Enforcement of Arbitration Agreements and International Arbitral Awards

The enforcement of arbitration agreements and international arbitral awards is a crucial aspect of any business transaction that involves international parties. In a globalized world, where businesses have a reach far beyond their home countries, resolving cross-border disputes through international arbitration has become the norm. However, the efficacy of international arbitration depends largely on the enforcement of arbitral awards, which is determined by the laws of the jurisdiction where the award is to be enforced.

Enforcement of Arbitration Agreements

Arbitration agreements are contracts between parties to a dispute that require them to submit their dispute to arbitration, rather than resolving their dispute through the courts. In international transactions, arbitration agreements are often included in contracts to avoid the uncertainty and potential disadvantage of litigating in foreign courts.

The enforcement of arbitration agreements is governed by the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which has been ratified by over 150 countries. According to the New York Convention, a court in a signatory country is required to recognize and enforce an arbitration agreement, unless the agreement is invalid or the dispute is not capable of being settled by arbitration.

The courts of non-signatory countries, however, are not obligated to recognize and enforce arbitration agreements. Thus, before entering into an international transaction, parties should ensure that the country where the dispute may arise is a signatory to the New York Convention or has its own laws recognizing and enforcing arbitration agreements.

Enforcement of International Arbitral Awards

Once an arbitral tribunal has rendered an award, the next step is to enforce it. The enforcement of international arbitral awards is governed by the New York Convention, which requires courts in signatory countries to recognize and enforce foreign arbitral awards as if they were final decisions of the court.

However, the enforcement process can be complicated and time-consuming, particularly if the losing party refuses to comply with the award. In such cases, the victorious party may need to resort to legal proceedings to enforce the award. In some cases, the courts of the country where enforcement is sought may refuse to enforce the award if it violates their public policy.

Conclusion

Enforcement of arbitration agreements and international arbitral awards is a complex process that requires careful consideration of the laws of the country where the dispute may arise. Parties to international transactions should ensure that they include valid arbitration agreements in their contracts and choose a jurisdiction that recognizes and enforces such agreements. Furthermore, parties should be prepared to enforce arbitral awards, if necessary, to ensure that the benefits of international arbitration are fully realized.