Annulment and Court Intervention in International Commercial Arbitration

29 Pages Posted: 10 Nov 2011 Last revised: 8 Feb 2013

See all articles by Loic E. Coutelier

Loic E. Coutelier

Stanford University - Stanford Law School Center for Internet and Society

Date Written: August 15, 2011

Abstract

By choosing the arbitral forum, parties to a contract agree to have their disputes resolved by an independent third party rather than by national courts. However, national courts still play an essential role in modern international commercial arbitration by ensuring the smooth process and supplementing the parties’ failures to agree on various procedural points. One area that remains highly contentious is the annulment of awards – i.e., the decision of the courts of the seat of arbitration to invalidate the arbitral award – and the effect of that decision on the enforcement of the same award by other courts. Despite arbitration’s increased popularity, unforeseen issues have arisen and the enforcement of annulled awards has awaken old debates regarding the very nature of arbitration and the interplay with national Courts.

Very few countries have had to make a decision regarding the enforcement of vacated awards: they all embraced the idea that under certain circumstances, annulled awards should be granted exequatur. Interestingly enough, these courts used different justifications for enforcing the award. Some will do so if the annulment decision violates principle of fairness and justice. Others argue that an award should be deemed enforceable unless it was set aside based on international standards of annulment. The most innovative and most advanced theory proclaims that annulment should not have effects abroad as awards are not part of the courts’ system. As a result, the validity of the award should be left to the enforcing court only.

This article looks at the different positions adopted by the countries party to the New York Convention, only to confirm that no transnational approach to the issue of the international effectiveness of annulment decisions exists under the Convention. Although a growing majority of authors concludes that the absence of consensus on the New York Convention’s position vis-à-vis the enforcement of annulled awards warrants its revamping (if not its replacement), this article argues that such a drastic step is not necessary, especially if the Guide on the Convention currently being prepared by UNCITRAL provides for the dynamic interpretation that is needed.

Keywords: international arbitration, enforcement, annulment, New York Convention

Suggested Citation

Coutelier, Loic Emilien, Annulment and Court Intervention in International Commercial Arbitration (August 15, 2011). Available at SSRN: https://ssrn.com/abstract=1957278 or http://dx.doi.org/10.2139/ssrn.1957278

Loic Emilien Coutelier (Contact Author)

Stanford University - Stanford Law School Center for Internet and Society ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States

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