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FORA NON CONVENIENS FOR ENFORCEMENT OF ARBITRAL AWARDS AGAINST STATES

Published online by Cambridge University Press:  02 April 2014

Ben Juratowitch
Ben Juratowitch*
Affiliation:
Partner in the International Arbitration Group of Freshfields Bruckhaus Deringer, Paris, Lecturer at the University of Paris V and Visiting Fellow at the London School of Economics, [email protected].
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Abstract

In Figueiredo Ferraz v Peru the US Court of Appeals, Second Circuit, deployed the doctrine of forum non conveniens to decline to enforce an arbitral award against Peru. The award had been rendered in Peru and the successful party in the arbitration sought to enforce it against Peru's assets in New York. This article argues that, contrary to the Second Circuit's approach, when the merits of a dispute are decided in an arbitration seated in one jurisdiction and the arbitral award is then presented to a court in another jurisdiction for enforcement against the award debtor and its assets within the jurisdiction of that court, neither forum non conveniens nor any rule performing the same function should arise.

Keywords

arbitrationaward enforcementFigueiredo Ferraz v Peruforum non conveniensNew York ConventionPanama Convention
Type
Shorter Articles and Notes
Information
International & Comparative Law Quarterly , Volume 63 , Issue 2 , April 2014 , pp. 477 - 490
Copyright
Copyright © British Institute of International and Comparative Law 2014 

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References

1 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (adopted 10 June 1958, entered into force 7 June 1959) 330 UNTS 3 (New York Convention).

2 665 F 3d 384 (2nd Cir 2011).

3 ibid 386.

4 Piper Aircraft Co v Reyno 454 US 235, 241 (1981) quoting from Koster v (Am) Lumbermans Mut Cas Co 330 US 518, 524 (1947). See Sinochem International Co Ltd v Malaysia International Shipping Corp 549 US 422, 429 (2007) and American Dredging Co v Miller 510 US 443, 447–8 (1994). See also the factors to be taken into account by a court in exercising its discretion, listed in Gulf Oil Corp v Gilbert 330 US 501, 508–9 (1947).

5 Gulf Oil (n 4) 508–9.

6 Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460, 476 (HL).

7 Club Mediterranée v Wendell [1989] 1 NZLR 216 at 219.

8 Workers’ Compensation Board v Amchem Products Inc [1993] I SCR 897 at 931.

9 Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197, 247–55; Voth v Manildra Flour (1990) 171 CLR 538, 31, 40, 51, 53; Regie National des Usines Renault SA v Zhang (2002) 210 CLR 491, para 95.

10 Voth v Manildra Flour (n 9) 44.

11 Figueiredo Ferraz v Peru (n 2) 388.

12 ibid.

13 ibid.

14 Organization of American States, Inter-American Convention on International Commercial Arbitration (adopted 30 January 1975, entered into force 16 June 1976) 1438 UNTS 245 (Panama Convention).

15 Federal Arbitration Act, 9 USC section 305 (2006).

16 Figueiredo Ferraz v Peru (n 2) 392.

17 ibid.

18 ibid.

19 ibid.

20 ibid 384 n 10.

21 On the potential difference between ‘convenient’ in English and ‘conveniens’ in Latin, see Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197, 249–50.

22 New York Convention art V(2)(b).

23 Panama Convention art 5(2)(b).

24 See Renusagar Power Co Ltd (India) v General Electric Co (US) Vol XX (1995) Yearbook Commercial Arbitration at 681, AIR 1994 SC 860. See also N Blackaby et al, Redfern and Hunter on International Arbitration (5th edn, OUP 2009) 658, para 11.107.

25 Richardson v Mellish [1824] 130 ER 294, 252 (CP).

26 But see the discussion in Soleimany v Soleimany [1999] QB 785, 797 (EWCA).

27 508 F 2d 969, 974 (2nd Cir 1974). See also, more recently, Chevron Corporation and Texaco Petroleum Company v Republic of Ecuador Civil Action No 12-1247 (JEB) 8, (Dist Ct DC 2013) (Boasberg, J): ‘The party resisting confirmation bears the heavy burden of establishing that one of the grounds for denying confirmation in Article V applies.’

