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The Guide to Challenging and Enforcing Arbitration Awards - First Edition

Substantive Grounds for Challenge

Introduction

For several decades, arbitration has been promoted as the preferred method for resolving commercial disputes, especially in international commerce. One of the advantages often touted in favour of arbitration is the final and binding nature of arbitral awards. The conventional wisdom has been that arbitral decisions should be insulated from any substantive judicial review, but in recent years, this pro-arbitration paradigm is being increasingly tested and courts seem to be taking notice.

This chapter looks at various avenues for challenging awards on substantive grounds. First, we consider a possible shift in judicial attitudes towards arbitration and, in line with that evolution, we define ‘substantive grounds’ broadly to include mistakes of law or fact going to the overall merits or substance of an arbitral decision, as distinct from strictly procedural or jurisdictional errors.[2] Second, we identify existing mechanisms for appealing directly from an arbitral award within the arbitration process itself or in the courts. Third, we survey recent court decisions to assess the viability of raising mistakes of law or fact as a basis for challenging awards in collateral judicial proceedings. Further, we explore how courts are relying on public policy or public order as a vehicle for correcting other serious defects in the merits or substance of an award. Finally, we describe the sui generis investor-state arbitration regime created under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States of 1966 (the ICSID Convention) and the possibility of challenging ICSID awards on substantive grounds.

An evolving paradigm for challenging arbitral awards on substantive grounds

The emergence of the current ‘arbitration friendly’ system was aided by the implementation of two of the most significant legal instruments governing arbitral awards: the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the New York Convention) and the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration of 1985.[3] As a result, arbitration institutions saw a boom in international commercial arbitrations.[4] That trend carried over into investor-state arbitration with the ratification of the ICSID Convention and the subsequent proliferation of bilateral and multilateral investment treaties.[5]

As explained in more detail below, this international legal framework limits the extent to which courts are able to review arbitral awards. With rare exceptions, awards are not subject to appeal or direct review. Thus, any relief from a defective award is likely to occur in collateral judicial proceedings either to set aside the award at the seat of the arbitration or to enforce the award in secondary jurisdictions. In either situation, there are no express provisions for directly challenging an award on ‘substantive grounds’, that is to say on the basis of a general mistake of law or fact. Instead, grounds for challenging awards are geared towards correcting mistakes in the arbitral process itself, such as serious departures from basic procedural rights or deviations from the arbitral mandate (sometimes described as jurisdictional or admissibility errors).[6]

As this international legal regime made its way into domestic laws, many national courts began to shed any prior scepticism towards arbitration and adopted an explicitly pro-arbitration bias.[7] Accordingly, courts have significantly limited their review of arbitral awards to facilitate faster and easier enforcement across jurisdictions. Put differently, courts have acted as strict enforcers of the parties’ agreement to arbitrate and have deferred substantially to the legal and factual determinations of arbitral tribunals. Thus, under the existing legal framework, a party has little, if any, chance of successfully challenging the merits or substance of an arbitral award.

However, recent judicial decisions suggest that courts may be showing a greater willingness to flex their judicial muscle to correct excesses or abuses of arbitral power. Most notably, the Court of Justice of the European Union (CJEU), the highest judicial authority on EU law, recently sent shock waves through the arbitration community when it ruled in Slovak Republic v. Achmea that EU Member States are precluded from agreeing to arbitrate disputes with investors of other EU Member States outside the EU judicial system,[8] effectively ending investor-state arbitration in its current form within the European Union.[9]

In that case, a Dutch investor, Achmea, brought claims against Slovakia pursuant to the arbitration provisions in a bilateral investment treaty (BIT) between the Slovak Republic and the Netherlands, both of which are EU Member States. Slovakia opposed the arbitral tribunal’s jurisdiction, arguing that, upon the state’s accession to the European Union, the arbitration provision in the BIT was unenforceable under EU law.[10] The tribunal concluded that it had jurisdiction and rendered an award in favour of Achmea. Because the arbitration was seated in Germany, Slovakia applied to set aside the award in a German court. Germany’s highest civil court, the Federal Court of Justice (BGH), referred the issue to the CJEU for a preliminary ruling. The CJEU agreed that Slovakia’s accession to the European Union precluded the state from agreeing to arbitrate disputes with investors of other EU Member States under the BIT. Accordingly, the BGH annulled the award on the grounds that no valid arbitration agreement existed between the parties under EU and German law.[11]

Although the BGH’s reason for annulling the award – the non-existence of a valid arbitration agreement – fits within the jurisdictional grounds for setting aside awards under the existing legal framework, that strict characterisation ignores a more fundamental aspect of the court’s decision. The court overruled the tribunal’s determination of its own jurisdiction on the basis of a substantive legal error, in that case a mistake in the interpretation and application of EU law. Thus, in a broader sense, the decision in Achmea is an example of an award that was set aside on substantive grounds because the German court reversed a mistake of law in the arbitral decision itself, as opposed to correcting only a mistake in the arbitral process.

