In this article, we examine how a party which has obtained an arbitral award in New Zealand can enforce it overseas under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention). We have previously discussed the enforcement options available to parties seeking to enforce arbitral awards in New Zealand, whether these awards are domestic or overseas.

Awards made in New Zealand but enforced overseas

A party may obtain an arbitral award in New Zealand but then seek to enforce it overseas. Examples of circumstances where parties may want to do this include where the arbitration took place in New Zealand because the arbitration agreement provided for arbitration in New Zealand. Alternatively, while one or both of the parties may be based overseas, their contractual obligations may have been performed in New Zealand or the subject matter of the dispute may have been most closely related to New Zealand. The requirements of Article 36 of Schedule 1 of the Arbitration Act (New Zealand) (Act) will apply.

Enforcement of awards under the New York Convention

The New York Convention applies to the recognition and enforcement of arbitral awards. It provides that the courts of contracting states shall give effect to arbitral awards made in other states. New Zealand is a contracting state.

Under Article III of the New York Convention, awards will be enforced according to the rules of procedure of the territory where the party is seeking to enforce the award. For example, New Zealand procedural rules govern the enforcement in New Zealand of an international arbitral award. However, the Convention does not permit states to impose substantially more onerous conditions or higher fees when enforcing a foreign award compared to a domestic award. At a policy level, this is intended to reduce barriers to enforcement of awards and to ensure that states do not seek to introduce protectionist measures to discourage overseas parties from enforcing arbitral awards against their domestic parties. This also supports the continued flow of international trade by ensuring that parties to cross-border contracts can enforce their arbitral awards without being required to comply with more stringent pre-conditions to enforcement compared to their domestic counterparties. 

Awards on the merits of a matter are typically capable of enforcement (unless, for example, one of the grounds to refuse enforcement applies) as discussed in our previous article. The position in relation to enforceability of interim awards is less clear. 

Process for enforcement

Because Article III of the Convention mandates that the enforcement process under the Convention is determined by the domestic law of the place in which it is being enforced, it is particularly important to check with local counsel as to any specific requirements for enforcement of the award. 

That said, at Article IV, the Convention sets out some conditions for the enforcement of an award. Under Article IV(1), when applying for recognition and enforcement, the applicant needs to supply the duly authenticated original award (or a duly certified copy), as well as the original agreement for arbitration (or a duly certified copy). If the award or agreement is not in an official language of the country in which it is being enforced, the applicant must also produce a certified translation of each. 

Grounds to refuse enforcement

The New York Convention has limited grounds to refuse recognition and enforcement. The respondent (the party opposing the application to enforce the award) must raise one or more of the following grounds set out in Article V(1) if it intends to rely on them: 

1. the parties to the arbitration agreement were under some incapacity, or the agreement is not valid under the law to which the parties have subjected it or the law of the country in which the award was made; 
2. the respondent was not given proper notice of the appointment of the arbitrator or the proceedings, or was otherwise unable to present their case; 
3. the award deals with matters beyond the scope of the submission to arbitration (although note that, if matters in the award beyond the proper scope can be separated from the remainder of the award, the award may still be enforced in part); 
4. the composition of the arbitral authority or the arbitral procedure was not in accordance with the parties’ agreement the law of the country in which the arbitration took place; or 
5. the award is not yet binding on the parties, or has been set aside or suspended by an authority of the country where the award was made. 

Under Article V(2) of the Convention, recognition and enforcement of an award may also be refused if the authority in the country in which recognition / enforcement is sought finds that: 

1. the subject matter of the dispute is not capable of settlement by arbitration under that country’s law; or 
2. the recognition and enforcement of the award would be contrary to the public policy of that country. 

As discussed in our previous article, these grounds are echoed in the Act. The fact that the Act mirrors the Convention in this regard is intended to ensure that the rules governing recognition and enforcement of arbitral awards remain consistent across borders, which provides predictability for parties seeking to enforce or oppose the enforcement of awards. While enforcement and recognition of awards is governed by the domestic law of the state in which the award is being enforced (per Article III of the Convention), and so Article 36 of the Act will not directly apply to awards enforced overseas, it is worth noting that the state’s domestic law may simply mirror the Convention. When interpreting these articles, courts have typically set few limits on the types of disputes which are capable of settlement by arbitration under Article V(2)(a), and most have imposed a narrow interpretation on the public policy ground [1]. As a result, it is rare for applications for refusal of recognition and enforcement which rely on these grounds to be successful. 

Timeframes for enforcement

The Convention does not itself set out any specific timeframe for enforcement of an award. This is therefore left up to the domestic law of the state in which the award is being enforced. In our previous articles we discussed the timeframes which apply where an award is being enforced in New Zealand. Where an award is being enforced overseas, parties ought to seek advice from counsel in the applicable jurisdiction. 

Further considerations

The Convention creates a broadly pro-enforcement approach to arbitral awards. It does this by streamlining the process to enforce awards and by establishing a maximum level of control over the process. That is, contracting states are not permitted to impose conditions for recognition and enforcement of awards which are more onerous than those set out in the Convention. They are, however, free to impose legal regimes which are more liberal than that of the Convention [2]. As the 2016 UNCITRAL Secretariat’s Guide to the Convention found, contracting states have typically interpreted and applied the Convention in a consistent manner, in conformity with the Convention’s pro-enforcement approach [3].

We are looking forward to seeing many of the topics in this series discussed at the upcoming AMINZ Construction Day at MinterEllisonRuddWatts. Click here to learn more and register.

Footnotes

[1] See e.g. Traxys Europe SA v Balaji Coke Industry Pvt Ltd [2012] FCA 276 at [94] – [96]; Parsons & Whittemore Overseas Co Inc v Société Générale De L’Industrie Du Papier 508 F 2d 969 (1974) at 974; Hebei Import & Export Corp v Polytek Engineering Co Ltd [1999] 2 HKC 205.  
[2] UNCITRAL Secretariat Guide on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (United Nations, 2016) at 1. 
[3] UNCITRAL Secretariat Guide on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (United Nations, 2016) at 4.