Refusal to Give Effect to Foreign Awards

Andrews, Neil

doi:10.1007/978-3-319-27144-6_9

Neil Andrews⁴

Part of the book series: Ius Gentium: Comparative Perspectives on Law and Justice ((IUSGENT,volume 54))

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Abstract

Cross-border enforcement of commercial awards under the New York Convention (1958) remains a major force in the expansion of arbitration. The Convention prescribes a narrow set of situations in which the enforcing court can legitimately refuse recognition and enforcement. Within this topic there are two matters of special interest: first, there is the issue whether a national court’s annulment of the award at the seat of the arbitration will preclude such cross-border enforcement or whether the enforcing court can still give effect to the award, even if has been annulled locally at the seat; secondly, there is the issue whether the enforcing court can reliably obtain evidence of the foreign law applicable to the arbitration agreement. In the Dallah case (section 9.3 of this chapter) the English courts became embroiled in such a difficult issue.

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Notes

1.
[2014] EWHC 2188 (Comm); [2014] 2 Lloyd’s Rep 435; 155 Con LR 221.
2.
For analysis, in English, of the Brazilian law concerning enforcement of domestic or internal arbitration awards, G Marques de Campos and M Desteffeni (2012) 208 Revista de Processo 343.
3.
Redfern and Hunter on International Arbitration (6th edn, Oxford University Press, 2015), 11.62.
4.
Mustill & Boyd, Commercial Arbitration (2nd edn, London, 1989), 417–418.
5.
Hence the decisions (generally on this topic, 9.27) which have allowed recognition/enforcement in foreign state X even though the relevant award has been annulled in state Y where the award was made under the domestic arbitral law: Redfern and Hunter, ibid, 11.94 ff. The famous triad of cases comprises: Hilmarton (1994)—France state X, Switzerland state Y, English excerpts in (1995) XX Ybk Comm Arb 663); Chromalloy (1996) – USA state X, Egypt state Y, 939 F Supp 907 (DDC 1996); and the Putrabali case, France state X, England state Y, (2007) Revue de l’Arbitrage.
6.
Most of these grounds were judicially considered in Honeywell International Middle East Ltd v. Meydan Group LLC [2014] EWHC 1344 (TCC); [2014] 2 Lloyd’s Rep 133; [2014] BLR 401, Ramsey J (permission for appeal has been granted on certain aspects of this case: Honeywell International Middle East Ltd v. Meydan Group LLC [2014] EWCA Civ 1800).
7.
e.g., Kanoria v. Guinness [2006] EWCA Civ; [2006] Arb LR 513 (Indian arbitration award rendering individual, Mr G, personally liable for debt; but during the arbitration proceedings G had not been informed of the basis for this claim; English enforcement court, acting under section 103(2)(c), Arbitration Act 1996 (adopting the New York Convention (1958)), entitled to refuse recognition and enforcement; authorities also cited were Minnmetals Germany v. Ferco Steel [1999] 1 All ER (Comm) 315, 326; (1999) XXIV Ybk Comm Arb 739, Colman J; and Irvani v. Irvani [2000] 1 Lloyd’s Rep 412, 426, CA, per Buxton LJ). A Pullé, ‘Securing Natural Justice in Arbitration Proceedings’ (2012) 20 Asia Pacific L Rev 63.
8.
Redfern and Hunter on International Arbitration (6th edn, Oxford University Press, 2015), 11.101 ff.
9.
Westacre Investments Inc v. Jugoimport-SPDR Holding Co Ltd [1999] 2 Lloyd’s Rep 65, CA; Rogers and Kaley, ‘The Impact of Public Policy in International Commercial Arbitration’ (1999) 65 J Chartered Inst of Arbitrators 4; Soleimany v. Soleimany [1999] QB 785, CA; Redfern and Hunter on International Arbitration (6th edn, Oxford University Press, 2015), 11.105 ff.
10.