28 Parsons & Whittemore Overseas Co (n 27) 974 (emphasis added).

29 New York Convention art V(1):

Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that:

  1. (a)

    (a) The parties to the agreement referred to in article II were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or

  2. (b)

    (b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or

  3. (c)

    (c) The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or

  4. (d)

    (d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

  5. (e)

    (e) The award has not yet become binding, on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

30 New York Convention art V(2):

Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that:

  1. (a)

    (a) The subject matter of the difference is not capable of settlement by arbitration under the law of that country; or

  2. (b)

    (b) The recognition or enforcement of the award would be contrary to the public policy of that country.

31 The International Commercial Disputes Committee of the Association of the Bar of the City of New York, Lack of Jurisdiction and Forum Non Conveniens as Defenses to the Enforcement of Foreign Arbitral Awards (2005) 18. See also Figueiredo Ferraz v Peru (n 2) 398 (Lynch J dissenting).

32 Yusuf Ahmed Alghanim & Sons v Toys ‘R’ Us 126 F 3d 15, 20 (2nd Cir 1997). See Figueiredo Ferraz v Peru (n 2) 396-7 (Lynch, J dissenting). See also TermoRio SA ESP v Electranta SP 487 F 3d 928, 935 (DC Cir 2007): courts ‘may refuse to enforce the award only on the grounds explicitly set forth in Article V of the Convention’.

33 New York Convention art III; Panama Convention art 4.

34 International Commercial Disputes Committee (n 31), 19 (emphasis in original). See the discussion of the relevant drafting history of this article of the New York Convention in Park, W and Yanos, A, ‘Treaty Obligations and National Law: Emerging Conflicts in International Arbitration’ (2006) 58 Hastings Law Journal 251, 262–5Google Scholar.

35 American Dredging (n 4) 453; Figueiredo Ferraz v Peru (n 2) 392.

36 Figueiredo Ferraz v Peru (n 2) 392.

37 311 F 3d 488 (2nd Cir 2002). But see Figueiredo Ferraz v Peru (n 2) 398–9 (Lynch J dissenting): ‘there are substantial reasons to think that Monegasque was wrongly decided.’ Although Lynch J acknowledged that it was binding on him, he went on to explain why he thought that it was wrong.

38 Monegasque (n 37) 496.

39 ibid 494.

40 ibid 494–5.

41 ibid 500.

42 Piper Aircraft (n 4) 241; American Dredging (n 4) 453–5.

43 Sinochem International Co (n 4) 425 and 432 (emphasis added).

44 Figueiredo Ferraz v Peru (n 2) 394–5.

45 The authorities relied upon were Pollux Holding Ltd v Chase Manhattan Bank 329 F 3d 64 (2nd Cir 2003); Piper Aircraft (n 4); Norex Petroleum Ltd v Access Industries Inc 416 F 3d 146 (2nd Cir 2005); Alcoa Steamship Co v M/V Nordic Regent 654 F 2d 147 (2nd Cir 1980); TMR Energy Limited v State Property Fund of Ukraine 411 F 3d 296 (DC Cir 2005); Louisiana Power & Light Co v City of Thibodaux 360 US 25 (1959).

46 Figueiredo Ferraz v Peru (n 2) 390.

47 cf Melton v Oy Nautor Ab 161 F 3d 13 (9th Cir 1998) (Tashima J dissenting).

48 See Figueiredo Ferraz v Peru (n 2) 405 (Lynch J dissenting). This was the approach taken by a bench of the DC Circuit that included Judge (now Chief Justice) Roberts in TMR Energy (n 45) 303–4. Having so held, in the third and final endnote to the judgment, the DC Circuit expressly declined to decide the submission made by the award creditor that Monegasque was wrongly decided and that the doctrine of forum non conveniens ‘has no place in an action to enforce an arbitration award’.

