Enforcing A Foreign Arbitration Award
The world is starting to become a smaller place due to enhancements in technology. We are now easily able to communicate with people across the world and that has led to changes in the global economy. There has been an increase of international business due to the increased ease in communications.
Naturally, there has been an increase in arbitration because usually arbitration is cheaper than litigation. Another reason for the increased usage of arbitration is that it can be faster than litigation. Arbitration is also more flexible than litigation because the participants don't need to work around the court's calendars.
This increase in arbitration has left some wondering how you can enforce a foreign arbitration award in the United States. In order for a foreign arbitration award to be recognized and enforced in the United States, the arbitration award must be binding in the foreign country where the decision was made by the arbitration panel. These requirements were set out in the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which is also known as the New York Convention.
In order for the New York Convention to apply, you need to ensure that the arbitration was done in one of the contracting states. A list of all of the contracting states can be found on the New York Convention website. There are currently 156 sovereign states that are currently parties to the New York Convention. The New York Convention has guidelines that can help determine whether or not the foreign arbitration award is final.
Although, there are many types of arbitral awards that are unenforceable, there are still many decisions that can be enforced by domestic courts. The first type of award that domestic courts will generally recognize and enforce is a money award. The second type of award that domestic courts will enforce is an injunction, which is an order that compels or prohibits someone from doing a particular act. A party who is seeking a confirmation of the foreign arbitration award must show that there is an immediate need for the court to maintain the 'status quo' while an underlying claim is still in dispute.
If there is a foreign arbitration award, then in most circumstances it is characterized by domestic courts as a "summary proceeding." The reason is that the foreign arbitration award is domesticated (i.e., converted) and it becomes a final decision. Under the New York Convention, if a party meets all of the requirements and shows there is no reason for the domestic court to not recognize the award, then the court must recognize and enforce the award. The party seeking to enforce the award must also submit documents. For example, it must provide: (1) a duly authenticated original award or certified copy; (2) the original agreement to arbitrate or a certified copy; and (3) a duly certified translation of the foreign arbitration award if the original award is in a different language from the official language of the country. By following some of these requirements, it makes it possible for a prevailing party to enforce the foreign arbitration award. However, there are several reasons why a court should refuse to enforce the foreign arbitration award.
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