IX. Recognition and Enforcement

Unless the parties to an arbitration settle their claims, an arbitral award terminates the arbitration. An arbitral award is analogous to a judgment of a state court such that an arbitral award has, between the parties, the effect of a final and binding court judgment (see supra 1.1.).

9.1 The New York Convention

Once the arbitral award is rendered at the seat of arbitration (see supra III.), it may be enforced in currently 154 jurisdictions worldwide on the basis of the 1958 New York Convention on the Recognition and Enforcement of Foreign Awards (see supra 1.1.). As so many countries are signatories to the New York Convention, including those actively engaged in international trade and commerce, it is fair to say that the relative ease and scope of enforceability is the primary advantage of international arbitration over state court litigation.

9.2 Article V of the New York Convention

The core provision of the New York Convention is Article V, which contains the grounds on which recognition and enforcement of an arbitral award may be refused. These grounds are similar to the grounds upon which an arbitral award rendered in Austria may be challenged (see supra VII.). Certain defences against enforcement or recognition must be raised by the party against whom the arbitral award is invoked, such as:

  1. the invalidity of the arbitration agreement, either pursuant to the law chosen or applicable to the dispute, or pursuant to the incapacity of a party under the law applicable to it;
  2. the inability of such party to present its case in the arbitration, due to not having been properly informed about the appointment of the arbitrator(s) or the arbitration proceedings at all;
  3. the arbitral award containing a decision ultra petita (i.e. the arbitral award deals with a dispute which is outside the scope of the arbitration agreement);
  4. deficiencies with the arbitration agreement, due to a defective formation or composition of the tribunal, or due to procedural irregularities in the conduct of the arbitration proceedings; and
  5. the arbitral award is not (yet) binding on the parties.

Certain defences against enforcement or recognition are considered directly by the court from whom the recognition or enforcement is sought:

  1. the non-arbitrability of the dispute, meaning that the subject matter of the dispute is not capable of settlement by arbitration under the law of the country where the recognition or enforcement is sought; and
  2. violations of public policy of such country (material ordre public).

Settlement or voluntary compliance with an arbitral award is, however, the most common outcome of arbitral proceedings.