Discuss securing an advantageous jurisdiction/legal code for post-arbitral enforcement proceedings

The following article discusses session two in the IR Global Virtual Series on ‘Staying Ahead of the Curve – Implementing Effective Arbitration Agreements’.

Austria – KO You do not get to choose anything for the post-proceedings phase in Austria. I can only think of possibly challenging the award. That's the only thing which follows the actual arbitrary proceedings and it depends on where the losing party’s assets are. This is the only aspect I would consider.

Germany – FW You could challenge the award in the country where the seat of arbitration takes place, or you could challenge the award within the framework of advancement or actions against enforcement proceedings in the state where it shall be enforced.

That would probably be the main difference, meaning there could be two different states where you have a basis or starting point for challenging the award. It's hardly something you could choose before, or take into consideration prior to the arbitration proceedings.

Switzerland – PR When it comes to post-arbitral enforcement proceedings, I like to ensure agreement in advance and employ interim reliefs if necessary.

Arizona – MH Typically, the majority of arbitration enforcement provisions that I have encountered are addressed in the specific contractual agreement. For those that are not addressed in the contract, the enforcement location will be agreed upon between the parties at the beginning of arbitration.

A written arbitration agreement might actually stipulate, where both parties agree that the enforcement of any arbitration award will occur in a specific jurisdiction in the United States (typically a state or a handful states are agreed upon.)

Usually, the state or states that are picked directly relate with where the parties are located. This is a bit more advantageous, because, to enforce the award, you simply go to the court building down the street from your firm, rather than to another state.

In the United States, most of the individual states have very similar arbitration enforcement statutes. These are based on the Uniform Arbitration Act (UAA), which is basically arbitration statutory language that's been developed over the last 60 years. Most of the individual states in the United States have adopted at least some form of the Act.

If there is no specific agreement between the parties, the statutes in the individual states will allow enforcement for any party who has a principal place of business in that state. The individual states have set procedures in place to enforce Provisions as well.

Because of the consistency of the UAA, no party is going to receive advantageous enforcement, or defence to enforcement, from one state to the other for the most part. There are exceptions to that rule, but they're not as prevalent.

What is more relevant is the convenience and cost factors. These factors are the reasons why I always lean towards allowing the parties to essentially select a state or states where the judgment award can be enforced.

Usually, if a client receives an arbitration award, or a party is on the losing end of an arbitration award, all of the parties will generally confer and agree upon payment for a certain amount, rather than spend additional time and expenses trying to enforce the judgment in whatever state is listed in the contract. All parties will come to some kind of negotiated resolution, without initiating the enforcement process at all.

Italy – RRS The choice of the seat of arbitration, as previously mentioned, is usually to be made upfront. Submission is possible once a dispute has already arisen, but not easy to agree upon, simply because the parties are no longer at the same starting point. While creditors may have an interest in speeding up a decision on a claim, debtors normally have the opposite goal.

Enforcement proceedings must be viewed from a different perspective. Once a party has secured a final and binding award, then it may request enforcement it in whatever state it wishes. If such state has ratified the 1958 New York Convention this will certainly be much easier.

There might be language in the contract and/or in additional agreements and during the arbitration that may help in this direction.

What is important to understand is that, in any event, arbitrators shall be supported by the parties to conduct the proceedings in the proper way and render a lawful award. Any deviation from this will allow the losing party, that is likely to be interested in opposing the award at the enforcement stage, to raise objections that will slow down the outcome of the award.

Italy is an enforcement friendly jurisdiction, where foreign awards are usually prima facie recognised unless they breach public policy rules or Italian mandatory provisions.

Argentina – AR Whenever you go into arbitration you need to make an analysis of soft and hard laws, in order to select the proper arbitration tribunal, as well as a venue.

During the past 20 or 30 years there has been a wide and in-depth elaboration of guidelines standards and codes of best practices for the conduct of proceedings, issued by several groups such as the International Bar Association (IBA), the International Chamber of Commerce’s Court of Arbitration (ICC) or the American Arbitration Association (AAA). These have often been called the soft law of arbitration procedure.

in Argentina, all these institutional arbitrations are very well known and there have been a number of cases where Argentine litigants have submitted arbitrations to these institutions. In addition, in Argentina, there is a very well-known and reputable arbitration panel handled by the Buenos Aires Stock Exchange and the American Chamber of Commerce (ACC), of which I am the chairman.

It’s also necessary to consider the national norms as well as international treaties governing the arbitration, which have been called the hard law of arbitration procedure. Only last month, Argentina adopted the UNCITRAL model law for Commercial International arbitration.

This is an important advance in terms of the hard law applicable in Argentina because we have adopted a very widely brought global procedure for arbitration.

Ad-hoc arbitration may be recommended when the size of the arbitration doesn't pay for the eventual cost of results from a body such as AAA or ICC, which normally deemed to be more applicable and recommendable when the size of the dispute is significant.

I normally make sure that the UNCITRAL parameters are respected and do pay a lot of attention in drafting an arbitral agreement which ensures that the arbitration procedure is fairly conducted.

