Awards

Absent compromise, while court cases end in judgments, arbitrations end in awards. It is important to keep in mind the distinction between the two.^[2]

Leaving aside investment treaty arbitrations, arbitrations concerning construction projects are essentially private affairs, even where one party is a state organisation. While different jurisdictions take somewhat different approaches, in general, arbitrations are regarded as being protected by a degree of privacy. Thus, the contents of the vast majority of arbitral awards are known only to the disputing parties, the arbitral tribunal and the institution under whose auspices an arbitration may be being conducted.

While, particularly in common law countries, courts are conscious that their decisions will be relied upon by parties outside the particular dispute being determined to regulate their affairs (in common law countries because of the doctrine of precedent, in civil law countries because judgments give guidance as to how similar disputes may be resolved in future), such considerations are generally absent in arbitrations. In arbitrations, tribunals are primarily concerned with deciding issues placed before them in a way that can be the subject of successful enforcement by the winning party.

Procedural orders

In the course of an arbitration the tribunal will issue directions regulating the conduct of the arbitration. Some arbitrators will describe these as ‘directions’ and some as ‘orders’: the distinction is mere nomenclature and of no significance. What is important is that such directions or orders are not ‘awards’, as they do not finally determine matters of substance in issue between the parties.

This is not in any way to diminish the significance of such orders, which may be of great complexity, may determine difficult issues that involve legal concepts and may have a crucial effect upon the success of one party or the other to the arbitration.

A decision that takes the form of a procedural order may not be final: thus, a tribunal that determines in a first procedural order that a substantive evidential hearing will take place on 1 January may decide in a later order that justice requires that hearing to be heard at a later date.

Other decisions expressed in the form of a procedural order may have substantive effect; for example, a decision refusing to permit an amendment to introduce a new claim may mean that the claim is ruled out for ever if a statutory limitation period prevents that claim from being brought in another arbitration or in court proceedings.

Distinguishing between a procedural order and a final dispositive decision that amounts to an award, even if not described that way by the tribunal, can be difficult, although in the vast majority of cases the distinction is clear enough. In broad terms, if the decision is a management decision as to how the arbitration is to proceed, it is a procedural order.^[3]

Important consequences can flow from the distinction. As pointed out below, there are often formal requirements relating to the issue of awards – sometimes emanating from the institution under whose auspices an arbitration is being conducted and sometimes arising out of the law of the country in which the seat of the arbitration is situated. If those formalities are not observed, an award may not be legally enforceable. By contrast, if the decision is merely procedural then it is unlikely that any formalities will be applicable.

Awards are also sometimes capable of challenge through annulment or other procedures but should, in most cases, be capable of recognition through the courts, whereas such procedures are not applicable to procedural orders.^[4]

Interim, partial and final awards

Unlike procedural orders, subject to certain qualifications all awards are final and binding, as is made clear by the express terms of many of the standard forms of construction contract (see, e.g., Clause 20.6 of the International Federation of Consulting Engineers (FIDIC) Red Book (finally settled), Clause 66(9) of ICE 7th Edition (finally determined) and Clause W1.4 of NEC3 (the tribunal settles the dispute referred to it)) and institutional rules (see, e.g., Article 34.2 of the 2010 United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules (final and binding), Article 35.6 of the 2021 International Chamber of Commerce (ICC) Arbitration Rules (binding on the parties), Article 33.1 of the 2021 International Centre for Dispute Resolution International Arbitration Rules (final and binding), Article 26.8 of the 2020 London Court of Arbitration (LCIA) Arbitration Rules (final and binding) and Rule 32.11 of the 2016 Singapore International Arbitration Centre (SIAC) Arbitration Rules (final and binding)). In the present context, a ‘final’ award is contrasted with an ‘interim’ or ‘partial’ award. In that context, the reference to a final award is a reference to the last award in a particular arbitration, that is the award by which the tribunal completes its task (there are qualifications to this generalisation, as explained below). Once the final award has been issued, the tribunal’s role is at an end (the tribunal is functus officio).

