INTERNATIONAL COMMERCIAL ARBITRATION

Research Paper on
Challenges in seeking Recourse against Arbitral Award

TABLE OF CONTENTS

Acknowledgement
Abstract of the Paper
Introduction
Recourses against Arbitral Award
Impact of Setting Aside of award on the Ground for refusal of enforcement
Alternative Approaches
Conclusion
Bibliography












Challenges in seeking Recourse against Arbitral Award
Abstract
The approaches to international arbitration play a significant role in determining the status of
award and possible recourse against arbitral award. The present paper is attempting to analyze
the relevance of the traditionally followed methods of recourse like annulment or setting aside of
award in the evolving concept of arbitral legal order which was proposed by the French court.
In this light, different arguments pro and against the concept are considered as well as alternate
models are suggested. The evolution of arbitral appellate regime is also analyzed in this regard.
Introduction
The ultimate aim of any dispute resolution mechanism is to ensure legal peace between the
parties. The finality of the proceedings is an essential factor. However, it should not be at the
expense of denial of justice to any party. Hence there are some specific measures available to opt
out of the decision which can be termed as recourse against Arbitral Award including setting
aside of award, appeal, revision, refusal of enforcement etc.
As per Blacks law dictionary
1
, recourse means the act of seeking help or advice or,.
Enforcement of, or a method for enforcing, a right. The renowned authors ,Redfern and Hunter,
have opted for a wider term challenge which they feels both appeal and recourse . The
terminology was a customary usage in common law which means either an appeal to a different
tribunal (where this is possible under the internal rules of the arbitration) or an appeal to the
relevant court which may be asked to vary the award, or to send it back to the arbitrators for
reconsideration, or to order that it should be set aside in whole or in part. In civil law countries,
the customary language is that of recourse to a court of law against an award which was also
utilized by the Model Law
2
.
There is no uniformity across the globe as to methods in which an award could be challenged
some jurisdictions are restrictive, choosing to favour the finality of the arbitral awards by

1
Blacks Law Dictionary (9th ed. 2009), available at Westlaw BLACKS
2
Alan Redfern and Ors., Redfern and Hunter on International Arbitration, (Oxford University Press,2009) , Page
587 para 10.04
limiting the circumstances in which an award may be revisited. Other jurisdictions prefer a more
extensive approach, allowing for various grounds in which to reopen the proceedings
3
.
The practical questions arising herein are firstly the law applicable in deciding the available
methods of recourse, the competent authority to which such recourses can be made, the time
frame for such process, the extent of intervention available to the competent authority and
implications of such recourses on the arbitral award.
The present paper is dealing only with the law applicable and a brief analysis of methods of
recourse with special reference to recent introduction of Optional Appellate Arbitration Rules by
American Arbitration Association and International Centre for Dispute Resolution.

Recourses against Arbitral Award
The possible recourses against any arbitral award will be at the outset for rectification of prima
facie mistakes like typographical, clerical or other calculation errors. The parties may also seek
for additional award or interpretation to an ambiguous area in the award. Further a party could
appeal on merit of the award . This may be sought to any appellate arbitral body or to any
competent court. Here the appellate body could alter or substitute its own decision. Another
important method of recourse recognized is an application for setting aside the award. In this
scenario, the forum to which recourse is sought cannot alter the decision of arbitrator, but can set
aside or nullify the decision if the alleged grounds are proved. The parties also have to right to
apply for refusal of the enforcement of the Award at the time when the enforcement is sought by
the winning party.
But then the question arises as to where these recourses can be sought against in case of
international arbitration proceedings. There will not be any issue with regard to the clarification
of the award, correction of error on the face of record as well as option to obtain an additional
award so long as it is provided in the arbitration rules or are specifically agreed to by the party.
In such case, the parties could directly approach the arbitral tribunal within the stipulated time.

