The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly known as the New York Convention, was adopted by a United Nations diplomatic conference on 10 June 1958 and entered into force on 7 June 1959. The Convention requires courts of contracting states to give effect to private agreements to arbitrate and to recognize and enforce arbitration awards made in other contracting states. Widely considered the foundational instrument for international arbitration, it applies to arbitrations that are not considered as domestic awards in the state where recognition and enforcement is sought.
The New York Convention is very successful. Nowadays many countries have adopted arbitration laws based on the UNCITRAL Model Law on International Commercial Arbitration. This works with the New York Convention so that the provisions on making an enforceable award, or asking a court to set it aside or not enforce it, are the same under the Model Law and the New York Convention. The Model Law does not replace the NYC, it works with it. An award made in a country which is not a signatory to the NYC cannot take advantage of the Convention to enforce that award in the 169 Contracting States unless there is some bilateral recognition, whether or not the Arbitration was held under the provisions of the UNCITRAL Model Law.
International arbitration is an increasingly popular means of alternative dispute resolution for cross-border commercial transactions. The primary advantage of arbitration over court litigation is enforceability: an arbitration award is enforceable in most countries in the world. Other advantages of arbitration include the ability to select a neutral forum to resolve disputes, that arbitration awards are final and not ordinarily subject to appeal, the ability to choose flexible procedures for the arbitration, and confidentiality.
Once a dispute between parties is settled, the winning party needs to collect the award or judgment. If the loser voluntarily pays, no court action is necessary.[1] Otherwise, unless the assets of the losing party are located in the country where the court judgment was rendered, the winning party needs to obtain a court judgment in the jurisdiction where the other party resides or where its assets are located. Unless there is a treaty on recognition of court judgments between the country where the judgment is rendered and the country where the winning party seeks to collect, the winning party will be unable to use the court judgment to collect.
Summary of provisions
Under the Convention, an arbitration award issued in any other state can generally be freely enforced in any other contracting state, only subject to certain, limited defenses. These defenses are:
a party to the arbitration agreement was, under the law applicable to him, under some incapacity, or the arbitration agreement was not valid under its governing law;
a party was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings, or was otherwise unable to present its case;
the award deals with an issue not contemplated by or not falling within the terms of the submission to arbitration, or contains matters beyond the scope of the arbitration (subject to the proviso that an award which contains decisions on such matters may be enforced to the extent that it contains decisions on matters submitted to arbitration which can be separated from those matters not so submitted);
the composition of the arbitral tribunal was not in accordance with the agreement of the parties or, failing such agreement, with the law of the place where the hearing took place (the "lex loci arbitri");
the award has not yet become binding upon the parties, or has been set aside or suspended by a competent authority, either in the country where the arbitration took place, or pursuant to the law of the arbitration agreement;
the subject matter of the award was not capable of resolution by arbitration; or
enforcement would be contrary to "public policy".
Additionally, there are three types of reservations that countries may apply:
Conventional Reservation - some countries only enforce arbitration awards issued in a Convention member state
Commercial Reservation – some countries only enforce arbitration awards that are related to commercial transactions
Reciprocity reservation – some countries may choose not to limit the Convention to only awards from other contracting states, but may however limit application to awards from non-contracting states such that they will only apply it to the extent to which such a non-contracting state grants reciprocal treatment.
States may make any or all of the above reservations. Because there are two similar issues conflated under the term "reciprocity", it is important to determine which such reservation (or both) an enforcing state has made.
Parties to the Convention
As of February 2022, the Convention has 169 state parties, which includes 166 of the 193 United Nations member states plus the Cook Islands, the Holy See, and the State of Palestine. Thirty UN member states have not yet adopted the Convention. In addition, Taiwan has not been permitted to adopt the Convention (but generally enforces foreign arbitration judgments) and a number of British Overseas Territories have not had the Convention extended to them by Order in Council. British Overseas Territories to which the New York Convention has not yet been extended by Order in Council are: Anguilla, Falkland Islands, Turks and Caicos Islands, Montserrat, Saint Helena (including Ascension and Tristan da Cunha).
