February 06, 2014 Articles

The Question of U.S. Enforcement of Annulled Foreign Arbitral Awards

By Monique Sasson

The issue that the Southern District of New York faced was whether, in the event a foreign arbitral award is set aside at the arbitral seat, the award can nonetheless be recognized and enforced in the United States. Stated differently, the issue was: "Which is to be given primacy, the award or the nullifying judgment?" Corporación Mexicana de Mantenimiento Integral, S. de R.L. de C.V., Petitioner – against- Pemex-Exploración y Productión, Respondent 10 Civ. 206(AKH).

The case arose from an arbitration that concluded with an award in favor of Corporación Mexicana de Mantenimiento Integral, S. de R.L. de C.V. (Commisa) in the amount of about 400 million U.S. dollars against Pemex-Exploración y Productión (PEP), a Mexican state entity. PEP issued proceedings in Mexico to set aside the award. The Mexican Court of Appeals granted the set-aside application on the grounds that the arbitrators lacked jurisdiction because PEP is an instrumentality of Mexico and, accordingly, the case should have been heard by the Mexican court for administrative matters. This appellate decision relied in part on a statute that was not in existence at the time that Commisa and PEP entered into their contract. The statute left Commisa without any recourse to have the merits of its case heard.

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