United States: International Arbitration (4th edition)

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This country-specific Q&A provides an overview of the legal framework and key issues surrounding international arbitration law in the United States.

This Q&A is part of the global guide to International Arbitration.

For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/international-arbitration-4th-edition/

  1. What legislation applies to arbitration in your country? Are there any mandatory laws?

    The U.S. Constitution establishes a federal system of government which gives specific powers to the federal (national) government, and all remaining power to the states. The statutory law governing arbitration therefore exists at both the federal and state levels. Additionally, under the U.S.’s common law system, the statutory law governing arbitration is developed through binding case law. Thus, practitioners should note both the state and federal legislation and case law in the jurisdiction in which an arbitration is seated.

    At the federal level, the Federal Arbitration Act (“FAA”), codified at Title 9 of the U.S. Code, governs arbitration in both state and federal courts. Chapter 1 of the FAA concerns arbitration generally, while Chapters 2 and 3 incorporate the New York and Panama Conventions, respectively. Chapter 1 of the FAA primarily governs domestic arbitration, but it also applies to international arbitration insofar as it does not conflict with Chapters 2 and 3. For example, an international arbitration involving a country that is not a party to either the New York or Panama Conventions (or the ICSID Convention) would likely be governed by Chapter 1 of the FAA.

    In addition to the FAA, each state has its own laws that govern arbitrations that are seated in that state. See, e.g., N.Y. C.P.L.R. 7501–7514 (2012); TEX. CIV. PRAC. & REM. CODE ANN. §§ 151.001–151.013 (West 2017); FLA. STAT. §§ 682.01–682.25 (2018). These state laws operate in conjunction with the FAA, however, if a state law conflicts with the FAA, the FAA controls. See, e.g., Kindred Nursing Centers Ltd. P’ship v. Clark, 137 S. Ct. 1421, 1426 (2017).

  2. Is your country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?

    Yes. The United States became a party to the New York Convention on September 30, 1970. The U.S. made two reservations to the Convention which limit its application (1) “to the recognition and enforcement of only those awards made in the territory of another Contracting State” and (2) “to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the national law of the United States.” See New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards art. I(3), June 10, 1958, 21 U.S.T. 2517.

  3. What other arbitration-related treaties and conventions is your country a party to?

    The United States is a party to the following treaties and conventions:

    • the Inter-American Convention on International Commercial Arbitration (“Panama Convention”), 9 U.S.C. § 301, et seq.;
    • the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (“ICSID Convention”), 22 U.S.C. § 1650, et seq.

    The United States is also a party to various bilateral and multilateral investment treaties and free trade agreements that contain provisions regarding arbitration, including inter alia, the North American Free Trade Agreement (“NAFTA”) and the Dominican Republic–Central America Free Trade Agreement (“CAFTA-DR”). In November 2018, the U.S. signed the United States–Mexico–Canada Agreement (“USMCA”), which was drafted to replace NAFTA. Unlike NAFTA, the USMCA exempts Canada from the Investor-State Dispute Settlement (“ISDS”) provision and significantly limits its application between the U.S. and Mexico. While the USMCA has been ratified by Mexico, it has not gone into force, as ratification is still pending in the U.S. and Canada.

  4. Is the law governing international arbitration in your country based on the UNCITRAL Model Law? Are there significant differences between the two?

    Several pieces of proposed legislation aimed at reforming arbitration in the U.S. have been introduced in recent years. Three notable bills before the current Congress are:

    • The Forced Arbitration Injustice Repeal Act, S. 610, 116th (2019–2020), which would prohibit a predispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute.
    • The Arbitration Fairness for Consumers Act, S. 630, 116th Cong. (2019–2020), which would prohibit a predispute arbitration agreement from being valid or enforceable if it requires arbitration of a dispute related to a consumer financial product or service.
    • The Restoring Statutory Rights and Interests of the States Act of 2019, S. 635, 116th Cong. (2019–2020), which would make it so that courts, rather than arbitrators, would have to decide whether arbitration agreements are valid and enforceable.
  5. Are there any impending plans to reform the arbitration laws in your country?

