Staying Enforcement of Arbitral Awards under the New York Convention

Abstract

in theory international arbitral awards are final and binding on the parties and should be paid promptly. In practice, however, the losing party often refuses to pay, thus forcing the winning party to seek judicial enforcement of the award in a jurisdiction where the other party is located and likely to have assets. At the same time the losing party might commence its own court action in another country to set aside the award. The result is a tangled web of transnational litigation which often takes years to resolve. Such parallel court proceedings raise not only competing claims of sovereignty but also conflicting goals of public policy. On the one hand it is the strong policy of most States to promote international arbitration by providing a speedy and simplified mechanism to enforce awards. On the other hand States also want to preserve some degree of judicial oversight to set aside awards for substantial defects. The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (‘New York Convention’ or ‘Convention’)1 attempts to obviate this potential conflict by providing for a stay of enforcement pending the outcome of a proceeding to set aside an arbitral award. This article discusses the case law under the New York Convention in which the issue of a stay arose.2 Although decided by courts in different countries, it is appropriate to consider these cases as a single body of jurisprudence because the purpose of the Convention is to promote the recognition and enforcement of foreign arbitral awards, and to do so on a uniform basis by all States parties.3 The New York Convention applies to ‘foreign’ arbitral awards, that is, ‘awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought’ or …