How can a party resist enforcement of an international arbitration award in the U.S.?
An earlier article in this series described the steps required to enforce an international arbitration award in the U.S. But how might enforcement be resisted? Below we give more detail on grounds for resisting enforcement.
Grounds for resisting enforcement
As previously noted, an award-creditor must first establish personal jurisdiction and provide the documentation required under the New York Convention. Failing to do either will doom the award-creditor’s attempt at enforcement. But assuming these steps are satisfied, a U.S. court must recognize the award unless one of the New York Convention’s seven grounds for non-enforcement applies.
The first five grounds for non-recognition must be raised by the award-debtor. They are:
- The parties to the arbitration agreement were under some incapacity, or the agreement is invalid;
- The award-debtor was not given proper notice of the arbitration agreement or the arbitration proceedings failed to satisfy due-process requirements;
- The award concerns issues not falling within the terms of the arbitration agreement;
- The arbitral procedure did not follow the arbitration agreement, or did not follow the law of the country where the arbitration took place; or
- The award is not yet binding or has been set aside by an authority of the country in which, or under the law of which, that award was made.
The final two grounds for non-recognition may be raised by the award-debtor or the court. They are:
- The subject matter of the arbitration is not capable of settlement by arbitration under the law of that country; or
- The recognition or enforcement of the award would be contrary to the public policy of the United States.
The enumerated grounds for non-recognition in the New York Convention are generally construed narrowly. Consequently, U.S. courts have often rejected attempts by losing parties to resist award recognition. For example, the final ground for non-recognition – that recognition is contrary to public policy – is often raised by award-debtors, but can be difficult to establish. The exception applies where recognition would violate the “most basic notions of morality and justice” in the United States.
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