January 27, 2011 Articles

The Restatement (Third) of the U.S. Law of International Commercial Arbitration in Context

The Restatement promises to assist in understanding the complexities of international arbitration.

By Steve Y. Koh, Jared D. Hager, and Jeremy L. Ross – January 27, 2011

Imagine that you are an in-house lawyer for Builder, Inc., a Delaware corporation with its principal place of business in California. Builder has been sued in the U.S. District Court for the District of Delaware by a German company, Deutsche AG (DAG), seeking to enforce an arbitration award it obtained in London against Builder. The underlying dispute arose from a contract for construction services that Builder executed and performed in Texas. The contract included the following arbitration clause:

All disputes arising out of or in connection with the present Contract shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce in force as of January 1, 2007 by one or more arbitrators appointed in accordance with the said Rules. The language of arbitration shall be English. The place of arbitration shall be London. The arbitration shall be governed by the substantive law of Germany, without regard to its choice-of-law rules.

Builder wants to resist the enforcement action, but how and on what grounds? You know that the Convention on the Recognition Enforcement of Foreign Arbitral Awards, art. I, June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 3 (New York Convention), applies because both Germany and the United States are signatories. See United Nations Commission on International Trade Law, Status—Convention on the Recognition and Enforcement of Foreign Arbitral Awards. You also know that the New York Convention allows a party to challenge the enforceability of a foreign arbitral award on specific but narrow grounds, including the following:

  • The parties lacked capacity or the arbitration agreement is otherwise invalid.
  • There was a lack of proper notice or other violation of due process.
  • The arbitral tribunal lacked jurisdiction.
  • The arbitral tribunal or procedure violated the arbitration agreement.
  • The award is not binding or has been set aside.
  • The dispute was not arbitrable.
  • Recognition or enforcement of the award would violate public policy.

New York Convention, supra, art. V. For a thorough discussion of each ground for refusal or recognition and enforcement, see Blackaby and Partasides, Redfern and Hunter on International Arbitration §§ 11.55–11.120 (5th ed. 2009).

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