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Introduction

The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards
("New York Convention" or "Convention") was concluded on 10 June 1958. The pre-New
York Convention regime for the resolution of international trade disputes, based almost entirely
on international litigation, was deficient and unsatisfactory. Party autonomy was usually
absent, and the possibility of enforcement of decisions on the merits was dependent on the
private international law rules of different legal systems, which were difficult to interpret and
access to foreign commercial users. Indeed, the resolution of international disputes was a
daunting process. That situation dramatically changed in 1958 with the adoption of the
Convention on the Recognition and Enforcement of Foreign Arbitral Awards which has been
considered as the cornerstone of the law of international arbitration1. The Convention has
immensely influenced the field of international arbitration, and is accepted as one of the most
successful treaties in the area of commercial law. It is often considered as one of the most
important treaties in the field of international trade law and has a great significance. It is often
described as a foundation stone in the field of international arbitration. It requires courts of the
contracting states to give effect to an agreement to arbitrate when seized of an action in a matter
covered by an arbitration agreement and also to recognize and enforce awards made in other
states, subject to specific limited exceptions.

The Convention has also influenced many international texts, and has served as a model.
Notable examples include the UNCITRAL Model Law on International Commercial
Arbitration ("Model Law"), and the UNCITRAL Arbitration Rules. There are currently 157
States adhered to the Convention, which corresponds to approximately 80.5% of the entire
World2.

Previous to this Convention, the validity and enforcement of arbitration agreements and foreign
arbitral awards was subject to the Geneva Protocol on Arbitration Clauses of 1923 and the
Geneva Convention on the Execution of Foreign Arbitral Awards of 1927. The Geneva treaties,
and the regime they provided, were burdensome and, thus, led to the start of the work on the
draft of the Convention3. The International Chamber of Commerce (ICC) was the first to

1
https://www.ibanet.org/Article/NewDetail.aspx?ArticleUid=
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For the full list of signatories please see:
http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention_status.html
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Article VII(2) of the New York Convention expressly states that the Geneva treaties shall cease to have effect
between the Contracting States on their becoming bound and, to the extent that they become bound, by this
Convention.
commence this work, and established a 'Preliminary Draft Convention' in 1953. In the
following year, the United Nations Economic and Social Council established the Committee
on the Enforcement of International Arbitral Awards, and replaced the ICC. The Committee
produced a draft on 18 March 1955. This draft formed the basis of the New York Convention
and the text of the Convention was provisionally approved on 9 June 1958 following
discussions and comments received from different countries. The New York Convention is
accepted as a 'substantial improvement, since it provides for a simpler and more effective
method of obtaining recognition and enforcement of foreign awards' and that 'it gives much
wider effect to the validity of arbitration agreements than that given under the Protocols'4.

It was adopted mainly for promoting healthy business relations between the countries and to
promote harmony and coordination among the states. Further it reduces the burden of the states
to decide which laws to be enforced or the procedures of which countries to be followed during
the process of the arbitration. Further it also establishes a minimum level of control which the
contracting states can exert over arbitral awards and arbitral agreements.

Objective and Scope of the Convention

The NY Convention has two objectives:

• The recognition and enforcement of arbitral agreements


• The recognition and enforcement of arbitral awards
• Article II(1): “Each Contracting State shall recognize an agreement in writing which
the parties undertake to submit to arbitration all or any differences which have arisen
or which may arise between them in respect of a defined legal relationship, whether
contractual or not, concerning a subject matter capable of settlement by arbitration.”
• Article III: “Each Contracting State shall recognize arbitral awards as binding and
enforce them in accordance with the rules of procedure of the territory where the award
is relied upon, under the conditions laid down in the following articles.”5

4
Chapter 11. Recognition and Enforcement of Arbitral Awards', in Nigel Blackaby, Constantine Partasides et al.,
Redfern and Hunter on International Arbitration 6th edition
5
https://www.arbitration-icca.org/media/9/.../nyc_roadshow_presentation.ppt
Scope

The Convention deals with two main issues: the recognition and enforcement of

(i) Arbitration agreements and

(ii) Foreign arbitral awards; namely, those awards made in other jurisdictions, and sets out the
requirements for the same.

Article I (1):

This Convention shall apply to the recognition and enforcement of arbitral awards made
in the territory of a State other than the State where the recognition and enforcement of such
awards are sought, and arising out of differences between persons, whether physical or legal.
It shall also apply to arbitral awards not considered as domestic awards in the State where their
recognition and enforcement are sought6.

Benefits of the New York Convention

The 1958 New York Convention is, undoubtedly, the most successful instrument in the realm
of international trade law. That success can be illustrated not only with the number of parties
which have adopted it —to date, 159 independent States— but also with the exponential
increase of world trade after its adoption. In its simplest terms, the Convention incorporated
two radical principles which, at that time, revolutionised the resolution of disputes with
international elements, namely, enforcement of arbitration agreements and enforcement of
foreign arbitral awards. These principles, encapsulated respectively in articles II and V, are the
main contributions of the Convention to the resolution of transnational disputes. Whilst the
former provision upholds the principle of party autonomy by requiring national courts to refer
the parties to arbitration, the latter incorporates a system of recognition of foreign arbitral
awards in States bound by the Convention subject to limited exceptions.

Furthermore, the Convention establishes a minimum legal framework, but it permits national
courts to enforce arbitral awards under higher standards than those included in its provisions.
In fact, article VII offers flexibility to States which want to go further without compromising
the minimum arbitration framework set forth in the Convention. This article has permitted

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ibid
jurisdictions such as France to innovate and adopt arbitration-friendly answers and
developments to current challenges. Accordingly, as it has been demonstrated, the New York
Convention provides important advantages which are now essential in the adjudication and
enforcement of transnational disputes, so unless the Convention presents unsurmountable
problems or important disadvantages, one might ask: is there really a need to revise the New
York Convention7.

Actions which were taken by the New York convention are as follows

 Recognition and Enforcement of Foreign Arbitral Award


The first action is to recognize the awards made in the foreign territory and is defined under
the Article 1 of the convention. It is the obligation of the states to recognize such awards and
enforce them according to the Article 3 of the convention. The state who wants to seek the
foreign arbitral award needs to submit the following documents before the court and it lies
upon the interpretation of the court to decide that it falls under the scope of the convention or
not. A state which needs to seek the enforcement needs to submit the following documents

• The arbitral award

• The arbitral document according to the article 4 of the convention

The state against whom the convention is enforced can object to the enforcement by submitting
the proof of even one grounds of refusal of the enforcement which are mentioned in the Article
5 of the constitution. Now it lies on the discretion of the courts to enforce an award or not based
on the paragraph 2 of the article 5 of the enforcement.

 Referral to the Court by the method of Arbitration


Article II, paragraph 3, provides that a court of a Contracting State, when seized of a matter in
respect of which the parties have made an arbitration agreement, must, at the request of one of
the parties, refer them to arbitration8.

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https://arbitrationacademy.org/wp-content/uploads/2018/07/7.pdf
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https://blog.ipleaders.in/new-york-convention/
Key features of the New York Convention

• It creates a uniform international framework which enables various countries to establish


strong trade and commercial relations and solve disputes with the help of arbitration. It achieves
this by firstly requiring the signatory states to enforce the awards rendered in the signatory state
and secondly by limiting the grounds on which the states may refuse recognition and
enforcement.

• The states who are a party to this convention are required to bind to the foreign awards and
enforce them according to the rules and procedures established by the New York Convention.

• The procedure is free from any complex procedures and charges. The states just need to
submit to a competent court in the contracting state where the enforcement is sought.