    Several pieces of proposed legislation aimed at reforming arbitration in the U.S. have been introduced in recent years. Three notable bills before the current Congress are:

    • The Forced Arbitration Injustice Repeal Act, S. 610, 116th (2019–2020), which would prohibit a predispute arbitration agreement from being valid or enforceable if it requires arbitration of an employment, consumer, antitrust, or civil rights dispute.
    • The Arbitration Fairness for Consumers Act, S. 630, 116th Cong. (2019–2020), which would prohibit a predispute arbitration agreement from being valid or enforceable if it requires arbitration of a dispute related to a consumer financial product or service.
    • The Restoring Statutory Rights and Interests of the States Act of 2019, S. 635, 116th Cong. (2019–2020), which would make it so that courts, rather than arbitrators, would have to decide whether arbitration agreements are valid and enforceable.
  6. What arbitral institutions (if any) exist in your country? When were their rules last amended? Are any amendments being considered?

    Several arbitral institutions are headquartered in the United States, including:

    • The American Arbitration Association (“AAA”): AAA’s most recent amendments became effective on January 1, 2019, and the AAA’s International Centre for Dispute Resolution‘s (“ICDR”) rules were last amended and became effective June 1, 2014.
    • JAMS (formerly, Judicial Arbitration and Mediation Services): JAMS’s most recent rules became effective on September 1, 2016.
    • The International Institute for Conflict Prevention and Resolution (“CPR”): CPR’s most recent rules became effective on March 1, 2019.
    • The Inter-American Commercial Arbitration Commission (“IACAC”): IACAC’s rules were last amended on April 1, 2002.
    • The International Centre for Settlement of Investment Disputes (“ICSID”): ICSID’s most recent rules became effective on April 10, 2006. ICSID is currently undergoing an extensive review of its rules, including changes to reduce time and cost, and enhance transparency, as well as an additional obligation to disclose third-party funding, among others.

    In addition to the above institutions, the International Chamber of Commerce, which is headquartered in France, also administers arbitrations in the U.S. through its International Court of Arbitration (its rules were last amended on March 1, 2017).

  7. What are the validity requirements for an arbitration agreement under the laws of your country?

    Under the FAA, an arbitration agreement must be in writing and must be part of a valid contract. 9 U.S.C. § 2. However, it does not necessarily need to be signed and it can be incorporated by reference. Id. The FAA places arbitration agreements on “equal footing” with all other contracts. Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443–44 (2006). In addition, arbitration agreements can be invalidated by “generally applicable contract defenses,” such as fraud, duress, or unconscionability. Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996).

  8. Are arbitration clauses considered separable from the main contract?

    Yes. While the FAA is silent on this question, the U.S. Supreme Court has held that “an arbitration provision is severable from the remainder of the contract.” Buckeye Check Cashing, 546 U.S. at 445; see also Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403–04 (1967).

  9. Is there anything particular to note in your jurisdiction with regard to multi-party or multi-contract arbitration?

    The FAA does not discuss multi-party and multi-contract arbitration and does not provide for joinder or consolidation of multiple claims and parties. Because courts allow parties to “specify with whom they choose to arbitrate their disputes,” multi-party and multi-contract arbitration agreements are generally enforceable. Stolt-Nielsen S. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 683 (2010). While the issue of whether the parties have a valid arbitration agreement is typically left to the courts, First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944–45 (1995), whether the agreement permits joinder or consolidation of parties is left to arbitral tribunals unless the parties specify otherwise in their agreement. Green Tree v. Bazzle, 539 U.S. 444, 452–53 (2003). Some institutional rules, which parties may incorporate into their agreements, provide for joinder or consolidation of related proceedings. For example, the JAMS International Rules state that “[w]here a request for arbitration is between parties already involved in other arbitral proceedings pending under these rules, JAMS may decide, after consulting with parties to all proceedings, and with the arbitrators, that the new case will be referred to the Tribunal already constituted for the existing proceedings.” JAMS Int’l Rules art. 7.1. The AAA/ICDR and the London Court of International Arbitration (“LCIA”) Rules provide for joinder of third parties and consolidation of arbitration proceedings, provided that any such third person and the applicant party have consented to such in writing. ACC/ICDR Rules arts. 7–8; LCIA Rules art. 22.1 (xiii–x).

