Notes on enforcing arbitration awards


Checklist:

• Is the arbitration award expressed to be “final”?

• Has the time expired for any appeal or challenge to the award?

• Is there a written arbitration agreement? If relying upon an arbitration clause in a charterparty, is the charterparty signed by the paying party?

• What assets does the paying party have?

• Can any other person be held liable for the award?

Supplementary Comments:

1. “Final” means the final decision of the tribunal on the issues covered in the award. Where a tribunal publishes an interim award, dealing with only some of the issues, the award is usually expressed to be a “Final Interim Award” to denote that it is final as regards the issues in question. A Final Interim Award can usually be enforced as a Final Award.

2. There is a 28 day time limit for an application to Court to appeal or challenge an award. This runs from the date of the award. [Unless the applicable arbitral process has an appeal or review procedure (e.g. such as under the Gafta rules), then the 28 day period runs from the date the appellant is notified of the result of that appeal or review.]

3. Currently 144 countries adhere to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention”). The Convention provides for the recognition and enforcement of commercial arbitration awards by member states upon production of the original arbitration award and the written arbitration agreement (or certified copies of the documents) plus certified translations of these documents into the language of the country of enforcement. Under the Convention recognition and enforcement can only be refused on limited grounds, principally where; the parties were under some incapacity; or, the award is not valid under its proper law; or, a party was unable to present his case; or, where the arbitrators have exceeded their powers; or, the award is not binding; or, on public policy grounds.

4. In some countries enforcement of an award is not possible under the Convention if the charterparty is not signed.

5. The Convention is not the only enforcement option. Countries that do not adhere to the Convention will apply their own rules when deciding whether or not to recognise or enforce an arbitration award.

6. An award that stipulates that a sum of money be paid, is evidence of a debt. Sometimes procedural difficulties in obtaining the recognition and enforcement of an award can be avoided by using a slightly different procedural route such as a Court action to recover the debt.

7. Enforcement may not be cost effective unless the creditor can identify assets that are likely to be available to satisfy the award.

8. A freezing injunction obtained to secure a claim may not give the creditor any priority over the frozen assets in the event that the debtor is wound up or dissolved. Once the award is enforceable the creditor should consider obtaining a charging order over assets, in preference to liquidation of the debtor.

9. Where there is any doubt as to the correct identity or status of the debtor, then this should be investigated as early as possible, preferably before the tribunal issues an award. In some situations persons other than the named contracting parties can be held liable. This would include an agent or broker who acted without authority. It would also include a person found on investigation to be the true party to the underlying contract even if the contract does not identify that person as a contracting party.

10. If contemplating enforcement by attachment of assets, then consider at the earliest opportunity whether the proposed steps are likely to harm any innocent third parties. Enforcement may be refused if it would entail unjustified interference with the rights of innocent third parties.

These notes reflect the author's opinion at the date of publication of the typical issues relevant to this topic from an English law perspective. The notes are only a general guide, they are not comprehensive. These notes do not contain or constitute any representation of fact. Individual circumstances vary and other features of English law may be relevant. It is recommended that you contact us and take detailed advice before taking any decisions. If you would like to be added to the mailing list for these notes then please write to us with your name and mailing address. Comments and suggestions for further topics are welcome. Contact: info@morgans-law.com Copyright © 2006 Morgans. Pursuant to s.78 Copyright Designs & Patents Act 1988, Morgans asserts the right to be identified as author of this work.