Direct review on questions of law or fact

Although the default practice is to agree to final and binding arbitration without any appellate review, in some cases parties may still be able to obtain direct review of an adverse award by agreeing either to arbitral rules that provide for direct appeals within the arbitration process itself or to arbitrate under the laws of a jurisdiction that allows for direct review by a court.

For instance, parties may provide for direct appeal of awards rendered under the auspices of the American Arbitration Association or its international arm, the International Centre for Dispute Resolution, pursuant to the Optional Appellate Arbitration Rules, which ‘apply a standard of review greater than that allowed by existing federal and state statutes’ in the United States.[12] Under these rules, a new ad hoc panel of arbitrators is appointed to hear challenges on the grounds that the underlying award is based upon ‘(1) an error of law that is material and prejudicial; or (2) determinations of fact that are clearly erroneous’.[13]

Similar optional appellate provisions are included in the arbitral rules of the International Institute for Conflict Prevention and Resolution (CPR) and the Judicial Arbitration and Mediation Services (JAMS). The CPR rules allow the new ad hoc appellate panel to set aside or modify the award if it ‘(i) contains material and prejudicial errors of law of such a nature that it does not rest upon any appropriate legal basis, or (ii) is based upon factual findings clearly unsupported by the record’.[14] Under the JAMS rules, the ad hoc appellate panel ‘will apply the same standard of review that the first-level appellate court in the jurisdiction would apply to an appeal from the trial court decision’ and ‘may re-open the record’ to review any evidence that was ‘improperly excluded’ by the original arbitrators or new evidence that has become ‘necessary in light of the [appellate panel’s] interpretation of the relevant substantive law’.[15] Other major institutions, such as the International Chamber of Commerce (ICC) and the London Court of International Arbitration (LCIA), do not provide comparable appellate procedures.

Outside the arbitration process, few jurisdictions still permit direct appeals from arbitral awards in court. One prominent example is England. The English Arbitration Act explicitly provides for direct appeals in certain enumerated circumstances, but only on questions of English law and only by agreement of all the parties to the arbitral proceedings or by leave of the court.[16] In practice, few applications make it ‘over the leave requirement which has been designed to catch all but the most meritorious appeals’.[17] Moreover, parties may contract out of these provisions by explicitly waiving the right to appeal in the contract or by selecting arbitral rules that expressly waive any right to appeal or other forms of recourse, such as Article 35(6) of the ICC Rules and Article 26(8) of the LCIA Rules.[18] But a provision in an arbitration agreement that the award shall be ‘final, conclusive and binding’ has been deemed to be insufficiently clear to waive this right.[19]

Similarly, in what some experts have described as a ‘ground-breaking precedential decision’ with potential ramifications for many African jurisdictions, the Ethiopian Supreme Court recently ruled that it could review an arbitral award for fundamental errors of Ethiopian law.[20] In that case, the governing law was Ethiopian law and the applicable arbitral rules (the European Development Fund Arbitration Rules) assimilated the award to a final court judgment of an Ethiopian court. Because the Ethiopian Constitution grants the Supreme Court jurisdiction to review the final judgments of all Ethiopian courts for fundamental errors of Ethiopian law, the court concluded that it could review the award for any such defects.[21] Applying this standard, the court found that the arbitral tribunal had erred in the interpretation and application of Ethiopian law in several respects, including by ignoring evidence of fraud in the contract, thereby rendering the award a nullity.[22] Commentators have observed that this decision departs from precedent in which the Ethiopian Supreme Court ruled that arbitral awards are not subject to substantive review.[23]

Challenging awards in collateral proceedings under national arbitral laws and the New York Convention

