Recognition and enforcement of arbitral awards Archives - international litigation blog
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Recognition and enforcement of arbitral awards

Doctrinal Debate: Enforcement of Annulled Arbitral Awards – a U.S. perspective

As mentioned in a previous post, I wanted to discuss with you some recent U.S. court decisions which have delineated the standards followed by local courts in enforcing annulled arbitral awards.

As is well-known, once an arbitral award is rendered, parties to a dispute often race to the courts: The winning party seeks the enforcement of the award while the losing party seeks its annulment.

Of course, if the losing party is successful in obtaining the annulment of an arbitral award, this situation can seriously complicate and even jeopardize the enforcement proceedings initiated by the winning party. Indeed, the New York Convention provides that a court may refuse to enforce a foreign award if “a competent authority” has set the award aside or has suspended it.

Notably, the wording of the Convention, and in particular the use of the word “may” (instead of “shall”), has given rise to discussions on whether a court remains entitled to enforce an award that has been set aside. This issue is particularly delicate as it often involves policy considerations.

In the United States, several court decisions have recently reassessed the standards to be applied by the courts when enforcing annulled awards.READ MORE

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Influential U.S. Court of Appeals for 2nd Circ. Holds FSIA Is Sole Basis for Jurisdiction in ICSID Enforcement Proceedings

On 11 July 2017, the United States Court of Appeals for the Second Circuit (the Second Circuit) rendered a decision in which it held that the Foreign Sovereign Immunities Act (the FSIA) provided the sole basis for jurisdiction over a foreign State in actions to enforce ICSID awards in the United States. Consequently, the Second Circuit also ruled that an award-creditor had to provide notice to the foreign State in order to enforce an ICSID award against that State. This ruling thereby effectively prevents ex parte enforcement of ICSID awards against foreign States in the United States.READ MORE

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International Litigation on Steroids: Citigroup Global Mkts., Inc. v. Fiorilla

Although the case below does not shed light on any new legal development, it is nevertheless an interesting story which offers a prime example of a plaintiff willing to use each and every possible trick in the context of international litigation and arbitration to (unsuccessfully) achieve his goal.READ MORE

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French “Tribunal des Conflits” Rules on Jurisdiction to Enforce Arbitral Award Relating to Public Law Contracts

In a decision of 24 April 2017, the French Tribunal des conflits ruled on the issue of whether the French civil courts or the French administrative courts have jurisdiction to enforce arbitral awards relating to public and administrative law.READ MORE

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Yukos Case: Brussels Court of First Instance Unfreezes Russia’s Assets

On 8 June 2017, the Brussels Court of First Instance handed down its decision on the legality of the seizures of assets belonging to Russia carried out by Yukos Universal Ltd (YUL) in the context of the Belgian enforcement proceedings of the Yukos case. As you certainly know, the Yukos case refers to an arbitral saga that saw three arbitral tribunals issuing three arbitral awards which cumulatively ordered Russia, in 2014, to pay USD 50 billion as reparations for the irregularities committed during the nationalisation of the Russian oil company Yukos (click here for a report of the hearing that took place before the Brussels Court of First Instance in November 2016).

Following the issuance of the award in 2014 in its favour, YUL (one of Yukos‘s former shareholder) sought the exequatur and the enforcement of the award in several countries, including Belgium. The Belgian exequatur of the award was granted to YUL in June 2015. In addition, YUL was also allowed to freeze and seize several key assets belonging to Russia as well as assets belonging to two Russian press agencies (ITAR TASS and Ria Novosti).

As a response to those precautionary seizures, Russia filed a third-party opposition before the Brussels Court of First Instance in which it challenged the legality of those seizures. As explained earlier, Russia’s main argument in opposing those seizures was that the three awards rendered in favour of Yukos‘s former shareholders had all been annulled by the District Court of the Hague (the Netherlands being the seat of the arbitration) in April 2016. As a consequence of this judgment by the District Court of the Hague, Russia argued that the Belgian exequatur order which had initially been granted to YUL in June 2015 was null and void and YUL was thus not entitled to proceed with the seizure of Russia’s assets.

In its decision of 8 June 2017, the Brussels Court of First Instance fully sided with Russia on this point.READ MORE

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Belgian Constitutional Court Rules on State Immunity From Execution

In a judgment dated 27 April 2017, the Belgian Constitutional Court (the Constitutional Court) largely confirmed the validity of the Belgian legal provision on State immunity from execution (Article 1412quinquies of the Belgian Judicial Code).

As a general rule, Article 1412quinquies of the Belgian Judicial Code provides that assets located in Belgium that belong to a foreign State are immune from execution and cannot be subject to enforcement proceedings by creditors. As mentioned before, France recently adopted a similar provision which largely mirrors Article 1412quinquies of the Belgian Judicial Code.

Exceptions to that rule are, however, possible if very strict conditions are met: a party wishing to seize the assets belonging to a State needs to obtain a prior authorisation from a judge (juge des saisies). This judge will only authorise the seizure if (i) the foreign State has “expressively” and “specifically” consented to the seizure of the assets; (ii) the foreign State has specifically allocated those assets to the enforcement of the claim which gives rise to the seizure; and (iii) the assets are located in Belgium and are allocated to an economic or commercial activity.

Given the difficulty of meeting those requirements, two entities (NML Capital Limited (NML), an American hedge fund which holds debts securities against Argentina, and Yukos Universal Limited (YUL), an entity that had been granted a multi-billion arbitral award against Russia) initiated legal proceedings before the Constitutional Court seeking the annulment of Article 1412quinquies of the Belgian Judicial Code.READ MORE

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