Thus, before issuing the final award, the tribunal should satisfy itself that it has indeed completed its task.

In this sense, there is an important distinction between a final award in arbitration and a final judgment in a court case. In the latter instance, the court may issue a final judgment dealing with all matters other than the form of an order or as to costs of the proceedings. This is certainly the case in many common law jurisdictions such as the UK. In this form of procedure, the form of the order or the order as to costs may be regarded as ancillary matters that would still be within the jurisdiction of the court to determine. By contrast, a final award in an arbitration should (on its own or taken with earlier partial awards) deal with all the matters arising out of the reference to arbitration including any dispositive orders, whether monetary or other, by way of remedy or relief and any order for the payment by one party or the other of the costs of the arbitration, including the parties’ legal costs, the remuneration of the tribunal and any charges payable to an arbitral institution. If the tribunal does not do so, it may be too late for the tribunal to put right any omission after the final award has been issued.

There are qualifications to the finality of a final award. First, many institutional rules provide for correction of an award after it has been issued. To quote from Article 36 of the 2021 ICC Arbitration Rules as an example:

1. On its own initiative, the arbitral tribunal may correct a clerical, computational or typographical error, or any errors of similar nature contained in an award, provided such correction is submitted for approval to the Court within 30 days from notification of the award by the Secretariat pursuant to Article 35(1).

2. Any application of a party for the correction of an error of the kind referred to in Article 36(1), or for the interpretation of an award, must be made to the Secretariat within 30 days from receipt of the award by such party.

3. Any application of a party for an additional award as to claims made in the arbitral proceedings which the arbitral tribunal has omitted to decide must be made to the Secretariat within 30 days from receipt of the award by such party.

4. After transmission of the application pursuant to Articles 36(2) or 36(3) to the arbitral tribunal, the latter shall grant the other party or parties a short time limit, normally not exceeding 30 days, from receipt of the application by that party or parties, to submit any comments thereon. The arbitral tribunal shall submit its decision on the application in draft form to the Court not later than 30 days from expiry of the time limit for the receipt of any comments from the other party or parties or within such other period as the Court may decide. A decision to correct or to interpret the award shall take the form of an addendum and shall constitute part of the award. A decision to grant the application under paragraph 3 shall take the form of an additional award. The provisions of Articles 32, 34 and 35 shall apply mutatis mutandis.

5. Where a court remits an award to the arbitral tribunal, the provisions of Articles 32, 34, 35 and this Article 36 shall apply mutatis mutandis to any addendum or award made pursuant to the terms of such remission. The Court may take any steps as may be necessary to enable the arbitral tribunal to comply with the terms of such remission and may fix an advance to cover any additional fees and expenses of the arbitral tribunal and any additional ICC administrative expenses.

Examples of similar provisions can be found in Articles 27.1 and 27.2 of the 2020 LCIA Arbitration Rules and Article 38 of the 2010 UNCITRAL Arbitration Rules. A tribunal’s response to any request to correct an error, however, will not invariably constitute part of the award.^[5]

Second, some institutional rules, in particular the 2020 LCIA Arbitration Rules, contain provisions that allow for the tribunal to decide claims not decided in an issued award. These provisions provide relief for oversights on the part of a tribunal that might otherwise provide grounds for annulment of an award. The LCIA provisions are Articles 27.3 and 27.4:

27.3 Within 28 days of receipt of the final award, a party may by written notice to the Registrar (copied to all other parties), request the Arbitral Tribunal to make an additional award as to any claim, counterclaim or cross-claim presented in the arbitration but not decided in any award. If, after consulting the parties, the Arbitral Tribunal considers the request to be justified, it shall make the additional award within 56 days of receipt of the request. If, after consulting the parties, the Arbitral Tribunal does not consider the request to be justified it may nevertheless issue an addendum to the award dealing with the request, including any Arbitration Costs and Legal Costs related thereto.

27.4 As to any claim, counterclaim or cross-claim presented in the arbitration but not decided in any award, the Arbitral Tribunal may also make an additional award upon its own initiative within 28 days of the date of the award, after consulting the parties.

