The advantages of arbitration for companies that transact business around the world are many: expedited resolutions, lower legal costs and knowing the playing field in advance are high among them. But businesses with international contractual relationships must always take into account that an arbitration result may be subject to appeal in courts in any jurisdiction where a party attempts to enforce an award.
One such scenario arose in a recent case decided by the Supreme Court of the United Kingdom. The court was asked to review an arbitration award in excess of $20 million won by a Saudi real estate development company in a French tribunal. Two lower courts in the UK had found that the Pakistani government was not bound by the arbitration agreement, due to a legalistic distinction between states and state entities, and the highest court agreed.
On the other hand, in a decision from earlier in 2010, the Swiss Federal Supreme Court refused to re-examine an arbitration award on the basis of whether it was contrary to public policy. The applicant argued for the application of the legal doctrine of pacta sunt servanda, which means "agreements must be kept." The dispute involved the contract defining the terms of the trade of a soccer player from a Uruguayan club to a Mexican club, originally heard by the Fédération Internationale de Football Association (FIFA). The Swiss court's decision suggests a very narrow availability of the public policy argument in deference to contractual terms and resolutions.
Such authorities as Article V (2) (b) of The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as The New York Convention, state that recognition of an award may be refused if it would be contrary to the public policy of the country where enforcement is sought. Clients must always understand that arbitration can lead to appellate litigation on foreign shores, and prepare accordingly.
Securing the Advice of Counsel With International Arbitration Experience
A range of legal actions require advice and representation from a law firm that understands the complexities triggered when payment and obligations cross international borders. Commercial contract disputes, admiralty and maritime matters, and enforcement of foreign courts judgments are common examples.
By enlisting the services of attorneys who are capable of aggressive action in any forum, businesses can gain the security of knowing that their case will benefit from consistent counsel.