85]  Transnational public policy, or “truly international public policy” comprises fundamental rules of natural law, principles of universal justice, jus cogens in public international law, and the general principles of morality accepted by what are referred to as “civilized nations.” [86]  In the case of transnational public policy, a national court only needs to consider transnational public policy when the arbitration is both international in scope and subject to the lex mercatoria.

            A court which is reviewing an international arbitral award based on the lex mercatoria should apply fundamental general principles of law without inquiring whether the dispute has any relationship to a particular State.[87]  In this way, transnational public policy is differentiated from international public policy, where a reviewing court must consider the public policy of all interested States.   The transnational principles comprising the lex mercatoria originate from the international community of states, and thus, must be respected as international obligations.  They must also remain independent from any relationship the particular case might have to one State or another.[88]

CHAPTER 4

Public Policy versus Mandatory Rules

As earlier discussed in this dissertation,[89] the public policy exception to enforcement of a foreign arbitral award is an acknowledgement of the right of the State and its courts to exercise ultimate control over the arbitral process.   This results in a conflict between not wanting to go against the State’s authority to enforcement of awards and its right to reject arbitral awards which contravene domestic laws and values; and the desire to respect the finality of foreign awards.[90]

Public policy comes up against mandatory rules in the enforcement of foreign arbitral awards due to the application of conflict of laws in private international law.   The rules of conflict of laws provide for the application of a particular law, but when the application of that particular law would result in a decision which is fundamentally repugnant to the fundamental concepts of the legal system then, by way of exception, the court would be required not to apply the law designated by the conflict of laws rule.    In short, in these instances, mandatory rules would prevail over international public policies.  Instead, what would be applied will be the substantive law of the forum, or the lex fori.   This is  known as the negative decision international public policy.[91]  It is “international” public policy since the concept is quite different from national mandatory law, also called in French as lois d’ordre public.   What is applicable in the conflict of laws is principles, not just laws, and these principles must be absolutely fundamental – not merely mandatory.  It must be seen in an international, not just national, context.[92]

Since an international arbitral tribunal does not have a lex fori, then the arbitration law at the seat, or the lex arbitri, may contain its own private international law rules, different from those applicable by the state courts at its seat.[93]

Another issue revolving the public policy versus mandatory rules debate is the question of to what extent will the parties’ choice-of-law clause be enforceable and what steps may they take to maximize the chances that the Convention will apply to the resolution of any subsequent dispute.   While it is not guaranteed, the choice of the law of an unrelated jurisdiction will often stand the best chance of being honoured if it is reinforced with a forum-selection clause designating the same jurisdiction.  When a choice-of-law clause will result in the application of a rule that offends a fundamental policy of an interested jurisdiction, then the courts may refuse to enforce the provision.  Courts will rarely find requirements in the Convention related to mandatory rules of the domestic law – such as Statute of Frauds, or general rules of contract law – to constitute fundamental policies.  On the other hand, a fundamental policy may be embodied in a statute that makers certain types of international contracts illegal or that is intended to “protect a person against the oppressive use of superior bargaining power.”[94]

 Some jurisdictions, most notably in New York, do not require a nexus between a contract and the jurisdiction designated in a choice-of-law clause, and do not recognize a public policy exception to the application of a choice-of-law clause.  The New York legislature passed the General Obligations Law.   Section 5-1401 of said law provides that the mandatory rule that New York law will apply to most commercial contracts valued in excess of $ 250,000 that contain a New York choice-of-law clause, even when neither the contract nor any of the parties to it has any relationship to New York.  A mandatory rule such as this provides that New York’s statutory choice-of-law rules will most likely assure application of a choice-of-law clause designating New York law in a New York forum, but New York’s choice-of-law rules will not assist a party litigating in a non-New York forum.[95]

Under the Bremen v. Zapata Offshore Co.[96] case  doctrine on public policy exception, there will generally remain a possible escape from forum-selection clauses for an ingenuous or motivated litigant who wishes to avoid application of mandatory rules.  Courts may also be reluctant to enforce forum-selection and choice-of-law clauses that operate in tandem as waivers of substantial rights.[97]

The European Convention on International Commercial Arbitration,[98] which came into force on April 21, 1961, does not provide for any express provisions dealing with public policy reservations between the parties to an international arbitral proceeding.  It does however contain provisions which uphold the strength of mandatory laws of state courts despite submission of the dispute to an international arbitral tribunal.

The European Convention provides in Article VI, on the jurisdiction of courts of law, that:

“(1) A plea as to the jurisdiction of the court made before the court seize by either party to the arbitration agreement, on the basis of the fact that an arbitration agreement exists, shall under penalty of estoppel, be presented by the respondent before or at the same time as the presentation of his substantial defence, depending upon whether the law of the court seize regards this plea as one of procedure or of substance.

(2) In taking a decision concerning the existence or the validity of an arbitration agreement, courts of Contracting States shall examine the validity of such agreement with reference to the capacity of the parties, under the law applicable to them, and with reference to other questions

(a) under the law to which the parties have subjected their arbitration agreement;

(b) failing any indication thereon, under the law of the country in which the award is to be made;

(c)failing any indication as to the law to which the parties have subjected the agreement, and where at the time when the question is raised in court the country in which the award is to be made cannot be determined, under the competent law by virtue of the rules of conflict of the court seized of the dispute.

The courts may also refuse recognition of the arbitration agreement if under the law of their country the dispute is not capable of settlement by arbitration.

… ”

            The European Convention further recognizes the supremacy of mandatory rules which provide that an arbitration agreement is not within the scope of national law.   Article IX of the European Convention states that international arbitral rules will only apply if the domestic law is not applicable to the parties due to some incapacity, or when the agreement is not valid under the law to which the parties have subjected it.[99]   In the same article, the European Convention also provides that the party requesting to set aside the arbitral award may do so on the ground of lack of proper notice of the appointment of the arbitrator or of the arbitration proceedings, or was otherwise unable to present his case.[100]

            English courts have long debated the nature of arbitration proceedings and how these differ from court actions.  According to Justice Kerr in his landmark paper:

“With the removal of the deterrent of the involvement of the courts under the special case procedure, we will see a vast increase of London arbitration clauses in international contracts coupled with the necessary exclusion agreements.

However, there are two further conditions which must be met.  First, we need an arbitral organisation, a focal point, which can provide more than mere reference to ‘London’ in future arbitration clauses.  It should avoid all the disadvantages of the ICC.  It should offer the appointment of suitable arbitrators and umpires on request, and premises and other ancillary services.  Its charges should be minimal, and totally independent of the amount in dispute.  But on no account should it seek to control the arbitrations in any way, and it should prescribe no procedural rules save to make it clear that the procedure will be in the sole discretion of the tribunals and not restricted by the English rules of procedure.  This point is further mentioned below.  On this basis it should rely on the quality of the tribunals available for appointment and leave the conduct of each arbitration to the tribunal.

The second qualification is one which will then have to be met by the tribunals themselves.  This is that they should not allow themselves to be dominated by English procedures.  In long and complex cases the Continental inquisitorial procedure is often more effective than our adversary system.  It is often better for the tribunal to limit discovery in the first instance, to appoint its own experts, and then to exercise control over the volume of discovery and the witnesses whom it wants to hear.  Our arbitrators will have to learn to be more imaginative than merely to follow the mirror-image of the procedure in our courts.  The difficulties concerning the adoption of the inquisitorial procedures of the civil law in appropriate cases have been a secondary reason why the ICC has been reluctant to direct arbitrations to this country.  A contractual relaxation of our procedure by leaving this expressly to the discretion of the tribunals would meet this criticism, and any abuses would still be subject to the control of ‘misconduct’ by the Commercial Court.”[101] (Emphasis supplied).

The word “misconduct” gave rise to the following significant footnote in Justice Kerr’s paper:

“Under §23 of the Arbitration Act 1950.  However, an express contractually binding power for the tribunal to apply its own procedure will no doubt be necessary: without this, any disregard of English procedural rules would probably constitute ‘misconduct.’[102] (Emphasis supplied).

The London Court of Arbitration (LCA) published new, simplified rules on international arbitration, incorporating Justice Kerr’s suggestions.  Rule 5 (1) provides:

“The arbitrator shall have the jurisdiction, and the powers to direct the procedure in the arbitration, necessary to ensure the just, expeditious, economical and final determination of the dispute, as set out in the Schedule of Jurisdiction and Powers of the Arbitrator.”[103]

Rule 13 of the LCA’s International Arbitration Rules (adopted to take effect in January 1, 1981) provides that if the parties have agreed that the United Nations Commission on International Trade Law (UNCITRAL) Rules shall apply, then the arbitrator will have the further powers provided therein in addition to those conferred upon him in the Schedule of Jurisdiction and Powers of the Arbitrator.[104]  However, a close comparison of the two instruments reveals that only insignificant extensions of the arbitrator’s specific such jurisdictional powers are envisaged.  Some of those apparent additions may, however, be deemed to be implied under the UNCITRAL Rules, and others may not be permissible at law, at least not outside England.[105]

The basic distinction must be made between the substantive law governing a contract and the procedural law applicable to the proceedings.  The difference between the substantive law governing a contract and the procedural law applicable to the proceedings lies at the heart of the issues surrounding the enforcement and recognition of international arbitral awards.

In the landmark cases of James Miller & Partners, Ltd. v. Whitworth Street Estates (Manchester), Ltd.[106] and Compagnie d’ Armement Maritime S.A. v. Compagnie Tunisienne de Navigation S.A.,[107] Lord Diplock provided:

“English law accords to the parties to a contract a wide liberty to choose both the proper law and the curial law which is to be applicable to it.  If the parties exercise that choice as respects either the proper law or the curial law or both, the English courts will give effect to their choice unless it would be contrary to public policy to do so.  But it is a liberty to choose – not a compulsion, and if the parties do not exercise it as respects the proper law applicable to their contract the court itself will determine what is the proper law.

