“Planes, paintings and Russian space assets” – Practicalities, challenges, successes and failures in the enforcement of arbitral awards against states and state entities

Wednesday 6 July 2016, 12.45 – 1.45pm BST

States are increasingly involved in disputes arising from commercial transactions and arbitrations with investors under various bilateral and multilateral investment treaties.  Resolving a dispute with a state is only the first step – more significant is the ability to enforce the award.

In this webinar, our speakers will draw on recent examples to discuss:

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English Court enforces arbitral award including a contractual penalty

The English High Court has enforced a Swiss-seated arbitral award (the Award) issued by the Court of Arbitration for Sport (CAS), notwithstanding that the Award ordered a payment representing enforcement of a contractual penalty.  The decision is significant because clauses which are considered penal under English law are not enforceable.  The test for whether a clause represents a penalty was recently considered and clarified by the English Supreme Court in the case of Makdessi, covered on our Litigation Notes blog here.      

The Court in this case did not consider that enforcement of the element of the Award representing the penalty would be contrary to public policy for the purposes of Article V(II) of the New York Convention 1958, finding that:

  1. there "is a strong leaning towards enforcement of foreign arbitral awards" and, given that the English law rule against penalties did not protect a "universal principle of morality", without more enforcement would not be refused; and
  2. the penalty was enforceable under the governing law as applied by the Tribunal and therefore, on application of "domestic principles", there was no reason why enforcement should be refused.

The decision is a welcome one in the context of international transactions, in which the parties may choose a governing law of a particular jurisdiction for their contractual obligations but may look to another jurisdiction for enforcement.  It is particularly important given that penalty clauses are a relatively regular feature in transactions in many sectors and jurisdictions. 

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Arbitration in the Middle East – expectations and challenges for the future

Craig Shepherd and Mike McClure from the HSF office in Dubai have co-edited a TDM (Transnational Dispute Management) Special entitled “Arbitration in the Middle East – expectations and challenges for the future”, that was published today. 

The Special considers a number of issues facing arbitration in the Middle East including the proliferation of new arbitral centres, updated statutory regimes to support arbitration and national courts recognising and enforcing arbitral awards.  It also reports on examples of where courts have assumed jurisdiction in spite of arbitration clauses and arbitral awards not being enforced for what appear to be minor procedural defects and public policy considerations that can play a major role in the region.

 A link to the Special is here.

For further information, please contact Craig Shepherd, Partner, Mike McClure, Senior Associate or your usual Herbert Smith Freehills contact.

Craig Shepherd
Craig Shepherd
+971 4 428 6304
Mike McClure
Mike McClure
Senior Associate
+971 4 428 6364

Victorian courts reinforce commitment to international commercial arbitration

Giedo van der Garde BV v Sauber Motorsport AG [2015] VSC 80; Sauber Motorsport AG v Giedo van der Garde BV [2015] VSCA 37

The occasion of the Formula One Grand Prix in Melbourne in mid-March 2015 provided a further opportunity for both the Victorian Supreme Court and the Victorian Court of Appeal to demonstrate its support for international commercial arbitration in Australia. The Court enforced a Swiss arbitral award ordering that an F1 team refrain from taking action which would deprive a driver from his entitlement to participate in the 2015 season as one of its nominated drivers.

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New York Convention enters force in the Democratic Republic of the Congo

Today, 3 February 2015, the Democratic Republic of the Congo became a Contracting State to the New Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958. In June 2013, the DRC passed legislation to facilitate its accession to the New York Convention. However, in order to finalize the accession, the DRC needed to deposit its instrument of accession with the Secretary-General of the UN, 90 days after which the New York Convention would enter into force. Continue reading