International Commercial Arbitration: Hurdles When Confirming a Foreign Arbitral Award in the U.S.

Commercial arbitration is a popular way to solve disputes between companies from different countries. However, sometimes there are obstacles when trying to enforce a decision from an arbitral tribunal. In the U.S., there is a three-year time limit for filing a petition to confirm an arbitral award. This means that if a party wants to enforce a decision from a foreign arbitration in the U.S., they have to do it within three years of the decision being made. When someone wants to enforce a foreign arbitration award in the US, they need to make sure that the federal court has the power to hear the case (subject matter jurisdiction) and that the court has authority over the person they’re trying to enforce the award against (personal jurisdiction). They also need to file the case in the right place (venue) and serve the other party with legal papers. In the US, the process is meant to be quick and decided based on written documents, not a full trial. The rules for serving legal documents on someone who lives in another country are not clearly laid out in the laws and international agreements. However, based on past court decisions in the United States, it is generally understood that if you want to enforce an arbitration award against someone who lives abroad, you need to follow the rules for serving legal papers outlined in the Federal Rules of Civil Procedure. This means you have to carefully review those rules and make sure you follow them when you serve the papers, or else the court might not consider your case. If someone from another country needs to be served with legal papers in the U.S., the person trying to do this should look at the rules of civil procedure to figure out how to do it. They should consider things like whether the foreign country’s laws require a summons to be issued, who is allowed to receive the papers on behalf of the foreign company, and how the papers can be served (like by mail or Federal Express). Because there isn’t clear guidance on this issue, it’s best to deal with it when making the arbitration agreement or at the start of the arbitration process. This way, everyone knows how the papers will be served if they need to be. Following all these rules will make it easier to enforce a foreign arbitration award in U.S. federal court. The Federal Arbitration Act and international conventions limit the review of foreign arbitration awards in U.S. courts. The party opposing enforcement of the award bears the burden of showing specific grounds for refusal. In order to prevent further review and appeals, parties should include a provision in their arbitration clause stating that the award is final and not subject to review or appeal. Two cases, Chromalloy Aeroservices v. The Arab Republic of Egypt and Termorio S.A. E.S.P. v. Electranta, S.P., had different outcomes due to the presence of such a provision. It is important for parties to include this provision in their arbitration clause to ensure the finality of their foreign arbitral award. In the U.S., foreign arbitral awards are those made in another country or involving parties from outside the U.S. A party wishing to enforce a foreign arbitral award in the U.S. needs to be aware of the potential challenges they may face, but with proper preparation, international commercial arbitration remains an effective option for resolving disputes. A federal court can also take control of any assets a person has in the U.S. to enforce a judgment against them. This is to collect a debt that has already been decided in a court that had authority over the person. The Federal Arbitration Act (FAA) allows for arbitration agreements to be enforced in U.S. courts. The New York Convention and Inter-American Convention can also be enforced in the U.S. through the FAA. If a person is in another country, the court can use international methods to notify them of legal proceedings. Arbitration agreements in international contracts are important for enforcing commercial agreements. The goal is to have consistent standards for arbitration across different countries. There are specific reasons a court can refuse to enforce an arbitral award, such as if a party was not given proper notice or if the award goes against public policy. An arbitral award can only be annulled or suspended by a court in the country where the award was made. However, there may be limitations on including certain clauses in arbitration agreements, based on a recent court case. Article 6 of the New York Convention and the Inter-American Convention allow a court to pause enforcement proceedings for an arbitration award and ask the party opposing enforcement to provide guaranties. This gives the court time to wait for a decision from the country where the award was issued. This information was provided by the International Law Section. “Inspire members to do their duty, serve the public, improve the justice system, and advance the study of law.”

Source: https://www.floridabar.org/the-florida-bar-journal/international-commercial-arbitration-hurdles-when-confirming-a-foreign-arbitral-award-in-the-u-s/