The first stage, therefore, when any question arises between parties to a contract as to the proper law applicable to it, is to determine whether the parties intended by their contract to exercise any choice at all and, if they did, to determine what was the system of law which they selected.  In determining this the English court applies the ordinary rules of English law relating to the construction of contracts.  If, applying these rules, the court reaches the conclusion that the parties did not intend to exercise any choice of proper law, or is unable to identify what their choice was, it becomes necessary for the court to proceed to the second stage, of determining itself what is the proper law applicable.  In doing so, the court applies the English rule of the conflict of laws relating to the proper law of the contract.  This is that the proper law is that system of law with which the transaction has its closest and most real connection (Bonython v. Commonwealth of Australia).

My Lords, this is applied as a positive rule of English law.  It is applied not because it is the choice of the parties themselves but because they never intended to exercise their liberty to make a choice or, if they did, they have failed to make their choice clear.

Similarly, with choice of curial law.  This generally takes the form of a provision in the contract for submission to arbitration of disputes arising out of it; although parties may, and sometimes do, agree by their contract to submit disputes to the determination of the courts of law of a particular country to the exclusion of all other courts.  An express choice of forum by the parties to a contract necessarily implies an intention that their disputes shall be settled in accordance with the procedural law of the selected forum and operates as if it were also an express choice of the curial law of the contractIf the parties have made no choice of forum, an English court can only apply English procedural law in any disputes under the contract in which it is invited to adjudicate.

My Lords, it is possible for parties to a contract to choose one system of law as the proper law of their contract and a different system of law as the curial law.  Although they may want their mutual rights and obligations under the contract to be ascertained by reference to the system of law of a country with which the transaction has some close and real connection, they may nonetheless consider that the arbitral procedure adopted in some other country, or the high reputation and commercial expertise of arbitrators available there, make the curial law of that country preferable to the curial law of the country whose system of law they have chosen as the proper law.”[108] (Emphasis supplied).

The reason why the distinction between substantive and procedural law becomes relevant thus is that the principle of party autonomy (discussed below) permits parties to select one governing law clause and a different arbitration forum.  The governing law clause will operate according to its terms, and the procedural law, the lex arbitri, will be that of the forum.  The problems consist in marrying the two systems to the extent that they are disparate.[109]

CHAPTER 5

The Public Policy Paradox of the New York Convention

Contracting parties from different countries to an international contract would normally want disputes to be tried in their home territory, where each would feel that they have the “home field advantage.”   Selecting a neutral third country would normally not be effective since a third-party country would often decline to try a case over which it does not exercise territorial jurisdiction.  When parties to an international contract come from different countries, the process of dispute litigation often leaves the parties with an expensive and oftentimes frustrating struggle to find an international tribunal to hear the case.  Even if a party obtains a favourable judgment, they are often faced with the dilemma of the impossibility of enforcement of such a judgment.[110]

An arbitration clause in an international contract will help the parties avoid the expensive, and frustrating process of settling their disputes.  The basic problem that this thesis will examine is enforcement and recognition of an arbitral award between two parties in an international commercial agreement, and how such enforcement and recognition may be hindered by the public policy exception in the Convention, pursuant to Article V.2(b).

Article V.2(b) of the Convention provides that a party may refuse recognition and enforcement of the award if the Convention is contrary to the public policy of the country upon which it is sought to be enforced.  The recurring problem here is that enforcing courts refuse to enforce the awards on the grounds that the arbitral tribunal failed to take account of the law of the enforcing party, and the award as being in conflict to the public policy of the enforcing state and thus cannot be enforced.  The basis for the public policy exception in the Convention is that certain provisions of the law of the enforcing state are matter of fundamental public policy and should not be disregarded even if the contract giving rise to the arbitral award is not the applicable law to the arbitration.   On the other hand, Article V.1 of the Convention places significant emphasis on the party autonomy, and the ability to settle their disputes as they choose.  Ironically, the public policy restriction in Article V.2 of the Convention places a significant limitation on that autonomy.

            The Convention provides that a proposing party may refuse to recognise and enforce an arbitral award based on public policy.   Article V.2(b) of the Convention provides:

“2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that:

  • The subject-matter of the difference is not capable of settlement by arbitration under the law of that country; or
  • The recognition or enforcement of the award would be contrary to the public policy of that country.”[111] (Emphasis supplied).

            The public policy exception provides that recognition and enforcement of an arbitral award may be refused if it is contrary to the public policy of the enforcement state.  A state may want to have the right to refuse to recognise and enforce an arbitral award that in some way offends or is contrary to that state’s own notions of public policy.[112]  However, when reference is made to “public policy” it is often difficult not to recall the comment of the English Judge Burrough who said, more than a century ago, “It is never argued at all but where other points fail.”[113]

Section A.      Arbitrability

            Historically, English courts have been reluctant to excuse an award from enforcement on the ground of being contrary to public policy.  According to Lord Justice Kerr, “there is no case in which this exception has been applied by an English court.”[114]

            Every state has its own concept of what is required by its own respective public policy.  The fact that different states have different concepts of their own public policy means that there is a risk that one state may set aside an award that other states would regard as valid.[115]   The problem is when one state recognises the dispute to not be contrary to public policy, then the state may raise the defence or exception under the Convention that the dispute is not “arbitrable.”

            When the issue of arbitrability arises, it is necessary to examine the laws of the different states involved.  These may include the law governing the party concerned, where the agreement is with a state or state entity; the law governing the arbitration agreement; the law of the seat of arbitration; and the law of the place of enforcement of the award.  However, in determining whether a dispute is “arbitrable” under a given law is essentially a matter of public policy for that law to determine.  The difficulty here arises in the fact that public policy varies from one country to the other, and changes from time to time.  The most that can be done is to indicate the categories of dispute that may fall outside the domain of arbitration.[116]

Section B.      National v. International Policy

            The “public policy” referred to in the Convention pertains to the public policy of the enforcement state.  The problem arises when the public policy differs between international awards from those of purely domestic awards.  The US case Bremen v. Zapata Offshore Co.[117] attempted to interpret this by stating:

“The expansion of American business and industry will hardly be encouraged if, notwithstanding solemn contracts, we insist on a parochial concept that all disputes must be resolved under our laws and in our courts…  We cannot have trade and commerce in world markets and international waters exclusively on our terms, governed by our laws and resolved in our courts.”[118]

            This opinion was further affirmed by the Federal District Court of Massachusetts in the Sonatrach[119] case:

           “The line of decisions which conclusively tip the judicial scale in favour of arbitration [are] a line of United States Supreme Court opinions which enthusiastically endorse an international approach towards commercial disputes involving foreign entities.  These decisions, the Bremen v. Zapata Offshore Co. v. Alberto-Culver Co. (international arbitration clause held enforceable when in conflict with federal securities laws); and most recently Mitsubishi[120] (international arbitration clause held enforceable when in conflict with Federal Antitrust laws) eschew the parochial tendencies of domestic tribunals in retaining jurisdiction over international commercial disputes.  The Supreme Court powerfully advocates the need for international comity in an increasingly interdependent world.  Such respect is especially important, in this Court’s view, when parties mutually agree to be bound by freely negotiated contracts.”[121]

            Apart from the US courts, tribunals in other countries have also recognised that in applying their own public policy to Convention awards, they should give it an international dimension rather than a domestic application.  In India, the Supreme Court ruled:

“This raises the question of whether the narrower concept of public policy as applicable in the field of public international law should be applied or the wider the concept of public policy as applicable in the field of municipal law.  The Court held that the narrower view should prevail and that enforcement would be refused on the public policy ground if such enforcement would be contrary to (i) fundamental policy of Indian law; or (ii) the interests of India; or (iii) justice or morality. “[122]

            A decision of Swiss court had similar effect:

“The Swiss public policy defence has a more limited scope in the context of proceedings for the recognition and enforcement of foreign arbitral awards than [the one allowed] in proceedings before a Swiss court deciding on the merits… From a formal point of view, we find that a procedural defect in the course of the foreign arbitration does not lead necessarily to refusing enforcement even if the same defect would have resulted in the annulment of a Swiss award system (with obvious exception of the violation of fundamental principles of our legal system, which would contrast in an unbearable manner with our feeling of justice…”[123]

            Similarly again, the German Federal Supreme Court provided for an identical view:

“From the viewpoint of German procedural public policy, the recognition of a foreign arbitral award can therefore only be denied if the arbitral procedure suffers from a grave defect that touches the foundation of the State and economic functions.”[124]

            The decisions presented herein come from different courts in different parts of the world, and they indicate a readiness to limit the public policy exception to enforcement.[125]

The English Court of Appeal has held that it would be contrary to its public policy to enforce an award which determined the rights of the parties, not on the basis of any particular but “upon some unspecified, and possibly ill-defined, internationally acceptable principles of law.”[126]    The English Court of Appeal as provided:

“Considerations of public policy can never be exhaustively defined, but they should be approached with extreme caution.  As Burrough J. remarked in Richardson v. Mellish (1824) 2 Bing. 229 at 252, [1824-34] All E.R. 258 at 266: ‘It is never argued at all, but when other points fail.’  It has to be shown that there is some element of illegality or that the enforcement of the award would be clearly injurious to the public good or, possibly, that enforcement would be wholly offensive to the ordinary reasonable and fully informed member of the public on whose behalf the powers of the state are exercised.

