The issuance of a “final” arbitral award may only mark the midway point in

an international commercial dispute. The losing party (the award-debtor) can

bring proceedings to set aside the award before the courts in the country where the

arbitration was seated, while the winning party (the award-creditor) may have to

apply to enforce the award before the courts in one or more other countries if the

award-debtor fails to pay. In many cases, the same legal and factual issues

relating to the validity and enforceability of the award will arise in each of these

post-award proceedings.1

 

Courts in the U.S. and England regularly give effect to the judgments of

foreign courts, applying well-developed rules on the recognition of foreign

judgments and claim or issue preclusion. These rules are intended (among other

things) to promote harmony and consistency in judicial outcomes, to conserve

judicial resources, and to achieve finality by preventing a party from relitigating

the same issues that it has already litigated and lost before another court – i.e.,

from taking multiple bites at the apple.

 

In the context of post-award proceedings, however, the granting of effect to a

foreign court’s judgment may arguably encourage forum shopping, violate a

state’s obligations under the Convention on the Recognition and Enforcement of

Foreign Arbitral Awards (commonly known as the New York Convention), and

undermine the parties’ intent to have their dispute decided in a neutral forum of

their choosing. This article surveys the current approach in the U.S. and England

with respect to the effect of foreign post-award judgments. It then analyzes the

principal criticisms of this approach and suggests a possible adjustment.

 

 

 

Courts in the U.S. and England generally give effect to foreign judgments

enforcing, refusing to enforce, confirming or setting aside an international arbitral

award. However, the scope of the effect that they give to such judgments differs

depending on whether the particular judgment in question was rendered by a court

at the seat of the arbitration (a “primary jurisdiction” court) or by a court in any

other country (a “secondary jurisdiction” court). By contrast with the approach in

the U.S. and England, courts in France do not give any effect to foreign postaward

judgments, regardless of which court rendered the judgment.2

 

 

 

Where the foreign judgment was rendered by a secondary jurisdiction court,

U.S. and English courts grant issue-preclusive effect to the foreign judgment

under the forum’s generally applicable rules on the recognition of foreign

judgments and issue preclusion (also known as collateral estoppel or issue

estoppel). These rules require a two-step analysis. The first step is to determine

whether the foreign judgment is entitled to recognition in the forum. Generally

speaking, recognition is granted unless it would violate the forum’s public policy

or the foreign court lacked jurisdiction. If the foreign judgment is entitled to

recognition, the second step is to determine whether any of the factual findings or

legal conclusions contained in the judgment are entitled to issue-preclusive effect.

While the U.S. and English requirements for issue preclusion differ in some

respects, they both include that the issue determined by the foreign court must be

identical to the issue arising in the forum and that the foreign court’s

determination of that issue must have been necessary for its decision.3

 

The Reporters of the Draft Restatement on the U.S. Law of International

Commercial Arbitration have endorsed this approach. Section 4-8 of the Draft

Restatement provides that in post-award proceedings, a U.S. court should give

preclusive effect to a foreign judgment in accordance with “the forum’s applicable
principles governing . . . claim and issue preclusion, and recognition of foreign