Forum selection depends on the hard law of the venue, because, at the time the award is to be enforced, we want a country that adheres to the New York Convention and will facilitate the enforcement procedure. Another issue to be taken into account is the legal culture of every creation page, even though the parties may have selected applicable governing law and procedural laws.

It is important to ensure that the arbitration agreements around substance and procedure do not invalidate pre-dispute agreements to allocate arbitration costs in advance of the dispute.

It is a general rule that the arbitration agreement should consider the power vested in the arbitration tribunal, to establish the burden of cost, mainly following the rules on who won and who lost the case, to avoid inconsistency and problems at the time of enforcement.

Turks & Caicos Islands – SW It very much depends on what you mean by advantageous jurisdiction.

If you're the winner of arbitration, you want a jurisdiction that restricts the ability to challenge the award and, in that respect, because of the inadequacies of our legislation, the Turks and Caicos Islands is an advantageous jurisdiction.

On the other hand, if you’re looking to enforce an award, you principally want to be able to take advantage of the New York Convention, or at least you want to enforce in a jurisdiction that recognises arbitration awards as if they are local court judgments and makes it easy to enforce.

Ordinarily, of course, you're going to be looking to enforce in jurisdictions where the defendant has its assets.

Dominican Republic – PGT The enforcement of an award is different if we are dealing with an international award, rather than a local one.

If we are dealing with an international award, then it has to be domesticated and obtain the exequatur under the New York Convention. The process for the exequatur of an international award must be filed and conducted before the national district court that sits in the capital, Santo Domingo.

The Dominican Republic became a signatory to the New York Convention in 2002 after some pressure on Congress to ratify the convention at the time and I had the opportunity to file one of the very first cases than under the new statute.

If we are dealing with a local award, then you can enforce a decision anywhere in the country. A claimant must take the decision about whether they wish to waive any rights to an appeal or challenge of the arbitration award before it is enforced. In some cases, it is worth doing this, because it will expedite the enforcement, but that will take an analysis in advance on the procedural position of a client, in case of a future dispute, It may be that, under the terms of the contract, the client would have a higher tendency to seek remedies.

Hong Kong – EW I would choose to enforce arbitral awards in the jurisdiction which the opposition party has assets and in which the court would readily recognise and enforce arbitral awards.

Hong Kong would be an attractive jurisdiction to enforce arbitral awards because the Hong Kong Courts would recognise and enforce arbitral awards, and there is rarely any case in Hong Kong in which arbitral awards are refused.

U.S., Florida – GD There is never going to be an agreement in advance, however, the most important thing for a client in considering post-award enforcement would be where the other side is located. If they are in a country that recognises the NY Convention, we can take the award no matter where rendered and enforce it.

If they are not, we must look at the difficulty of enforcing an award, and this has to be thought through before agreeing to the arbitration clause.

You may still want to agree to arbitration with an entity from a country that is not a NY Convention member, however, if you did proceed to arbitration, you would only want to do that with an entity that has moveable assets worldwide that can be grabbed in order to satisfy a judgment.

The advantage of doing arbitration in Florida is that we allow lawyers from anywhere in the world to come here and arbitrate, you don’t have to be licensed in Florida. If you want to have a local presence, that can be arranged and you can hire local counsel to arbitrate with you. Lawyers and clients from all over the world come to Florida to do arbitrations.

California has been to the contrary, and that really hurt their attractiveness as a locale for arbitration. They have just changed their law.

There are no disadvantages to doing arbitration in Florida. We have a very experienced federal judicial branch that hears lots of arbitration issues, and we also have a dedicated judge in the state system, who is responsible for hearing disputes on the enforcement of arbitration clauses.

CONTRIBUTORS

Ruggero Rubino Sammartano (RRS) LawFed BRSA – Italy www.irglobal.com/advisor/ruggero-rubino-sammartano

Stephen Wilson, QC (SW) Graham Thompson – Turks & Caicos Islands www.irglobal.com/advisor/stephen-wilson-qc

Dr. Klaus Oblin (KO) OBLIN Rechtsanwälte GmbH – Austria www.irglobal.com/advisor/dr-klaus-oblin

Gary E Davidson (GD) Diaz Reus – U.S. – Florida www.irglobal.com/advisor/gary-e-davidson

Peter Ruggle (PR) Ruggle Partner – Switzerland www.irglobal.com/advisor/peter-ruggle-switzerland

Matthew Harrison (MH) Harrison Law, PLLC – U.S. – Arizona www.irglobal.com/advisor/matthew-harrison

Eric Woo (EW) ONC Lawyers – Hong Kong www.onc.hk/en_US/eric-woo/

Dr. Alfredo L. Rovira (AR) Estudio ROVIRA – Argentina www.irglobal.com/advisor/dr-alfredo-l-rovira

Pablo González Tapia (PGT) González Tapia Abogados– Dominican Republic www.irglobal.com/advisor/pablo-gonzalez-tapia

Florian Wettner (FW) METIS Rechtsanwälte LLP – Germany www.irglobal.com/advisor/florian-wettner

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