These are salutary provisions, designed to do justice and to increase the prospects of enforcement of an award, but experience shows that they are susceptible to abuse by more or less thinly disguised attempts by unsuccessful parties to undermine an adverse award. Such attempts usually fail.

Third, some jurisdictions require formal registration or confirmation of an award before enforcing an award, placing a procedural hurdle to be overcome that may provide the opportunity for an award to prove neither final nor binding.

Finally, both the New York Convention and jurisdiction-specific laws and procedures may allow for the validity of an award to be challenged, either by denying enforcement of an award, by annulling an award or (less usually) providing for grounds of appeal against the contents of an award.

The matters referred to above are considered further below.

In many cases, leaving resolution of disputes referred to arbitration until the issue of a single final award may be inconvenient, time-consuming, expensive or unjust to the parties. In such cases the tribunal may issue an interim or partial award.

In this context, an interim or partial award means an award that decides one or more, but not all, of the issues in dispute between the parties – the award is ‘partial’ because it decides some but not all of the substantive issues in an arbitration.

Such an award is sometimes described as an ‘interim’ award. However, increasingly, an award dealing with substantive issues is described as a ‘partial’ award, and the expression ‘interim’ award is used when its subject is the issue by the tribunal of interim relief such as an order for the preservation of evidence.

Interim awards are discussed further below. In this chapter, ‘partial award’ is used in the sense referred to above: that is, an award dealing finally with one or more of the substantive issues in dispute, but not all of those issues, leaving the remaining issues to be determined in a later award or awards.

A partial award is useful in many circumstances. At the outset of proceedings, objections to the jurisdiction of a tribunal are often raised. It is the usual practice of tribunals to resolve such objections under the principle of ‘competence-competence’. If the tribunal has no jurisdiction to decide a particular dispute, it is often convenient for the tribunal to so decide before the parties spend time and money debating substantive issues before a tribunal that has no jurisdiction to determine those issues.^[6]

However, in many cases that course may not be convenient, perhaps because the case as a whole is simple and this will stretch out the proceedings uneconomically or perhaps because the tribunal feels that it will be better able to understand the jurisdictional issues when it is better informed about the substantive issues in dispute.

A particular form of problem in construction disputes relates to whether notice of claims has been given sufficiently early (e.g., under Clause 20 of the FIDIC Red Book contract). Sometimes tribunals will determine such disputes, which are not strictly jurisdictional disputes, in the same way as jurisdictional disputes (i.e., as preliminary issues leading to a partial award), but in practice most arbitrators prefer to resolve notice issues when they are better informed as to the substance of the claims made.

Bifurcation of proceedings is often convenient to first determine issues of liability, before moving on to issues of quantum that may be irrelevant if claims are rejected by the tribunal on the basis, for example, that no breach of contract has occurred, or that a claim is barred because of the expiry of a limitation period.

In construction disputes, it is often convenient to deal with issues concerning the valuation of works before factually complex claims for extensions of time and associated claims for time-related prolongation costs. In this situation, a partial award relating to valuation of works (particularly issues as to variations and their value) is often issued before the tribunal hears disputes concerning extensions of time.

Partial awards are often issued when the tribunal has determined all issues except for the allocation of costs. It is often convenient for the tribunal to invite submissions as to who should bear the costs of the proceedings once it is known who is the winner and who is the loser; or, perhaps, the extent to which each party is winner or loser.

In deciding whether to issue one or more partial awards followed by a final award, or simply to issue one final award, the tribunal will principally be concerned with the time and cost consequences of splitting the decision-making process.

Another important factor is the assessment of the risk that facts or matters that have a bearing on the decision or decisions contained in a partial award may become evident in a later part of the arbitration. An extreme case might be that in a partial award the tribunal might accept the reliability of the evidence of a particular witness, only to discover that later evidence placed before it after the issue of the partial award casts considerable doubt upon the earlier evidence or upon the integrity of the witness.

