TY - JOUR
AU - Deshpande, Justice V., S.
AB - ALTHOUGH the New York Convention 1958 is primarily concerned with the recognition and enforcement of foreign arbitral awards, an arbitration award arises out of an arbitration agreement and is therefore regarded as a part of it. Russell1 has expressed this law in the following words: English law regards an arbitral award as inherently valid and enforceable whatever procedure has been adopted to enforce it, and indeed before ever the successful party has sought to enforce it. This is because it represents an agreement made between the parties, and is no more and no less enforceable than any agreement made between parties. The Supreme Court of India2 has also observed that: ‘The contract remained a part of the award.’ The New York Convention opens with Article I(1) which deals with awards as ‘arising out of differences between persons.’ It is because the parties in their arbitration agreement have agreed to refer to arbitration the ‘differences’ between persons that the award could result out of the arbitration agreement. Again, Article II of the Convention expressly deals with arbitration agreement and not with the award. The Court The reference in Article II(3) of the New York Convention to ‘[t]he court of a Contracting State when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article’ refers to the court which has jurisdiction over the subject-matter of the agreement. Such a court has been defined in section 2(c) of the Indian Arbitration Act 1940 and section 4 of the US Federal Arbitration Act 1925, as amended in 1970 to implement the Convention, as a court which has jurisdiction to decide the question forming the subject-matter of reference if the same had been the subject-matter of a suit. This court is located by reference to the law governing the arbitration agreement. The Proper Law of the Contract An arbitration agreement is a contract. The proper law of the contract may have to be found by invoking the principles of the conflict of laws. These principles contemplate two different methods of determining the proper law applicable to the contract. The first method is the traditional method where the ‘localising elements’ or the ‘connecting factors’ to use the expressions adopted by Dicey & Morris3 have to be sought. Once they are found they will point to the law which will be applicable as the proper law of the contract. Briefly, this law would be the lex causae which would be denoted by a variety of expressions such as lex patriae (law of the nationality), lex loci contractus (law of the country where the contract is made), lex loci solutionis (law of the country where the contract is to be performed or where a debt is to be paid), lex loci delicti (law of the country where a tort is committed), lex situs (law of the country where a thing is situated), lex loci actus (law of the country where legal act takes place) etc. Dicey & Morris observe that ‘the lex causae is a convenient shorthand expression denoting the law (usually but not necessarily foreign) which governs the question. It is used in contradiction to the lex fori, which always means the domestic law of the forum i.e. (if the forum is English) English law.’ It is because Article II(3) contemplates an action in a matter in respect in which the parties have made an agreement that the court in which such action would be lodged would be bound to be the court which has jurisdiction over such action in the light of the definition of the ‘court’ given in the Indian and the American statutes referred to above. It is this court which supports the arbitration and supervises over it. The arbitration proceeding cannot be effective and the arbitrator's award cannot become a rule of the court except with the support and supervision of this court. The Procedural Law The procedural law applicable to the arbitration proceeding is two-fold. On the one hand, the arbitration agreement may contain express or implied terms which lay down the procedure to be followed by the arbitrator. The First Schedule to the Indian Arbitration Act 1940 read with section 3 thereof enumerates some of the implied terms of an arbitration agreement. They correspond to the first three sub-sections of section 12 of the English Arbitration Act 1950. This part of the procedure is consensual and can be varied by the agreement of parties. At times this is referred to as a choice of the procedural law made by the parties. The expression ‘procedural law’ is not strictly applicable to these terms of arbitration agreement. They are not law. But a semblance of law is created when parties agree to apply the rules of an international arbitral institution to the arbitration when the arbitration agreement is an international one between nationals of two different States who are contracting States under the New York Convention. The International Chamber of Commerce is the prime example of such an institution. The rules of arbitration framed by it are incorporated in the international arbitration agreement because the parties agree to do so in their agreement. These rules give power to the arbitrator to determine the applicable law. They also give power to the ICC Court of Arbitration to fix the venue of the arbitration proceeding. These powers create the appearance of being exercised according to law. But these rules are not law. In contrast, there are the rules of procedural law which are embodied in the statutes relating to arbitration such as the Indian Arbitration Act 1940. Power is given to the court which has jurisdiction to support the arbitration by issue of processes to compel the appearance of parties and witnesses and to impose penalties for non-appearance (S. 43). The court also has power to remove the arbitrator (S. 5), to make interim orders such as an interim injunction or appointment of receiver etc. (Second Schedule to the Act) and the most important power of making the award a rule of the court (S. 17) or to set aside the award (S. 30). These are powers given to the court by statute. Without these powers the arbitration cannot be effective. These provisions are sometimes regarded as procedural because they are contained in the arbitration statute and Mustill & Boyd4 recognize that the ‘law of arbitration is mainly procedural in content.’ But the same learned authors immediately go on to say ‘But it does also deal with certain substantive aspects of the arbitration process in the sense that it creates and regulates the jurisdiction of the court to intervene in the event of an erroneous decision by the arbitrator’. This law being substantive cannot come out of an agreement of parties. It applies without any such agreement. Therefore the proper law applicable to an arbitration agreement is partly procedural and partly substantive. Article II(3) of the Convention also recognizes the power of the court having jurisdiction to refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed. This power to construe the arbitration agreement with a view to determine the scope of the agreement vests finally in the court even though the arbitrator may initially consider the scope of the arbitration agreement (S. 33 of the Arbitration Act, 1940).5 This court is called the court of the country of the origin of the award by van den Berg, meaning thereby the country in which, or under the law of which, the award was made.6 The Court of Enforcement of a Foreign Award Articles V and VI of the New York Convention make a distinction between two courts: (i) the court of the country of the origin of the award; (ii) the court which enforces a foreign award. The same award has thus two faces. It is a domestic award of the court in whose jurisdiction and under the law of which it is made. It is a foreign award in the court before whom the award has been brought for enforcement. The powers of these two courts are also different. Under Article V(1)(e) the court of the country of the origin of the award has the power to set aside the award. This power is recognized by Article VI. On the other hand, the rest of the provisions in Articles V and VI deal with the enforcement of a foreign award by a court which is not the court of the country of the origin of the award. The enforcing court has more limited powers. It cannot set aside an award. It can only refuse to enforce the award on the grounds specified in Article V excepting its clause (e). This distinction is stated by van den Berg in the following words: The courts have affirmed the principle that, according to the Convention, the courts of the country in which or under the law of which the award was made are exclusively competent to decide on an action for setting aside the award. The courts in the other contracting States may only decide under the Convention whether or not to grant enforcement of the award within their jurisdiction… The Convention itself does not apply to an action for the setting aside of the award. It is limited to the action for enforcement of a foreign award.7 When is an Award Domestic? Commonsense and the above provisions of the Convention tell us that the same award is domestic in the country or under the law of which it is made or is a foreign award in all other countries. Though the Convention deals only with the award when it becomes a foreign award and does not deal with the award when it is a domestic award, the Convention recognizes these two different faces of the same award. Normally, by virtue of Article I.1 of the Convention the foreign award is one which is made in the territory of a State other than the State where the recognition and enforcement of such awards are sought. But Article I.1 also says that the Convention ‘shall also apply to arbitral awards not considered as domestic awards in the State where their recognition and enforcement are sought.’ That is to say, some awards which are made in the State in which they are sought to be enforced may not be regarded as domestic awards by that State and would therefore be enforced as foreign awards. Thus, in Bergesen v. Muller8 the US Court of Appeals (2d Circuit) held that, although the arbitration has taken place in New York and was governed by the law of New York, the award made in New York was still a foreign award because both the parties were foreigners, even though the goods were transported from USA to Europe under the charter party which contained the arbitration clause. The French Court of Appeals9 also held that an award made in France between the Republic of Iran and an American company was not a French award in France and therefore an application for the setting aside of the award could not be made to a French court.10 On the other hand, the jurisdiction to set aside an award is recognized by Article V.1(e) of the Convention to vest only in a competent authority of the country in which or under the law of which that award was made. Therefore, except when the awards are not regarded as domestic in the country in which they were made in circumstances exemplified by the American and