Under Article 1(3) of the New York Convention, ratifying states have the option to limit the applicability of the New York Convention. The first of the two limitations refer to a reciprocal approach by states declaring to only enforce awards made in a country that is also a contracting state of the New York Convention. Secondly, a contracting state might declare to only apply the New York Convention to “commercial” relationships, whereby “commercial” shall be interpreted in accordance with the laws of such state.

The New York Convention outlines the requirements for (i) the enforceability of an arbitration agreement, (ii) the conditions of recognition and enforcement of an arbitration award and (iii) the grounds for a refusal of the recognition and enforcement of an arbitration award.

Article II of the New York Convention makes it clear that a fundamental requirement for the enforceability of the arbitration agreement is the need for such an agreement to exist in writing. The term “agreement in writing” has its legal definition in Article II (2) of the New York Convention “as 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 must be noted that the “Model Law on International Commercial Arbitration” (“Model Law”) that has been adopted by many states which are signatories of the New York Convention provides a much broader interpretation of the “writing” requirement taking into account newer modes of communication.

Further conditions outlined in Article II (1) New York Convention are a “defined legal relationship” and the “arbitrability” of the dispute.

The New York Convention further outlines the practical requirements for a recognition and enforcement of the arbitral award in its Article IV. Such requirements are the duty to provide a “duly authenticated original award or a duly certified copy thereof “and the original arbitration agreement or a duly certified copy thereof. Further translation requirements are stated if the award is in a different language from the official language in the country of recognition and enforcement.

Several grounds for refusal of the recognition and enforcement of an arbitration award are listed in Article V of the New York Convention. It should be noted that the grounds outlined in the New York Convention are exhaustive. No other grounds for refusal of recognition and enforcement are permitted. Further, it is important to understand that the grounds for a refusal do not necessarily lead to an automatic refused enforcement. The New York Convention uses the term “may” and provide the enforcing courts with the option to recognize or enforce the award even if the outlined grounds are applicable.

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DUENSING KIPPEN is an international law firm specializing in business transaction and dispute resolution matters, with offices in Bangkok and Phuket, Thailand and affiliated offices in 45 other countries. Visit them at: duensingkippen.com

The relevance of the New York Convention is demonstrated by the fact that a majority of countries have adopted it. By 2013, 149 countries have adopted the New York Convention. The broad applicability of the New York Convention to the recognition and enforcement of arbitral awards made in another state makes it the most recognized way of settling international disputes.

Along with the 1965 “Convention on the Settlement of Investment Disputes between States and Nationals of Other States”  (“Washington Convention”), that intends to protect investors in a foreign state, the New York Convention is one of the cornerstones of international arbitration.

The legal relevance of the New York Convention is two-fold:

Firstly, Article II (3) of the New York Convention regulates the enforceability of the arbitration agreement. A court of a contracting state is required, if so requested by one party, to refer a dispute to arbitration if there is an arbitration agreement between the disputing parties in place.  Therefore, the dispute is taken out of the jurisdiction of the state courts and resolved via arbitration.

Secondly, the legal relevance of the New York Convention can be observed when it comes to the “recognition” and “enforcement” of international arbitration awards. An international arbitration award must be treated as binding in the territory of the state applying the convention. The enforcement of the award will take place in accordance with the rules and procedures of the enforcing state. A review of the “merits” of the award is not permitted.

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DUENSING KIPPEN is an international law firm specializing in business transaction and dispute resolution matters, with offices in Bangkok and Phuket, Thailand and affiliated offices in 45 other countries. Visit them at: duensingkippen.com

After alternative dispute resolution was introduced and regulated by certain national legislators, it was recognised at the beginning of the 20^th century that in light of expanding international trade, an international dispute resolution process was required. The International Chamber of Commerce (“ICC”) established its International Court of Arbitration in 1923 in Paris, France. The purpose was to arbitrate in business disputes of an international character.

The issue of worldwide enforcement of arbitration agreements and arbitration awards became evident. Since international treaties are the means of resolution of transnational issues, the predecessor of the United Nations, the League of Nations along with the ICC started drawing up an international convention on the enforceability of arbitration agreements. The first such convention was the “Geneva Protocol on Arbitration Clauses” (“Geneva Protocol”) of 1923. The purpose of the Geneva Protocol was to ensure that arbitration clauses can be enforced internationally. According to the Geneva Protocol, the enforceability of arbitration awards however, was limited to the territory of the respective state in which the award has been made.

Only four years later, in 1927, the “Geneva Convention on the Execution of Foreign Arbitral Awards“ (“Geneva Convention”) was created. The reason for the establishment of the Geneva Convention was to expand the enforceability of arbitration awards from the limited approach of the Geneva Protocol. The expansion related to the enforceability of arbitration awards from the country in which the arbitration award originated to the territory of any state that becomes a signatory of the Geneva Convention.