The power to issue partial awards may derive from the law of the seat of arbitration. Thus, for example, the Arbitration Act 1996 provides in Section 47:

1. Unless otherwise agreed by the parties, the tribunal may make more than one award at different times on different aspects of the matters to be determined.

2. The tribunal may, in particular, make an award relating to:

(a) an issue affecting the whole claim, or

(b) a part only of the claims or cross-claims submitted to it for decision.

3. If the tribunal does so, it shall specify in its award the issue, or the claim or part of a claim, that is the subject-matter of the award.

Some, but by no means all, institutional rules provide for the issue of interim or partial awards – see, for example, Article 26.1 of the 2020 LCIA Arbitration Rules and Article 2(v) of the 2021 ICC Arbitration Rules (which defines an ‘award’ as including ‘inter alia, an interim, partial, final, or additional award’).

Where neither the law of the seat of the arbitration nor governing institutional rules expressly provide for the issue of interim or partial awards, the parties may agree terms of reference conferring the power to issue such awards.

Interim awards and emergency awards

As already explained, sometimes the expression ‘interim award’ is used in respect of awards determining some, but not all, of the substantive issues in dispute in an arbitration. It is also an expression often used to describe the decision of a tribunal granting interim relief, such as an injunction or other restraining order. Such an order is usually not final in that it is only intended to hold the ring pending the determination of the substantive issues in the case.

One particular form of such awards is the award of an ‘emergency arbitrator’. The establishment of an arbitral tribunal through an institution can take several weeks, if not months. During that period, there is a substantial risk where there is an unscrupulous respondent of significant evidence being destroyed or assets being dissipated. In order to hold the position, many institutions have introduced an emergency arbitrator procedure where an arbitrator who will probably not be a member of the tribunal determining the final substantive issues decides whether or not to grant protective relief (see, e.g., Article 29 of the 2021 ICC Arbitration Rules, Article 9B of the 2020 LCIA Arbitration Rules and Schedule 1 of the 2016 SIAC Arbitration Rules).

Emergency arbitrations may give rise to heightened risks of problems (actual or perceived) being raised by aggrieved parties by way of challenge to an award under such procedures.^[7]

Interim awards and emergency awards are similar in that there is uncertainty in many jurisdictions as to whether such interim or emergency awards, not being ‘final’ awards, are unenforceable.^[8] As a result, many parties will prefer to seek interim relief from domestic courts. However, there is a potential problem in some jurisdictions where the court will refuse to grant relief if effective emergency relief is available from the relevant arbitral tribunal.^[9]

Awards supporting DAB decisions^[10]

An increasing number of construction contracts in international projects using one of the FIDIC suite of contracts, or other forms of contract, incorporate dispute adjudication boards (DABs) as a form of dispute resolution procedure to take place before resort to arbitration is permitted. Where a DAB has considered and ruled on an issue, the arbitration is a form of appeal from the DAB decision.

Frequently, a DAB will rule on an issue that has only temporary significance, albeit that the issue may be of great importance. An example is where a monthly interim payment certificate is (in the view of the contractor) measurably below the amount due for the work valued in that certificate.

In that situation, it is possible that the shortfall may be made good in a later interim payment certificate: in that situation, the cash flow problem suffered by the contractor may be limited in time.

If an arbitration tribunal considers what should be included in a particular interim payment certificate, its decision will be final as to what should be in that interim certificate, but will be interim in the sense that the tribunal will not necessarily be determining what the contractor will finally be entitled to for the work done.

This conundrum has caused difficulties in arbitrations considered by the courts in Singapore.^[11] The problem arose because in Singapore, as in other jurisdictions, provisional awards are not recognised and enforced: the courts enforce awards stating the final rights and obligations of the parties in respect of the matters with which they deal.

The solution adopted was to uphold an interim award declaring the amount due in an interim payment certificate, and a direction to the employer to make the payment promptly, and to grant recognition of that award as being final. Thus the court of appeal gave effect to a binding but non-final DAB decision.

The problem does not arise where the DAB has decided an issue that will not call for reconsideration later under the contract machinery. Thus, a decision that a particular instruction was a variation is a final decision on that issue, which could be the subject of a final award by an arbitral tribunal, even if the project is ongoing.