the French decisions referred to above, the country in which the award is made or under the law of which the award is made may regard these awards as domestic awards. In Oil & Natural Gas Commission Limited v. Western Company of North America11 the arbitration agreement, and therefore the award, was governed by the laws of India even though the parties had agreed to London being the venue of arbitration and even though the award was made in London. The award was therefore treated as a domestic award by the Supreme Court of India. This decision was strictly in accordance with the distinction between a foreign award and a domestic award implicit in Article V.1(e) and recognized in Article VI of the Convention. The Convention relates only to foreign awards and provides only for their recognition and enforcement subject to certain defences. But it does not provide for the setting aside of the award. This means that the national laws which provide for the setting aside of an award governed by the national laws are left unaffected by the Convention. The national laws could apply only to domestic awards and hence the arbitration agreement and the award governed by the laws of India were regarded as domestic and not governed by the Convention in the Indian Supreme Court decision. National Law The New York Convention recognizes the application of the national law to the international arbitration agreement and the award made under the national law. Though it also recognizes a choice of the applicable law by the parties, a hierarchy of the applicable laws has been made in Article V.1(a). This refers to the arbitration agreement suffering from causes of invalidity. Naturally, the causes of invalidity would be found in the law governing the arbitration agreement. It is that law under which the arbitration agreement has to be valid. Therefore Article V.1(a) says the parties to the agreement referred to in Article II were (1) under the law applicable to them, under some incapacity, or (2) the said agreement is not valid under the law to which the parties have subjected it, or (3) failing any indication thereon under the law of the country where the award was made. In this hierarchy, therefore, the first place is given to the applicable law. The second place is given to the law chosen by the parties and the third place is given to the country where the award was made. If the agreement is primarily governed by the national law which is the proper law of the contract then the award would also be so governed. It is only when the application of the national law is excluded by the Convention that it would cease to apply. The scheme of the Convention is that the award becomes a foreign award in the country in which the award was not made or under the law of which the award was not made. Article V.1(e) of the Convention recognizes the application to the binding nature of the award or the setting aside of the award of two sets of laws, namely the law of the country in which the award was made and the law under which the award was made. Subject to the exception of the award being not considered as domestic award, the award would be considered as domestic in the country in which it was made or in the country under the law of which it was made. For, in these two countries the award would be enforceable as a domestic award and would also be liable to be set aside as a domestic award. The enforceability of such an award otherwise than under the Convention is recognized in Article VII of the Convention which states that the provisions of the present Convention shall not deprive any interested party of any right he may have to avail himself of an arbitral award in the manner and to the extent allowed by law or the treaties of the country where such award is sought to be relied on. Such a right could be only under the national law which governs the award. The Convention thus recognizes two exceptions, namely (1) an additional way of enforcing the award outside the Convention, and (2) the setting aside of the award which, of course, would be outside the Convention. Sections 4 and 9(b) of the Indian Arbitration Act 1940 The New York Convention is implemented in India by the Foreign Awards (Recognition and Enforcement) Act 1961. The Convention as well as the implementing legislation is limited to the recognition and enforcement of a foreign award. But the Convention and the implementing legislation have to be understood in the background of the pre-existing law of arbitration in the country. The Arbitration Act 1940 has a larger scope in that it deals with the arbitration agreement, reference to arbitration, appointment and removal of arbitrators, making of the awards and setting aside of the awards. S. 47 of the Arbitration Act 1940 also expressly applies the Act to all arbitrations ‘save as is otherwise provided by any law.’ Therefore the new Act of 1961 is a special Act, while the Act of 1940 is a general Act. The special Act prevails over the general Act to the extent of inconsistency between the two. But the special Act does not purport to be comprehensive and therefore on those matters on which the special Act is silent the general Act would naturally apply. For instance, the special Act does not provide for any period of limitation for the enforcement of an award. But the general Act does so. Section 37(1) of the Arbitration Act 1940, the general Act, applies the provisions of the Limitation Act to arbitrations just as they apply to proceedings in courts. Therefore, unless the general Act applies to the enforcement of a foreign award in the matter of limitation on which the special Act is silent, the foreign award would have been enforceable without any law of limitation being applicable to it. But this is not so. The law of limitation applies to it because it is an award to which the general Act applies on a matter on which the special Act is silent. It was so held in Orient Middleeast Lines v. Brace Transport Corpn. of Monrovia.12 A similar view of the law of limitation being applicable to the enforcement of a foreign award under the New York Convention even though the English Arbitration Act 1975 was silent upon the matter was taken in England in Agromet v. Maulden13 by Orton J. following the opinion expressed by Mustill & Boyd.14 It is for this reason that the Act of 1961 itself recognizes the applicability of the general Act of 1940 to awards which are governed by the Indian law and would not therefore be foreign awards under the Convention and the Act of 1961. This is done by S. 4(1) of the Act of 1961 which states: a foreign award shall, subject to the provisions of this Act, be enforceable in India as if it were an award made on a matter referred to arbitration in India. This is also more explicitly done by section 9(b) of the Act of 1961 which provides ‘nothing in this Act shall apply to any award made on an arbitration agreement governed by the laws of India.’ Prior to the New York Convention 1958 and its implementation in India in 1961, the Geneva Convention of 1927 was implemented in India by the Arbitration (Protocol and Convention) Act 1937. But the Act of 1937 was also limited to the enforcement of foreign awards. It was also a special Act dependent on the general law of arbitration which existed outside it. Sections 46 and 47 of the Act of 1940 had the effect of applying that Act to all arbitrations except in so far as a special law may provide otherwise. Thus the general Arbitration Act 1940 applied even to international arbitrations in matters in which the special Act was silent. This was so held in Société D' Traction v. Kamani Engineering Co. Ltd.15 by the Supreme Court of India. It is on this basis that the decision in Oil & Natural Gas Commission v. Western Company of North America16 has to be understood. It held that the arbitration agreement and the award governed by the Arbitration Act 1940 of India would be treated as domestic by the Indian courts and the award would therefore be liable to be set aside by an Indian court because the Convention would not apply to the award which was a domestic award in India but a foreign award in the court of New York where it was sought to be enforced under the Convention. Criticism Answered The decision of the Supreme Court of India in Oil & Natural Gas Commission v. Western Company of North America16 has been criticised by a learned author who was the counsel for the Western Company which sought to enforce the award given in its favour and against the ONGC by the arbitrators in London.17 The award was a foreign award in the court at New York in which it was sought to be enforced under the New York Convention. Under Article VI of the Convention the Court in New York had the discretion either to enforce the award or to adjourn its enforcement if an application for the setting aside of the award has been made to the court in India as contemplated in Article V.1(e) of the Convention. But the New York Convention is limited to the enforcement of foreign awards. It does not exhaust the whole law of arbitration and the inherent jurisdiction of the courts. Prevention of multiplicity of judicial proceedings on the same subject leading to two inconsistent decisions of two courts is within the inherent jurisdiction of a court to prevent abuse of the process of court leading to injustice. For instance, even when under the relevant arbitration statutes proceedings in a court relating to the subject-matter of arbitration are not stayed, inherent jurisdiction exists in the court to prevent such a proceeding as it would lead to inconsistent decisions. In Roussel v. G. D. Searle & Co.18 the multiplicity of proceedings in different countries would have led to abuse of the process of court as the subject-matter of the competing litigation and arbitration was the same. The international commercial arbitration could not be allowed to be so defeated. One remedy was to obtain a stay under section 1(1) of the English Arbitration Act 1975. But a general remedy of an injunction to prevent the multiplicity of proceedings was also available to the court to restrain a party before it from instituting or prosecuting a parallel proceeding. Graham J. who decided this case held in favour of issuing an injunction to prevent multiplicity of proceedings. He first quoted from the Fifth Report of the Private International Law Committee dealing with the recognition and enforcement of foreign arbitral awards dated October 1976 as follows: Arbitration in international trade can be impeded if national courts are free to ignore arbitral agreements and awards and to assume jurisdiction over matters covered by arbitral agreements. He further observed it is beyond question that the duplication of proceedings such as are envisaged is highly undesirable if it can be avoided without hardship to either party … In this connection, Mr. Aldous, in dealing in particular with the inherent jurisdiction of the court to stay (i.e. apart from the Arbitration Act 1975) and now enshrined in S. 41(a) of