  10. Are any types of dispute considered non-arbitrable? Has there been any evolution in this regard in recent years?

    The FAA provides that it does not apply to “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9 U.S.C. § 1. The Supreme Court recently held that a court, rather than an arbitrator, should decide a dispute regarding whether a party falls under the exemption for “contracts of employment” of transportation workers before ordering arbitration. New Prime Inc. v. Oliveira, 139 S.Ct. 532, 537 (2019).
    The Supreme Court also recently ruled that the FAA does not allow a court to compel class arbitration when the agreement does not explicitly provide for such because the courts may not infer consent to class arbitration through state-law interpretation of an ambiguous contract. Lamps Plus, Inc. v. Varela, 139 S.Ct. 1407, 1418 (2019).
    Additionally, there has been recent pushback to arbitration generally in the United States from some legislators. As discussed above, lawmakers have proposed legislation called the Forced Arbitration Injustice Repeal Act of 2019, or the FAIR Act, which, if enacted into law, would prohibit pre-dispute arbitration agreements that force arbitration of future employment, consumer, antitrust, or civil rights disputes, and prohibit agreements that interfere with the right of individuals, workers, and small businesses to participate in joint, class, or collective related to an employment, consumer, antitrust, or civil rights dispute. FAIR Act, S. 610, 116th Cong. § 2 (2019).

  11. In your country, are there any restrictions in the appointment of arbitrators?

    The FAA does not expressly impose restrictions on the appointment of arbitrators. However, evidence of partiality or corruption on the part of arbitrators can be grounds for vacating an award. See 9 U.S.C. § 10. Additionally, some state laws do have restrictions on the appointment of arbitrators. For example, California requires that arbitrators be “neutral.” See CAL. CIV. PROC. CODE § 1282 (2019).

  12. Are there any default requirements as to the selection of a tribunal?

    Under the FAA, courts will appoint an arbitrator if the arbitration agreement does not provide a method for selecting a tribunal — either expressly or by incorporating institutional rules — or if the parties fail to do so. See 9 U.S.C. § 5. In cases where the parties have not agreed a method for appointing arbitrators (and no institutional rules apply), either party can move the court in the district in which the arbitration is seated to appoint a single arbitrator. Where the FAA does not apply, many state laws also may provide for court appointment of arbitrators, including those of New York, California, Texas, and Florida, among others. See, e.g., N.Y. C.P.L.R. § 7504 (2012); CAL. CIV. PROC. CODE § 1281.6 (2019); TEX. CIV. PRAC. & REM. CODE ANN. § 172.054 (1997); FLA. STAT. § 684.0012 (2019).

  13. Can the appointment of an arbitrator be challenged? What are the grounds for such challenge? What is the procedure for such challenge?

    The FAA is silent on challenges to the appointment of arbitrators. Although the Supreme Court has not weighed in, a number of federal appellate courts have precluded any mid-arbitration intervention, including for arbitrator challenges. See In re Sussex, 781 F.3d 1065, 1073 (9th Cir. 2015) (finding that the district court’s ruling was clearly erroneous as to the legal standard for “evident partiality” and the nature of the equitable concerns sufficient to justify a mid-arbitration intervention and compiling cases). However, some state courts have allowed mid-arbitration intervention where the FAA does not govern. See Metro. Dist. Comm’n v. Connecticut Res. Recovery Auth., 130 Conn. App. 132, 144 (2011) (disqualifying an arbitrator).

    Some institutional rules do provide grounds for such a challenge. For example, under the UNCITRAL Arbitration Rules, a party may challenge an arbitrator’s appointment if there are “justifiable doubts as to the arbitrator’s impartiality or independence” and only “for reasons of which [the party] becomes aware after the appointment has been made.” See UNCITRAL Arbitration Rules arts. 11–13. The challenging party must send notice of the challenge within a certain time period and communicate it to the other parties and the entire tribunal. If all parties do not agree to the challenge, or the challenged arbitrator does not withdraw, then the challenging party can ask the appointing authority to rule on the challenge.

