I. THE FUNDAMENTALS OF RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRAL AWARDS
Arbitration is one of the most preferred methods for solving cross boarder commercial disputes that often arise in the area of international commerce. The popularity of arbitration has been increasing over the past decade due to expansion in commercial activities around the world and the development of new robust arbitration laws by several countries in an effort to promote arbitration. Arbitration provides parties with a mechanism to solve their dispute in their own way as the process is driven and tailored by the parties’ agreement. Therefore, recognition and enforcement of foreign arbitral awards is a very important aspect of arbitration. As a result most countries have developed national arbitration laws for solving commercial disputes and enforcing foreign arbitral awards.
Enforcement of arbitral awards often occurs when the parties comply with an arbitral award, the award is then enforced amicably. However, when one of the parties does not voluntarily comply with the award, the other party may seek to recognize and enforce such an award in a country in which the other party has assets. Further, the losing party has the right to set aside the arbitral award. The challenge of an award aims to modify or set aside the award, whereas recognition and enforcement aims to put the award into effect. Hence, comes the need for an international instrument to organize and harmonize recognition and enforcement of foreign arbitral award. Consequently, this lead to the development of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.