In the absence of a direct appeal, a party may still be able to attack an award in collateral judicial proceedings in two ways. One option is to oppose enforcement of the award wherever the prevailing party tries to enforce it. The New York Convention, with almost 160 contracting states, provides the nearly universal defences against recognition and enforcement of awards.[24] A successful defence would not extinguish the award, but would avoid enforcement in that jurisdiction and could preclude enforcement in other jurisdictions as well.[25]

Another option is to apply to have the award set aside or annulled by a court with supervisory or primary jurisdiction over the arbitration (also known as the seat of the arbitration). Under the New York Convention, there may be two primary jurisdictions (i.e., ‘the country in which, or under the law of which, that award was made’ (emphasis added)).[26] The most common grounds for setting aside an award are set forth in Article 34 of the UNCITRAL Model Law, which forms the basis of arbitration laws in more than 110 jurisdictions.[27]

If the award is properly set aside, courts in other countries or secondary jurisdictions may recognise the annulment decision and refuse to enforce the award under the New York Convention.[28] However, nothing in the New York Convention or the UNCITRAL Model Law mandates recognition of an annulment decision.[29] And some courts have enforced awards notwithstanding the fact that they had been annulled in a primary jurisdiction, for instance when the annulment decision is ‘repugnant to fundamental notions of what is decent and just’.[30]

As is evident from a side-by-side comparison (see table below), the grounds for challenging an award in set-aside and enforcement proceedings are practically identical. Nevertheless, the odds of success may vary depending on the procedural posture because courts in different jurisdictions may apply different standards of review and may respond differently to the same award.[31]

Under both legal regimes, the grounds for attacking an award are limited primarily to serious deviations from constitutive or procedural aspects of the arbitration, for example a failure to act within the scope of the arbitration agreement or a failure to abide by basic standards of due process. In addition, an award may be disregarded if it decides an issue that is not arbitrable (i.e., not capable of settlement by arbitration under the state’s domestic law), or if it is otherwise contrary to public policy insofar as it violates the forum’s fundamental notions of justice and morality or contravenes important national interests.[32] Notably, there are no express provisions for directly attacking the merits or substance of an arbitral decision, whether on the basis of a mistake of fact or law.

Article 34 of the UNCITRAL Model Law Article V of the New York Convention
A party to the arbitration agreement . . . was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of this State; or The parties to the [arbitration] agreement . . . under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or
The party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or
The award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award that contains decisions on matters not submitted to arbitration may be set aside; or The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or
The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Law from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Law; or The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or
The award has not yet become binding on the parties, or 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; or
The subject matter of the dispute is not capable of settlement by arbitration under the law of this State; or The subject matter of the difference is not capable of settlement by arbitration under the law of that country; or
The award is in conflict with the public policy of this State. The recognition or enforcement of the award would be contrary to the public policy of that country.

Arbitration laws that are not based on the UNCITRAL Model Law can be similarly or even more restrictive in leading arbitral jurisdictions. In the United States, the Federal Arbitration Act (FAA) provides the exclusive grounds for a federal court to set aside or ‘vacate’ an award:

  • where the award was procured by corruption, fraud or undue means;
  • where there was evident partiality or corruption in the arbitrators, or either of them;
  • where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehaviour by which the rights of any party have been prejudiced; or
  • where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final and definite award upon the subject matter submitted was not made.[33]

As with the UNCITRAL Model Law, the FAA does not expressly include grounds for vacating an award on the basis of general mistakes of law or fact.[34] The same is true under Swiss and French arbitration laws.[35] And French law goes even further for international awards. Unlike domestic awards, which are subject to review on the basis of French standards of morality and justice (ordre public interne), international awards – regardless of where they were rendered – are subject to a presumably lower standard of review under internationally recognised norms (ordre public international).[36]

In short, the only realistic way to attack an arbitral award on ‘substantive grounds’ in collateral proceedings is to present a challenge within the context of the express provisions found in the New York Convention or the relevant state’s domestic arbitration law. Recent court decisions setting aside awards or refusing enforcement under the excess of powers or public policy rubrics illustrate this point.[37]

Challenging substantive errors of law as excesses or abuses of arbitral power

Even though it is not expressly included in the FAA, United States courts have recognised the doctrine of ‘manifest disregard of the law’ as a proper basis for vacating awards, including international awards rendered in the United States.[38] And the United States Supreme Court has explained that ‘manifest disregard of the law’, as opposed to general errors of law, may be a proper basis for review under one of the FAA’s express provisions, such as when the arbitrators are ‘guilty of misconduct’ or ‘exceeded their powers’.[39] As a general rule, this doctrine applies when two criteria are met: ‘(1) the arbitrators knew of a governing legal principle yet refused to apply it or ignored it altogether, and (2) the law ignored by the arbitrators was well defined, explicit, and clearly applicable to the case’.[40]

