![]() ![]() To qualify for coverage by the New York Convention, there must be a written agreement creating a commercial legal relationship that contains an agreement to arbitrate in a signatory country. The New York Convention contains the grounds that might justify non-enforcement. Invalidity of the agreement in the jurisdiction issuing the award or under the law chosen in the arbitration clause incapacity of the party against whom enforcement is sought if the award is beyond the scope of the agreement and failure of proper notice are all grounds that could block enforcement. Enforcement may also be denied if the Tribunal was improperly constituted, if the subject matter of the case is not arbitratable under the law of the forum, or if the award violates the public policy of the country of enforcement. Enforcement may also be denied if the award has not yet become binding. Foreign awards being enforced in the United States are brought before the United States District Courts, and in some cases before state courts. ![]() They require the country in which enforcement is sought to recognize arbitral awards as binding. These conventions, or multilateral treaties, provide for the cross-border enforcement of arbitral awards except is cases of violation of procedural rights or public policy of the country of enforcement. The United States has ratified both conventions. Some South and Central American countries that have not joined the New York Convention are signatories of the Inter-American Convention on International Arbitration (OAS Treaty Series No. You may tell your engineering client that Germany, Costa Rica and Sweden are signatories. 38, 1958) – commonly known as the New York Convention of 1958. Over one hundred and twenty countries are signatories to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (21 U.S.T 2517, 330 U.N.T.S. Awards in properly conducted arbitrations have an advantage over court judgments because of multi-lateral treaties. Cases may not be heard on consecutive days, and gaps could delay a final resolution. If the losing party does not voluntarily abide by the award, the winner will have to go to court anyway.Ī favorable court award is of little value unless it can be enforced. Enforcement may be required in another country such as where money or assets can be found. Preliminary injunctions might require court action. The case can become bogged down in jurisdictional issues. Discovery is also limited, saving the parties time and money. There may be some disadvantages that you should consider. Summary procedures may not be available. ![]() Among the advantages are choice of language, law and situs, impartial arbitrators experienced in the field of dispute, confidentiality, and the ability to enforce awards in other countries and against sovereign bodies. Arbitration may also be quicker from start to finish because awards are final, and there are limited grounds to appeal or vacate. You want predictability. The growing trend is towards more flexible methods of dispute resolution – binding arbitration, mediation, or a combination of the two – mediation first and if that is not successful, referring the matter to binding arbitration.Īrbitration of international commercial disputes is conceptually similar to arbitration of domestic commercial disputes. Because of the greater obstacles encountered in navigating the global commercial world, arbitration offers a number of advantages and allows the parties to tailor a dispute resolution model that mitigates against uncertainty. Your client may confront sovereign immunity, and have difficulty enforcing a favorable judgment in the country where the remedy can be found. The hearing may be in an unfamiliar language at inconvenient situs subject to local laws that do not provide appropriate remedies. Judges might have a bias towards local customs. Not necessarily knowing where litigation may be filed, your client should have concerns. The case may heard by politically biased judges in a court system that is not equipped to resolve complicated commercial problems. Foreign courts can be a morass of unpredictability.Ī United States based party forced to litigate in the courts of another country might face frightening obstacles. In today’s global economy, the options for resolving disputes are of singular importance in the negotiation and performance of international contracts. Your mind reels with the myriad of potential issues and disputes that may arise during and after performance. Imagine your client, a United States based engineering company, asking you to draft documents for a joint venture with a Swedish domiciled construction company and a German based fertilizer manufacturer for the construction of a processing plant in Costa Rica. Published in the Maryland Bar Journal Volume XLIII, Number 4, July/August, 2010. ![]()
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