Asking myself these questions, I am left in no doubt that the parties intended to create legally enforceable rights and liabilities and that the enforcement of the award would not be contrary to public policy.  That only leaves the question of whether the agreement has the requisite degree of certainty.  By choosing to arbitrate under the rules of the ICC and, in particular, Article 13.3, the parties have left the proper law to be decided by the arbitrators and have not in terms confined the choice to national systems of law.  I can see no basis for concluding that the arbitrators’ choice of proper law – a common denominator of principles underlying the laws of the various nations governing contractual relations – is outwith the scope of the choice which the parties left to the arbitrators.”[127]

            This English case indicates how courts have resisted arbitral awards from an international arbitration proceeding for being contrary to domestic public policy.  The same case however provides that invoking the public policy exception should not be carelessly made, but should require a clear indication that “there is some element of illegality or that the enforcement of the award would be clearly injurious to the public good or, possibly, that enforcement would be wholly offensive to the ordinary reasonable and fully informed member of the public on whose behalf the powers of the state are exercised.”[128]

            The problem thus with the public policy exception of the Convention is that the domestic courts will always have the discretion to determine what is its public policy, and what would be contrary to its public policy.  Should the party from such state wish to invoke this defence, so as not to recognise and enforce an arbitral award under the Convention against it, then  a dilemma will arise.  The opposing party would of course claim that the act of the party invoking the exception is contrary to the former’s own public policy.   What is perhaps required is to have a workable definition of “international public policy” that would be able to prevent an award in an international arbitration from being set aside for purely domestic policy considerations.  Such an international concept of public policy would not concern itself with matters of form or of purely domestic nature, but should look to the broader public interest of honesty and fair dealing in international contracts.[129]

CHAPTER 6

How the Public Policy Exception Is Applied in Enforcement Proceedings

Section A.     Judicial Review of Arbitral Awards

            Traditionally, national courts have intervened in arbitral proceedings in two instances.  First, at the onset of arbitration to determine whether the agreement to arbitrate is valid and enforceable.   The court in this instance determines whether the issue itself is arbitrable or whether it concerns an area where public policy dictates that all such disputes be resolved by the courts.  The second instance for judicial review is at the end of an arbitration, when a court is asked to enforce an arbitral award and where the court reviews the award to assure that the award’s enforcement will not violate any procedural due process or other public policy concerns.

An example of national courts exercising judicial review over foreign arbitral awards is the power granted to US courts under the Federal Arbitration Act (FAA) enacted by Congress in 1925.[130]  The express intention behind the FAA was to reverse past judicial animosity towards arbitration and to “place arbitration agreements upon the same footing as other contracts.”[131]  Together with the New York Convention reversed the traditional judicial hostility towards arbitration, and transformed the US into an arbitration-friendly jurisdiction.

The Federal Arbitration Act (FAA), added by amendment of July 31, 1970, [132] provides in Section 201 that the New York Convention shall be enforced in the courts of the United States.   Chapter 2 of the FAA provides that the 1958 Convention will apply for the recognition and enforcement of foreign arbitral awards.  Section 206 of the FAA provides that a court having jurisdiction under Chapter 2 of the Act may direct that arbitration be held in accordance with the agreement at any place provided for in the arbitration agreement between the parties – whether that place is within or without the US.  Under Section 207 further provides that any party to the arbitration may apply to any court having jurisdiction for an order confirming the award as against any other party to the arbitration, within 3 years after an arbitral award falling under the 1958 Convention is made.  Section 207 of the FAA further provides that the court shall confirm the arbitral award unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the 1958 Convention.   In Section 207 of the FAA it is evident that US courts may take cognisance of the public policy exception, as one of the exceptions specifically allowed under the 1958 Convention in Article V.2(b).  Section 207 of the FAA incorporates that public policy exception of the New York Convention into US statutory law.

To date, US courts routinely validate and enforce foreign arbitral agreements, even if they may implicate fundamental issues of deeply held public policy, such as securities violations,[133] RICO claims,[134] anti-trust causes of action,[135] employment discrimination,[136] and civil rights cases.[137]  An example of a public policy rule is an anti-trust law.   A number of courts consider anti-trust law to be part of public policy. For instance, in the case, Mitsubishi Motors [138] case, the US Court of Appeals emphasised its strong presumption of favouring and upholding international arbitration agreements, but it nevertheless reserved the right to review any award that violated US anti-trust law. Other examples that are often cited are currency controls; price fixing rules; environmental protection laws; measures on embargo, blockade or boycott; tax laws; and laws to protect parties presumed to be in an inferior bargaining position (i.e. consumer protection laws).[139]

Section B.     The Public Policy Exception to Award Enforcement

            The Convention and the FAA both dictate that an enforcing court may refuse to recognize or enforce an arbitral award if enforcement of such an award would be contrary to the public policy of the enforcing nation.[140]  The public policy exception is the most widely asserted reservation to award enforcement, especially in respect to foreign arbitral awards.[141]   On numerous occasions, the US Supreme Court has specifically reserved the right at the award-enforcement stage to review an award, in order to assure that the combination of a choice-of-forum and choice-of-law clauses in an arbitration agreement did not serve to defeat statutorily protected rights in violation of public policy.[142]

            The public policy exception should only be employed where enforcement of the foreign arbitral award would violate a forum State’s “most basic notions of morality and justice.”[143]  This restricted interpretation of the public policy exception is warranted so that the pro-arbitration policies of the Convention and the FAA will be safeguarded.  The public policy exception is further limited by the nature of the dispute and the type of public policy involved.  The nature of the dispute and the nationality of the parties involved determine which one of the three types[144] of public policy are relevant: domestic, international, or transnational public policy.   Thus, the standard of review for annulling an arbitral award differs depending on which type of public policy is applicable.[145]

            The International Commercial Arbitration Committee of the International Law Association conducted a 6-year study into the application of public policy by enforcement courts.[146]  The ILA Committee reviewed numerous case law and commentaries from different countries to understand why public policy has rarely been successful in preventing enforcement of international arbitral awards.  According to the study, courts of many countries apply a narrow concept of public policy.[147]  The study points out that the international public policy applied in many countries is generally the public policy of the country in question which is applicable to international awards, and not transnational public policy. [148]

            Some courts have approved the application of transnational public policy but this has not yet received widespread acceptance.  The Milan Court of Appeals considered a more transnational concept when it described international public policy as a “body of universal principles shared by nations of similar civilization, aiming at the protection of fundamental human rights, often embodied in international declarations or conventions.”[149]  In the same vein, the Swiss Federal Tribunal in a case was in favour of taking into account a “universal conception of public policy, under which an award will be incompatible with public policy if it is contrary to the fundamental moral or legal principles recognized in all civilized countries.”[150]   However, the same court, in another case,[151] refused to take a position on the point, and instead preferred to take a more pragmatic approach.

            In France, the Paris Court of Appeal expressed a degree of scepticism in relation to applying the concept of transnational public policy,[152] although it noted that certain activities, such as corruption, violate both French public policy and international business ethics.[153]  Common Law countries have likewise restricted the scope of public policy but have not embraced the concept of transnational public policy.[154]

            In the US, the definition of public policy with regard to the enforcement of foreign arbitral awards is that penned by Judge Joseph Smith in the Parsons & Whittemore [155]case, in which he held that that the enforcement of a foreign arbitral award may be denied on public policy grounds “only where enforcement would violate the forum state’s most basic notions of morality and justice.”  In the same year (1974), the Supreme Court, in the case Scherk v. Alberto-Culver Co.,[156] recognized the difference between international and domestic public policy.  In the case, the US Supreme Court enforced an agreement to arbitrate a claim arising in international trade, although arbitration of a similar claim would have been barred had it arisen from a domestic transaction. [157]

Section C.      The Parsons & Whittemore case

            The leading case worldwide on the narrow scope applied by the courts in interpreting the public policy exception is in the case of Parsons & Whittemore Overseas Co. v. Societe Generale De L’Industrie Du Papier (RAKTA), 508 F.2d 969 (2d Cir. 1974).  Parsons, a US corporation, entered into agreement with RAKTA, an Egyptian corporation to construct and manage a paperboard mill in Egypt under the auspices of the US Agency for International Development (AID).  Sometime in May 1967, following the outbreak of the Arab-Israeli Six-Day War, most of Parsons’ crew was forced to leave Egypt.  With construction nearly completed, Parsons notified RAKTA that it regarded this postponement of the project as excused by the force majeure clause under their construction contract.  RAKTA disagreed and sought damages for breach of contract.  Parsons submitted to arbitration at the International Chamber of Commerce.

Later, the Egyptian government severed diplomatic ties with the US and order all Americans expelled from Egypt, except those who could apply and qualify for a special visa.  In response, the US government, through the State Department, cut off AID funding, banned foreign assistance to Egypt, and ordered Parsons to stop work on the project.

            Thus, based on the laws barring foreign assistance, and the express instruction of the US government, Parsons abandoned the project, claiming that its performance was excused by the force majeure clause of the contract.  An arbitration tribunal awarded RAKTA monetary damages for breach of contract, to which Parsons appealed, arguing that enforcement of the award would punish Parsons for complying with the US trade laws against Egypt, and was therefore contrary to the “public policy” of the US.  Parsons argued on the ground of public policy that various actions by the US officials subsequent to the severance of the American-Egyptian relations, Parsons, as a loyal American citizen, was forced to abandon the project.

            In settling the controversy, the Court looked to the inferences to be drawn from the history of the Convention as a whole, and concluded that the public policy exception, if not sharply constricted or narrowly interpreted, would quickly expand to undermine the supranational emphasis of the Convention and destroy its very purpose of encouraging the enforcement of international arbitration awards.

The Court in the same case set an exceedingly high standard for determining whether enforcement of a foreign arbitral award would violate public policy: “[e]nforcement of foreign arbitral awards may be denied on this basis only where enforcement would violate the forum state’s most basic notions of morality and justice.”[158]  In applying this standard, the Court thus rejected Parsons’ public policy challenge to the arbitral award, finding that Parsons had mistakenly equated the “national policy” of the US with “public policy.”  The Court further held that the Convention’s limited public policy exception was never intended to encompass the parochial interests of the particular enforcing country. [159]  As such, the Court held that neither the 1958 Convention or the FAA could be used to raise the defence of public policy exception, and they rejected Parsons’ defence for failing to provide a sound basis for vacating the foreign arbitral award.