3
Nathalie Voser, Anya George, Chapter 3: Revision of Arbitral Awards in , Post Award Issues- ASA Special
Series No. 38, ( JurisNet, LLC 2011)
However, with respect to the application of setting aside and appeal, there will be an issue as to
whether the application for setting aside should be as per the law of seat of arbitration or as per
law under which award is made.
The proponents of the seat theory support the first proposition. As per the seat theory, the arbitral
award is anchored to the national legal order of the seat of arbitration
4
. Hence ,any recourse to
such arbitral award will be dictated by the laws of such place. In fact Article 36 (1) (v) of the
UNCITRAL Model Law states that enforcement of an arbitral award may be refused if it is
proved that the award was set aside or suspended by a Court under which , or the law under
which, the award was made
5
. It may be noted that merit of this approach is that a challenge
procedure allowed by the place of arbitration may act detrimental to the enforcement of award
anywhere else. Further there is clarity for the parties of arbitration as to the remedies available.
This is especially true for the aggrieved party can directly seek the recourse against the award
within the stipulated time.
However, the argument for the application of the law under which award is made also have equal
merits. It shall be noted that this is also a ground provided under the UNCITRAL Model Law.
This clearly reflects the fact that drafters were contemplating a situation wherein the award could
be challenged under the law in which it is made. This approach respects the party autonomy and
their choice of law. It is based on the logic that when the genesis of the award itself derives from
the governing law, the grounds for the challenging the award should also be the same. In fact if
we analyze the wordings of the Section 34 of UNCITRAL Model Law, it clearly speaks about
the law to which parties have subjected and only in the absence of any such choice, law of place
of arbitration will be applicable.
Hence, at least at the theoretical level, it is possible for the parties to approach the governing law
for setting aside the award.

4
F.A. Mann, Lex Facit Arbitrum in P. Sanders (ed.), International Arbitration: Liber Amicorum for Martin Domke
(1967) 157 at 159 reprinted as Arbitration International, Vol. 2 No. 3 (1986), pp. 241 - 260
5
Article 36. Grounds for refusing recognition or enforcement: (1) Recognition or enforcement of an arbitral award,
irrespective of the country in which it was made, may be refused only:. (v) The award has not yet
become binding on the parties or has been set aside or suspended by the court of the country in which, or the law
under of which, that award was made;.
Another important possibility of recourse against arbitral award is seeking an appeal. This can be
made either to a higher arbitral authority or to a court. The arbitral body of second instance is
sometimes provided in institutional arbitration. The recent adoption of Optional Appellate
Arbitration Rules by American Arbitration Association and its international arm, International
Centre for Dispute Resolution is a good example of this scheme. The Optional Appellate
Arbitration Rules requires the parties to specifically include the appeal clauses in their arbitration
agreement. The Appellate Tribunal thus formed can confirm, alter or nullify the award
accordingly. In case of national laws like Section 39 of UK Arbitration Act, l996 provides for
right to appeal in case of question of law. This provision is applicable only in case seat of
arbitration is in UK. Similarly in the United States, many federal courts have recognized
manifest disregard of the law as a non- statutory basis for annulment of arbitral awards. This
concept, introduced into US law as a possible additional ground for annulment of arbitral awards
through a dictum in Wilko v. Swan
6
has a hybrid nature and provides a possibility for a national
court to revisit the merits of a dispute on a point of law decided by an arbitral tribunal However,
the concept of appeal to national courts are less preferred as it undermines the propriety of the
arbitration and reduces the whole institution to another lower court under the national law. But
this can be overcome by the establishment of Arbitral Appellate Tribunal wherein all the
advantages of the arbitration proceedings are available. However, it needs to be noted that such a
system may be beneficial only for institutional arbitration. In case of an ad hoc arbitration, it is
not only costly and time consuming, but impractical at many times.
The next important course of challenging the award is the application for refusal of its
enforcement at the time when the enforcement of award is sought by the winning party. As
compared to the setting aside of the award, this is a passive mode of recourse by the losing party.
The application will be made here only when the other party is seeking an enforcement of the
award. The grounds available for application of refusal of award are listed in the Article V of the
New York regarding Recognition and Enforcement of Arbitral Award. Similar grounds are
available under Article 36 of the UNCITRAL Model Law. The language of both the clauses is
such that the enforcement of the award may be refused only on the specified ground. Further,
discretion is provided to the enforcing court as to consider or not to consider the grounds by the