Although this defence rarely succeeds, in January 2019, the US Court of Appeals for the Ninth Circuit affirmed a lower court’s decision to vacate an international award rendered in the United States under the FAA because the arbitrators’ decision was ‘completely irrational’ and in ‘manifest disregard of the law’.[41] In that case, a US government contractor, ECC, awarded subcontracts to a local company, Aspic, for two construction projects in Afghanistan pursuant to ECC’s prime contract with the US Army Corps of Engineers. Under the terms of the subcontracts, Aspic were obliged to comply with US regulations applicable to ECC as a government contractor, the Federal Acquisition Regulations (FAR), including provisions relating to termination of contracts and settlement procedures.

Eventually, the Army Corps of Engineers terminated the prime contract and ECC accordingly cancelled the subcontracts. Aspic claimed that it was owed certain expenses and termination costs, but ECC refused to pay, in part because Aspic had failed to properly present its settlement costs as required by the relevant FAR provisions. Aspic filed for arbitration pursuant to the subcontracts, and the sole arbitrator issued an award in favour of Aspic for more than US$1 million on the basis that it would be ‘unreasonable’ and ‘unjust’ to hold a local Afghan company to the same strict standards as a US contractor.[42] A federal district court in California vacated the award and the court of appeals affirmed. The latter reasoned that the arbitrator erred as a matter of law and thereby exceeded its authority in concluding that Aspic need not comply with the FAR provisions.[43]

Similarly, in France, in January 2019, the Paris Court of Appeal partially set aside an award on the grounds that the arbitral tribunal exceeded its mandate by erroneously awarding damages for claims that the tribunal itself had concluded to be outside its temporal jurisdiction.[44] A Canadian gold mining company, Rusoro, had acquired interests in certain mining projects in Venezuela between 2006 and 2008. In 2009, Venezuela enacted various measures restricting exports of gold and regulating foreign exchange. In 2011, Venezuela nationalised the gold mining sector. Rusoro submitted a request for arbitration, claiming that Venezuela had breached its obligations under the Canada–Venezuela BIT by enacting restrictive measures in 2009 and expropriating Rusoro’s gold mining interests in 2011.

The arbitral tribunal found that the claims based on the 2009 measures were time-barred under the BIT. Nevertheless, it awarded Rusoro US$967 million plus interest in compensation for the alleged expropriation based on the value of the company’s shares in 2008, without taking into account the decrease in value caused by the restrictive measures imposed in 2009. The French court reviewed the relevant ‘elements of law and of fact’ and concluded that it was an error to award damages for losses that were caused by measures that fell outside the tribunal’s mandate.[45]

Challenging the substance of an award based on violations of public policy

Another avenue for challenging an award on substantive grounds is the public policy defence. Under the UNCITRAL Model Law and the New York Convention, courts are free to disregard an award if they believe it violates their own state’s public policy. Again, as a general matter, an award is contrary to public policy if it is repugnant to fundamental notions of justice or morality or if it contravenes important national interests.[46] Because of its inherent vagueness, the public policy defence seems to provide the greatest latitude for courts to correct substantive defects in an arbitral award. Accordingly, it is perhaps the most commonly invoked basis for challenging an arbitral decision, yet rarely with any success.

However, recent cases suggest that awards may be increasingly vulnerable to this sort of challenge, consistent with the current trend towards greater scrutiny of arbitral awards. For example, in June 2018, a federal district court in Washington, DC, refused to confirm an arbitral award against India on public policy grounds.[47] India had entered into a contract with an Indian company, HEPI, for the exploration and potential commercialisation of oil and natural gas in India. A dispute arose regarding HEPI’s rights to continue its exploration activities following India’s determination that the company had relinquished its rights to a certain block. The tribunal ultimately ruled in favour of HEPI but, instead of awarding monetary damages, ordered India to let the company back into the block so that it could continue its exploration activities for another three years. The tribunal also awarded interest on the value of HEPI’s investment, including 18 per cent interest that would continue to accrue until HEPI was allowed back into the block.