It is important to understand that the problem is to do with enforcement under legislative provisions in particular jurisdictions. The power of a tribunal to deal with such issues derives from the arbitration agreement appointing the tribunal, and any applicable arbitration rules.

Default awards

From time to time one party (usually the respondent) will decline to participate in an arbitration, or may withdraw from proceedings.

Where this happens in a court case, the court (if satisfied of due service of the proceedings upon the absent party) will simply issue a default judgment, perhaps without the necessity of any judicial consideration of the case. In court proceedings there is usually an available process for default judgments to be set aside if (for example) it later transpires that the proceedings were not duly served.

Arbitrations present different problems, because enforcement is not in the control of the body determining liability.

In respect of default awards, as with other awards but perhaps even more so, the tribunal should be astute to ensure that the award is enforceable.

To that end, the tribunal will have particular regard to the extent of its jurisdiction and to setting out the basis upon which it concludes that it has jurisdiction to enter upon a dispute and issue an award.

Again, in contrast to how a court might often proceed, tribunals generally regard it as appropriate to scrutinise with care the merits of claims put before them by the party appearing before them. It is not the role of the tribunal to rubber stamp the claim because the respondent has declined to participate. (Of course, the absent respondent may have an answer to the claim that is not apparent to the tribunal.)

Consent awards^[12]

Where parties come to terms by agreement, they will often seek a consent award from the tribunal. Article 33 of the 2021 ICC Arbitration Rules expressly makes provision for a consent award:

If the parties reach a settlement after the file has been transmitted to the arbitral tribunal in accordance with Article 16, the settlement shall be recorded in the form of an award made by consent of the parties, if so requested by the parties and if the arbitral tribunal agrees to do so.

The advantage to the parties is that such an award may ease enforcement of a settlement agreement if one party does not honour its part of that agreement.

Asked to issue such an award, a tribunal will normally scrutinise it to see if there are any problems or manifest errors that might affect its enforceability, and will also wish to ensure that any administrative details have been dealt with, not least ensuring that the financial aspects of the arbitration concerning the tribunal and any arbitral institution have been considered.

Time for issue of awards

Some institutional rules place a time limit within which the arbitral tribunal must issue its award. For example, Article 31.1 of the 2021 ICC Arbitration Rules imposes a six-month time limit. However, where there is such a time limit there is usually the option of it being extended.

In practice, few construction arbitrations are concluded within six months. Construction arbitrations tend to be document-heavy, and to involve significant amounts of factual and expert witness evidence, making such a time limit very hard to achieve.

The time taken by arbitrators to produce awards is often a matter of adverse comment, but the volume and nature of the evidence to be considered does make producing awards arduous. There is also an undoubted tendency for the appointment of arbitrators to be confined to selection from a small coterie whose workload is so heavy that delay in issue of awards is a frequent cause of complaint, but this problem has been recognised and the arbitral institutions are introducing methods to ameliorate the problem including requiring potential arbitrators to declare their existing commitments and reducing the amount paid to arbitrators whose awards are unacceptably delayed.

Contents of awards

When preparing an award, an essential task of the tribunal is to strive to the best of its ability to produce an award that will be enforceable. The requirements set out below are some of the requirements generally required for an award to be enforceable. Particular jurisdictions may have other additional requirements.^[13]

In modern practice, it is generally expected that awards will be in writing (unlike a court judgment), signed by each member of the tribunal (again, unlike a court judgment) and dated.

An award will normally record the names and addresses of the parties and of their representatives, which in construction arbitrations normally means their legal representatives.

The award will normally record the matters conferring authority upon the tribunal, that is to say the arbitration agreement and the particulars of appointment of the member or members of the tribunal.

The award will usually record at least the principal procedural stages of the arbitration.

The award should record the issues that the tribunal is called upon to decide. This is partly to make it clear that the tribunal has properly understood what those issues are, in order to ensure that there is no later challenge to the award upon the basis that the tribunal did not understand the issues before it, or has not resolved issues that it was required to resolve.

