london conference (2000)
Post on 05-Jan-2017
Embed Size (px)
INTERIM REPORT ON PUBLIC POLICYAS A BAR TO ENFORCEMENT OF
INTERNATIONAL ARBITRAL AWARDS
Dr Mohammed Aboul-Einein (Egypt)Alternate: Professor Ahmed El-Kosheri
Mr Guillermo Aguilar Alvarez (Mexico)Judge Koorosh H Ameli (HQ/Iran)Professor David J Attard (Malta)Professor Sidnei Beneti (Brazil)Mr Piero Bernadini (Italy)
Alternate: Professor Giorgio RecchiaProfessor Karl-Heinz Bckstiegel
(Germany)Alternate: Dr Norbert Wuhler
Professor Bengt Broms (Finland)Alternate: Judge Gustaf Moller
Mr Charles N Brower (USA)Professor Fernando Carmona (Brazil)Professor Bernardo M Cremades Sanz-
Pastor (HQ/Spain)M Jean-Louis Delvolve (France)M Yves Derains (France)Lord Devaird QC (UK)Direktor Ulf Franke (Sweden)
Alternate: Professor Lars HjernerProfessor Julio Gonzalez Soria (Spain)Dr Horacio Alberto Grigera Naon
(Argentina)Mr Mustapha Hamdane (HQ/Algeria)Professor Bernard Hanotiau (Belgium-
Luxembourg)Alternate: Professor Hans van Houtte
Mr Michael F Hoellering (USA)Professor Bernd von Hoffmann (Germany)Dr Pierre Karrer (Switzerland)
Alternate: Maitre Teresa Giovannini Dr Mojtaba Kazazi (HQ/Iran)Professor Tae Ryun Kim (Korea)
Alternate: Professor Young-Gil Park Dr A F M Maniruzzaman (Bangladesh)Mr Fernando Mantilla-Serrano
(HQ/Colombia)Mr F S Nariman (India)
Alternate: Mr S K Dholakia Mr Philip D ONeill, Jr (USA)The Hon Justice Rodney Purvis QC
(Australia)Alternate: The Hon Andrew Rogers Alternate: Mr Damian Sturzaker
Professor Toshio Sawada (Japan)Professor Jose Luis Siqueiros (Mexico)Dr Atef Suleiman (HQ/United Arab
Emirates)Mr L H W van Sandick (Netherlands)Mr V V Veeder Q C (UK)Professor Dragica Wedan-Lukic (Slovenia)Mr David Williams QC (New Zealand)Mr Stephen Kai-yi Wong (Hong Kong)
INTERNATIONAL LAW ASSOCIATION
LONDON CONFERENCE (2000)
COMMITTEE ON INTERNATIONAL COMMERCIAL ARBITRATION
Members of the Committee:
Professor Pierre Mayer (France): ChairmanMr Audley Sheppard (UK): Co-RapporteurDr Nagla Nassar (Egypt): Co-Rapporteur
I. INTRODUCTIONThis is an interim report of the Committee on the topic of public policy as a
ground for refusing recognition and enforcement of international arbitral awards.
This report comprises the following sections:I. IntroductionII. Definitions of public policyIII. Enforcement conventions and national legislationIV. Content of public policy
A. FinalityB. Substantive public policyC. Procedural public policy
V. Whose public policy?VI. Extent of review by the courtsVII. Conclusion
As all arbitration practitioners and scholars know, violation of public policy(or ordre public) of the enforcing State has long been a ground for refusingrecognition/enforcement of foreign judgments and awards. This principle isenshrined in Article V.2 of the New York Convention1 and Article 36 of theUNCITRAL Model Law2. The public policy exception to enforcement is anacknowledgement of the right of the State and its courts to exercise ultimatecontrol over the arbitral process. There is a tension, however, which the legis-lature and the courts must resolve between: on the one hand, not wishing to lendthe States authority to enforcement of awards which contravene domestic lawsand values; and, on the other hand, the desire to respect the finality of foreignawards. In seeking to resolve this tension, some legislatures and courts havedecided that a narrower concept of public policy should apply to foreign awardsthan is applied to domestic awards. This narrower concept is often referred toas international public policy (or ordre public international). This name sug-gests that it is in some way a supra-national principle; however, in practice it isno more than public policy as applied to foreign awards and its content andapplication remains subjective to each State.
It has been suggested, instead, that only if an award is contrary to trulyinternational public policy or transnational public policy, representing an
2 INTERNATIONAL LAW ASSOCIATION
1 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New Yorkon 10 June 1958 (the New York Convention); United Nations Treaty Series (1959), vol. 330, p.38, no. 4739. The New York Convention has been ratified, acceded or succeeded to by over 120countries, although not all of those countries have implemented domestic legislation or court pro-cedures needed to give practical effect to the Convention. See van den Berg, The New YorkConvention of 1958 (Kluwer, 1981).2 United Nations Commission on International Trade Law (UNCITRAL) Model Law onInternational Commercial Arbitration, as adopted by UNCITRAL on 21 June 1985, and recom-mended by the General Assembly of the United Nations to Member States on 11 December 1985(Resolution No. 40/72).
international consensus as to universal standards and accepted norms of conductthat must always apply, should courts refuse recognition or enforcement.
