The Application of the Public Policy Exception in Brazil, Russia, India and China - Chapter 6 - Public Policy Exception Under The New York Convention: History, Interpretation, and Application

Dr. Anton G. Maurer, LL.M. has been actively involved in international arbitration for more than 20 years, concentrating on commercial, post M&A, and corporate disputes, and the enforcement of foreign arbitral awards. He is also actively involved in international litigation and has been professionally involved in disputes in more than 55 countries and in over 80 jurisdictions. He graduated with a law degree as well as a PhD in public international law from the University of Tübingen, Germany, and a Master of Laws in U.S. and Global Business Law from Suffolk University, Boston, MA.

Anton Maurer has been a Partner with CMS Hasche Sigle since 1987. He started his career with Sigle Loose Schmidt Diemitz & Partners in Stuttgart, Germany and then worked as a foreign attorney with Johnson & Swanson in Dallas, Texas. He currently serves on the board of directors of the International Association of Defense Counsel; as Chair of the Advisory Board of The Southwestern Institute for International and Comparative Law; and, as a member of the Advisory Board of the Institute for Transnational Arbitration, and the Board of Trustees, all with the Center for American and International Law, Plano, Texas.

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In the last years, globally active companies increased their business activities in the most important growth markets in Brazil, Russia, India and China. With the strong growth of trading and investment activities, such companies need a reliable and effective dispute resolution mechanism. Often foreign judgments will not be enforced in Brazil, Russia, India, and China. All four states are members of the New York Convention. Therefore, it is of most important interest for the foreign companies to see whether such four countries are arbitration friendly, whether a foreign arbitral award will be enforced in each of the four countries under Art. III of the New York Convention, and whether such countries have a good or a bad track record. Unfortunately, only Brazil wants to increase foreign investment by applying the public policy exception narrowly in accordance with the New York Convention and the practice of most of the other member states.

Table of Contents:

I. Brazil
A. Law
B. Foreign Awards
C. Brazilian Public Policy: No Review of the Merits
1. Public Policy is Defined by Doctrine
2. Assessment of Formal Requirements Only
3. No Refusals Based on Public Policy
D. Refusal of Recognition and Enforcement

II. Russian Federation
A. Law
B. Public Policy: Basic Principles of Russian Law
1. Basics of the Social Formation of the Russian State
2. Informational Letter No. 96
C. Enforcement Despite Broad Interpretation of Public Policy
D. Refusal of Recognition and Enforcement
E. Very Broad Interpretation Leading to Refusal
1. Social and Economic Interest
2. Review of Merits
3. Mandatory Russian Rules and National Property
4. Missapplication of Russian Law
F. Other Ways to Refuse Enforcement: Third Party Litigation
G. Very Mixed Picture

III. India

A. Implementation of the New York Convention
1. Foreign Awards (Recognition and Enforcement) Act, 1961
2. Arbitration and Conciliation Act, 1996
B. Foreign Awards--Two Major Restrictions
1. Foreign Awards under the New York Convention
2. Foreign Awards under the Foreign Awards Act, 1961
3. Foreign Awards under the Arbitration and Conciliation Act, 1996
4. Was Limitation "Governed by Indian Law" Dropped?
5. Indian Definition of "Foreign Award" Violates New York Convention
C. Public Policy Exception--Statutory Law
1. Foreign Awards Act 1961
2. Arbitration and Conciliation Act 1996
D. Public Policy is Not Limited to Fraud, and Corruption
E. The Philosophy of Legal Interpretation of the Supreme Court of India
F. Application of the Public Policy Exception by the Supreme Court of India: from Narrow to Broad Interpretation
1. Public Policy Doctrine--Modifications and Expansion
2. Application of the Public Policy Exception under the Foreign Awards Act
3. Application of the Public Policy Exception under the Arbitration and Conciliation Act 1996
G. Public Policy Exception as Gateway to Full Judicial Review
H. Is There New Hope?

IV. People's Republic of China
A. Law
1. Notice of the Supreme People's Court
2. Arbitration Law and Several Other Laws are Applicable
B. Foreign Awards
1. Foreign Arbitral Institution
2. Two Years' Deadline
C. Centralized Decision by Supreme People's Court in Case of Refusal
D. Public Policy: Contrary to Social and Public Interest and Fundamental Principles
E. Inconsistent Interpretation of the Public Policy Exception
1. Insensitive to Feelings of Chinese People
2. Breach of Mandatory Provisions of PRC Laws
3. Mere Unfairness or Injustice
4. Violation of China's Judicial Sovereignty
F. More Successes Than Failures