Challenging an Arbitral Award in New York Courts -Chapter 9 - Arbitration of International Disputes in New York

Dr. Peter (Pieter) Bekker is an international arbitration practitioner and professor. He has been a member of the Bar of the State of New York since 1992. He is also a member of the Bar of the Supreme Court of the United States. He is admitted to practice before the U.S. district courts for the Eastern and Southern Districts of New York and the U.S. Court of Appeals for the First Circuit. He is a commissioned New York Notary Public and, as such, a constitutional officer of the State of New York, where he resides.

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Originally from Arbitration of International Disputes in New York

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9.1. Procedure for Challenging (Vacating) an Arbitral Award

The New York and Panama Conventions do not regulate vacatur, or setting aside, of arbitral awards — these treaties are restricted to the recognition and enforcement of arbitral awards. These instruments also do not address the issue of what court (federal or state) is competent to receive an application to deny recognition and enforcement of an arbitral award falling within their scope. Such matters are regulated by national law, or the law of the forum (lex fori). For arbitral awards falling within the scope of the New York Convention, the only restriction that this treaty imposes on Contracting States is that “[t]here shall not be imposed substantially more onerous conditions or higher fees or charges on the recognition or enforcement of arbitral awards to which this Convention applies than are imposed on the recognition or enforcement of domestic arbitral awards.”

A party wishing to challenge or oppose an award rendered by an arbitral tribunal may seek to have the award vacated (nullified) by a competent court when the award is rendered in the United States, i.e., when the formal seat of arbitration is within the territory of the United States. The Second Circuit has interpreted Article V(1)(e) of the New York Convention as allowing the application of domestic arbitration law, specifically the FAA vacatur standards, to a motion to set aside, or vacate, a “nondomestic award” rendered in the United States or under Chapter 1 of the FAA, while recognizing that “when an action for enforcement is brought in a foreign state, the state may refuse to enforce the award only on the grounds explicitly set forth in Article V of the [New York] Convention.” Consequently, a U.S. award falling within the scope of the New York Convention is subject to vacatur based on the vacatur grounds specified or implied in Chapter 1 of the FAA, while an arbitral award made outside the U.S. may only be denied recognition and enforcement based on the provisions of the New York Convention. Given that the vacatur grounds listed in the FAA are similar to the grounds set forth in the New York and Panama Conventions, a party seeking refusal of recognition and enforcement of an arbitral award in a U.S. court may find guidance in U.S. case law addressing the FAA vacatur grounds.