New York Convention — Enforcement of International Arbitration Award — Normally a Secondary State May Not Enforce an Award Lawfully Set Aside by a Competent Authority in the Primary State

Thai-Lao Lignite (Thailand) Co., Ltd. v. Gov’t of Lao People’s Republic, 2014 U.S. Dist. LEXIS 15004 (S.D.N.Y. Feb. 6, 2014):

The New York Convention "provides a carefully crafted framework for the enforcement of international arbitral awards." TermoRio S.A. E.S.P. v. Electranta S.P., 487 F.3d 928, 935, 376 U.S. App. D.C. 242 (D.C. Cir. 2007). The Second Circuit has explained that:

   [T]he Convention mandates very different regimes for the review of arbitral awards (1) in the state in which, or under the law of which, the award was made, and (2) in other states where recognition and enforcement are sought. The Convention specifically contemplates that the state in which, or under the law of which, the award is made, will be free to set aside or modify an award in accordance with its domestic arbitral law and its full panoply of express and implied grounds for relief. However, the Convention is equally clear 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 Convention.

Yusuf Ahmed Alghanim & Sons v. Toys "R" Us, Inc., 126 F.3d 15, 23 (2d Cir. 1997). "Under the Convention, 'the country in which, or under the [arbitration] law of which, [an] award was made' is said to have primary jurisdiction over the arbitration award. All other signatory States are secondary jurisdictions . . ." Karaha Bodas Co., L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 335 F.3d 357, 364 (5th Cir. 2003).

Article V(1)(e) of the New York Convention provides that recognition and enforcement of an arbitral award by a court with secondary jurisdiction over an arbitral award "may be refused, at the request of the party against whom it is invoked" if the award "has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made." "Pursuant to this provision of the Convention, a secondary Contracting State normally may not enforce an arbitration award that has been lawfully set aside by a 'competent authority' in the primary Contracting State." TermoRio S.A. E.S.P. v. Electranta S.P., 487 F.3d 928, 935, 376 U.S. App. D.C. 242 (D.C. Cir. 2007). Petitioners do not contest that the Malaysian High Court is a "competent authority" as defined by Article V(1)(e); rather, Petitioners argue that this Court has the discretion not  [*12] to defer to the Malaysian court's decision.

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