Are Comity and Sovereignty Over Natural Resources Legitimate Considerations when Applying the Public Policy Exception to Enforcement of Arbitral Awards? - Chapter 66 - Pro-Arbitration Revisited: A Tribute to Professor George Bermann from his Students Over the Years
The pro-enforcement ethos of the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention”) is its defining achievement. The Convention is one of the world’s most widely adhered to treaties. Among other things, it requires States to enforce foreign arbitral awards save in exceptional circumstances. The public policy exception is one of those circumstances. That exception is the safety valve that helped convince governments to cede some of their sovereign authority to adopt the Convention. Yet it is also regarded as the Convention’s Achilles’ heel—potentially offering wily litigants an opportunity to encourage courts to improperly meddle in disputes already resolved by arbitration.
This essay will focus on two recent arbitration awards governed by the Convention that State courts then refused to enforce on public policy grounds. These cases are interesting because they involve considerations of comity and sovereignty over natural resources. This essay considers whether these cases are outliers, or harbingers of the future of the public policy exception—a matter that may be particularly significant given States’ increasing scrutiny of the exploitation of natural resources in the face of climate change.
I. THE PUBLIC POLICY EXCEPTION TO THE ENFORCEMENT OF AWARDS
Article III of the Convention provides that States “shall recognize arbitral awards as binding and [shall] enforce them” subject to certain rules and exceptions.