e.g., Colman J’s reference in Westacre Investments Inc v. Jugoimport SDPR Holding Co Ltd [1999] QB 740, 773 to ‘the public policy of sustaining international arbitration awards’.
11.
Lesotho Highlands Development Authority v. Impreglio SpA [2005] UKHL 43; [2006] 1 AC 22, at [30].
12.
[2010] UKSC 46; [2011] 1 AC 763, at [102].
13.
AJ van den Berg, ‘Failure by Arbitrators to Apply Contract Terms from the Perspective of the New York Convention’, in G Aksen, et al. (eds), Global Reflections on International Law, Commerce and Dispute Resolution: Liber Amicorum in Honour of Robert Briner (ICC Publications, Paris, 2005), 63–71.
14.
A Tweedale, ‘Enforcing Arbitration Awards Contrary to Public Policy in England’ (2000) 17 International Construction Law Review 159.
15.
e.g. Redfern and Hunter on International Arbitration (6th edn, Oxford University Press, 2015), 11.420 ff; AJ van den Berg, The New York Arbitration Convention of 1958 (1981); D Di Pietro and M Platte, Enforcement of International Arbitration Awards: The New York Convention of 1958 (London, 2001).
16.
Westacre Investments Inc v. Jugoimport SDPR Holding Co Ltd [1999] QB 740, 751, per Colman J, noting that Article V.2(b) of the New York Convention states ‘the recognition or enforcement of the award would be contrary to the public policy of that country.’ (Emphasis added.)’
17.
Eco Swiss China Time Ltd v. Benetton International NV C-126/97 [1999] ECR I-3055 (ECJ holding that national rules for review of domestic arbitral awards must allow investigation of the allegation that the award is inconsistent with EU competition law).
18.
For wider perspectives, A Chong, ‘Transnational Public Policy in Civil and Commercial Matters’ (2012) 128 LQR 88–113.
19.
Omnium de Traitement et de Valorisation SA v. Hilmarton Ltd [1999] 2 All ER (Comm) 146; [1999] 2 Lloyd’s Rep 222, per Timothy Walker J, citing the Westacre case, [1999] 1 All ER (Comm) 865 at 876, per Waller LJ; and Colman J [1998] 4 All ER 570 at 601B–C.
20.
Honeywell International Middle East Ltd v. Meydan Group LLC [2014] EWHC 1344 (TCC); [2014] 2 Lloyd’s Rep 133; [2014] BLR 401, at [180] to [182], citing Parke B in Egerton v. Brownlow (1853) 4 HLC 1 at 123: ‘[it] is the province of the statesman, and not the lawyer, to discuss, and of the legislature to determine, what is best for the public good, and to provide for it by proper enactments’; also citing Fender v. St John-Mildmay [1938] AC 1, 12, HL, per Lord Atkin: ‘[public policy] should only be invoked in clear cases in which the harm to the public is substantial, incontestable, and does not depend upon the idiosyncratic inferences of a few judicial minds.’
21.
Lord Denning, Enderby Town FC Ltd v. Football Association [1971] Ch 591, 606–7, CA, was not slow to proclaim his equestrian skills, for this purpose: ‘With a good man in the saddle, the unruly horse can be kept in control. It can jump over obstacles. It can leap the fences put up by fictions and come down on the side of justice.’
22.
[1990] 1 AC 295, 316, CA (reversed by HL but on a different point).
23.
Harbour Assurance Co (UK) Ltd v. Kansa General International Insurance Co Ltd [1993] QB 701, CA, per Ralph Gibson LJ, at 712c-f, Leggatt LJ, at 719 and Hoffmann LJ, at 723f-724e; explained by Colman J in Westacre Investments Inc v. Jugoimport SDPR Holding Co Ltd [1999] QB 740, 756–757.
24.
Gazprom OAO case (Grand Chamber, ECJ, 13 May 2015) (Case C-536/13).
25.
Opinion of Advocate General Wathelet (delivered 4 December 2014), at [130] to [152], at [167] to [188].
26.
ibid, at [167], note 95.
27.
ibid, at [168], note 96.
28.
ibid, at [169], note 97.
29.
ibid, at [170], note 98, citing Deutsche Schachtbau- und Tiefbohrgesellschaft mbH v. Ras Al-Khaimah National Oil Co [1990] 1 AC 295, 316, CA (reversed by HL, but on a different point).
30.
ibid, at [167], note 95.
31.