  14. What happens in the case of a truncated tribunal? Is the tribunal able to continue with the proceedings?

    The FAA contains a provision that grants courts discretionary authority to appoint an arbitrator to fill a vacancy under certain circumstances. 9 U.S.C. § 5. Even so, the authority does not appear to be settled and the answer is dependent on both the facts and the jurisdiction. The Second Circuit has held that when an arbitrator dies before the tribunal renders an award, the arbitration must start anew with a full panel, unless the parties had a contrary agreement or there are other special circumstances. See Marine Prod. Exp. Corp. v. M.T. Globe Galaxy, 977 F.2d 66, 68 (2d Cir. 1992). One such special circumstance is when one arbitrator dies after the tribunal has decided on the issue of liability, but before it has awarded damages. In this instance, the Second Circuit has approved the appointment of a replacement arbitrator rather than requiring the process to start anew. See Trade & Transp., Inc. v. Nat. Petroleum Charterers Inc., 931 F.2d 191, 195–96 (2d Cir. 1991). The Second and Seventh Circuits have held that under the FAA, the resignation of an arbitrator after the arbitration is underway, but before the panel has entered its award, does not require the arbitration to begin anew, and that an arbitrator can be appointed to fill the vacancy. WellPoint, Inc. v. John Hancock Life Ins. Co., 576 F.3d 643, 644–49 (7th Cir. 2009); Ins. Co. of N. Am. v. Pub. Serv. Mut. Ins. Co., 609 F.3d 122, 127 (2d Cir. 2010).

    Under the FAA, courts have the power to compel the respondent’s participation in arbitration. See 9 U.S.C. § 4. Most state laws empower courts to do the same. See, e.g., N.Y. C.P.L.R. § 7503 (2012). Whereas courts may enter default judgment against a party that fails to appear, under applicable JAMS, National Arbitration and Mediation (“NAM”), and AAA rules, an arbitrator may not render an award solely on the basis of the default or absence of a party, but may make the award on the evidence presented to it by the appearing party. See, e.g., JAMS Rules, R.22(j); ICDR Rules art. 26(1)–(2). Such awards are generally enforceable in the United States.

  15. Are arbitrators immune from liability?

    The FAA is silent on the question of liability of arbitrators. However, some U.S. courts have held that arbitrators are immune from liability for “all acts within the scope of the arbitral process.” Sacks v. Dietrich, 663 F.3d 1065, 1069 (9th Cir. 2011); see also, e.g., Pfannenstiel v. Merrill Lynch, Pierce, Fenner & Smith, 477 F.3d 1155, 1160 (10th Cir. 2007); Honn v. Nat’l Ass’n of Sec. Dealers, Inc., 182 F.3d 1014, 1017 (8th Cir. 1999). Nevertheless, arbitrators can be held liable in rare cases, such as for acting in “bad faith, with malicious purpose, or in willful and wanton disregard of human rights, safety, or property.” Postma v. First Fed. Sav. & Loan of Sioux City, 74 F.3d 160, 163 (8th Cir. 1996).

  16. Is the principle of competence-competence recognised in your country?

    The FAA is silent on the principle of competence-competence. However, U.S. courts have recognized the authority of an arbitral tribunal to rule on its own jurisdiction, so long as the parties have clearly delegated the question of arbitrability to the arbitrator, either expressly or by incorporating the rules that recognize the principle of competence-competence. See, e.g., Henry Schein, 139 S. Ct. at 531; First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (1995); Belnap v. Iasis Healthcare, 844 F.3d 1272, 1290–92 (10th Cir. 2017); Terminex Intern. Co. v. Palmer Ranch Ltd., 432 F.3d 1327, 1332–1333 (11th Cir. 2005).

  17. What is the approach of local courts towards a party commencing litigation in apparent breach of an arbitration agreement?

    When a party commences litigation in apparent breach of an arbitration agreement, the adverse party can file a motion to compel arbitration with the court in which the arbitration will be seated. The court has jurisdiction to determine the validity of the arbitration agreement and its own jurisdiction. Upon granting a motion to compel, a court will generally either dismiss the lawsuit or stay the proceedings until the arbitration is concluded. The court may also find that the party commencing arbitration has waived its right to arbitrate, if it later seeks to enforce the arbitration agreement to the detriment of the adverse party. See, e.g., Grumhaus v. Comerica Sec., Inc., 223 F.3d 648, 653 (7th Cir. 2000).

  18. How are arbitral proceedings commenced in your country? Are there any key provisions under the arbitration laws relating to limitation periods or time bars of which the parties should be aware?

    The FAA does not speak to the commencement of arbitral proceedings, and proceedings are generally commenced pursuant to the agreed upon rules of arbitration. See Emp’rs Ins. of Wausau v. Banco de Seguros del Estado, 199 F.3d 937, 942 (7th Cir. 1999). If the parties fail to agree upon a set of rules, then the procedural law of the forum in which the parties agreed to conduct the arbitration would likely apply. See, e.g., N.Y. C.P.L.R. § 7503 (2012).

