Non-domestic Arbitral Awards and the New York Convention - Part 5 Chapter 15 - The Practice of International Litigation - 2nd Edition
Lawrence W. Newman has been a partner in the New York office of Baker & McKenzie since 1971, when, together with the late Professor Henry deVries, he founded the litigation department in that office. He is the author/editor of 4 works on international litigation/arbitration.
Michael Burrows, Formerly, Of Counsel, Baker & McKenzie, New York.
ARBITRAL AWARDS rendered outside the United States are not enforceable as judgments in this country until they have been presented in court for recognition and enforcement, just as must be done for the confirmation and enforcement of domestic arbitral awards. The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) — which was signed in New York City on June 10, 1958, under the auspices of the United Nations and has since been ratified by some 100 nations, including the United States (in 1968) — is the primary basis for the enforcement of foreign arbitral awards in the United States.
The convention provides both for the recognition and enforcement within signatory nations of "foreign" arbitral awards issued within other countries that are also signatories to the convention and for the recognition and enforcement within signatory nations of awards considered "nondomestic."
In 1970 legislation was enacted to implement the terms of the convention in Chapter 2 of the Federal Arbitration Act (FAA). Under FAA §203, federal courts have original jurisdiction for any action or proceeding "under the convention" regardless of the amount in controversy. Whether an arbitral award is enforceable in the United States under the convention is of importance because the grounds upon which a court can vacate a convention award are narrower than those on which a U.S. domestic award may be set aside.
An action or proceeding falls under the convention in two situations. First, under the first sentence of Article I(l) of the convention, an action or proceeding falls under the convention if it is brought to enforce an arbitral award issued in a signatory country other than the country in which enforcement of the award is sought. Thus, an award issued in France, a signatory nation, would be considered a"foreign" award in the United States and would fall under the convention. Second — the situation that is the focus of this article — an action or proceeding falls under the convention pursuant to the second sentence of Article I(1) if the arbitral award is "not considered as domestic in the State where [its] recognition and enforcement [is] sought."