Transnational Construction Arbitration

Renato Nazzini

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CHAPTER 10 The enforcement of foreign arbitral awards: main recent developments and prospectives

Introduction

10.1 How a binding means of dispute resolution scores in terms of reliability depends on the actual enforceability of the decision rendered thereby. Despite any other available and often discussed quality indicators, whether a means of dispute resolution is worth pursuing depends exclusively on whether it offers a viable prospective as to enforceability of decisions. This is particularly the case at an international level, where costs and neutrality are prominent factors. 10.2 Domestic legislators and international conventions have traditionally devoted a considerable amount of efforts to create a legislative environment capable of addressing the expectations of international business operators. As international arbitration is by far the preferred means of dispute resolution in international business, it is no surprise that most of such efforts have been made to facilitate the recognition and enforcement of arbitral awards rendered in international disputes. The most impactful international instrument created in that respect is the 1958 New York Convention for the Enforcement of Arbitral Awards Rendered Abroad (the Convention). Its role cannot be underestimated. After almost 60 years of application it has not just created a viable system for the recognition and enforcement of arbitral awards. It has also played a fundamental role in the harmonisation of domestic legislation and facilitated the creation of a reasonably consistent body of case law.1

The mechanics of the New York Convention

10.3 How was such a successful instrument attained? Answering this question is important not just to understand the roots of the Convention but also to better understand the development experienced in the last 20 years. 10.4 With a view to attaining the best possible outcome, the negotiators of the Convention devised a text that would possibly avoid clashes with the contracting states’ core principles of law. In other words, they thought of an instrument that would be highly compatible with different domestic jurisdictions. In doing so, they performed what is often described as a ‘balancing act’. Indeed, the final text of the Convention, on the one hand, imposes a general obligation to recognise and enforce arbitral awards rendered abroad.

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On the other hand, it qualifies such a general obligation where recognition and enforcement would clash with the core provisions of domestic law at the place of enforcement.2 10.5 That strategy made the Convention acceptable to a great number of signatories. Inevitably, it is also responsible for that perceived degree of inconsistency in the application of the Convention amongst the different contracting parties. It may be suggested, however, that the issue is not so much one of inconsistency but rather one of varied degree of application, which is generally entirely consistent with the spirit and provisions of the Convention. Contracting states are expected to respect and protect international arbitration without abdicating their core principles of law. The pragmatic spirit of the Convention was caught by the late Dr Robert Briner as follows:

Rather than attempting the impossible, the conference sensibly sought to address the most pressing practical problems experienced by the post-war business world. In so doing, it took the path of moderation and pragmatism by producing an exhaustive list of basic requirements for the recognition and enforcement of awards. It gave effect to the will of the parties without asking states to renounce their legal systems. This approach may have been modest and cautious, but it was above all judicious, for not only did it ensure the effectiveness and acceptability of the convention but also gave it a far-reaching legacy.3

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