the Judicature Act 1925, cited a number of cases, including in particular the Atlantic Star v. Bona Spes.19 I find this case helpful and, in particular, the conclusions of Lord Wilberforce at page 464 onwards where he states that the words ‘Frivolous and vexatious’ are struck between advantages to the plaintiff and disadvantages to the defendant.' He, therefore, issued an injunction against the party before him preventing him from prosecuting the parallel proceedings in another country on the subject-matter of the arbitration. Russell20 Dicey & Morris21 and Mustill & Boyd22 all recognize the inherent jurisdiction of the English courts to restrain a party to a foreign action from prosecuting that action where it is inequitable for him to do so. Other English decisions upholding such inherent power of the court are Cohen v. Rothfield23Charles Forte Investments Ltd. v. Amanda24 and Cadiz Waterworks Co. v. Bernett.25 The American courts also recognized such inherent jurisdiction in Cunard Steamship Co. Ltd. v. Salen Reefer Services,26 in which a parallel proceeding in Sweden was prevented by an injunction issued against the party before the US court. The decision of the Indian Supreme Court was therefore in line with the English and the American decisions when it issued an injunction against the Western Company of North America not to enforce the award which was a foreign award in New York until the application for setting aside the award as a domestic award in an Indian court was decided. The additional reason given by the Supreme Court was that even under the New York Convention Article V. 1 (e) the words ‘the award has not yet become binding on the parties’ showed that something had to be done after the making of the award to make it binding and this something was the confirmation of the award by the Indian court which was sought by the Western Company also. Before such confirmation therefore the foreign award could not be enforced in New York or in India. This is also the English law under section 3(1)(a) of the Arbitration Act, 1975. (a) Is this a breach of the Convention? Mr. Tupman has said of the Indian Supreme Court decision that – ‘not only is the judgment clearly incorrect as a matter of law, but it also amounts to a serious breach of India's international obligation under the New York Convention.’ This criticism ignores the fact that the New York Convention itself recognizes the distinction between the jurisdiction of the court of the country of the origin of the award to set aside the award and the jurisdiction of other courts to enforce the same award as a foreign award. The conflict between these two jurisdictions is envisaged in Article VI of the Convention but the discretion is given to the enforcing court to enforce the foreign award without adjourning the enforcement until the decision on the application for the setting aside of the award is given by the court in the country of the origin of the award. But the Convention is not exhaustive. For instance, it is silent regarding the power of the court to issue interim orders such as orders of stay etc. But the laws of most of the States which are parties to the New York Convention provide separately for the powers of the court to issue such interim orders. When such power was doubted the legislature of the State of New York changed the law and added a sub-paragraph to S. 7502 of CPLR. This sub-paragraph now enables a court to issue an attachment or a preliminary injunction in connection with an arbitrable controversy ‘only upon the ground that the award to which the applicant may be entitled may be rendered ineffectual without such provisional relief.’ Similar provisions have been made in the laws of many Convention countries such as Australia, Israel, Japan, Italy, West Germany, India, Nigeria, Kuwait, Sweden and Switzerland. Such alternative remedies cannot be said to be a breach of the New York Convention. (b) Is this double-exsequatur? The second criticism is that the Indian Supreme Court has reimposed the double exsequatur on any foreign claimant seeking to enforce an award rendered outside India which is subject to Indian law. This criticism is contrary to the Convention itself. Article III of the Convention requires each Contracting State to recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the following articles. There shall not be imposed substantially more onerous conditions, or higher fees or charges on the recognition of enforcement of arbitral awards to which this Convention applies than are imposed on the recognition or enforcement of domestic arbitral awards. Under Article IV of the Convention the award has to be filed in the court. It is here that the difference between the court enforcing the foreign award and the court before which an application for the setting aside of the same award is pending arises. While a foreign award is enforced by a foreign court, without having any application for setting aside the award before it, the same award cannot be enforced in the court of the country of the origin of the award without first disposing of the application for the setting aside of the award. The priority is given to the enforcement in the foreign court enforcing the award as a foreign award. But priority is given to the consideration of the application for the setting aside of the award in the court of the country of the origin of the award. The reason is that this latter jurisdiction is exercised under the domestic law of the country of the origin of the