The award should contain reasons for its resolution of issues, but unlike a judgment in a common law court, findings of fact and the basis for findings of fact are seldom set out at length. And while legal conclusions are usually recorded (because awards do not have the same formal effect as legal precedents, and indeed are generally confidential and therefore not published), they are not set out in the depth and with the analytical reasoning that is expected, for example, of UK judges whose decisions are liable to be scrutinised by an appellate court and relied upon by third parties as statements of the law (this latter point is not relevant in the same way in civil law jurisdictions). In a paper published in 1988, the late Lord Bingham suggested the following reasons for giving reasons in an award:^[14]

• the parties are entitled to know why they have won or lost;
• a reasoned award is a safeguard against arbitrariness, private judgment or an irrational splitting of the difference;
• a reasoned award allows the parties to be guided by it in respect of their future commercial conduct between one another;
• a reasoned award can allow an appellate or supervisory court to review the decision effectively; and
• the giving of a reasoned judgment is a valuable intellectual discipline for the decision maker (he described this as a ‘half reason’).

The award (or where there is more than one award, at least one of the awards) should state clearly and unambiguously what remedies the tribunal is granting, if any.

A useful checklist for the contents of an award has been given by a distinguished international arbitrator:^[15]

• the parties and their representatives;
• the contract and the arbitration agreement;
• an overview of the dispute;
• the arbitral tribunal;
• procedural history;
• the issues raised in respect of the claim (and any counterclaim);
• relevant contractual provisions;
• relevant background or contextual matters;
• summary of the arguments of the parties;
• evidence and findings on factual issues;
• legal issues;
• conclusions on substantive issues;
• claims and arguments on relief;

• interest;

• costs; and

• disposition.

The decision-making process: dissenting awards?

Where a tribunal consists of three members rather than one, different tribunals have different methods of reaching their decision. Obviously, consultation is important, but with modern communications that does not necessarily involve face-to-face meetings. It is customary for the chair or president of the tribunal either to write the whole of the award or the greater part of it, but in complex construction arbitrations this would very often place an unrealistic and unjust burden upon the chair or president.

In public law arbitrations such as investment treaty arbitrations, dissenting awards are not infrequent, but they are rare in construction arbitrations. Not only are dissenting awards outside the ambit of expectation of most institutional rules, they are contrary to one of the expectations of the parties to commercial arbitrations, namely that the award or awards should be clear and unambiguous.

Institutional scrutiny

Some institutional arbitration rules, most importantly in the context of construction disputes, the ICC Arbitration Rules, require awards to be scrutinised and approved by the institution before issue.

While such scrutiny is liable to cause delay, it can be extremely useful. Institutions such as the ICC have enormous experience of jurisdictions around the world as to what is required of an award for it to be enforceable.

Challenges to an award

There are two overlapping concepts to be considered: a challenge to an award on the one hand and resistance to enforcement of an award on the other.

A challenge to an award will usually take place in the courts of the jurisdiction that is the seat of the arbitration. The grounds upon which a court will uphold a challenge will depend upon the laws of the jurisdiction in which it is situated. There is not space here to set out a comparison of the different approaches in different countries.^[16]

What can be said is that, generally, grounds that will justify resistance to enforcement of an award under the New York Convention (discussed below) will be grounds for a successful challenge to the award in a local court. The converse is by no means necessarily the case: local laws may justify the setting aside or annulment of an award on grounds that would not justify refusal to enforce an award. This can produce conflicts between jurisdictions, as noted below.

Enforcement of awards

Each country is likely to have its own jurisprudence as to the available methods of enforcement of domestic awards.

As far as the enforcement of international arbitration awards is concerned, by far the most important consideration is the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, signed in New York on 10 June 1958. There are now over 150 states that have contracted into the New York Convention. There are other significant treaties relating to the enforcement of awards, not least the International Centre for Settlement of Investment Disputes Convention and certain regional conventions – the Moscow Convention, the Panama Convention and the Riyadh Convention, among others. However, of the conventions concerning construction arbitration, the New York Convention is by far the most important.