The US district court refused to enforce the award. The court found that it could not order India to perform an act within its own territory because doing so would violate US public policy respecting the sovereignty and independence of nations.[48] The court found that the interest portion of the award also violated public policy because the penal nature of the interest had the ‘practical effect’ of coercing India into complying with the specific performance ordered by the award[49] and, furthermore, it contravened US law on foreign sovereign immunity, which expressly prohibits holding foreign states liable for punitive damages.[50]

In France, too, the public policy defence has gained some appeal ‘as an extension to the courts’ increasing control over arbitral awards’.[51] This is even more notable because in France, as explained above,[52] international awards are only subject to review for violations of internationally recognised norms rather than purely domestic norms, and courts must find that the alleged violation satisfies the heightened standard of being ‘flagrant, effective and concrete’.[53] In a notable case in 2018, the Paris Court of Appeal ruled that it had the power to review an international award ‘in law and in fact’ to determine whether it violated international public policy.[54] The court then vacated the award because it had the effect of conferring international legal protection to an investment secured by defrauding government authorities in derogation of the ‘international consensus’ respecting every state’s right to control foreign investments within its territory and subject them to government approval.[55]

Challenging awards on substantive grounds under the ICSID Convention

An entirely different regime applies to awards rendered under the ICSID Convention, which creates a ‘self-contained’ arbitration system for investor-state disputes separate and apart from the regime created under the New York Convention and the UNCITRAL Model Law.[56] The ICSID Convention provides the exclusive mechanism for annulling an award within the ICSID system itself. An ad hoc committee composed of three ICSID-appointed arbitrators considers the annulment application.

Article 52 of the ICSID Convention sets forth the exclusive grounds for annulling an ICSID award:

  • the tribunal was not properly constituted;
  • the tribunal has manifestly exceeded its powers;
  • there was corruption on the part of a member of the tribunal;
  • there has been a serious departure from a fundamental rule of procedure; or
  • the award has failed to state the reasons on which it is based.

As with the UNCITRAL Model Law, these provisions relate primarily to the integrity of the arbitration process and do not expressly include errors in the substance of the arbitral decision. Nevertheless, ad hoc committees have annulled awards for serious mistakes of law under an excess of powers rubric, for instance when the arbitral tribunal failed to apply the proper law or its misinterpretation or misapplication of the law is ‘so gross or egregious as substantially to amount to failure to apply the proper law’.[57]

A recent example is Venezuela’s success in having an ICSID award partially annulled for failure to apply the proper law in calculating damages.[58] The arbitrators awarded certain subsidiaries of ExxonMobil approximately US$1.6 billion in compensation for various claims, including for an expropriation under the Netherlands–Venezuela BIT. The ad hoc committee reviewed the award and found that the tribunal had disregarded the terms agreed by the parties for computing damages and instead had applied general principles of international law.[59] The ad hoc committee disagreed with the tribunal’s decision on the applicable law and ‘the way in which the Tribunal put that decision into effect’.[60] It concluded that the tribunal had exceeded its powers and, accordingly, annulled the relevant portion of the award, which amounted to a reduction of more than US$1.4 billion.[61]

Unless an award is annulled in accordance with the ICSID Convention, each contracting state is required to enforce it as if it were a final judgment of its domestic courts.[62] The New York Convention’s grounds for resisting enforcement do not apply. Thus, challenging ICSID awards in court is even more difficult because, in theory, they are not subject to judicial review on any grounds. Yet, the recent saga involving intra-EU investor-state arbitration has shown that ICSID awards are susceptible to judicial oversight as well. In February 2019, a Swedish court refused to enforce an ICSID award because, in effect, it directed Romania, an EU Member State, to grant impermissible subsidies or ‘state aid’ to investors of another EU Member State in violation of EU law. The court recognised that the ICSID Convention called for recognition and enforcement of the award as if it were a final judgment of a Swedish court, but reasoned that a Swedish court judgment that violated EU law would also be unenforceable.[63]

In the United States, the notion that ICSID awards are automatically enforceable against foreign states has been rejected. Under the federal statute implementing the ICSID Convention, ICSID awards must be enforced in federal court as if they were final judgments of a court of a constituent state.[64] For many years, federal district courts in New York believed this provision permitted the use of state court procedures to convert ICSID awards into federal judgments in summary proceedings without notice to the award debtor. In 2017, however, the US Court of Appeals for the Second Circuit put an end to that decades-old practice and ruled that proceedings to enforce ICSID awards against a foreign state are subject to the procedural and substantive requirements of the US law on foreign sovereign immunity, including its service of process, venue and jurisdictional immunity provisions.[65]

Conclusion

Mounting a successful challenge against an arbitration award on ‘substantive grounds’ is not easy, but it is not impossible. Courts across jurisdictions, including in so-called ‘arbitration friendly’ jurisdictions, have shown that they will not blindly enforce awards containing egregious mistakes of law or other serious defects. And recent court decisions seem to suggest that, in light of a growing suspicion of arbitration within many communities, courts may be rediscovering their scepticism about unfettered arbitral power and reasserting their own power to scrutinise awards more closely.


