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Enforcement of Arbitral Awards in International Investment Disputes
Enforcement of Arbitral Awards in International Investment Disputes
The 'transportability' of arbitral decisions under the Washington Convention on the Settlement of Investment Disputes and the New York Convention provides benefits of international arbitration over litigation. The majority of international arbitration rulings are currently complied with voluntarily because of enforcement procedures and unfavourable press. But there will probably be more cases of rewards not being paid willingly as BIT claims grow in number, particularly where the underlying claims raise important domestic political problems. Under public interest exceptions and domestic immunity rules, unsuccessful parties that fail to pay may have recourse. This is especially true if the failed parties are states. Under either agreement, a respondent state may also request a stay of enforcement of an arbitral ruling while an annulment application is being considered. The UNCITRAL Model Law and UNCITRAL Arbitration Rules serve as the foundation for the legal framework that governs the execution of foreign arbitral rulings. A challenge to an arbitrator on the grounds of lack of independence, impartiality, or qualification may be made under Section 13 of the 1996 Act. The competence-competence concept is included in Section 16, which gives the arbitral tribunal the authority to decide on matters within its purview, such as the existence or legality of the arbitration agreement.
Based on Art. 34 of the Model Law, Section 34 of the 1996 Act specifies the circumstances under which an award may be set aside. Nevertheless, the Act establishes new reasons in India, including fraud or corruption, breaching Sections 75 or 81, and conciliation procedures. The main requirement of the New York Convention is that contracting nations recognise and enforce international arbitral rulings in conformity with their domestic procedural laws. Opposing parties may contest enforcement on the following grounds: incompetence; lack of due process; award exceeding tribunal jurisdiction; irregularity in the makeup of the tribunal; and award not binding, suspended, or set aside in the nation of its making. An international framework for the arbitration of investment disputes between 143 parties is provided under the ICSID Convention. The 'transportability' of arbitral decisions under the Washington Convention and New York Convention on the Settlement of Investment Disputes makes international arbitration preferable to litigation. The majority of awards are voluntarily complied with because of enforcement procedures and unfavourable press. But there will probably be more cases of rewards not being paid willingly as BIT claims grow in number, particularly where the underlying claims raise important domestic political problems. Public interest exclusions and domestic immunity rules govern redress for unsuccessful parties that are unable to pay. Under either agreement, a respondent state may also request a stay of enforcement of an arbitral ruling while an annulment application is being considered.
The UNCITRAL Model Law and UNCITRAL Arbitration Rules serve as the foundation for the legal framework that governs the execution of foreign arbitral rulings. Based on Art. 34 of the Model Law, Section 34 of the 1996 Act specifies the circumstances under which an award may be set aside. The Act establishes new reasons in India, including fraud or corruption, breaking Sections 75 or 81, and conciliation procedures. The main requirement of the New York Convention is that contracting nations recognise and enforce international arbitral rulings in conformity with their domestic procedural laws. An international framework for the arbitration of investment disputes between 143 parties is provided under the ICSID Convention. The parties are allowed to reopen the arbitration if they so want, but the court is unable to fix the arbitrators' mistakes and may only annul the award. Because the parties to the agreement consciously choose arbitration over court proceedings, the provision's goal of maintaining the court's supervisory role at a minimum is warranted. It cannot be argued that, in light of the 1996 Act, the standards regularly established by the Supreme Court and other High Courts are no longer sound law. The New York Convention or the ICSID Convention provides for the enforcement of arbitral verdicts acquired through private contracts or treaties against a state. International financial centres and other contracting states are suitable locations for this. However, domestic rules on sovereign immunity and public policy limit the power to enforce against a state. A state may also try to cause trouble by requesting that an award be revoked in national courts or before an ICSID ad hoc committee. Payment under an award may be delayed significantly by the annulment process, but there are a few reasons why an award may be annulled. Domestic sovereign immunity laws continue to be the biggest obstacle to having an arbitral ruling against a state satisfied.
References
[1] Khindria, Tony. "Enforcement of arbitration awards in India." Int'l Bus. LJ (1995): 256.
[2] Tupman, W. Michael. "Staying Enforcement of Arbitral Awards under the New York Convention." Arbitration International 3.3 (1987): 209-225.
[3] Saunders, Matthew, and Claudia Salomon. "Enforcement of arbitral awards against states and state entities." Arbitration International 23.3 (2007): 467-476.
[4] Mistelis, Loukas A. "Award as an investment: The value of an arbitral award or the cost of non-enforcement." ICSID review 28.1 (2013): 64-87.
- The transportability of arbitral decisions under international conventions makes arbitration preferable to litigation.
- Compliance with arbitration rulings is typically voluntary, but non-payment may increase with growing investment dispute claims.
- Challenges to enforcement exist due to domestic rules on sovereign immunity and annulment processes, particularly when states are involved.