6
346 U.S. 427 (1953)
usage of word may. However, the extent of such discretion is a mootable question which will
be dealt in detail in subsequent sections.
Impact of Setting Aside of award on the Ground for refusal of enforcement
We have detailed about the recourse to national court to set aside the award. However, with the
recent developments in the theory of an independent arbitral legal order, it needs to be analyzed
as how far the option of setting aside the award at the country of origin is effective as a method
of recourse. If we need to follow the recent case like, Putrabali
7
or Maximov
8
by the French
Court by the US court, it need to be assumed that the international arbitral award is not
anchored in any particular legal system, but has an autonomous existence in a separate arbitral
order. It is deemed to be an international judicial decision which cannot be overturned by any
national court. Hence any annulment or setting aside of the award in its alleged country of origin
does not have any impact. The award exists despite of the any recourse sort against it. In such a
case, the only actual recourse that can be sought is the application for refusal of enforcement.
Even the jurists who supports delocalized approach ,which speaks about retrospective
validation from the legal regime where the enforcement is sort, agrees to this proposition
9
. They
have rejected the argument of traditional jurisdictional theory that award cease to exist if it is
annulled in its country of origin. They state that Article V(1) (e) of the New York Convention
will not be a hindrance to this approach. Firstly, the definition of the arbitral award under Article
I of the New York Convention does not exclude the annulled award from the ambit of arbitral
award, secondly the use of may in the Article V reflects the discretion of the Court of
Enforcement and thirdly the subsequent Article VII states that the provisions of Conventions
are not bar to the application of any another applicable international treaty or national law.
Hence, the courts could resort to the national law. This is true especially when the countries are
pro-arbitration and may disregard the annulment and go ahead in enforcing the award justifying
the public policy in supporting the finality of arbitral awards. The cases like Hilmarton
10
or

7
PT Putrabali Adyamulia v. Rena Holding, Ltd., Cour de Cassation [Cass. 1e civ.] June 29, 2007, Revue del
Arbitrage 507 (2007)
8
Maximov v. Novolipetsky Steel Mill, Tribunal de Grande Instance de Paris, May 16, 2012.
9
Jan Paulsson, Enforcing Arbitral Awards Notwithstanding a Local Standard Annulment (LSA), The ICC
International Court of Arbitration Bulletin, Vol.9 May (1993): 14
10
Hilmarton Ltd. v. Omnium de Traitement et de Valorisation, Cour de Cassat ion [Cass. 1e civ.] Mar. 23, 1994,
Revue de lArbitrage 327 (1994).
Chromalloy
11
follows this approach. Further Professor Albert Jan van den Berg argues that the
judgments approach creates mirror recognition in the reverse: a foreign arbitral award can be
recognized if a foreign court judgment is not recognized which turns the New York
Convention upside down.
12

Another significant argument in favour of enforcement of annulled award is grounds under
which the refusal of enforcement shall be granted. Almost identical grounds as of setting aside
can be found under refusal of enforcement clause also. This nullifies the arguments that
enforcement of annulled award is against public policy as it permits the patently wrong award to
be enforced. The same ground could be utilized by the aggrieved party to apply against
enforcement of award.
In light of the above, we can see that there is a movement towards the enforcement of awards
irrespective of the fact that the same was set aside or annulled in the country of origin. In this
respect, we need to ponder about the relevance of setting aside of award as a recourse against
arbitral award.
However, there are many criticisms to this approach. Firstly , it may create inconsistent decision.
For instance, in Putrabali case there were three awards. If the first award which may be annulled
is allowed to be enforced, what will happen to the right of the other party who subsequently
receives a favorable award contrary to the first award. Another argument is that though the word
may is utilized in the New York Convention Article V, it cannot be easily dusted off by the
enforcing Court. Though narrow in scope, the enumeration of grounds in Article gives
significance to such grounds. Further as stated above, it will be clearly against public policy to
patently wrong awards. It is also argued that the use of the term may is not deliberate by the
framers as the supporting legislative documents do not reveal any such deliberation. In fact, it is
interesting to note that in French translation of the Convention, the term shall is found instead
of May. Further, disregard of the decision of the foreign court will be against judicial propriety.
Also, the seat theory implicates that the parties have intentionally chosen the seat of arbitration in
order to subject themselves to the benefits and remedies available under the particular law which