Notes

[1] Joseph D Pizzurro is a managing partner, Robert B García is a partner and Juan O Perla is an associate at Curtis, Mallet-Prevost, Colt & Mosle LLP. The authors would like to thank William Hampson, associate in Curtis’ London office, for his contribution.

[2] See Chapters 5, 6 and 7.

[3] Convention on the Recognition and Enforcement of Foreign Arbitral Awards, signed on 10 June 1958, http://www.newyorkconvention.org/new+york+convention+texts; United Nations Commission on International Trade Law, UNCITRAL Model Law on International Commercial Arbitration 1985, with amendments as adopted in 2006, www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbitration.html. See Nigel Blackaby and Constantine Partasides with Alan Redfern and Martin Hunter, Redfern and Hunter on International Arbitration, Sections 1.01 to 1.03 (6th ed. 2015).

[4] From 2012 to 2016, the overall caseload at major arbitral institutions continued to grow significantly. See Markus Altenkirch and Jan Frohloff, ‘International Arbitration Statistics 2016 – Busy Times for Arbitral Institutions’, Global Arbitration News (26 June 2017), https://globalarbitrationnews.com/international-arbitration-statistics-2016-busy-times-for-arbitral-institutions/.

[5] The number of International Centre for Settlement of Investment Disputes [ICSID] cases has grown exponentially in the last two decades. See World Bank, ‘The ICSID Caseload – Statistics 7’ (Issue 2019-1), https://icsid.worldbank.org/en/Documents/resources/ICSID%20Web%20Stats%202019-1(English).pdf.

[6] See Redfern and Hunter on International Arbitration (footnote 3), at Sections 10.36, 10.41, 10.75.

[7] See, e.g., Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 US 614, 631 (1985).

[8] Judgment of 6 March 2018, Slovak Republic v. Achmea B.V., Case C-284/16, ECLI:EU:C:2018:158, paras. 45, 46, 48, 49, 62 [hereinafter Achmea].

[9] Following the Court of Justice of the European Union’s Achmea decision, EU Member States committed to terminating intra-EU bilateral investment treaties. See European Commission – Daily News, ‘Single Market: Commission welcomes Member States’ commitments to terminate all bilateral investment treaties within the EU’ (17 January 2019), http://europa.eu/rapid/midday-express-17-01-2019.htm?locale=en.

[10] Achmea, at para. 11.

[11] Slovak Republic v. Achmea B.V., Bundesgerichtshof [BGH] [Federal Court of Justice] 31 October 2018, I ZB 2/15, paras. 14, 15.

[12] American Arbitration Association [AAA], ‘Optional Appellate Arbitration Rules 3’ (1 November 2013), https://www.adr.org/sites/default/files/AAA%20ICDR%20Optional%20Appellate%20Arbitration%20Rules.pdf.

[13] id., at A-10. In the United States, parties cannot contractually expand the statutory grounds upon which a court may review and set aside an award. Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 US 576 (2008). But there is no indication that such a prohibition extends to broader appellate review by arbitrators. In fact, a federal court in New York has confirmed an arbitral award modified under the AAA appellate procedures as if it were any other award rendered under the Federal Arbitration Act. Hamilton v. Navient Sols. LLC, No. 18-cv-5432 (PAC), 2019 US Dist. LEXIS 24412 (SDNY 14 February 2019).

[14] The International Institute for Conflict Prevention and Resolution, ‘Appellate Arbitration Procedure’, Section 8.2(a) (2015), https://www.cpradr.org/resource-center/rules/arbitration/appellate-arbitration-procedure.

[15] Judicial Arbitration and Mediation Services, ‘Optional Arbitration Appeal Procedure’, Section (d) (June 2013), https://www.jamsadr.com/files/Uploads/Documents/JAMS-Rules/JAMS_Optional_Appeal_Procedures-2003.pdf.