This Report reviews the development over the past fifteen years3 of the con-cept of public policy as applied by enforcement courts.4
This Report builds on the paper presented to the Committee by RapporteurSheppard at the previous ILA Conference in Taiwan in 1998, and the commentsmade during that Conference. Subsequently, all Committee members and somenon-members were invited to respond to the following enquiry:(a) Please forward a copy or the text of the relevant legislation and/or con-
ventions that provide that enforcement of awards may be refused ongrounds of public policy.
(b) Comment on the practice of the courts, with examples of decisions inwhich enforcement has been refused and also of decisions in which appli-cations based on public policy have been rejected. What principles ofpublic policy were alleged to have been violated?
(c) Comment on whether the courts, when considering public policy, make adistinction between domestic and international awards; between awardsrendered in the country of the forum and awards rendered abroad; andbetween domestic public policy, international public policy and trulyinternational public policy. Is there a trend towards allowing enforce-ment of foreign awards save in the clearest breaches of international pub-lic policy?
(d) Comment on whether similar or different principles are applied in respectof foreign court judgments.
(e) Comment on whether the courts distinguish between two aspects of pub-lic policy, namely fundamental principles (such as pacta sunt servanda,fraus omnia corrumpit, prohibition of racial discrimination) and manda-tory rules of law or lois de police (in the sense of Article 7 of the 1980Rome Convention; this could include competition law, company law,bankruptcy law, etc.).
(f) Comment on whether violation of foreign mandatory rules of law or loisde police by an award can constitute a ground for refusing enforcement.
(g) Is it possible to identify other categories of public policy?(h) Comment on whether the courts will reconsider the facts underlying an arbi-
tration award to determine whether there has been a violation of public policy.
COMMITTEE ON INTERNATIONAL COMMERCIAL ARBITRATION 3
3 A comprehensive review of the various applications of public policy in international commer-cial arbitration was conducted in 1986 by the International Council for Commercial Arbitration, seeICCA Congress Series No. 3, Comparative Arbitration Practice and Public Policy in Arbitration(Kluwer, 1987). For a very recent review, see Racine, LArbitrage Commercial International etLOrdre Public (LGDJ, 1999).4 For a detailed analysis by our Committee Chairman of the determination and application byarbitral tribunals of public policy, including mandatory laws or lois de police, see Mayer,Mandatory rules of law in international arbitration, (1986) 2 Arbitration International 274; andMayer, La sentence contraire a lordre public au fond, (1994) Rev. Arb. 615; and see other com-mentaries cited at nn. 86 and 87 below.
We are grateful to the following Committee Members for their responses andcomments: Dr Horacio Grigera Naon (Argentina); Sir Laurence Street, TheHon. Rodney Purvis, The Hon. Andrew Rogers and Mr Damian Sturzaker (jointreport) (Australia); Professor Bernard Hanotiau (Belgium/Luxembourg);Professors von Hoffman and Karl-Heinz Bckstiegel (joint report) (Germany);Mr. S. K. Dholakia (India); Professor Avv. Piero Bernardini (Italy); ProfessorAvv. Giorgio Recchia (Italy); Professor Young Gil Park (Korea); Lic. GuillermoAguilar Alvarez (Mexico); Professor Jos Luis Siqueiros (Mexico); Mr L. H. W.van Sandick (The Netherlands); Prof. Dragica Wedam-Lukic (Slovenia); MrFernando Mantilla-Serrano (Spain); Dr Atef Suleiman (HQ/UAE); and the fol-lowing non-Committee members: Professor Arelino Leon (Chile); Advokat JanErlund (Denmark); Ms Anna Mantakou (Greece); Dr Abdul Hamid El-Ahdab(Middle East); Dr Andrzej Tynel (Poland); Dr Bandar Salman Al Saud (SaudiArabia); Mr Nigel N. T. Li (Taiwan); and Dr Rauf Versan (Turkey).
All comments and responses have been circulated to Committee members.
II. ATTEMPTS TO DEFINE PUBLIC POLICYIt is notoriously difficult to provide a precise definition of public policy (in
the context of enforcement of arbitral awards). The definitions which have beenarticulated have, however, not changed markedly over the years.
Violation of basic notions of morality and justiceThe English House of Lords in 1853 described public policy as that princi-
ple of law which holds that no subject can lawfully do that which has a tenden-cy to be injurious to the public, or against public good.5 Cheshire and Northrefer to some moral, social or economic principle so sacrosanct ... as to requireits maintenance at all costs and without exception.6 In the context of enforce-ment of an arbitral awa