ibid, at [167] note 94, citing UNCITRAL Guide on the Convention on the Ecognition and Enforcement of Foreign Awards (New York, 1958), guide on Article V(2)(b), paragraph 4, available on the UNICTRAL website.
32.
ibid, at [181], citing the Exo Swiss case (EU C 1999/269), at [36], and the Mostaza Claro case (EU C2006/675), at [37].
33.
ibid, at [184] and [185].
34.
ibid, at [185] to [188].
35.
ibid, at [165].
36.
Honeywell International Middle East Ltd v. Meydan Group LLC [2014] EWHC 1344 (TCC); [2014] 2 Lloyd’s Rep 133; [2014] BLR 401, at [180] to [182].
37.
[1990] 1 AC 295, 316, CA (the case concerned enforcement in England of a Swiss award; the Court of Appeal’s decision was reversed by the House of Lords, but not on the point concerning the definition of public policy in this context).
38.
Westacre Investments Inc v. Jugoimport SDPR Holding Co Ltd [2000] QB 288, 309, CA, per Waller LJ: ‘where perjury is…alleged…the evidence must be so strong that it would reasonably be expected to be decisive at a hearing, and if unanswered must have that result’); see also [1999] QB 740, 784, per Colman J; Honeywell International Middle East Ltd v. Meydan Group LLC [2014] EWHC 1344 (TCC); [2014] 2 Lloyd’s Rep 133; [2014] BLR 401, at [166] to [172], per Ramsey J; as for failure to object to allegedly perjured evidence during the conduct of English arbitration proceedings, Thyssen Canada Ltd v. Mariana Maritime SA [2005] EWHC 219 (Comm); [2005] 1 Lloyd’s Rep 640, [39], [43], [60] to [66], per Cooke J.
39.
Honeywell International Middle East Ltd v. Meydan Group LLC [2014] EWHC 1344 (TCC); [2014] 2 Lloyd’s Rep 133; [2014] BLR 401.
40.
The position regarding domestic awards in England is clear: David Taylor & Son v. Barnett Trading Co [1953] 1 WLR 562, 572, CA, per Hodson LJ (the other judges agreed): ‘it is clear that, once the illegality is made plain, the award can, and should be, set aside.’
41.
[2014] EWHC 1344 (TCC); [2014] 2 Lloyd’s Rep 133, at [65] to [69], [71], [88], [89], [94], [211].
42.
ibid, at [173] to [185], [211].
43.
[1999] QB 785, CA.
44.
A Tweedale, ‘Enforcing Arbitration Awards Contrary to Public Policy in England’ (2000) 17 International Construction Law Review 159, 164, noting A Cohen, An Introduction to Jewish Civil Law (Feldheim Publishers, New York, 1991), 186–7.
45.
[1999] QB 785, 794, CA.
46.
ibid, at 799.
47.
[1999] 2 All ER 429, 433, per Colman J, sitting with Sedley LJ; applied in Pickering v. Deacon [2003] EWCA Civ 554; The Times, 19 April 2003.
48.
[1921] 2 KB 716, 729, CA.
49.
The Times, 25 March 1994 (end of Beldam LJ’s judgment).
50.
Supported by A Tweedale, ‘Enforcing Arbitration Awards Contrary to Public Policy in England’ (2000) 17 International Construction Law Review 159, 173 at proposition (2).
51.
Westacre Investments Inc v. Jugoimport SDPR Holding Co Ltd [2000] QB 288, 304, CA, per Waller LJ.
52.
[1999] 2 All ER (Comm) 146, Timothy Walker J.
53.
ibid, at 148–9.
54.
ibid, at 149.
55.
ibid: per Timothy Walker J: ‘it seems to me that (absent a finding of fact of corrupt practices which would give rise to obvious public policy considerations) the fact that English law would or might have arrived at a different result is nothing to the point.’
56.
ibid.
57.
ibid, at 148.
58.
Westacre Investments Inc v. Jugoimport SDPR Holding Co Ltd [2000] QB 288, 317, CA.
59.
ibid, at 317.
60.
Westacre case [2000] QB 288, 302, CA.
61.
ibid, at 305, CA; noting also at 315, Lemenda Trading Co Ltd v. African Middle East Petroleum Co Ltd [1988] QB 448, Phillips J, and Neill LJ in ED & F Man (Sugar) Ltd v. Yani Haryanto (No 2) [1991] 1 Lloyd’s Rep 429.
62.
Honeywell International Middle East Ltd v. Meydan Group LLC (No 2) [2014] BLR 599, Ramsey J.
63.
Harbour Assurance Co (UK) Ltd v. Kansa General International Insurance Co Ltd [1993] QB 701, CA, per Ralph Gibson LJ, at 712c-f, Leggatt LJ, at 719 and Hoffmann LJ, at 723f-724e; explained by Colman J in Westacre Investments Inc v. Jugoimport SDPR Holding Co Ltd [1999] QB 740, 756–757.