[16] English Arbitration Act 1996, Section 69.

[17] David St John Sutton, Judith Gill and Matthew Gearing, Russell on Arbitration, 531 (24th ed. 2015).

[18] See, e.g., Lesotho Highlands v. Impregilo [2006] 1 AC 221, para. 3.

[19] See, e.g., Shell Egypt West Manzala GmbH v. Dana Gas Egypt Ltd [2009] EWHC 2097 (Comm), para. 36.

[20] I-Arb Africa, ‘The Ethiopian Supreme Court Annuls a €20 Million Euro International Arbitral Award in Favor of an Italian Contractor under the European Development Fund Rules (EDF)’, https://www.iarbafrica.com/en/news-list/17-news/660-the-ethiopian-supreme-court-annuls-a-%E2%82
%AC-20-million-euro-international-arbitral-award-in-favor-of -an-italian-contractor-under-the-european-development-fund-rules-edf.

[21] id.

[22] Sadaff Habib, ‘Spotlight on Ethiopia as it Annuls a Euro 20 million Arbitral Award’, Kluwer Arbitration Blog (14 August 2008), at http://arbitrationblog.kluwerarbitration.com/2018/08/14/spotlight-on-ethiopia-as-it-annuls-a-euro-20-million-arbitral-award/.

[23] Mintewab Afework, ‘The Fate of Finality Clause in Ethiopia’, Kluwer Arbitration Blog (22 July 2018),
http://arbitrationblog.kluwerarbitration.com/2018/07/22/fate-finality-clause-ethiopia-2/. Note that Ethiopia is not a party to the New York Convention, and its arbitration law is not based on the UNCITRAL Model Law. See UNCITRAL, ‘Status – Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958)’, www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention_status.html; UNCITRAL, ‘Status – UNCITRAL Model Law on International Commercial Arbitration (1985), with amendments as adopted in 2006’, http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/1985Model_arbitration_status.html.

[24] ‘Status – Convention on the Recognition and Enforcement of Foreign Arbitral Awards’ (footnote 23).

[25] See Gary Born, International Commercial Arbitration, Vol. III 3391 (2nd ed. 2014).

[26] New York Convention, Article V(1)(e) (emphasis added).

[27] ‘Status – UNCITRAL Model Law’ (footnote 23).

[28] See, e.g., Termorio S.A. E.S.P. v. Electranta S.P., 487 F.3d 928, 936 (DC Cir. 2007) (‘[A]n arbitration award does not exist to be enforced in other Contracting States [under the New York Convention] if it has been lawfully “set aside” by a competent authority in the State in which the award was made.’); Luxembourg No. 7, PEMEX – Exploracion y Produccion v. Corporacion Mexicana de Mantenimiento Integral, S. de R.L. de C.V., Court of Appeal of Luxembourg, Case No. 59/17, 27 April 2017, in Yearbook Commercial Arbitration, Volume XLII (van den Berg ed. 2017) [hereinafter Luxembourg PEMEX decision] (refusing to enforce an award under the New York Convention because it had been annulled at the seat of the arbitration and therefore ‘produce[d] no effects . . .  in its country of origin’); see also Born, International Commercial Arbitration (footnote 25), at 3390.

[29] Both the Model Law and the New York Convention provide that a court ‘may’ refuse to recognise and enforce an award that has been set aside by a competent authority. UNCITRAL Model Law, Article 36(1)(a)(v); New York Convention, Article V(1)(e).

[30] See, e.g., Corporación Mexicana De Mantenimiento Integral, S. De R.L. De C.V. v. Pemex-Exploración Y Producción, 832 F.3d 92, 99 (2d Cir. 2016) [hereinafter United States PEMEX decision].

[31] Compare Luxembourg PEMEX decision (footnote 28) with United States PEMEX decision (footnote 30).

[32] See Redfern and Hunter on International Arbitration (footnote 3), at Sections 10.82, 10.83.

[33] 9 USC Section 10.

[34] See Hall St., 552 US at 584; United Paperworkers Int’l Union v. Misco, Inc., 484 US 29, 38 (1987).

[35] See Swiss Federal Private International Law Act 1987, Article 190; French Code of Civil Procedure 2011, Article 1492.

