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26 July 2018
A disgruntled party on the losing end of an award will sometimes seek to have the award annulled or set aside at the seat of arbitration. However, even if such a challenge at the seat is successful, that is not necessarily the end of the matter. Awards that are seemingly 'dead and buried' can sometimes be resurrected or haunt the losing party in other jurisdictions where enforcement of the award is sought.
The New York Convention on the Recognition and Enforcement of Foreign Arbitration Awards does not oblige contracting states to refuse the enforcement of awards that have been set aside at the seat. Article V(1)(e) only goes so far as to provide that an award "may" be denied recognition and enforcement if it has been annulled by the courts of the arbitral seat; it does not prohibit enforcement. Additionally, Article VII provides that the convention shall not deprive any party of any right to benefit from an arbitral award as permitted by the law of the enforcing state.
However, having been drafted in a permissive manner, the New York Convention contains no further guidance in this regard. In the absence of an international standard, different jurisdictions have adopted diverging standards with regard to the circumstances in which the enforcement of annulled awards may be permitted. Taken generally, these circumstances can include the annulment being:
However, parties should be aware that in most jurisdictions, there is an increasingly high burden to satisfy when seeking to enforce an annulled award – particularly where it is claimed that the annulment was contrary to basic principles of justice.
Obtaining judicial recognition of an annulled award is likely to be most problematic where the grounds for annulment at the seat properly applied the grounds given in Article V(1)(a)‑(d) of the New York Convention.
However, the key takeaway is that just because an award seems dead and buried does not mean that it is necessarily the end of the matter. Where an award has been set aside, it is essential that parties seek advice from arbitration counsel knowledgeable in the jurisdiction of the enforcement to identify whether recovery may still be possible.
For further information on this topic please contact Sherina Petit or Ben Grant at Norton Rose Fulbright LLP by telephone (+44 20 7283 6000) or email (email@example.com or firstname.lastname@example.org). The Norton Rose Fulbright LLP website can be accessed at www.nortonrosefulbright.com.
Ewelina Kajkowska, trainee, assisted in the preparation of this update.
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