In 1958 the “United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards” (“New York Convention”) was adopted by the United Nations. The New York Convention is substituting the Geneva Convention for countries that are a signatory to both, the Geneva Convention and the New York Convention.

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DUENSING KIPPEN is an international law firm specializing in business transaction and dispute resolution matters, with offices in Bangkok and Phuket, Thailand and affiliated offices in 45 other countries. Visit them at: duensingkippen.com

One of the advantages of arbitration proceedings over domestic court proceedings is the opportunity for the parties to select the person(s) that will decide on the issue in question, the arbitrator(s). In arbitration proceedings the parties are enabled to nominate arbitrators that have a certain specialized and up-to-date know-how that might be required to understand the technical background of the issues in question.

The number of arbitrators forming the tribunal must be an uneven number in accordance with Section 17 of the Arbitration Act of Thailand (2002) (the “Act”). If the parties nominate an even number, the appointed arbitrators will need to choose another arbitrator to create an uneven number. If the parties fail to agree on the number of arbitrators the Section 17 further provides that a sole arbitrator will be appointed. In Thailand, exactly how the arbitrators are appointed is up to the parties and generally the parties will agree that the rules of the institute conducting the arbitration dictate this procedure; failing which, the Act would dictate this procedure.

Section 19 of the Act requires that the arbitrator be “independent and impartial” and possess the particular qualifications, if any, agreed by the parties. The interpretations of the terms “independent” and “impartial” are highly controversial and subject to a dispute themselves. In general, it can be said that the absence of close relations between an arbitrator and a party means the arbitrator is independent; whereas “impartiality” refers to the arbitrator’s lack of prejudice with respect to a party or the matter in dispute. Such definitions are, however, still very vague.

Some guidance in this area has been provided by the International Bar Association (the “IBA”) its Guidelines on Conflicts of Interest in International Arbitration (the “Guidelines”). While the Guidelines are not legally binding, the standards they articulate are generally accepted and parties and arbitrators often use and cite them when the assessment of an arbitrator’s independence or impartiality is at issue. A potential arbitrator may, for example, turn to the Guidelines to determine what facts he is required to disclose prior to accepting an appointment to act as an arbitrator. Alternatively, for example, a party may turn to them to determine under what circumstances they can nominate or challenge an arbitrator.

Some of the most common issues that need to be assessed when determining whether or not an arbitrator is adequately independent and impartial are:

1)    the relationship between a party and the arbitrator;

2)    the relationship between a party and an arbitrator’s law firm;

3)    the relationship between an arbitrator and a party’s counsel;

4)    prior appointments as an arbitrator (repeated appointments by one party);

5)    ex-parte contacts immediately prior to appointment;

6)    non-disclosure of any of the above.

It must be noted that none of the above in itself determines that a potential arbitrator is not independent or not impartial. The determination of such will always depend on the circumstances in each individual case. And even no issue raises sufficient doubt of independence or impartiality at one stage of the arbitration proceedings, the arbitrator is duty bound to disclose the occurrence of any such later in the proceedings for the relevant parties’ consideration.

In case a party believes that an appointed arbitrator is not independent or impartial, such party has the right to challenge that arbitrator. The procedure for challenging an appointed arbitrator is dictated by the relevant arbitration institute’s rules and the Act. Where it is decided that an arbitrator was not independent or impartial at the time of appointment or was no longer independent or impartial later in the proceedings, that arbitrator will then be removed from the arbitral tribunal and replaced.

With regard to the arbitrator’s independence and impartiality it is noteworthy that Section 23 of the Act imposes (somewhat controversially vis-à-vis most other jurisdiction’s arbitration legislation) criminal sanctions on any arbitrator for “[…] wrongfully demanding, accepting,  or agreeing to accept an asset or any other benefit for himself or anyone else for doing or omitting to do any act in his duties […]”

Choosing the right arbitrator with the right skill set who will make the right decisions, is among the most important and sometimes also the most difficult decisions in the arbitration proceedings. Whether the right choice is someone with the right formal legal training, skills and experience or someone with a specialized or “hands-on” expertise will depend on the dispute that gave rise to the claim. Competent legal counsel with solid arbitration experience will not only be able to help the parties in making the right choice in relation to the proposed arbitrator, but will also be able to identify issues that makes a challenge of an arbitrator advisable if necessary.

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DUENSING KIPPEN is an international law firm specializing in business transaction and dispute resolution matters, with offices in Bangkok and Phuket, Thailand and affiliated offices in 45 other countries. Visit them at: duensingkippen.com