Doing Business Abroad Easier
adopted the New York Convention of
1958, an agreement that makes it easier
for businesses to arbitrate disputes with
entities around the globe. With a thorough
understanding of the Convention,
companies doing business abroad can
reduce risk and save substantial time
and money resolving disputes that cross
national borders.
Many executives fear unfamiliar
foreign legal practices and laws in
locations unfriendly to their interests
when engaging in international commerce.
The New York Convention can provide
a solution. Mastering the principles of
this virtually universal agreement allows
companies to choose the place, process
and law for resolving disputes, with
confidence that these choices will be
respected by courts nearly everywhere in
the world.
The 1958 Convention on the
Recognition and Enforcement of Foreign
Arbitral Awards (often called the New
York Convention) creates a process for
compelling arbitration and enforcing
countries or involving foreign parties.
The Convention is a model of simplicity
comprising a mere four pages of text
(compare that to the recent trend of
legislation often thousands of pages long).
Each of the 149 adopting countries has
agreed to recognize written agreements
to arbitrate disputes, and to compel
arbitration at the request of either one
of the parties (unless the contract is
unenforceable or the matter is not capable
of arbitration).
Once the arbitration panel makes a
decision, one simply needs to submit the
decision and a copy of the arbitration
agreement to a court in any of 149
countries for recognition of the award.
Once recognized, the award has the force
and effect of a domestic judgment. This
allows the prevailing party to use any and
all domestic methods for enforcement and
collection.
There are only a few reasons why
a court may refuse to recognize an
arbitration award, including invalidity of
the arbitration agreement, failure to obey
agreement, immaturity of the award (if it is
not yet binding), or if the court determines
that enforcement would be flatly contrary
to the enforcing country's public policy.
These exceptions are sparingly
invoked. Further, the Convention forbids
countries from charging higher fees or
creating procedural hurdles more onerous
than are required for enforcement of
domestic arbitration agreements. The
spirit of the Convention is to encourage
arbitration, and to keep it as simple as
possible for companies to resolve foreign
business disputes.
Application of the Convention in the
United States is limited to commercial
disputes. In the spring of 2014, the
United States Supreme Court (BG Group
PLC v. Republic of Argentina) affirmed
the bedrock principles of the Convention
and the great deference courts should
grant arbitrator decisions. The Court
held that decisions, regarding whether
parties have properly followed any pre-
arbitration procedure required by an
agreement (for instance, conducting a
focusing on complex litigation and alternative dispute resolution.
After six years with Cravath, Swaine & Moore, LLP, litigating
benchmark cases under the Convention in the Southern District
of New York, Ryan brings his experience and training to Kohner,
Mann & Kailas, S.C., to assist its clients in regional, national and
international settings.
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