International Arbitration And The New York Convention

On behalf of Wolf Popper LLP

Last time, we began looking at the issue of arbitration, and specifically what law or laws govern the process. As we noted, domestic arbitration is governed by both state contract law and arbitration statutes, as well as the Federal Arbitration Act. As some arbitration experts point out, the Federal Arbitration Act plays a larger role in governing the process of arbitration than some would expect, though parties do have the freedom to determine for themselves the rules that govern the process.

When it comes to international arbitration, one of the primary measures governing the process is the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The measure, also known as the New York Convention, was passed in 1958 with the aim of providing a common set of legislative standards governing arbitration involving foreign and non-domestic awards. 

The New York Convention is aimed not only at arbitration awards reached in foreign jurisdictions, but also in domestic arbitration cases deemed foreign because there is some aspect of the proceedings that is foreign to the country in which the arbitration occurred. Again, parties to arbitration are able to select the rules governing arbitration proceedings, and this includes foreign arbitration rules, if so desired.

The New York Convention ensures that foreign arbitration awards will be recognized and enforced the same way domestic arbitration awards would be. The convention also requires the courts to deny access to the court system when there is a valid agreement to arbitration a dispute.  

Like other international laws, the New York Convention is only binding on countries that become parties to the agreement. At present, most major nations have signed onto the agreement. In a future post, we'll look briefly at some of the major international institutions and entities that establish rules and appoint arbitrators in international disputes, as well as the importance of working with experienced legal counsel in navigating international disputes.