Under Article 1(3) of the New York Convention, ratifying states have the option to limit the applicability of the Convention. The first of these limitations refers to a reciprocal approach, where states declare that they will only enforce awards made in a country that is also a contracting state of the New York Convention. Secondly, a contracting state might declare that it will only apply the Convention to “commercial” relationships, with “commercial” interpreted in accordance with the laws of that state.
The New York Convention outlines the requirements for: (i) the enforceability of an arbitration agreement, (ii) the conditions for recognition and enforcement of an arbitration award, and (iii) the grounds for refusing recognition and enforcement of an arbitration award.
The “Agreement in Writing” Requirement
Article II of the New York Convention makes clear that a fundamental requirement for the enforceability of an arbitration agreement is that it must exist in writing. The term “agreement in writing” is defined in Article II(2) to include an arbitral clause in a contract, or an arbitration agreement signed by the parties or contained in an exchange of letters and telegrams. It should be noted that the Model Law on International Commercial Arbitration (“Model Law”), adopted by many states that are signatories to the New York Convention, provides a much broader interpretation of the “writing” requirement — one that accounts for newer modes of communication.
Further conditions outlined in Article II(1) include the existence of a “defined legal relationship” and the “arbitrability” of the dispute.
Practical Requirements for Recognition and Enforcement
The New York Convention sets out the practical requirements for recognition and enforcement of an arbitral award in Article IV. These requirements include the duty to provide a duly authenticated original award (or a duly certified copy), along with the original arbitration agreement (or a duly certified copy). Further translation requirements apply if the award is in a language different from the official language of the country where recognition and enforcement is sought.
Grounds for Refusal
Several grounds for refusing recognition and enforcement of an arbitration award are listed in Article V of the New York Convention. Importantly, these grounds are exhaustive — no other basis for refusal is permitted. It’s also worth noting that the existence of one of these grounds does not necessarily lead to automatic refusal. The Convention uses the word “may,” giving enforcing courts the discretion to recognize or enforce an award even where one of the listed grounds applies.