After the Parsons decision, courts from all corners of the world have uniformly adopted the landmark case’ s narrow reading of the public policy exception for the past 30 years.  After Parsons, courts have regularly distinguished between national laws and those principles that constitute a nation’s “basic notions of morality and justice,” finding that mere violations of the former do not preclude the enforcement of international awards under the 1958 Convention.  Thus, courts routinely recognize the “difference between domestic and Convention law in respect of the enforceability of arbitration agreements.”[160]

Section D.     Various Other Case Law

English courts have not expressly applied the concept of international public policy, but they have affirmed the importance of recognizing the finality of foreign arbitral awards when considering an objection to the enforcement on grounds of illegality.  As such, the English courts have endorsed a restrictive concept of public policy.  In the case of D.S.T v. Rakoil, [161] the English Court of Appeal, through Sir John Donaldson MR, stated:

“Considerations of public policy can never be exhaustively defined, but they should be approached with extreme caution. … It has to be shown that there is some element of illegality or that the enforcement of the award would be clearly injurious to the public good or, possibly, that enforcement would be wholly offensive to the ordinary reasonable and fully informed member of the public on whose behalf the powers of the State are exercised.”

In India, the Supreme Court, in the case of Renusagar Power Co. Ltd v. General Electric Co.,[162] interpreted public policy more restrictively than it had done previously. The Indian Supreme Court held that in order to attract the bar of public policy, the enforcement of the award must invoke something more than the violation of the law of India. It held that the phrase “public policy” must be construed in the sense in which the doctrine of public policy is applied in the field of private international law.  The Court ruled that enforcement of a foreign award would be contrary to public policy if it was contrary to the following: (a) the fundamental policy of Indian law; (b) the interests of India; or (c) justice and morality.

Similarly, a  Singaporean judge has said (1996): “the principle of comity of nations requires that the awards of foreign arbitration tribunals be given due deference and be enforced unless exceptional circumstances exist.”.[163]

In 1999, the Hong Kong Court of Final Appeal highlighted the issues faced by many courts around the world.  The Court addressed whether the applicable policy was that of Hong Kong or some shared public policy, and to what extent a national court could or should look at the practice of other courts. The Court rejected the suggestion that public policy under the New York Convention meant some “standard common to all civilized nations.” Nevertheless, the Hong Kong Court of Final Appeal construed public policy narrowly.

It provided that in order to refuse enforcement of a New York Convention award on public policy grounds, “the award must be so fundamentally offensive to that jurisdiction’s notion of justice that, despite it being a party to the Convention, it cannot reasonably be expected to overlook the objection.”  Furthermore, the Hong Kong Court accepted that, in many instances, the relevant public policy of the forum would coincide with the public policy of other countries, and that it would be appropriate to examine how far the courts of other jurisdictions had been prepared to go in enforcing 1958 Convention awards made in circumstances that did not meet their domestic standards.[164]

Section E.      Trade Sanctions as Public Policy?

            While most nations agree on the narrow scope of the public policy exception, one issue which remains to be subject to much disagreement is on whether trade sanctions  (such as embargos and import/export laws) constitute public policy for purposes of the New York Convention.   For instance, statutes such as the Trading with the Enemy Act in the US prohibits trade with countries such as Cuba, Iran, and Iraq.   Would a US court then enforce an arbitration award in favour of a US company illegally trading with Cuba?  International economic sanctions are becoming widely used to prevent and fight terrorism around the world.  In enforcing any foreign arbitral award, there is thus always the possibility of the award clashing with the enforcing nation’s particular trade policy.[165]   This leads to the fundamental question of whether trade policies should constitute public policies under the New York Convention.

            In 2002, the Committee on International Commercial Arbitration of the International Law Association issued its Final Report on Public Policy as a Bar to Enforcement of International Arbitral Awards. The Committee found that “measures of embargo, blockade or boycott,” among other, less controversial areas, were an “often cited” example of a public policy rule that would justify refusal to enforce an international arbitration award.

Some case law have likewise ruled that trade sanctions constitute public policy to justify refusal of enforcement of a foreign arbitral award under the New York Convention.  In the case of Harris Adacom Corp. v. Perkom Sdn Bhd,[166] the Malaysian High Court addressed a motion to vacate an arbitral award alleged to involve trade with Israel. While declining, on factual grounds, to vacate the award, the court made clear that given Malaysia’s longstanding enmity toward and boycott of Israel, it would vacate such an award if it were convinced the transaction involved an Israeli party or destination. In Soleimany v. Soleimany,[167] the Court of Appeal of England held that an arbitral award based on a contract that violated export restrictions imposed by the Republic of Iran was unenforceable under the public policy exception to the Convention.

The US Courts however have once again taken a contrary view and have on various occasions ruled that trade sanctions do not constitute public policy for the purposes of the New York Convention.  This was already provided for in the  Parsons case where it rejected the defence of refusing to enforcing a foreign arbitral award for fear of violating trade sanctions against Egypt in the form of statutes and State Department pronouncements.   Similarly, in the case of National Oil Corporation v. Libyan Sun Oil,[168] the US government had enacted a series of trade sanctions against Libya, including bans on the importation of oil from Libya, severe restrictions on exports to Libya, State Department regulations preventing travel to Libya and “Libyan Sanctions Regulations,” which, among other things, nullified any judgment with respect to any property in which Libya had an interest.

As a result of these trade sanctions, Sun Oil, an American corporation, failed to perform its contract with a Libyan government entity, which then won an arbitral award against Sun Oil for breach of contract. Sun Oil argued that enforcement of the award was barred by the public policy exception of the Convention, due to the US sanctions against Libya, and claimed that enforcing the award would benefit the Qadhafi Government, whose “terrorist activities, which have been condemned internationally, are hardly just a parochial interest of the US.”  The Court in this case cited the Parsons ruling, and held  that the foreign policy of the United States — even though clearly and unequivocally expressed in these trade regulations — was not synonymous with “public policy” as used in the Convention.

CHAPTER 7

Public Policy and the Annulment of Arbitral Awards

International arbitration conventions are considered as treaties to which States agree to become signatories to such conventions.   As such, the Vienna Convention on the Law of Treaties,[169] done at Vienna on 23 May 1969, and entered into force on 27 January 1980, could be applicable in general terms to international arbitration conventions.   For instance, Section 2 of the Vienna Convention recognizes reservations, wherein a State to a treaty may validly formulate a reservation, unless such reservation is prohibited by the treaty itself, or the treaty provides that only specified reservations are allow, or that the reservation is incompatible with the object and purpose of the treaty.

            In applying this to the public policy exception in the New York Convention, parties to an arbitration agreement, or indeed signatories to the New York Convention, may validly formulate a reservation for not enforcing or recognizing any foreign arbitral award which is contrary to its own public policy.  Such a public policy reservation would be valid under the 1958 Convention, since the latter does not prohibit the reservation, and in fact specifically allows such a reservation to be made.  Since it is also specifically allowed by the 1958 Convention, on its face, the public policy reservation cannot also be said to be incompatible with the object and purpose of the 1958 Convention.

            Furthermore, the Vienna Convention also allows for the suspension of the operation of a multilateral treaty by agreements between certain of the parties only in the following circumstances:[170]

“1.  Two or more parties to a multilateral treaty may conclude an agreement to suspend the operation of provisions of the treaty, temporarily and as between themselves alone, if:

  • the possibility of such a suspension is provided for by the treaty; or
  • the suspension in question is not prohibited by the treaty and;
  • does not affect the enjoyment by the other parties of their rights under the treaty or the performance of their obligations;
  • it is not incompatible with the object and purpose of the treaty.

…”

            Under the Vienna Convention, “suspension” as allowed in Article 58 thereof, may refer to not suspension of the entire 1958 Convention, but a suspension of the enforcement of any arbitral award rendered under the New York Convention.  And as such, suspension is specifically allowed in the Vienna Convention, and likewise, enforcement and recognition of arbitral awards under the 1958 Convention, are also allowed to be “suspended” (in fact, entirely refused) based on a public policy exception in the New York Convention.   And pursuant to the requirements of Article 58 of the Vienna Convention, such “suspension” in question (the public policy exception as suspending enforcement of the arbitral award) is not prohibited by the treaty, and is in fact provided for by the treaty.

The enforcement of arbitral awards in foreign countries is assured by multilateral conventions or bilateral treaties with the only exception to be refused on the grounds provided by convention or by treaty.  An arbitral award, though it is given the same validity as  a judgment of a court, needs support by the court when it is enforced against a losing party that has not fulfilled an obligation under the award.   On the other hand, after an arbitral award is rendered, it may be subject to annulment by the court, in a country where the award was rendered, upon request by either part if it does not conform to due process of law, non-arbitrability of the subject matter of the dispute, or conflicts with the public policy of the State.  The purpose of the annulment or setting aside of an award is to make the award invalid before it can be enforce in another jurisdiction against the losing party.[171]

The arbitral award is final and binding on the parties.  It may only be vacated or annulled by a court on the grounds provided for in the 1958 Convention, such as the public policy exception in Article V.2(b) or under the FAA, such as corruption, fraud, or irregularity during the hearing, or exceeding the arbitrator’s power, under Section 10 thereof.

The Chromalloy Aeroservices v. Egypt[172] case

This case relates to annulment and enforcement of a foreign arbitral award.  Chromalloy Aeroservices, an American corporation, entered into a military procurement contract with the Egyptian government to provide parts, maintenance, and repair for helicopters of the Egyptian Air Force.   Three and a half years later, Egypt notified Chromalloy that it was terminating the contract.  In turn, Chromalloy notified its rejection of the cancellation of the contract and commenced arbitration in Egypt under the contract.  The arbitral panel ruled that Egypt was liable to Chromalloy, with the latter applying to the US District Court for the District Court of Columbia to enforce the award.  Egypt on the other hand appealed to the Cairo Court of Appeal seeking nullification of the award, and then filed with the US Court a motion to adjourn Chromalloy’s petition.

