Why the New York Convention should not be Amended, Revised, or Abandoned.

By: Anjoly Ibrahim 

The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“Convention”) has approximately 163 State parties, including 158 of the 193 United Nations Member States.[1] It does not seek to impose upon contracting States obligations or limit pre-existing freedoms; but simply hopes to facilitate the recognition of arbitral awards and agreements to the greatest extent possible.[2]

The Convention is “the most significant international instrument for the recognition and enforcement of arbitral awards.”[3]  Scholars have debated whether revision or amendment of the document is necessary.  However, at this time, revision would lead to a diminished number of ratifications and will not accomplish further clarity.

Firstly, this endeavor would cause too much time to be lost.  In the 60 years of the Convention’s existence, 163 States have ratified the document, over 80 percent of the world, which is one of the major draws of international arbitration: that an award can be enforced in this many places. [4] Additionally, increasing trends in globalization has developed international arbitration significantly in the last 80 years.[5]  This rapid increase and expansion of international arbitration would be stalled if the Convention was scrapped for a new or revised convention.  In the first 10 years of the Convention’s existence, only thirty-four States had become parties.[6]  Gaining support for a new Convention could take even longer creating questions regarding the minimum requirements for enforcement of awards and State practice in enforcement and implementation of awards, leading to a general set back in international arbitration.

Further, the revision question must be brought to individual State and global politics.  Firstly, one must consider the amount of people who would need to agree to a new convention. The Conference where the original Convention was adopted only had forty-five States in attendance,[7] now at a minimum 160 States would need to be included.  Secondly, as Professor Gaillard has discussed, the development of arbitrations based on investment protection treaties has implicated many States as the defendant, putting States “in a position to resist enforcement of awards.”[8]  This may be detrimental to the drafting and ratification of a new treaty aiming to “enhance the effectiveness of the enforcement process.”[9]  Thirdly, even if the States could come to an agreement, nationalist policies and political parties are spreading around the world, which could make ratification difficult.[10]  Fourthly, some practitioners believe that States will be unwilling to “expend political capital, time, and resource[s] on the revision of a treaty which has been shown to be extraordinarily effective.”[11]  All in all, Marike Paulsson puts it best: “one cannot assume that yet again 160 States would sign on to the New York Convention.”[12]

Lastly, the Convention was written to withstand the test of time.  It is meant to be a safeguard against lower norms of enforcement, not the golden standard.  For example, States can have laxer requirements than Article II requires, but must treat those as a minimum.[13]  Article VII “ensures that the Convention cannot freeze the development of international arbitration,”[14]  but allows national courts to advance international arbitration within its borders[15] while providing a minimum standard by which States must utilize their courts for award enforcement.[16]  The Convention is made for everlasting change and development.

Could the Convention use clarification? Yes.  Could this be done by other avenues, such as interpretive guidance? Most likely. Will an amended Convention cure all the major issues with award enforcement? Definitely not.  The Convention is a flexible document whose revision at this time is not justified.  It continues to fulfill its purpose and has been accepted by a majority of the world.  The amendment would be a massive undertaking for questions and issues that guidance, model laws, and State sovereign agreements could resolve.

[1] New York Arbitration Convention, Contracting States-List of Contracting States, available at http://www.newyorkconvention.org/list+of+contracting+States

[2] UNCITRAL, supra note 1.

[3] Id.

[4] Paula Hodges QC, Alastair Henderson, Gitta Satryani, Vanessa Naish and Hannah Ambrose, 60 years of the New York Convention: a triumph of trans-national legal co-operation, or a product of its time and in need of revision?, Inside Arbitration: Perspectives on Cross-Border Disputes (Herbert Smith Freehills, July 2018) available at https://www.herbertsmithfreehills.com/latest-thinking/60-years-of-the-new-york-convention-a-triumph-of-trans-national-legal-co-operation

[5] Andrew de Lotbinière McDougall QC & Nika Larkimo, Recent trends in International Arbitration, White & Case (Feb 27, 2018) available at https://www.whitecase.com/publications/article/recent-trends-international-arbitration

[6] The United States, Australia, the United Kingdom, and Canada had not yet joined.  UNGAOR, 2nd Sess, IM Doc A/CN.9/22 (7 February 1969).

[7] Robert C. Bird, Enforcement of Annulled Arbitration Awards: A Company Perspective and an Evaluation of a New York Convention, 37 N.C. J. Int’l L. & Com. Reg. 1013 (2011).

[8] Emmanuel Gaillard, The Urgency of Not Revising the New York Convention, in The New York Convention at 50 689, 692 (A.J. Van Den Berg, 2008).

[9] Id.

[10] From Brexit to the nationalist policies implemented in Japan, India, the Philippines, China, and Turkey, from the election of Donald Trump and Boris Johnson to the successes of far-right parties in Italian, German, and Austrian elections, there is a rise of nationalist policies in many countries. See Florian Bieber, Is Nationalism on the Rise? Assessing Global Trends, 17(5) Ethnopolitics 519 (2018) available at https://doi.org/10.1080/17449057.2018.1532633.  I would even venture to say that in States where nationalist parties do not have a stronghold in the legislature, their ideals would make passage and ratification of this new Treaty difficult. See Sheryl Gay Stolberg, McConnell Promised to End Senate Gridlock. Instead, Republicans are stuck in Neutral. (New York Times Aug. 3, 2019) available at https://www.nytimes.com/2019/08/03/us/politics/senate-votes-mcconnell.html; Shawn Zeller, Divided government will pose an obstacle to lawmaking in 2019 (Roll Call Jan. 3, 2019) available at https://www.rollcall.com/2019/01/03/divided-government-will-pose-an-obstacle-to-lawmaking-in-2019/.

[11] Hodges QC, supra note 6

[12] Marike R. P. Paulsson, The Future of the New York Convention in Its Most Extreme Sense: A Dual Convention that Disposes of National Setting Aside Regimes (Kluwer Arbitration Blog Aug. 15, 2018) available at arbitrationblog.kluwerarbitration.com/2018/08/15/the-future-of-the-new-york-convention/?doing_wp_cron=1588110243.3603050708770751953125

[13] Melissa Balikci, 60 Years of the New York Convention, Erdem & Erdem available at http://www.erdem-erdem.av.tr/publications/newsletter/60-years-of-the-new-york-convention/

[14] UNCITRAL, supra note 1.

[15] Id.

[16] Gaillard, supra note 11 at 692.

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