Lack of jurisdiction of tribunals & procedural inconsistencies of arbitral awards are the two main issues the NYC tries to tackle. Tribunals in most jurisdictions are sufficiently authorized to render awards as per the principle of kompetenz-kompetenz. Considered pivotal to the arbitration process’ stability, it provides debtors with a chance to challenge decisions, even if a tribunal isn’t authorized to deliver them. Under Article 5, awards rendered by foreign courts can be rejected if:
- an arbitration agreement is considered invalid pursuant to the legislation if the countries it’s been concluded in;
- arbitration agreements deal with matters falling outside arbitral awards’ scope.
Initiating arbitration in Europe or America requires determining an arbitration agreement’s validity according to the legislation governing the arbitration site. A problem with determining an argument's validity emerged due to investment-related claims filed in the EU. Based on EU treaties, they don’t have any documentary basis, such as a valid arbitration agreement; hence, those initiating arbitration proceedings for the protection of foreign investments in the EU have to cite other documents.
Another area of concern is claims collective arbitration. It’s believed that initiating collective arbitration in the US would put arbitration agreements’ confidentiality in jeopardy.
One of the serious limitations of tribunals’ powers is the consent of parties. Frequently, arguments provided by debtors in their claim differ from the ones presented during a tribunal. Also, there’s cases in which tribunals go beyond the scope of their mandate. Revolking courts' excessive powers is only possible if they have no jurisdiction.
The two questions arising in connection with enforcement of awards by courts in the EU & US are:
- What’s the reason for cancelling an arbitral award?
- Was immunity from action a basis for enforcing an award?
Making a Decision Annulled Immediately
Under Article 5, debtors can challenge enforcement decisions if they’ve been overturned/suspended by relevant authorities. However, there may be another problem here, and namely, whether courts have jurisdiction. Rendering arbitral awards in America, for instance, requires their enforcement; however, enforcing awards requires ensuring that there’s no grounds for refusal.
Since arbitrations have been on the increase lately, initiating litigation against sovereigns in the EU or US is becoming quite commonplace; however, quite a few of such arbitrations are governed by UNCITRAL’s ad hoc proceedings.
Under FSIA, foreign countries must be protected from US courts’ jurisdiction if a claim for enforcing agreements concluded by foreign states on behalf of private parties has been filed.
A similar approach to state immunity is taken by other jurisdictions, such as Sweden & Switzerland. According to it, immunity is annulled if a foreign country has agreed to initiate arbitration in Switzerland or Sweden.
Dealing with jurisdictional issues requires developing an effective strategy. By entrusting it to IQ Decision UK, you will no longer have to worry about choosing the right jurisdiction. Our team of highly qualified experts will assist you with initiating arbitration proceedings in the US & help you resolve disputes in the EU.