    The FAA does not contain any statutes of limitations. However, there may be limitations periods specified in the agreed rules, in the state arbitral provisions, or under the law governing the substance of a claim that would serve as a time bar to bring that claim.

  19. In what circumstances is it possible for a state or state entity to invoke state immunity in connection with the commencement of arbitration proceedings?

    Under the Foreign Sovereign Immunities Act, a state or state entity may invoke state immunity as a jurisdictional defense at the commencement of arbitration proceedings unless an exception to such immunity applies. The FSIA provides several such exceptions, including, for example, where the state “has waived its immunity either explicitly or by implication” or where the action is brought to “to enforce an agreement made by the foreign state with or for the benefit of a private party to submit to arbitration all or any differences which have arisen or which may arise between the parties with respect to a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration under the laws of the United States.” 28 U.S.C. § 1605(a)(1) and (6).

  20. What happens when a respondent fails to participate in the arbitration? Can the local courts compel participation?

    Under the FAA, courts have the power to compel the respondent’s participation in arbitration. See 9 U.S.C. § 4. Most state laws empower courts to do the same. See, e.g., N.Y. C.P.L.R. § 7503 (2012). Whereas courts may enter default judgment against a party that fails to appear, under applicable JAMS, National Arbitration and Mediation (“NAM”), and AAA rules, an arbitrator may not render an award solely on the basis of the default or absence of a party, but may make the award on the evidence presented to it by the appearing party. See, e.g., JAMS Rules, R.22(j); ICDR Rules art. 26(1)–(2). Such awards are generally enforceable in the United States.

  21. What interim measures are available? Will local courts issue interim measures pending the constitution of the tribunal?

    While the FAA does not contain specific provisions regarding interim measures, a majority of courts have held that maintaining the status quo is consistent with the FAA’s liberal policy in favor of arbitration and ensures that the arbitration proceedings remain meaningful. See, e.g., Talk Fusion, Inc. v. Ulrich, No. 8:11-CV-1132-T-33, 2011 WL 2681677 (M.D. Fla. June 21, 2011). Thus, most courts retain the authority to grant interim measures to support arbitration. Most arbitral institutional rules also grant tribunals the authority to grant interim relief. The type of interim relief granted varies case-by-case.

    Local courts can issue interim measures pending the constitution of the tribunal, known more commonly as “emergency measures.” Many arbitral institutions, including the ICC, ICDR, Singapore International Arbitration Centre (“SIAC”), Arbitration Institute of the Stockholm Chamber of Commerce (“SCC”), and LCIA, have adopted emergency arbitrator procedures that allow parties to obtain urgent relief from the institution before a tribunal is formed. In these circumstances, a sole arbitrator can be appointed by the arbitral institution in order to resolve applications for emergency relief in such cases. Whether such emergency awards rendered by arbitrators are enforceable in U.S. courts varies. For example, arbitrator interim measures have been enforced in some courts where they have been found to finally dispose of a self-contained issue. Island Creek Coal Sales Co. v. City of Gainesville, Fla., 729 F.2d 1046 (6th Cir. 1985); Publicis Comm’n v. True N. Comm’ns, Inc., 206 F.3d 725 (7th Cir. 2000).

  22. What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your country?

    Ethical codes and professional standards are set by the jurisdiction in which the practitioner is licensed and the jurisdiction in which the arbitration is seated. Counsel and arbitrators should therefore familiarize themselves with the practice of law rules as well as the ethics rules in the state in which the arbitration will be seated. For example, in certain states, counsel must be licensed to practice in that state, and, if not licensed, may only participate in arbitration if the proceedings arise out of the attorneys’ home state practice, see, e.g., N. J. R. 21-1(a), if they file a verified statement with the state bar association, see, e.g., Fla. Rule 1-3.11 (not applicable to international arbitrations), or if they practice in conjunction with a licensed attorney, see, e.g., Nev. Sup. Ct. Rule 42.2(a)(f).

    Generally, arbitrators must abide by standards of impartiality and neutrality. Additionally, some institutions provide guidance on the ethical requirements for arbitrators. For example, the American Bar Association has issued the Code of Ethics for Arbitrators in Commercial Disputes, and the JAMS Arbitrators Ethics Guidelines also provides guidance regarding ethical standards for arbitrators.

