Enforcement of Awards - Chapter 17 - International Arbitration Checklists - 3rd Edition
Originally from International Arbitration Checklists - 3rd Edition
The issue of the final award at the end of the arbitration is not always the end of the dispute. If the losing party complies voluntarily with the award, that is fine. As seen in the previous chapter, the losing party sometimes seeks to challenge the award. An application to set aside an award can only be done in the seat of arbitration. Alternatively, the losing party may simply sit back and refuse to comply with the orders in the award. In that case, the successful party will have to take steps to enforce the award. In an international arbitration, the award may not be issued in the place of domicile of either party or in a jurisdiction where the assets of the losing party may be found. This is where one of the main reasons for the rise of international arbitration comes into focus - the enforceability of the arbitral award.
The International Framework for Enforcement of an Award
There are not many countries that have agreements for reciprocal enforcement of judgments. In other words, a judgment rendered is one country is not directly enforceable as such in many other countries. By contrast, 156 States are signatories to a multilateral treaty called the Convention on the Recognition and Enforcement of Foreign Arbitral Awards made in 1958 (popularly known as “The New York Convention”). Under the New York Convention, Contracting States are obliged to recognize and enforce arbitral awards made in the territory of another State. Article I (3) permits Contracting States to limit recognition and enforcement to awards made in another Contracting State. Many have opted to do so. The New York Convention also requires that a court of a Contracting State stays any court action on a matter in respect of which the parties have made an arbitration agreement and refers the matter to arbitration.
The New York Convention has been tremendously successful and a key reason for the growth in international arbitration.