49 Figueiredo Ferraz v Peru (n 2) 392.

50 van den Berg, AJ, The New York Arbitration Convention of 1958: Towards a Uniform Judicial Interpretation (TMC Asser Institute 1981) 18Google Scholar and more generally at 17–19.

51 ibid 18.

52 See Energy Transport Ltd v MV San Sebastian 348 F Supp2d 186, 198-9 (Dist Ct NY 2004) and Bowman, John, ‘The Panama Convention and its Implementation under the Federal Arbitration Act’ (2000) 11 American Review of International Arbitration 1Google Scholar, 36–37. Cf section 202 of the Federal Arbitration Act.

53 In addition to the cases in the Second Circuit, see Melton v Oy Nautor Ab (n 47), where the trial court relied on forum non conveniens to dismiss an application to confirm an arbitral award and the Ninth Circuit found that the trial court had not abused its discretion. It further held that the appellant's argument that ‘the New York Convention precluded application of forum non conveniens’ was inadmissible because it had not been raised in the trial court. Tashima J dissented.

54 See eg Duke Energy International Peru Investments No1 Ltd v Republic of Peru Civil Action No 11-1602 (Dist Ct DC 2012); Thai-Lao Lignite (Thailand) Co v Government of the Lao People's Democratic Republic 10 Civ 5256 (SDNY 2011); Constellation Energy Commodities Group Inc v Transfield ER Cape Ltd 10 Civ 4434 (SDNY 2011); Schneider (as Insolvency Administrator of Walter Bau AG) v The Kingdom of Thailand 10 Civ 2729, 17-24 (SDNY 2010), which was the subject of an unsuccessful appeal on another point but no appeal at all on the refusal to dismiss on grounds of forum non conveniens; Schneider v Kingdom of Thailand No 11-1458, 5 (2nd Cir 2012); Venture Global Engineering LLC v Satyam Computer Services Ltd 06-2056 (6th Cir 2007); TMR Energy (n 45) 303–5.

55 See eg Belize Social Development Limited v The Government of Belize, 09-2170 (RJL), 2013 WL 6502416 at *11, TMR Energy (n 45) 303–4 and Yaiguaje v Chevron Corporation, Judgment of the Ontario Court of Appeal of 17 December 2013, para 60, overturning Yaiguaje v Chevron Corporation [2013] ONSC 2527 (Can).

56 See Case C-281/02, Owusu v Jackson [2005] ECR I-1383, 46.

57 See the discussion of Swiss cases in Sinclair, I, ‘The Law of Sovereign Immunity: Recent Developments’ (1980) 167 Recueil des Cours de l'Académie de Droit International 234–6Google Scholar; see also Reinisch, A, ‘European Court Practice Concerning State Immunity from Enforcement Measures’ (2006) 17(4) European Journal of International Law 803Google Scholar, 809–10.

58 [1980] ATF 106 Ia 142, 62 ILR 228 (Federal Supreme Court of Switzerland).

59 ibid 62 ILR 228, 234.

60 ibid.

61 ibid 235.

62 [2009] ATF 261 5A, 135 III 608 at 4.5.

63 ibid.

64 See [2009] ATF 261 5A, 135 III 608 at 1.4, 4, 4.2–4.5.

65 See Lalive, P and Bucher, A, ‘Chronique de jurisprudence de droit international privé’ in Annuaire Suisse de Droit International (1981) XXXVII, 463–9Google Scholar.

66 Dubai Court of Cassation, Appeal No 156-2013.

67 ibid.

68 Mustill, Lord, ‘Arbitration: History and Background’ (1989) 6(2) Journal of International Arbitration 43, 48Google Scholar.

69 American Dredging (n 4) 455.

70 Scherk v Alberto Culver Co 417 US 506, 520 n 15 (1974).