64.
Westacre Investments Inc v. Jugoimport SDPR Holding Co Ltd [1999] QB 740, 755, per Colman J and not disturbed by the CA ([2000] QB 288, CA).
65.
ibid, per Colman J.
66.
Bribery Act 2010; E O’Shea, The Bribery Act 2010: A Practical Guide (Jordans, Bristol, 2011); N Cropp [2011] Crim L Rev 122–141; S Gentle [2011] Crim L Rev 101–110; J Horder (2011) 74 MLR 911–931 and (2011) 127 LQR 37–54; C Monteith [2011] Crim L Rev 111–121; G Sullivan [2011] Crim L Rev 87–100; A Wells (2011) Business Law Review 186; C Wells [2012] JBL 420–431.
67.
R v. J [2013] EWCA Crim 2287; [2014] 1 WLR 1857; [2014] 1 Cr App R 21, on the Prevention of Corruption Act 1906 (see Lord Thomas CJ’s judgment at [9] ff concerning the Public Bodies Corrupt Practices Act 1889, the 1906 Act just mentioned, and the Prevention of Corruption Act 1916).
68.
Sections 1 and 2, Bribery Act 2010; Hansard, HL Vol 715, col 1086 (December 9, 2009) states: ‘[The Act] creates two general offences of bribery, a third specific offence of bribing a foreign public official and finally a new corporate offence of failing to prevent bribery....The general offences, in [sections 1 and 2], cover on one side of the coin the offer, promise and giving of a financial or other advantage, and on the flip side the request, agreeing to receive or acceptance of such an advantage. These offences focus on the conduct of the payer or the recipient of a bribe and describe six scenarios, each involving the improper performance of a function, where one or other offence would be committed. These new offences will apply to functions of a public nature as well as in a business, professional or employment context.’
69.
Section 5, Bribery Act 2010.
70.
Section 3, ibid.
71.
Section 4, ibid.
72.
Section 6, ibid.
73.
Section 5(2), ibid (Phillips J had grappled with this problem in Lemenda Trading Co Ltd v. African Middle East Petroleum Co Ltd [1988] QB 448).
74.
For these statutes, note 68 above concerning R v. J [2013] EWCA Crim 2287; [2014] 1 WLR 1857, at [9] ff.
75.
[1910] AC 87, HL.
76.
[1925] 2 KB 1, Lush J.
77.
Honours (Prevention of Abuse) Act 1925.
78.
H Kronke, et al., Recognition and Enforcement of Foreign Arbitral Awards: A Global Commentary on the New York Convention (Kluwer, Deventer, 2010), 10, and (notably) 324 ff; Mustill & Boyd, Commercial Arbitration: Companion Volume (London, 2001), 85 ff; WW Park, Arbitration of International Business Disputes: Studies in Law and Practice (Oxford University Press, 2006), 185 ff; 189–92.
79.
(Martinus Nijhoff, Leiden, and Boston, 2010).
80.
[2010] UKSC 46; [2011] 1 AC 763, at [129].
81.
ibid, at [129], citing (France) Pabalk Ticaret Sirketi v. Norsolor, Cour de cassation, 9 October 1984, 1985 Rev Crit 431; Hilmarton Ltd v. OTV, Cour de cassation, 23 March 1994 (1995) 20 Yb Comm Arb 663, 665; République arabe d’Egypte v. Chromalloy Aero Services, Paris Cour d’appel, 14 January 1997 (1997) 22 Yb Comm Arb 691; Soc PT Putrabali Adyamulia v. Soc Rena Holding, Cour de cassation, 29 June 2007 (2007) 32 Yb Comm Arb 299 (award in an arbitration in England which had been set aside by the English court (see PT Putrabali Adyamulia v. Soc Est Epices [2003] 2 Lloyd’s Rep 700) was enforced in France, on the basis that the award was an international award which did not form part of any national legal order); also citing (Netherlands) Yukos Capital SARL v. OAO Rosneft, 28 April 2009, Amsterdam Gerechtshof.
82.
Koller (Austria: National Report for the Heidelberg conference, summer 2011): noting OGH 3 Ob 117/93 and 3 Ob 115/95, Ybk Comm Arb 1999, 919.
83.