[36] Compare French Code of Civil Procedure 2011, Article 1492 5º with Article 1520 5º. See Redfern and Hunter on International Arbitration (footnote 3), at Section 10.84; Frank-Bernd Weigand, Practitioner’s Handbook on International Commercial Arbitration, Section 1.159 (2nd ed. 2010).

[37] See generally Born, International Commercial Arbitration (footnote 25), at 3354.

[38] Yusuf Ahmed Alghanim & Sons, W.L.L. v. Toys ‘R’ Us, Inc., 126 F.3d 15, 21 (2d Cir. 1997).

[39] Hall St., 552 US at 584, 585. Some federal courts of appeals have rejected this interpretation, raising the prospect that the Supreme Court will revisit this issue in the near future. See, e.g., Affymax, Inc. v. Ortho-McNeil-Janssen Pharm., Inc., 660 F.3d 281, 285 (7th Cir. 2011); Citigroup Glob. Mkts Inc. v. Bacon, 562 F.3d 349, 355 (5th Cir. 2009).

[40] Wallace v. Buttar, 378 F.3d 182, 189 (2d Cir. 2004) (citation omitted); Stolt-Nielsen SA v. AnimalFeeds Int’l Corp., 548 F.3d 85, 95, 97 (2d Cir. 2008).

[41] Aspic Eng’g & Constr. Co. v. ECC Centcom Constructors LLC, No. 17-16510, 2019 US App. LEXIS 2774, at *8 (9th Cir. 28 January 2019) (quoting Kyocera Corp. v. Prudential-Bache Trade Servs., Inc., 341 F.3d 987, 997 (9th Cir. 2003)).

[42] id., at *13, *14.

[43] id., at *14.

[44] République Bolivarienne du Venezuela v. Société Rusoro Mining Limited, Paris Court of Appeal, 29 January 2019, No. RG 16/20822, No. Portalis 35L7-V-B7A-BZ2EA [hereinafter Société Rusoro], https://www.italaw.com/sites/default/files/case-documents/italaw10298.PDF; see also Tom Jones and Sebastian Perry, ‘Billion-dollar award set aside in Paris’, Global Arbitration Review (30 January 2019), https://globalarbitrationreview.com/article/1179819/billion-dollar-award-set-aside-in-paris.

[45] Société Rusoro at 4, 9.

[46] See Redfern and Hunter on International Arbitration (footnote 3), at Sections 10.82, 10.83.

[47] Hardy Exploration & Production (India) v. Gov’t of India, 314 F. Supp. 3d 95 (DDC 2018).

[48] id., at 110, 114.

[49] id., at 115, 116.

[50] id., at 113. The United States Foreign Sovereign Immunities Act expressly states that foreign states ‘shall not be liable for punitive damages.’ 28 USC Section 1606.

[52] See subsection ‘Challenging awards in collateral proceedings under national arbitration laws and the New York Convention’.

[53] Société MK Group v. S.A.R.L. Onix, Paris Court of Appeal, 16 January 2018, No. RG 15/21703, p. 8 [hereinafter Société MK Group], http://web.lexisnexis.fr/LexisActu/CAParis16janv20181521703.pdf.

[54] id., at 4.

[55] id., at 5, 8.

[56] See Christoph Schreuer, The ICSID Convention: A Commentary, 1103, 1154 (2d ed. 2009).

[57] Hussein Nuaman Soufraki v. United Arab Emirates, ICSID Case No. ARB/02/7, Decision on Annulment, 5 June 2007, para. 86; see, e.g., Sempra Energy International v. Argentine Republic, ICSID Case No. ARB/02/16, Decision on Annulment, 29 June 2010, paras. 164-165; Occidental Petroleum Corporation v. Republic of Ecuador, ICSID Case No. ARB/06/11, Decision on Annulment, 2 November 2015, para. 48, 56.

[58] Venezuela Holdings, B.V., et al. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/07/27, Decision on Annulment, 9 March 2017.

[59] id., at paras. 143, 150, 165, 186, 187.

[60] id., at para. 175.

[61] id., at paras. 188(a), 189.

[62] ICSID Convention, Article 54.

[63] See Tom Jones, ‘Miculas suffer setback in Sweden’, Global Arbitration Review (4 February 2019), https://globalarbitrationreview.com/article/1179932/miculas-suffer-setback-in-sweden.

[64] 22 USC Section 1650a.

[65] Mobil Cerro Negro, Ltd v. Bolivarian Republic of Venezuela, 863 F.3d 96 (2d Cir. 2017).