award while the former jurisdiction is exercised under the Convention. That the two jurisdictions would be differently exercised is recognized by Article III of the Convention. The only limitation imposed by it is that the conditions on enforcement of the award shall not be more onerous in the country of the origin of the award than the conditions for the recognition and enforcement of the domestic arbitral awards. The application for the setting aside of the award is made on the basis that the award is a domestic award. Under section 17 of the Arbitration Act 1940 a domestic award is not enforced unless the application for the setting aside of the award is disposed of. This is precisely what was ordered by the Supreme Court and this is in accordance with Article III of the Convention. There was thus no reimposition of double-exsequatur. (c) Separate scope of Articles III and VI of the Convention The third criticism is that the discretion to postpone the enforcement is given to the court enforcing the foreign award and not to the court in which the same award is domestic award. This criticism is answered by the difference in the scope of Articles III and VI of the Convention. Article III recognises the court in which the award is enforced as a domestic award while Article VI applies to the court in which it is enforced as a foreign award. Therefore there is no violation of the spirit of Article VI. (d) Irreparable injury The fourth criticism is that there was no irreparable injury to the ONGC but there was considerable harm to the Western Company. The irreparable injury according to the Supreme Court was that, first, the award would be enforced even before it had become binding on the parties. The word ‘yet’ used to qualify the words ‘become binding’ led the Supreme Court to believe that something had to be done to the award after it was delivered to make it binding. Secondly, the New York Court would come to the conclusion that the award was valid when it enforced it. In that event an action for restitution in New York would not be possible by the ONGC because restitution is available only when the judgment enforcing the award was shown to be reversed or varied. The New York court would not grant restitution to the ONGC if the ONGC succeeded in getting the award set aside because the New York court would not be bound by the decision of the Indian court setting aside the award. Therefore, if the ONGC were made to pay under the award in the court at New York and then the award was set aside by the Indian court, there would be no remedy for the ONGC to recover back the money from the Western Company. A suit to recover the money based on the Indian decision would be met by the answer that the American decision was contrary to the Indian decision and the American court would be bound by the American decision and not by the Indian decision. (e) Reciprocity Mr. Tupman says: For years successful Indian claimants have taken advantage of the expedited procedures under the New York Convention to enforce awards rendered in India or under Indian law without first having to have them confirmed by an Indian court. Yet the Indian Supreme Court's judgment in Western denies the same advantage to claimants that are nationals of other States parties to the Convention. This not a correct statement of fact or law. If Indian awards were enforced as foreign awards in foreign courts under the Convention, reciprocity requires Indian courts also to enforce foreign awards in India in the same way under the Act of 1961. But an Indian award in India is liable to be set aside by the Indian court outside the Convention and under sections 17, 30 and 33 of the Indian Arbitration Act 1940. In the Western case, the Indian Supreme Court did not deny reciprocity to Western because the Indian Supreme Court dealt with the Indian award under the Indian law and not under the Convention at all. Reciprocity under Article XIV of the Convention is contemplated in regard to enforcement of foreign awards between countries both of whom are enforcing foreign awards. No reciprocity is contemplated in the Convention between a country enforcing a foreign award and a country entertaining an application for the setting aside of an award before confirming the award because the award is a domestic award of that country which is the country of the origin of the award. The conclusion arrived at by Mr. Tupman that reciprocity should hereafter be denied to the enforcement of Indian awards by foreign courts does not, therefore, follow. A further note of caution is necessary. The Convention itself regards an award to be domestic in the country of the origin of the award. Such country may be a country in which an award is made or a country under the law of which the award is made.27 But the place of arbitration is often fortuitous and the country of the place of arbitration may not regard an award made there as a domestic award. But a country under the law of which the award is made would generally regard the award as a domestic award as was done by the Indian Supreme Court in the Western case. This jurisdiction is recognized by the Convention to exist outside the Convention. There can be no reciprocity between these two different jurisdictions. The criticism regarding lack of reciprocity is therefore not based on correct premises. Conclusions The analysis of the treatment of arbitration agreements and awards involving foreign elements in the New York Convention 1958 leads to the following conclusions