   The Egyptian Court issued an order nullifying the award, stating that the contract was an administrative contract and that the arbitral panel failed to apply the applicable Egyptian administrative law and had applied Egyptian civil law instead.   Deviation from the parties’ contractual choice of law constituted a ground for annulment of the arbitral award.[173]  Egypt sought to deny the enforcement of the award, while Chromalloy sought confirmation of the award on the ground that Egypt did not present any serious argument that its court’s nullification decision was consistent with the New York Convention or the FAA.

Under US laws, arbitration awards were presumed to be binding, and may only be vacated by the court under very limited circumstances.   The US Court, after reviewing Egypt’s arguments that Egyptian administrative law should govern the contract, and the arbitral panel’s ruling that it did not matter which substantive law of administrative or civil law they applied, decided the decision constituted a mistake of law not subject to judicial review by the US Court.   The Court further stated that a decision by it to recognize the decision of the Egyptian court would violate the clear principle of US public policy in favour of final and binding arbitration of commercial disputes and supported by treaty, by statue, and by case law.   Egypt likewise appealed to the Court of Appeal in Paris,[174] with laid down an almost identical decision as the US Court.  The French judges stated the award made in Egypt was an international award, and its existence remained established despite its being annulled in Egypt and its recognition in France was not in violation of international public policy.

The Hilmarton v. Omnium de Traitement et de Valorisation (OTV)[175] case

During almost the same time when the Chromalloy case was being argued, the case of Hilmarton v. Omnium de Traitement et de Valorisation (OTV) was also being argued in Switzerland and France. The facts of this case were that in order to obtain a construction contract for a drainage system in Algeria, OTV, a French company, appointed Hilmarton, a UK company, as its consultant and administrative coordinator. OTV successfully contracted with Algeria but only paid a half of the fee to Hilmarton. Hilmarton initiated arbitration at the ICC in Geneva under the contract. Hilmarton’s request was denied, on the ground that the consultant contract was a brokerage contract that used intermediaries to obtain a contract for OTV in Algeria which was forbidden as a violation of both Algerian law and Swiss public policy.

In this case, a second arbitration award was rendered after annulment of the first award in Switzerland, and enforcement procedures were taken three times in France.  Hilmarton sought an annulment of the award made by the Court of Appeal of Geneva, which annulled the award on November 17, 1989.   The Court reviewed the award and stated that the intermediary activities were perfectly admissible in Switzerland as long as no bribes were paid. The violation of a foreign law did not offend morality in Swiss law in the present case. The result reached by the arbitrator was arbitrary. The award was annulled. Upon appeal by OTV, the Swiss Supreme Court affirmed the decision, stating that the arbitrator manifestly violated the applicable law. The contract would be illicit only if it violated Swiss law.

            In the meantime, OTV requested enforcement of the Swiss award in France at the Paris Court of First Instance, which granted exequatur, or enforcement, on February 26, 1990.   Hilmarton appealed to the Paris Court of Appeal, which affirmed the decision on December 19, 1991.   Upon appeal by Hilmarton, the Cour de Cassation, or the Supreme Court, affirmed the decision on March 23, 1994 (1st exequatur).  The Court stated that the award rendered in Switzerland was an international award which was not integrated into the legal system of that State, and so remained in existence even if set aside in that State and its recognition in France was not contrary to international public policy.

After annulment of the arbitral award in Geneva, a new arbitrator was appointed to arbitrate, and the decision eventually granted Hilmarton’s request and ordered OTV to pay the balance of the consideration.  Hilmarton requested the enforcement of the new award in France at the Nanterre Court of First Instance, which granted the exequatur on February 25, 1993 (2nd  exequatur).  OTV appealed to the Versailles Court of Appeal. Hilmarton also sought enforcement of the annulment decision made by the Swiss Supreme Court at the Nanterre Court of First Instance, which granted the exequatur on September 22, 1993 (3rd exequatur). The Court stated that French court could only refuse enforcement without reviewing the merits under the Code. The present exequatur concerned a decision rendered by a competent court according to Swiss law which applied to the contract at issue. Recourse against an arbitral award did not in principle violate French public policy. The Swiss decision did not go against French public policy.[176]

OTV appealed to the Versailles Court of Appeal.  The Court of Appeal of Versailles heard jointly the cases of the 2nd and 3rd exequatur on the same day and affirmed the decisions in both cases on June 29, 1995.[177]  Both decisions were appealed by OTV to the Cour de Cassation, which reversed the decision on June 10, 1997[178]stating that while the existence of a final French decision bearing on the same subject between the same parties created an obstacle to any recognition. This meant that as the Supreme Court decision on March 23, 1994 for the 1st  exequatur already existed, principle of res judicata applied.

            The ILA Committee[179] provides that public policy is of such importance for upholding the values of the State that the enforcement court should be entitled to review the underlying evidence presented to the tribunal and, in exceptional cases, any new evidence. However, the court should undertake a reassessment of the facts only where there is a strong prima facie argument of violation of international public policy.   The ILA further stated that a party may be considered to have waived its right to raise fundamental principles as a ground for refusing enforcement, if that party could have raised relied on any such principle before the tribunal but failed to do so. A public policy rule of the enforcement State cannot, however, be waived – intentionally or not.

The US case of AAOT Foreign Economic Association (VO) Technostroy Export v. International Development and Trade Services, Inc.,[180] provides an interesting example. The losing party, IDTS, sought to resist enforcement in the United States of a Russian award on grounds that it had evidence that the arbitration court which had appointed the tribunal was corrupt, relying on Article V.2(b) of the New York Convention.

The US Court of Appeals rejected that argument on the basis that a party who has knowledge of facts possibly indicating bias or partiality cannot remain silent and later object.   Even if IDTS thought that seeking relief through the arbitration court would have been futile, it was incumbent upon it at least to notify opposing counsel.


 

CHAPTER 8

Conclusion

The concept of “public policy” has been likened to an “unruly horse” in that you never know where it will carry you. [181]   Despite its strong points, one of the major loopholes in the enforcement and recognition of foreign arbitral awards under the New York Convention is the public policy exception of Article V.2(b).   Member States have different definitions of what is public policy in their jurisdiction, and may raise this public policy exception to resist enforcement of a foreign arbitral award by claiming that such award is contrary to the public policy of their country.   The drafters of the New York Convention have tried to limit the scope of the public policy exception. [182]  A review of case law concerning raising the ground of public policy also indicates that attempts to resist enforcement of arbitral awards on this ground has rarely been successful.[183]   As a result of the Parsons decision, international courts have been extraordinarily reluctant in denying the enforcement of arbitral awards under the public policy exception.

Nevertheless, the uncertainties and inconsistencies surrounding the interpretation and application of public policy by State courts continue to encourage the losing party to an arbitration proceeding to rely on this except to resist, or at least delay or suspend, enforcement of the award. [184]

            One way to prevent abuse of this public policy exception, as suggested by Holtzmann and Schwebel, is to set up an International Court of Arbitral Awards. [185]  Although this is perhaps a difficult task to undertake, as party autonomy is something that States are fiercely protective of.  Having an international tribunal defining the limits of what is international public policy is bound to have effects on the definition of that State’s domestic policy, and this kind of interference is something that most States are wary of.   Another solution perhaps is for the international arbitration community to reach a broad consensus on what “exceptional circumstances” would qualify as public policy exceptions and would justify a State court in denying the enforcement of a foreign arbitral award.

            A global standard of “public policy” is not likely to happen in the near future.  But attempting to trace the trend of various court decisions across the world in applying the public policy exception of the New York Convention will help to lend some uniformity and consistency, or at least provide for a model or pattern of consistency, in the interpretation and application of public policy as  a bar to enforcement of foreign arbitral awards.

BIBLIOGRAPHY

Laws/Conventions/Treaties

Convention on Choice of Court Agreements, concluded June 30, 2005, Hague Conference on Private International Law, <http://www.hcch.net/index_en.php?act= conventions.text&cid=98>  accessed 15 January 2007

Convention on the Recognition and Enforcement of Foreign Arbitral Awards, opened for signature June 10, 1958, entered into force June 7, 1959; 330 UNTS 38, <http://www.uncitral.org/pdf/english/texts/arbitration/ NY-conv/XXII_1_e.pdf> accessed 15 January 2007

European Convention on International Commercial Arbitration, April 21, 1961, 484 UNTS 364, <http://www.law.berkeley.edu/faculty/ddcaron/Documents/RPID%20Documents/rp04011.html>   accessed 18 January 2007

European Council Regulation on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (No 44/2001, dated Dec. 22, 2000, entered into force March 1, 2002) <http://eur-lex.europa.eu/ smartapi/cgi/sga_doc?smartapi!celexplus!prod! DocNumber&lg=en&type_doc=Regulation&an_doc=2001&nu_doc=44>  17 January 2007

Federal Arbitration Act, Chapter 2, added by amendment of July 31, 1970, 84 Stat. 692, codified as 9 U.S.C. §§ 201-208 (2006)

UNCITRAL Model Law on International Commercial Arbitration, as adopted by the United Nations Commission on International Trade Law on 21 June 1985, UN Doc A/40/17 (Model Law) <http://www.uncitral.org/pdf/english/texts/arbitration/ml-arb/06-54671_Ebook.pdf> accessed 18 January 2007.

Vienna Convention on the Law of Treaties, opened for signature 23 May 1969, 1155 UNTS 331 (entered into force 27 January 1980)  <http://72.14.253.104/search?q=cache:hO971hUp3EYJ: untreaty.un.org/ilc/texts/instruments/english/conventions/1_1_1969.pdf+Vienna+Conve ntion+on+the+Law+of+Treaties&hl=en&gl=us&ct=clnk&cd=1&client=firefox-a>   accessed 17 January 2007

Books

Bucher, Andreas. International Arbitration in Switzerland 105 (1989).