Article I(1) is in very wide terms, and read on its own has the effect that an award made in any state, even if that state were not a party to the Convention, would be recognised and enforced by any other state that was a party, as long as the award satisfied the basic conditions set down in the Convention. However, Article I(3) has two reservations that states are permitted to adopt. The first is to limit the scope of the Convention to awards made in another state that is a party to the Convention (the reciprocity reservation). Roughly 50 per cent of states acceding to the Convention have availed themselves of the reciprocity reservation. The second is to declare that the Convention will only be applied to legal relationships that are considered as commercial under the national law of the state making such reservation (the commercial relationships reservation). Approximately one-third of states have availed themselves of this reservation.

There are formal requirements in the Convention: first that either the duly authenticated original award or a duly certified copy of the award is produced to the relevant court and that the original arbitration agreement or a duly certified copy of that agreement is also produced.^[17] However, there have been examples of some latitude being shown by some courts to these formalities.^[18] If the award or the arbitration agreement is not in the official language of the court in which recognition and enforcement is sought, certified translations are required.^[19]

Once the necessary documents have been supplied, the court will grant recognition and enforcement unless one or more of the grounds for refusal set out in the Convention are present.

There are seven separate grounds on which recognition and enforcement of a Convention award may be refused.^[20]

The first five are triggered by the party opposing recognition and enforcement.^[21] The opposing party (the party against whom the Convention is invoked) needs to prove that:

(a) The parties to the arbitration agreement … were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties subjected it or, failing any indication thereon, under the law of the country where the award was made; or

(b) 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

(c) 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 decision 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 recognised and enforced; or

(d) 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

(e) 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, the award was made.

It will be seen that each of these grounds is essentially concerned with the procedure:

• Was the tribunal properly constituted in accordance with a valid arbitration agreement?
• Was the arbitration conducted in accordance with due process?
• Did the tribunal answer all the questions put to it?
• Did it answer questions not put to it?

The Convention does not permit any review as to the merits of an award.

Even if one or more of the grounds are made out, the Convention does not require refusal of enforcement. Some countries are more likely than others to uphold awards. Thus, for example, the United States and the United Kingdom have a ‘pro-enforcement bias’,^[22] but this bias is not universal.

Two separate heads of refusal are vested in the ‘competent authority’ of the country where recognition and enforcement is sought. These are where the competent authority finds:^[23]

• the subject matter of the difference 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 that country.

English courts have considered the public policy exception on a number of occasions. In a decision of the English Court of Appeal, RBRG Trading (UK) Ltd v. Sinocore International Co Ltd,^[24] the following points were set out as being the approach of the English courts to the public policy exception:

• the public policy ground should be given a restrictive interpretation;
• where the arbitration tribunal had jurisdiction to determine an issue of illegality and had determined that there was no illegality on the facts, an English court should not allow the facts to be reopened, apart from, possibly, in exceptional circumstances;
• where there was no illegality under the governing law, but there was illegality under English law, public policy would only be engaged where the illegality reflected considerations of international public policy rather than purely domestic public policy;
• in considering whether and, if so, to what extent public policy was engaged, the degree of connection between the claim sought to be enforced and the relevant illegality would be important; and
• English law principles of illegality of contracts did not affect the principles to be applied when considering recognition and enforcement under the Convention.

A recent decision of the Privy Council emphasised that a court cannot use the guise of public policy as a reason to reopen issues relating to the meaning and effect of a contract or whether it complied with a regulatory or legislative scheme.^[25]

In countries with a ‘pro-enforcement bias’, courts are slow to refuse enforcement on either of these grounds.^[26]

Enforcement of awards that have been annulled or set aside

It might be thought that where an award has been set aside or annulled in the courts of the seat of an arbitration it would be difficult to enforce that award elsewhere. While that is generally the case where the set-aside has been upon grounds equating to Convention grounds for refusing recognition and enforcement, there are many cases where an annulled or set-aside award has been enforced elsewhere. This is a large and complicated subject.^[27]

Notes