  23. In your country, are there any rules with respect to the confidentiality of arbitration proceedings?

    The FAA does not provide specific rules governing confidentiality, but some states have adopted specific provisions for the confidentiality of an arbitration. See, e.g., MO. REV. STAT. § 435.14.

    However, courts will generally uphold confidentiality agreements between parties, and unlike court proceedings in the United States, which are public by default, arbitral proceedings are generally private by default. Further, many institutions provide default confidentiality rules. For example, the LCIA rules provide that:

    [t]he parties undertake as a general principle to keep confidential all awards in the arbitration, together with all materials in the arbitration created for the purpose of the arbitration and all other documents produced by another party in the proceedings not otherwise in the public domain, save and to the extent that disclosure may be required of a party by legal duty, to protect or pursue a legal right, or to enforce or challenge an award in legal proceedings before a state court or other legal authority. Confidentiality is therefore a matter of agreement between the parties.

  24. How are the costs of arbitration proceedings estimated and allocated?

    The FAA is silent on costs, and courts diverge on the question of how the costs of arbitration proceedings should be estimated and allocated. However, costs are generally handled as a matter of contractual agreement between the parties or according to the institutional rules that govern a proceeding.

  25. Can pre- and post-award interest be included on the principal claim and costs incurred?

    The FAA is silent on interest. However, U.S. courts have generally held that unless parties have specified otherwise in their agreement, arbitrators have the authority to award interest and to determine the amount of interest and the date from which the interest should be calculated. See, e.g., Matter of Hawai’i State Teachers Ass’n, 140 Haw. 381, 400 (2017); Haddon v. Shaheen & Co., 231 Ga. App. 596, 599 (1998); Peoples Sec. Life Ins. Co. v. Monumental Life Ins. Co., 991 F.2d 141, 148 (4th Cir. 1993).

  26. What legal requirements are there in your country for the recognition and enforcement of an award? Is there a requirement that the award be reasoned, i.e. substantiated and motivated?

    In order for an arbitral award to be enforced by the courts of the United States, it must be “confirmed” (i.e. recognized) by a court with jurisdiction. The legal requirements for confirmation/recognition and enforcement of an award differ depending on the nature of the award and the jurisdiction in which recognition is sought. There is no requirement that the award be reasoned, unless agreed by the parties.

    Domestic Awards. The FAA, 9 U.S.C. § 9, provides a summary procedure where — by agreement of the parties — an award “shall” be confirmed if it is requested within one year of issuance unless the award is vacated, modified, or corrected. Courts are split over whether the statute creates a statute of limitations. See Photopaint Techs., LLC v. Smartlens Corp., 335 F.3d 152, 154 (2d Cir. 2003) (one year statute of limitations); Val-U Const. Co. of S. D. v. Rosebud Sioux Tribe, 146 F.3d 573, 575 (8th Cir. 1998) (finding language to be permissive). Regardless, the FAA’s summary confirmation procedure does not preclude other remedies, so arbitral awards can be confirmed through an action at law if brought more than one year after issuance.

    International Awards. Chapter 2 of the FAA provides for similar summary proceedings for international arbitration awards:

    Within three years after an arbitral award falling under the [New York] Convention is made, any party to the arbitration may apply to any court having jurisdiction under this chapter for an order confirming the award as against any other party to the arbitration. The court shall confirm the award unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention.
    9 U.S.C. § 207.

    Once parties have confirmed an arbitral award, they have in hand an enforceable U.S. court judgment which they can set about enforcing against the parties’ assets. Usually this involves taking discovery regarding the judgment debtors’ assets, registering the judgment in the jurisdiction in which the judgment debtor has assets, attaching those assets, and ultimately attempting to execute against the judgment.

  27. What is the estimated timeframe for the recognition and enforcement of an award? May a party bring a motion for the recognition and enforcement of an award on an ex parte basis?

    Under the FAA (both Chapters 1 and 2), notice must be provided to an adverse party of confirmation proceedings and the proceedings cannot proceed ex parte. Notice must also be provided to a sovereign pursuant to the Foreign Sovereign Immunities Act (“FSIA”). See Mobil Cerro Negro, Ltd. v. Bolivian Republic of Venezuela, 863 F.3d 96 (2nd Cir. 2017).