 

Redfern, Alan and Martin Hunter, Law and Practice of International Commercial Arbitration (Sweet & Maxwell, London 1986).

 

Redfern, Alan and Martin Hunter, Law and Practice of International Commercial Arbitration, 3rd Ed. (Sweet & Maxwell, London 1999).

Sieghart, Paul, Commentary on the International Arbitration Rules (LCA, International Arbitration Centre, London 1981).

Smit, Hans, Nina M. Galston, and Serge L. Levitsky, Eds., International Contracts (Matthew Bender, New York, NY 1981).

Wetter, J. Gillis. The International Arbitral Process: Public and Private (1978).

 

Case Law

 

AAOT Foreign Economic Association (VO) Technostroy Export v. International Development and Trade Services, Inc., 139 F. 3d 980 (2nd Cir., 1998)

 

Antco Shipping Co. v. Sidermar, S.P.A., 417 F. Supp. 207, 214 (S.D.N.Y. 1976)

Brandeis Intsel Ltd. v. Calabrian Chems. Corp., 656 F. Supp. 160, 167 n.4 (S.D.N.Y. 1987)

Bremen v. Zapata Offshore Co  [1972] 407 US 1, 92 S.Ct 1907; 32 L.Ed. 2d 513

 

Channel Tunnel Group Ltd. v. Balfour Beatty Construction Ltd., I All E.R. 664 (H.L. 1993)

Chromalloy Aeroservices v. Egypt, 939 F.Supp. 907 (D.D.C. 1996)

Compagnie d’ Armement Maritime S.A. v. Compagnie Tunisienne de Navigation S.A. [1970] 3 All E.R. 71

 

Deutsche Schachtbau-und Tiefbohrgesellschaft v. Ras Al Khaimah National Oil Co. and Shell International Petroleum Co. Ltd. (DST v. Rakoil) [1987] 3 W.L.R 1023; [1987] 2 Lloyd’s Rep. 246, CA; reversed on different grounds by the House of Lords: [1990] 1 A.C. 295; [1988] l Lloyd’s Rep. 293

Eagle Star Insurance Co. v. Yuval Insurance Co., 1 Llyod’s Rep. 357 (C.A. 1978)

Eco Swiss China Time Ltd (Hong Kong) v. Benetton International NV, Court of Justice of the European Union, Case C-126/97, reported at [1999] 2 All ER (Comm) 44 and [1999] European Court Reports I-3055

Egerton v. Brownlow (1853) 4 HLC 1

European Gas Turbines SA v. Westman International Ltd, 30 Sept. 1993, (1994) Rev. Arb. 359

Feinberg v. Bear, Stearns & Co., 1991 WL 79309 (S.D.N.Y. 1991)

Fougerolle v. Procofrance, Decision dated 25 May 1990, (1990) Rev. Arb. 892

Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991)

Harris Adacom Corp. v. Perkom Sdn Bhd, 1994] 3 Malayan L.J. 506 (Kuala Lampur High Court Dec. 10, 1993) (Malaysia)

Hilmarton v. Omnium de Traitement et de Valorisation (OTV), XIX Y.B. Com. Arb. 216 (1994)

James Miller & Partners, Ltd. v. Whitworth Street Estates (Manchester), Ltd. [1970] 1 All E.R. 796

Les Emirats Arabes Unis v. Westland Helicopters, Decision date 19 April 1994, (1994) Bull. ASA 404

Maguire & Co., 391 F.2d 821 (9th Cir. 1968)

Mitsubishi Motor Corporation v. Soler Chrysler-Plymouth Inc. [1985] 473 U.S. 614; 105 S.Ct. 3346; 87 L.Ed.2d.44

National Oil Corp. v. Libyan Sun Oil Co., 733 F. Supp. 800, 819-20 (D. Del. 1990)

Parsons Whittemore Overseas Co. Inc v. Société Générale de l’Industrie de Papier [1974] 2nd Circ. 508 F.2d 969

Re an arbitration between Hainan Machinery Import and Export Corporation and Donald & McArthy Pte. Ltd [1996] 1 SLR 34

Renusagar Power Co. Ltd v. General Electric Co., AIR 1994 SC 860; also reported in (1995) XX Yearbook 681.

Richardson v. Mellish [1824] 2 Bing. 229, [1824-34] All E.R. 258

Rodriguez de Quijas v. Shearson American Express, 490 U.S. 477 (1989)

 

Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974)

Shearson/American Express, Inc. v. McMahon, 482 U.S. 220 (1987)

Smith Ltd. v. H&S International [1991] 2 Lloyd’s Rep. 127

Societe Almira Films v. Pierrel es Quai, 4 Revue de l Arbitrage 711, 714-15 [1989]

Societe Labinal v. Societes Mors et Westland Aerospace, 4 Revue de l’Arbitrage 645, 650 [1993]

Soleimany v. Soleimany, [1999] Q.B. 785 (C.A. 1998) (England).

Sonatrach (Algeria) v. Distrigas Corp. (United States District Court) Massachusetts, reported in [1995] XX Yearbook Commercial Arbitration

Sumitomo Heavy Industries v. Oil and National Gas Commission [1994] 1 Lloyd’s Rep. 45

United States Asphalt Refining Co. v. Trinidad lake Petroleum Co., 229 F. 1006, 1010-11 (S.D.N.Y. 1915).

Vimar Seguros Y Reaseguros v. MIV Sky Reefer, 115 S. Ct. 2322, 2330 (1995)

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Journals

Buchanan, Mark A. ‘Public Policy and International Commercial Arbitration,’ 26 Ant. Bus. L.J. 511, 513 (1988).

Delaume, Georges R. ‘Comparative Analysis as a Basis of Law in State Contracts. The Myth of the Lex Mercatoria,’ 63 Tul. L. Rev. 575 (1989)

Highet, Keith. ‘The Enigma of the Lex Mercatoria,’ 63 Tul. L. Rev. 613 (1989)

Kerr, J. ‘Concord and Conflict in International Arbitration’ (1997), 13 Arbitration International No. 2.

Kerr, J. ‘International Arbitration v. Litigation,’ (1980) The Journal of Business Law, 164-180.

Lando, Ole. ‘The Lex Mercatoria in International Commercial Arbitration,’ 34 Int’l & Comp. L.Q. 747 747 (1985)

Lowenfeld, Andreas F. ‘Lex Mercatoria: An Arbitrator’s View,’ 6 Arb. Int’l 133 (1990)

Mann, F.A. ‘England Rejects Delocalized Contracts and Arbitration,’ 33 Int’l 61 Comp. L. Q. 193, 196-97 (1984)

Reports/Texts/Conference Papers/Miscellaneous Papers

Dervaird Committee, ‘Scotland and the UNCITRAL Model Law’ (1990) 6 Arbitration International 63

Mustill, L. ‘The New Lex Mercatoria: the First Twenty-five years,’ (1988) 4 Arbitration International 86

Mustill Committee, ‘A New Arbitration Act for the United Kingdom?’  (1990) 6 Arbitration International 3.

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van den Berg, A.J. ‘Refusals of Enforcement under the New York Convention of 1958: the Unfortunate Few’ in Arbitration in the Next Decade (ICC Bulletin – 1999 Special Supplement).

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Curtin, Kenneth M.  ‘Contractual expansion & limitation of judicial review of arbitral awards’ (November 2000-January 2001) Dispute Resolution Journal

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Franch, Richard T., Lawrence S. Schaner, Anders C. Wick. ‘Choice of law and choice of forum are both crucial’ (February 11, 2002)  The National Law Journal. <http://www.jenner.com/files/tbl_s20Publications/RelatedDocumentsPDFs1252/296/NLJweb.pdf>  accessed 7 March 2007

Karrer, Pierre A.  ‘Enforcement of ICC Arbitral Awards Globally.’ (April 2004) FIDIC <http://www1.fidic.org/resources/contracts/icc_apr04/icc26_pierre_a_karrer.asp>   accessed 5 March 2007

Okuma, Kazutake.  ‘Confirmation, Annulment, Recognition and Enforcement of Arbitral Awards’ (2005) The Seinan Law Review, Vol. 37, No. 4.  Seinan Gakuin University Law School.  <http://www.seinan-gu.ac.jp/jura/home04/pdf/3704/3704okuma.pdf>  accessed 8 March 2007

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Sheppard, Audley and Clifford Chance.  ‘Public Policy and the Enforcement of Arbitral awards: Should there be a Global Standard?’ (March 2003) Oil, Gas & Energy Law Intelligence, Vol. I, Iss. 2 <http://www.gasandoil.com/ogel/samples/freearticles/article_67.htm>  accessed 5 March 2007

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[1] Convention on the Recognition and Enforcement of Foreign Arbitral Awards, opened for signature June 10, 1958, entered into force June 7, 1959; 330 UNTS 38, <http://www.uncitral.org/pdf/english/texts/arbitration/ NY-conv/XXII_1_e.pdf> accessed 15 January 2007 [hereinafter “New York Convention” or “1958 Convention.”]

[2] ‘Status:  1958 – Convention on the Recognition and Enforcement of Foreign Arbitral Awards.’  United Nations Commission on International Trade Law (No date)  <http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/

NYConvention_status.html>  accessed 16 January 2007.

[3] New York Convention, Article V.2(b).

[4] New York Convention, Art. V. 1 provides:

  1. Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:

(a)          The parties to the agreement referred to in article II were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or

(b)          The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or

(c)           The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or

(d)          The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the laws of the country where the arbitration took place; or

(e)          The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the laws of which, that award was made.

