One of the benefits of using Arbitration to resolve international disputes is that Arbitration awards can be enforced in domestic courts. This is achieved through the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, known as the New York Convention (NYC), the Geneva Convention on the Execution of Foreign Arbitral Awards 1927, and the 1965 Convention on the Settlement of Investment Disputes (ICSID) Additional Facility Rules.
Even if the Arbitration hearing took place in another jurisdiction, if you are the successful party and the Respondent has assets in England and Wales, you can apply to the English Courts to enforce the award.
Before discussing enforcing an award, it is worthwhile briefly setting out how Arbitration works.
What is Arbitration?
Arbitration is a powerful alternative dispute resolution (ADR) method that is often used to settle international commercial disputes. Parties must agree to submit a dispute to Arbitration, therefore, it is essential to have a carefully drafted Arbitration Agreement either included or attached to the main commercial contract.
Arbitration agreements are final and binding. Parties can choose the jurisdiction they wish the Arbitration to take place in, the rules governing the procedure, and the appointment of the Arbitrator/s.
Arbitration in England and Wales is governed by the Arbitration Act 1996, therefore, if you plan to enforce an award in this jurisdiction you must have regard for the Arbitration Act 1996 from the outset.
What are the distinct types of Arbitration awards?
It is vital to note that although the term ‘Arbitration award’ appears to form a single concept, there are in fact different types of awards. A partial award will dispose of certain points put forth for Arbitration, but not all. For example, the Arbitration Tribunal (the Tribunal) may make a final award concerning some of the main claims but leave decisions on other claims and any counter-claims for a later date. Only the matters that have been determined in a partial award are enforceable.
The Tribunal may also make provisional awards which are not final and therefore unenforceable as such. Examples of provisional awards include interim injunctions and interim payments.
Obviously, the ideal situation is where the Tribunal makes a final, and therefore enforceable, award covering all the claims and counter-claims put forward by the parties, however, you cannot take for granted that this will occur.
How does the New York Convention help me enforce an Arbitration award?
The NYC, which has been signed by over 160 countries (including the UK), is the main instrument of international arbitration. Signatory States have agreed to recognise and enforce awards made in countries other than the one in which recognition and enforcement of the award is sought. In terms of resolving commercial disputes, the NYC makes Arbitration a more attractive option than litigation as, due to the fewer number of reciprocal judgment recognition and enforcement arrangements the UK has with foreign legal jurisdictions, it is often easier to enforce an Arbitration award made in a signatory State than a court order made in a foreign jurisdiction.
How can I increase my chances of successfully enforcing an Arbitration award?
Having a well thought out strategy when drafting/negotiating an Arbitration Agreement and before commencing Arbitration can dramatically increase the chances of having an award enforced. Therefore, consider:
- Ensuring that the State in which you and the other party agree for any Arbitration proceedings to take place are signatories to the NYC.
- Investigate which States the other party’s assets are located in. If they reside in a NYC State enforcement will be relatively straightforward. If not, you will need to obtain local legal advice on enforcing any award obtained.
- Enforcement under the NYC is most commonly resisted on the grounds of public policy. Public policy is a vague concept and the courts in different States take varying approaches. Therefore, be sure to think about any potential public policy issues that could relate to your commercial activities before choosing an Arbitration jurisdiction.
- To ensure that the award debtor has sufficient assets with which to pay any award made, it is useful to apply for a freezing injunction during the course of Arbitration proceedings. A freezing injunction can also be granted by a court in England and Wales post-award to support enforcement.
Final words on arbitration awards in England and Wales
International commercial disputes are by nature complex and often involve multiple claims and counter-claims. Arbitration provides a straightforward, confidential way of resolving matters. By ensuring you obtain the legal advice required to build an enforcement strategy before Arbitration proceedings, you can markedly increase your chances of a successful outcome and preserve necessary commercial relationships.
To discuss any points raised in this article, please call us on +44 (0) 203972 8469 or email us at email@example.com.
Note: The points in this article reflect sanctions in place at the time of writing, 09 February 2023. This article does not constitute legal advice. For further information, please contact our London office.
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