11
Chromalloy v. Arab Republic of Egypt 4 939 F. Supp. 907 (D.D.C. 1996)
12
A. J. van den Berg, Enforcement of Arbitral Awards Annul led in Russia: Case Comment on Court of Appeal
of Amsterdam , Journal of International Arbitration, Vol. 27 (2010): 191
will be denied if complete disregard is made to the decision of place of origin. Most importantly,
if we are not realizing the annulment of award as ground for refusal of enforcement anywhere
across the globe, and rather provide only for challenging the enforcement proceedings, there will
be again no finality to the proceedings. As the decision of refusal of enforcement does not have
an extra territorial application, the winning party could try their luck in other jurisdictions also,
and each time aggrieved party have start the vicious cycle of challenging the award. This clearly
goes against the very objective of arbitration.
Alternative Approaches
Paulson had also proposed an alternate approach making a distinction between Local Standard
Annulment and International Standard Annulment
13
He argues that the Article VII should be
given more importance than Article V (1) (e), which will result in a harmonized approach.
Instead of hanging on the discretion of whether the annulled award can be enforced or not, the
enforcing court should be analyzing the applicable laws in particular set of facts. The judge
should decide whether annulment was on local standard or international standard, which is well
determined through case laws and practices. The local standard can be disregarded in the
International Commercial Arbitration owing to its very nature. This approach can be found in the
Article IX of European Convention. In such an approach, however, the process of setting aside of
arbitral award will become a futile exercise as the same could be disregarded by the enforcing
court.
However, this will not be consistent to the evolving concept of independent arbitral order as
ultimately there is a requirement to look into the national legal order. Though the idea of judicial
decision independent of any particular legal order and can be annulled only on International
Standard Annulment is attractive , the question of who is the competent body for nullifying such
decision remains. In this light, we need to look into the recent development by American
Arbitration Association gains significance. The idea of challenging the arbitral award before
another arbitral body is very much in sync with the autonomous theory. In fact, if we such bodies
are provided power to even set-aside the awards of the arbitrators on the specified circumstances,
it could greatly solve the question of balance between finality of award and fairness. Any award

13
Supra Note.9
which is set aside or annulled by the appellate body will become nullity and hence no question of
enforcement of the same comes into picture. However, if no challenges are made within the
stipulated time or the challenges were refused, then the award could be enforced. Such awards
should allow to be challenged at the stage of enforcement only on the limited ground of public
policy. It is not argued that this model is flawless. Firstly, the setting up of the appellate tribunal
includes many practical difficulties which were discussed earlier. Secondly, the arbitral order
cannot be completely freed from the legal order, but the role of the latter should be viewed as
complementary rather than genesis of the other. There is need for an international instrument
recognizing the existence of independent arbitral order.
Conclusion
In light of the above discussions, it is clear that though there are different methods of recourse
against arbitral award identified, there is no uniform procedure. In fact, the mode and extent and
implications of any recourse against the arbitral award depend on the approach towards the very
system of the Arbitration. However, with the advent of international trade and commerce, the
significance of the international commercial arbitration is tremendous. The transnational issues
are complex and multi faceted and evolution of their nature could not have been even predicted a
decade back. These issues require a global solution rather than limited domestic approach. Hence
we could not peg down the system of international arbitration to any territorial limit. The change
in approach is equally applicable to status of arbitration and the subsequent right to challenge
against it. The approach of French Courts in conceptualizing an independent arbitral order can be
considered a fountainhead of novel concepts in this regard.
In this respect, an alternate view as to recourse against the arbitral award need to be looked into
which is not compromising on the justice and fairness, at the same ensures the validity of the
arbitral proceedings. The judicial review, even at a supervisory level , does leave the arbitration
tribunal as just another lower court whose decision could be reviewed by the Court. This is push
the parties back to the legal technicalities, right from the law to be applied as to determine the
grounds of challenge, which was reason for the choice of Alternate Dispute Resolution. Further,
the validity of decision of the court with respect to existence of the award could be disregarded
on many grounds as we have seen earlier. Hence a self sustaining system within the arbitral order
needed to be adopted for attaining the ultimate purpose of institution of arbitration.
Bibliography
1. Cases
Chromalloy v. Arab Republic of Egypt 4 939 F. Supp. 907 (D.D.C. 1996)
Hilmarton Ltd. v. Omnium de Traitement et de Valorisation, Cour de Cassat ion [Cass. 1e
civ.] Mar. 23, 1994, Revue de lArbitrage 327 (1994).


Maximov v. Novolipetsky Steel Mill, Tribunal de Grande Instance de Paris, May 16, 2012.
PT Putrabali Adyamulia v. Rena Holding, Ltd., Cour de Cassation [Cass. 1e civ.] June
29, 2007, Revue del Arbitrage 507 (2007)
Wilko v. Swan346 U.S. 427 (1953)

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