[5] Quinn Emanuel Trial Lawyers, ‘The Public Policy Exception to the Recognition and Enforcement of Foreign Arbitral Awards’ (2007) <http://www.quinnemanuel.com/news/article_detail.aspx?recid=18> accessed 5 March 2007 [hereinafter “Quinn Emanuel.’]

[6] Audley Sheppard and Clifford Chance.  ‘Public Policy and the Enforcement of Arbitral awards: Should there be a Global Standard?’ (March 2003) Oil, Gas & Energy Law Intelligence, Vol. I, Iss. 2 <http://www.gasandoil.com/ogel/samples/freearticles/article_67.htm>  accessed 5 March 2007  [hereinafter “Sheppard and Chance.”]

[7] Pierre A. Karrer.  ‘Enforcement of ICC Arbitral Awards Globally.’ (April 2004) FIDIC <http://www1.fidic.org/resources/contracts/icc_apr04/icc26_pierre_a_karrer.asp>   accessed 5 March 2007  [hereinafter “Karrer.’]

[8]Smith Ltd. v. H&S International [1991] 2 Lloyd’s Rep. 127, at 130.

[9] Sumitomo Heavy Industries v. Oil and National Gas Commission [1994] 1 Lloyd’s Rep. 45, at 47.

[10] English Arbitration Act of 1996, s. 46 (3).

[11] Alan Redfern and Martin Hunter, Law and Practice of International Commercial Arbitration, 3rd Ed. (Sweet & Maxwell, London 1999), at 80. [hereinafter “Redfern and Hunter, 1999.”]

[12] Id.

[13] Id, at 80-81.

[14] Id, at 81.

[15] J. Gillis Wetter. The International Arbitral Process: Public and Private (1978), at 405 [hereinafter “Wetter, 1978.’]

[16] Ole Lando. ‘The Lex Mercatoria in International Commercial Arbitration,’ 34 Int’l & Comp. L.Q. 747 747 (1985); Andreas F. Lowenfeld. ‘Lex Mercatoria: An Arbitrator’s View,’ 6 Arb. Int’l 133 (1990) [hereinafter “Lando; Lowenfeld.”]

[17] Lord Mustill, ‘The New Lex Mercatoria: the First Twenty-five years,’ (1988) 4 Arbitration International 86, para. 2-60, n. 85. [hereinafter “Mustill”.]

[18] Redfern and Hunter, 1999, supra note 11, at 120, citing Mustill, op. cit., at 174.

[19] Id, at 121.

[20] Id, at 121, citing E. Guillard, ‘Transnational Rules in International Arbitration,’ op. cit., at 104.

[21] Id, at 121.

[22] Id, at 121-122.

[23] Philip D. O’Neill, Jr. and Nawaf Salam, ‘Transnational Rules in International Commercial Arbitration,’ (1993) ICC Publication No. 480/4, op. cit., at para. 2-52, n. 53, at 247 [hereinafter “O’Neill and Salam”.]

[24] Redfern and Hunter, 1999,  supra note 11, at 122.

[25] Deutsche Schachtbau-und Tiefbohrgesellschaft v. Ras Al Khaimah National Oil Co. and Shell International Petroleum Co. Ltd. (DST v. Rakoil) [1987] 3 W.L.R 1023; [1987] 2 Lloyd’s Rep. 246, CA; reversed on different grounds by the House of Lords: [1990] 1 A.C. 295; [1988] l Lloyd’s Rep. 293 [hereinafter “DST v. Rakail”.]

[26] Andreas Bucher, International Arbitration in Switzerland 105 (1989), at 106 [hereinafter “Bucher.”]

[27] F.A. Mann, ‘England Rejects Delocalized Contracts and Arbitration,’ 33 Int’l 61 Comp. L. Q. 193, 196-97 (1984); Georges R. Delaume, ‘Comparative Analysis as a Basis of Law in State Contracts. The Myth of the Lex Mercatoria,’ 63 Tul. L. Rev. 575 (1989); Keith Highet, ‘The Enigma of the Lex Mercatoria,’ 63 Tul. L. Rev. 613 (1989).

[28] Berthold Goldman, ‘The Applicable Law: General Princples of Law-The Lex Mercatoria,’ in Contemporary Problems in International Arbitration 113 (Julian D.N. Lew ed., 1987).

[29] Eagle Star Insurance Co. v. Yuval Insurance Co., 1 Llyod’s Rep. 357 (C.A. 1978): DST v. Rakail, supra note 25; Channel Tunnel Group Ltd. v. Balfour Beatty Construction Ltd., I All E.R. 664 (H.L. 1993).

[30] Kenneth M. Curtin.  ‘Contractual expansion & limitation of judicial review of arbitral awards’ (November 2000-January 2001) Dispute Resolution Journal

<http://findarticles.com/p/articles/mi_qa3923/is_200011/ai_n8962594/print>   accessed 7 March 2007 [hereinafter “Curtin.”]

[31] Karrer, supra note 7.

[32] Id.

[33] English Arbitration Act of 1996, Article 46.

[34] Karrer, supra note 7.

[35] New York Convention, supra note 1.

[36] Antco Shipping Co. v. Sidermar, S.p.A., 417 F. Supp. 207, 214 (S.D.N.Y. 1976).

[37] Quinn Emanuel, supra note 5.

[38] Report of the Committee on the Enforcement of International Arbitral Awards, 28 March 1955, UN Doc. E/2704 and E/AC.42/4/Rev.1. For comments by governments, see UN Doc. E/2822.

[39] Karrer, supra note 7.

[40]Id.

[41] Id.

[42] Id., at 71-72.

[43] Alan Redfern and Martin Hunter, Law and Practice of International Commercial Arbitration (Sweet & Maxwell, London 1986), at 363. [hereinafter “Redfern and Hunter, 1986.”]

[44] UNCITRAL Model Law on International Commercial Arbitration, as adopted by the United Nations Commission on International Trade Law on 21 June 1985, UN Doc A/40/17 (Model Law) <http://www.uncitral.org/pdf/english/texts/arbitration/ml-arb/06-54671_Ebook.pdf> accessed 18 January 2007. [hereinafter “UNCITRAL Model Law.”]

[45] UNCITRAL Model Law, Article I.3

[46] Id., Article I.3(a)

[47] Mustill Committee, ‘A New Arbitration Act for the United Kingdom?’  (1990) 6 Arbitration International 3, paragraph 89.

[48] Dervaird Committee, ‘Scotland and the UNCITRAL Model Law’ (1990) 6 Arbitration International 63, paragraph 1.9.

[49] UNCITRAL Model Law, Article 34.

[50] Id., Article 36.

[51] Id., Article 18.

[52] Id., Articles 18, and 34.2(a)(ii).

[53] UN Doc. A/40/17, para. 297.

[54] Redfern and Hunter 1999, supra note 11,  at 69-70.

[55] Sheppard and Chance, supra note 6.

[56] The 1927 Geneva Convention, Article 1.e.

[57] The 1979 Montevideo Convention, Article 2.h.

[58] The 1983 Riyadh Convention, Article 37.

[59] Sheppard and Chance, supra note 6.

[60] Convention on Choice of Court Agreements, concluded June 30, 2005, Hague Conference on Private International Law, <http://www.hcch.net/index_en.php?act= conventions.text&cid=98>  accessed 15 January 2007

[61] Convention on Choice of Court Agreements, Article 2.4

[62] European Council Regulation on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (No 44/2001, dated Dec. 22, 2000, entered into force March 1, 2002) <http://eur-lex.europa.eu/ smartapi/cgi/sga_doc?smartapi!celexplus!prod! DocNumber&lg=en&type_doc=Regulation&an_doc=2001&nu_doc=44>  17 January 2007

[63] Sheppard and Chance, supra note 6.

[64] Eco Swiss China Time Ltd (Hong Kong) v. Benetton International NV, Court of Justice of the European Union, Case C-126/97, reported at [1999] 2 All ER (Comm) 44 and [1999] European Court Reports I-3055.

[65] Sheppard and Chance, supra note 6.

[66] Id.

[67] Wikipedia, The Free Encyclopedia.  ‘Public policy (law)’ (2007) <http://en.wikipedia.org/wiki/Public_policy_(law)>  accessed 9 March 2007

[68] Egerton v. Brownlow (1853) 4 HLC 1.

[69]Cornell University Cornell University. ‘Public Policy Analysis’ (2005) <http://instruct1.cit.cornell.edu/courses/pam230/2005%20Lecture%20Notes/Policy%20Overview%208-29-05.pdf>  accessed 8 March 2007 [hereinafter “Cornell University.”]

[70] Id.

[71] Id.

[72] Mark A. Buchanan. ‘Public Policy and International Commercial Arbitration,’ 26 Ant. Bus. L.J. 511, 513 (1988) [hereinafter “Buchanan.’]

[73] Sheppard and Chance, supra note 6.

[74] Buchanan, supra note 72, at 514.

[75] Bucher, supra note 26.

[76] Curtin, supra note 30.

[77] Id.

[78] Societe Labinal v. Societes Mors et Westland Aerospace, 4 Revue de l’Arbitrage 645, 650 (1993); Societe Almira Films v. Pierrel es Quai, 4 Revue de l Arbitrage 711, 714-15 (1989).

[79] Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 629 (1985); Parsons & Whittemore Overseas Co. v. Societe Generale de l’Industrie du Papier, 508 F.2d 969, 974 (2d Cir. 1974); Antco Shipping Co. v. Siderrnar, 417 F. Supp. 207, 216-17 (S.D.N.Y. 1976); National Oil Corp. v. Libyan Sun Oil Co., 733 F. Supp. 800, 819-20 (D. Del. 1990).

[80] Sheppard and Chance, supra note 6.

