International corporations enter into contracts with different entities throughout the world. At times, disputes arise, leading to arbitration. The arbitrator issues an award when arbitrating a disagreement. The New York Convention of 1958 assists in enforcing awards rendered in international arbitration proceedings. Understanding the Convention helps ensure success in the complicated and challenging process of enforcing these awards. This article will give an insight into the steps involved in executing an award and the power of the New York Convention.
The Importance of The New York Convention
The New York Convention of 1958 is one of commercial arbitration’s most important international treaties. It provides a framework for the recognition and enforcement of foreign arbitral awards. The Convention has been ratified by over 160 countries, making it a truly global instrument. Countries that are signatories to the Convention can enforce arbitral awards rendered in one country, according to the Convention’s provisions. This is an essential mechanism for international corporations that engage in cross-border business because it allows them to obtain an enforceable judgment without having to litigate in different countries’ courts. For more information on differentiating judgments and awards, please visit Arbitration Award vs. Judgment – Transnational Matters.
The Convention also establishes a simple and effective procedure for recognizing and enforcing foreign awards. This procedure is known as the “New York Convention regime.” Under this regime, parties can apply directly to the country’s court where they want to enforce the award. The court will have to examine the award’s validity and compliance with the Convention’s provisions. If the award meets the requirements, it will be recognized and enforced as if it were a local judgment. This regime allows international corporations to avoid the lengthy and costly process of seeking enforcement through different countries’ legal systems.
One of the critical features of the Convention is the legal protection it provides to foreign arbitral awards. According to the Convention, an award made in a country that is a signatory to the Convention “shall be recognized as binding and, upon application in writing to the competent authority, be enforced in any other Convention country.” This means that the award will have the same legal force and effect as a local judgment. A broad range of countries worldwide enforce and recognize this award as well.
How To enforce the Award Under the New York Convention
To enforce an award, one must first determine the country where the award was rendered. Generally, it takes place where the assets belonging to the wrongdoer are located. Thus, a party seeking to enforce an arbitral award has to identify if the defendant has assets and their location. This enables them to commence the enforcement proceedings in a local court.
The most critical aspect of enforcing an award is to verify if the award is capable of enforcement. This is known as the “Recognition or Enforcement Process.” If a local court recognizes the award, it becomes enforceable, like a court judgment. Therefore, a party seeking to enforce an award must provide the court with relevant procedural or substantive documents, the award itself, and any additional documents requested by a local court.
The Process of Enforcement Differ Based on the State
Enforcement proceedings differ based on the state and can be either through judicial or non-judicial methods. In a judicial enforcement process, the award becomes an enforceable judgment that a local court can enforce. In contrast, non-judicial options include asset seizure or attachment to which the award creditor attempts to seize and sell the debtor’s property to satisfy the award.
The most significant benefit of the New York Convention for international corporations is the extent of recognition and enforcement worldwide. The Convention has over 160 signatory states, making it a nearly universal instrument. It defines the grounds for denying the recognition and enforcement of foreign awards. It is easy to enforce an award in a state that has signed the Convention, and the overall process is streamlined. Thus, this shows the power of the New York Convention.
The Convention also sets out the requirements for foreign awards to be enforceable. For instance, it ensures that the award is binding on the parties by the laws they have expressly committed and ensure that the losing party was legally notified of the proceedings. Moreover, the Convention establishes several criteria that allow for challenging an award, including the failure to follow the required procedural elements. For more information on the New York Convention, please visit The New York Convention » New York Convention
International corporations face multiple challenges when dealing with foreign disputes, particularly in enforcing an award outside their home country. The New York Convention of 1958 provides a universal framework for enforcing foreign awards and streamlines proceedings across the globe. The party seeking to enforce an award should understand the requirements set out by the Convention, including determining the country where the award was rendered and identifying the necessary documents to present for recognition of an award. Following this, they can proceed with either non-judicial or judicial enforcement methods, depending on the enforcing state. Overall, the power of New York convention assists in creating an efficient, cost-effective, and secure process for international corporations seeking to enforce their arbitration awards.