namely: The complete process of the formation of the arbitration agreement, the operation of the agreement and the award resulting therefrom are all subject to the proper law of contract consisting of the main contract and its arbitration clause or the arbitration agreement alone. This proper law of contract is objectively determined by the ‘localising elements’ or ‘the connecting factors’ which attract the proper law to the transaction or contract involving a foreign element under the conflict of laws rules. If the proper law is divisible into (a) substantive law, and (b) procedural law then the so-called procedural law has to be divided into (i) the terms of the arbitration agreement binding on the parties which may be further given effect to by law which can be contracted out, and (ii) the mandatory provisions of law which cannot be contracted out. The territorial and subject-matter jurisdiction of the court supporting and supervising the arbitration which cannot be ousted by agreement of parties makes the arbitration agreement and the award known as belonging to the country of the origin of the agreement and the award. The object of the New York Convention is to make this award enforceable in countries other than the country of the origin of the award without touching the jurisdiction of the country of the origin of the award to enforce it after considering any application for the setting aside of the award. While the New York Convention deals with the recognition and enforcement of foreign awards, it leaves out of its scope the jurisdiction of the courts of the country of the origin of the award to set aside the award or to enforce it. Inevitably, the award has two faces. On the one hand, it is a foreign award for the purpose of recognition and enforcement in the courts of all the participating countries other than the courts of the countries of the origin of the award, such countries being the country in which the award was made or the country under the law of which the award was made. On the other hand, the award is a domestic award in the country in which it is made or under the law of which it is made governed by the domestic law of arbitration and not by the New York Convention. A conflict of jurisdictions leading possibly to two inconsistent decisions between a court enforcing the award as a foreign award and a court of the country of the origin of the award considering an application for the setting aside of the award before it is enforced is avoided in two ways. First, the court enforcing the award under Articles IV, V and VI of the Convention may exercise the discretion under Article VI to adjourn the decision on the enforcement of the award till the decision on the application for the setting aside of the award by the court of the origin of the award. Secondly, the court of the country of the origin of the award may issue a temporary injunction against the party seeking the enforcement of the award as a foreign award in another country restraining him from enforcing the award till the decision of the court issuing the injunction on the application for the setting aside of the award. These two courts éxercise these powers independently of each other. This duality of jurisdictions is inevitable because the New York Convention does not deal with the jurisdiction of the court of the country of the origin of the award to set aside the award when jurisdiction is given to it by the rules of conflict of laws and is thus rooted in justice and a respect for the internal sovereignty of the country of the origin of the award and is justifiable under public international law also. Footnotes 1 Russell on Arbitration (20th edition) pp. 357–358. 2 Continental Construction Co. Ltd. v. State of M.P. AIR 1988 SC 1166. 3 Dicey & Morris on Conflict of Laws (11th edition), Part I. 4 Mustill & Boyd, Commercial Arbitration in England, (2nd edition), p. 121. 5 Russell on Arbitration (20th edition) pp.91–92; Mustill & Boyd, op.cit., p. 8, and Chitty on Contracts (26th edition) para. 1068. 6 The ICCA Yearbook on Commercial Arbitration, Volume XIV (1989) p. 532. 7 (1989) XIV ICCA Yearbook on Commercial Arbitration, p. 595. 8 701 F.2d 928 (1983). 9 Commander of the Air Forces of Iran v. Bendone Derossi International, decision of 5 May 1987 – 1987 Journal du droit international 964, excerpts in English in XIV Yearbook Commercial Arbitration 629 (1989). 10 (1989) XIV ICCA Yearbook on Commercial Arbitration, pp. 627–628. 11 AIR 1987 SC 674. 12 AIR 1986 Gujarat 62. 13 [1985] 2 All E.R. 436. 14 Mustill & Boyd, op. cit., p. 418. 15 AIR 1964 SC 558. 16 AIR 1987 SC 674. 17 Michael Tupman ‘Staying Enforcement of Arbitral Awards under the New York Convention’, 1987 Arbitration International, p. 209. 18 [1978] 1 Lloyd's Rep. 225. 19 [1974] A.C. 436. 20 Russell on Arbitration (20th edition) p. 297. 21 Dicey & Morris on Conflict of Laws (11th edition), Chap. XIII. 22 Mustill & Boyd, op. cit, p. 461. 23 [1919] 1 K.B. 410, 415. 24 [1963] 2 All E.R. 940. 25 (1874) LR 19 Eq. 182. 26 Civil Action No. 85-7365, US Court of Appeals, 2d Circuit. 27 van den Berg in XIV ICCA Yearbook on Commercial Arbitration (1989), p. 595. © 1991 LCIA
TI - Jurisdiction Over ‘Foreign’ and ‘Domestic’ Awards in the New York Convention, 1958
JF - Arbitration International
DO - 10.1093/arbitration/7.2.123
DA - 1991-06-01
UR - https://www.deepdyve.com/lp/oxford-university-press/jurisdiction-over-foreign-and-domestic-awards-in-the-new-york-rsB2BPCXYx
SP - 123
EP - 136
VL - 7
IS - 2
DP - DeepDyve
ER -