[2011] EWHC 1461 (Comm); [2012] 1 All ER (Comm) 479; [2011] 2 Lloyd’s Rep 443; [2011] 2 CLC 129, examining, among other decisions: Carl Zeiss Stiftung v. Rayner & Keeler Ltd (No 2) [1967] 1 AC 853, HL; Carl Zeiss Stiftung v. Rayner & Keeler Ltd (No 3) [1970] Ch 506; ‘The Sennar’ (No 2) [1985] 1 WLR 490, 499, HL; P Rogerson, ‘Issue Estoppel and Abuse of Process in Foreign Judgments’ (1998) CJQ 91.
84.
[2012] EWCA Civ 855; [2013] 1 All ER 223; [2012] 2 Lloyd’s Rep 208.
85.
[2014] EWHC 2188 (Comm); [2014] 2 Lloyd’s Rep 435; 155 Con LR 221.
86.
ibid,, at [12]; and [15] to [22] is an illuminating discussion.
87.
[2010] UKSC 46; [2011] 1 AC 763, at [130], citing Baker Marine (Nigeria) Ltd v. Chevron (Nigeria) Ltd, 191 F 3d 194 (2d Cir 1999); TermoRio SA ESP v. Electranta SP, 487 F 3d 928 (DC Cir 2007); also noting that an Egyptian award which had been set aside by the Egyptian court was enforced because the parties had agreed that the award would not be the subject of recourse to the local courts: Chromalloy Aeroservices v. Arab Republic of Egypt, 939 F Supp 907 (DDC 1996) (as noted in Karaha Bodas Co v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 335 F 3d 357, 367, 5th Cir 2003); whether it was correctly decided was left open in the TermoRio case 487 F 3d 928, 937 (DC Cir 2007).
88.
Rolf Stürner (Freiburg) (national report for the Heidelberg congress, 2011).
89.
[2010] UKSC 46; [2011] 1 AC 763; for comment, Jan Kleinheisterkamp, ‘Lord Mustill and the courts of tennis – Dallah v. Pakistan in England, France and Utopia’ (2012) 75 MLR 639, 640 at n 2 listing various comments on this decision.
90.
Generally on the issue of third parties and joinder or consolidation arbitration, see the abundant literature cited in chapter 2 section XI, at 2.54.
91.
Gouvernement du Pakistan v. Société Dallah Real Estate & Tourism Holding Co, Cour d’appel de Paris, Pôle 1 – Ch 1, n° 09/28533 (17 February 2011) (www.practicallaw.com/8-505-0043). On which see both the next note and the comment by White & Case: http://www.whitecase.com/insight-03022011/
92.
For the text of Article V(1), NYC (1958), 9.07.
93.
[2010] UKSC 46; [2011] 1 AC 763 (where the lower courts’ decisions are also cited).
94.
[2009] EWCA Civ 755, at [24] and [25] for the Court of Appeal’s summary of this curious aspect.
95.
On this [2009] EWCA Civ 755, at [18], per Moore-Bick LJ.
96.
ibid, at [56], per Moore-Bick LJ.
97.
Gouvernement du Pakistan v. Société Dallah Real Estate & Tourism Holding Co, Cour d’appel de Paris, Pôle 1 – Ch 1, n° 09/28533 (17 February 2011) (www.practicallaw.com/8-505-0043). On which see both the next note and the comment by White & Case: http://www.whitecase.com/insight-03022011/.
98.
James Clark, http://www.practicallaw.com/4-504-9971?q=&qp=&qo=&qe=: ‘…the French court did not focus on French law principles and proceeded to a factual enquiry to determine whether the parties had actually consented to go to arbitration [an approach which reflects the French courts’] desire…to develop …rules for international arbitration that ensure that the outcome of a dispute does not depend on the particularities of a national law. This solution is also consistent with French case law on the extension of arbitration agreements to parties that are non-signatories but have participated in its negotiation and performance.’
99.
Cour de Cassation, First Civil Chamber, Municipalité de Khoms El Mergeb v. Dalico, 20 December 1993, JDI 1994, 432, note E Gaillard.
100.
[2010] UKSC 46; [2011] 1 AC 763.

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Neil Andrews

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Andrews, N. (2016). Refusal to Give Effect to Foreign Awards. In: Arbitration and Contract Law. Ius Gentium: Comparative Perspectives on Law and Justice, vol 54. Springer, Cham. https://doi.org/10.1007/978-3-319-27144-6_9

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