[81] Contrast the decision of the Supreme Court of Zimbabwe in Zimbabwe Electricity Supply Authority -v- Maposa, dated 21 December 1999, judgment no. 114/99. The arbitrator used the wrong start date for calculating the claimant’s entitlement for lost salary, which resulted in a windfall to the claimant of approximately 13 months salary. After reviewing the public policy bar to enforcement in the New York Convention and the Model Law, the Court held:

“Under Article 34 or 36 [of the Model Law] the court does not exercise an appeal power either [to] uphold or set aside or decline to recognise and enforce an award by having regard to what it considers should have been the correct decision. Where, however, the reasoning or conclusion in an award goes beyond mere faultiness or incorrectness and constitutes a palpable inequity that is so far reaching and outrageous in its defiance of logic or accepted moral standards that a sensible and fair minded person would consider that the conception of justice in Zimbabwe would be intolerably hurt by the award, then it would be contrary to public policy to uphold it. The same consequence applies where the arbitrator has not applied his mind to the question or has totally misunderstood the issue, and the resultant injustice reaches the point mentioned above.”

[82] Curtin, supra note 30.

[83] Sheppard and Chance, supra note 6.

[84] Id.

[85] Lando;Lowenfeld, supra note 16, at 511.

[86] Buchanan, supra note 72.

” (1988) 26 American Business law Journal 511

[87] Bucher, supra note 26, at 120.

[88] Id., at 121.

[89] Discussed in Chapter 2 of this Thesis.

[90] Sheppard and Chance, supra note 6.

[91] Discussed in Chapter 2 of this Thesis.

[92] Karrer, supra note 7.

[93] English Arbitration Act of 1996, Article 46.

[94] Franch, Schanger and Wick Richard T. Franch, Lawrence S. Schaner, and Anders C. Wick. ‘Choice of law and choice of forum are both crucial’ (February 11, 2002)  The National Law Journal. <http://www.jenner.com/files/tbl_s20Publications/RelatedDocumentsPDFs1252/296/NLJweb.pdf>  accessed 7 March 2007 [hereinafter “Franch, et al.”]

[95] Id.

[96] [1972] 407 US 1, 92 S.Ct 1907; 32 L.Ed. 2d 513.

[97] Mitsubishi Motors Corp v. Soler Chrystler-Plymouth Inc., 473 U.S. 614, 637, n. 19 (1985) [hereinafter “Mitsubishi Motors.”]

[98] European Convention on International Commercial Arbitration, April 21, 1961, 484 UNTS 364, <http://www.law.berkeley.edu/faculty/ddcaron/Documents/RPID%20Documents/rp04011.html>   accessed 18 January 2007

[99] Id., Article XI.1(a).

[100] Id., Article XI.1(b).

[101] Justice Kerr, ‘International Arbitration v. Litigation,’ (1980) The Journal of Business Law, 164-180.

[102] Id, at 180.

[103] London Court of Arbitration International Arbitration Rules (1981).

[104] Paul Sieghart, Commentary on the International Arbitration Rules (LCA, International Arbitration Centre, London 1981) [hereinafter “Sieghart.”]

[105] Hans Smit, Nina M. Galston, and Serge L. Levitsky, Eds., International Contracts (Matthew Bender, New York, NY 1981), at 282 [hereinafter “Smit, et al.”]

[106] (1970) 1 All E.R. 796.

[107] (1970) 3 All E.R. 71.

[108] (1970) 3 All. E.R. 71, at 91-92.

[109] Smit, et al., at 277.

[110] Faegre & Benson, LLP, ‘The Role of International Arbitration in World Trade’ (10 November 2005)  <http://www.faegre.com/global/article.aspx?id=1734 >   accessed 24 February 2007

[111] The New York Convention, Art. V.2.

[112] Redfern and Hunter, 1999, supra note 11, at 471.

[113] Richardson v. Mellish [1824] 2 Bing. 229, at 252.

[114] Lord Justice Kerr, ‘Concord and Conflict in International Arbitration’ (1997), 13 Arbitration International No. 2, at 140 [hereinafter “Kerr, 1997”.]

[115] Redfern and Hunter, 1999, supra note 11, at 430-431.

[116] Id, at 148-149.

[117] [1972] 407 US 1, 92 S.Ct 1907; 32 L.Ed. 2d 513.

[118] Id.

[119] Sonatrach (Algeria) v. Distrigas Corp. (United States District Court) Massachusetts, reported in (1995) XX Yearbook Commercial Arbitration, at 795 [hereinafter “ Sonatrach.”]

[120] Mitsubishi Motors, supra note 97.

[121] Sonatrach, supra note 119..

[122] Parsons Whittemore Overseas Co. Inc v. Société Générale de l’Industrie de Papier [1974] 2nd Circ. 508 F.2d 969 [hereinafter “Parsons.”]

[123] K.S. .A.G. v. C.C. S.A., [1995] XX Yearbook Commercial Arbitration 762.

[124] (1987) XII Yearbook Commercial Arbitration, at 489.

[125] Redfern and Hunter, 1999, supra note 11, at 474.

[126] Id., at 122.

[127] DST v. Rakoil, supra note 25.

[128] Id.

[129] Redfern and Hunter, 1999, supra note 11, at 432.

[130] Federal Arbitration Act. 9 U.S.C. sec 1 et seq. (1995) [hereinafter “FAA.”].

[131] United States Asphalt Refining Co. v. Trinidad lake Petroleum Co., 229 F. 1006, 1010-11 (S.D.N.Y. 1915).

[132]  84 Stat. 692, codified as 9 U.S.C. §§ 201-208 (2006).

[133] Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974); Rodriguez de Quijas v. Shearson American Express, 490 U.S. 477 (1989).

[134] Shearson/American Express, Inc. v. McMahon, 482 U.S. 220 (1987).

[135] Mitsubishi Motors, supra note 97; Maguire & Co., 391 F.2d 821 (9th Cir. 1968).

[136] Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991).

[137] Feinberg v. Bear, Stearns & Co., 1991 WL 79309 (S.D.N.Y. 1991). See G. Richard Shell, “ERISA and Other Federal Employment Statutes: When is Commercial Arbitration an `Adequate Substitute’ for the Courts” 68 Tex. L. Rev. 509, 569– 70 (1990).

[138] 373 U.S. 614 (1985).

[139] Sheppard and Chance, supra note 6.

[140] FAA, Section 10; New York Convention, Article V.2(b).

[141] Curtin, supra note 30.

[142] Mitsubishi Motors, supra note 97; Vimar Seguros Y Reaseguros v. MIV Sky Reefer, 115 S. Ct. 2322, 2330 (1995).

[143] Parsons, supra note 122.

[144] Discussed in Chapter 3 of this Thesis.

[145] Curtin, supra note 30.

[146] Sheppard and Chance, supra note 6.

[147] Id.

[148] Id.

[149] Decision dated 4 December 1992, reported in (1997) XXII Yearbook 725.

[150] W. v. F. and V., Decision dated 30 Dec. 1994, (1995) Bull. ASA 217.

[151] Les Emirats Arabes Unis -v- Westland Helicopters, Decision date 19 April 1994, (1994) Bull. ASA 404.

[152] Fougerolle v. Procofrance, Decision dated 25 May 1990, (1990) Rev. Arb. 892.

[153] European Gas Turbines SA -v- Westman International Ltd, 30 Sept. 1993, (1994) Rev. Arb. 359.

[154] Sheppard and Chance, supra note 6.

[155] Parsons, supra note 122.

[156] 417 U.S. 506 (1974).

[157] Sheppard and Chance, supra note 6.

[158] Parsons, supra note 122, at 974.

[159] Quinn Emanuel, supra note 5.

[160] Brandeis Intsel Ltd. v. Calabrian Chems. Corp., 656 F. Supp. 160, 167 n.4 (S.D.N.Y. 1987)

[161] DST v. Rakail, supra note 25, at 254.

[162] AIR 1994 SC 860; also reported in (1995) XX Yearbook 681.

[163] Re an arbitration between Hainan Machinery Import and Export Corporation and Donald & McArthy Pte. Ltd [1996] 1 SLR 34 at 46, per Judith Prakash J.

[164] Sheppard and Chance, supra note 6.

[165] Id.

[166] [1994] 3 Malayan L.J. 506 (Kuala Lampur High Court Dec. 10, 1993) (Malaysia), excerpted in 22 Y.B. Comm’l Arb. 753)

[167] [1999] Q.B. 785 (C.A. 1998) (England).

[168] 733 F. Supp. 800 (D. Del. 1990).

[169] United Nations, Treaty Series, vol. 1155, p. 331.

[170] The Vienna Convention on the Law of Treaties, Article 58, entered into force on 27 1980, United Nations, Treaty Series, Vol. 1155, at 331.

[171] Kazutake Okuma.  ‘Confirmation, Annulment, Recognition and Enforcement of Arbitral Awards’ (2005) The Seinan Law Review, Vol. 37, No. 4.  Seinan Gakuin University Law School.  <http://www.seinan-gu.ac.jp/jura/home04/pdf/3704/3704okuma.pdf>  accessed 8 March 2007 [hereinafter “Okuma.”]

[172] 939 F.Supp. 907 (D.D.C. 1996).

[173] FAA, Section 207.

[174] XXII Y.B. Com. Arb. 691 (1997).

[175] XIX Y.B. Com. Arb. 216 (1994).

[176] XX Y.B. Com. Arb. 194 (1995).

[177] XXI Y.B. Com. Arb. 524 (1996).

[178] XXII Y.B. Com. Arb. 696 (1997).

[179] Sheppard and Chance, supra note 6.

[180] 139 F. 3d 980 (2nd Cir., 1998).

[181] Richardson v. Mellish (1824) 2 Bing. 228; [1824-34] All ER Rep. 258.

[182] A.J. van den Berg, ‘Refusals of Enforcement under the New York Convention of 1958: the Unfortunate Few’ in Arbitration in the Next Decade (ICC Bulletin – 1999 Special Supplement).

[183] Sheppard and Chance, supra note 6.

[184] Id.

[185] Id.

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