    It is impossible to estimate the timeframe for obtaining recognition and enforcement of an award. While petitions to confirm awards are generally considered to be summary proceedings and awards can sometimes be confirmed within a matter of weeks, in other cases it may take years to obtain a ruling because there are no time constraints and there are numerous relevant factors. For example, annulment proceedings in the seat, challenges to jurisdiction, objections to confirmation, and appeals all may affect the timing. Once an award is confirmed, it can take years before a judgment can be enforced (i.e., before a judgment can be registered in other districts and before any assets can be attached).

    Confirming and enforcing awards against foreign sovereigns can also take time because of complexities effecting service and arising out of the FSIA’s enforcement provisions. See 28 U.S.C. § 1602, et seq.

  28. Does the arbitration law of your country provide a different standard of review for recognition and enforcement of a foreign award compared with a domestic award?

    Yes. Under Chapter 1 of the FAA (domestic awards), if agreed by the parties, and if filed within one year of issuance, arbitral awards shall be recognized under the summary procedures unless the award is “vacated, modified, or corrected.” Under Chapter 2 of the FAA, the award shall be recognized, if filed within three years, unless the party resisting confirmation proves that one of the grounds of refusal set for the in the New York Convention applies, i.e.:

    a. The parties to the agreement referred to in article II were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or

    b. The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or

    c. The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or

    d. The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or

    e. The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

    f. The subject matter of the difference is not capable of settlement by arbitration under the law of that country; or

    g. The recognition or enforcement of the award would be contrary to the public policy of that country.

    Additionally, under 22 U.S.C. § 1650a, ICSID awards “shall be enforced and shall be given the same full faith and credit as if the award were a final judgment of a court of general jurisdiction of one of the several States.”

  29. Does the law impose limits on the available remedies? Are some remedies not enforceable by the local courts?

    The FAA does not limit available remedies. However, certain states may do so. For example, in New York, arbitrators may not award punitive damages. See Garrity v. Lyle Stuart, Inc., 353 N.E.2d 793 (1976). Where the FAA governs the arbitration, however, such limitations are not applicable. See Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 59 (1995) (finding that New York-seated arbitration governed by the FAA is not restricted and that punitive damages could be awarded); see also FLA. STAT. § 682.11(1) (allowing punitive damages “if such an award is authorized by law in a civil action involving the same claim and the evidence produced at the hearing justifies the award under the legal standards otherwise applicable to the claim”).

    In certain circumstances, courts have refused to enforce remedies in international arbitral awards that violate U.S. public policy. For example, in Laminoirs-Trefileries-Cableries de Lens, S. A. v. Southwire Co., 484 F. Supp. 1063, 1068 (N.D. Ga. 1980), a federal district court refused to recognize an interest rate increase awarded in a French arbitration as violating U.S. public policy. The court found that the increase was penal rather than compensatory, and bore no reasonable relation to any damage resulting from delay in recovery of the sums awarded, and instead recognized only the base interest rate. Additionally, in Hardy Expl. & Prod. (India), Inc. v. Gov’t of India, Ministry of Petroleum & Nat. Gas, 314 F. Supp. 3d 95, 113 (D.D.C. 2018), a federal district court refused to recognize an award that ordered specific performance in India, finding that doing so would violate U.S. public policy recognizing states’ sovereignty and the right to control their lands and natural resources.

  30. Can arbitration awards be appealed or challenged in local courts? What are the grounds and procedure?

    Yes. Chapter 1 of the FAA provides the limited circumstances in which a party to the arbitration may apply to the court for the district in which the award seated to have the award vacated, modified, and corrected. 9 U.S.C. §§ 10–12. If a court vacates an arbitration award, and the arbitration agreement is still valid, the court may direct rehearing by the arbitrators.

    Under 9 U.S.C. § 10, the court may be vacate an award:

    (1) where the award was procured by corruption, fraud, or undue means;

    (2) where there was evident partiality or corruption in the arbitrators, or either of them;

    (3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or

    (4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.
    Under 9 U.S.C. § 11, the court may modify or correct an award “so as to effect the intent thereof and promote justice between the parties”:

    (a) where there was an evident material miscalculation of figures or an evident material mistake in the description of any person, thing, or property referred to in the award;

    (b) where the arbitrators have awarded upon a matter not submitted to them, unless it is a matter not affecting the merits of the decision upon the matter submitted;

    (c) where the award is imperfect in matter of form not affecting the merits of the controversy.
    The U.S. Supreme Court has held that these grounds are exclusive, and cannot be expanded by agreement of the parties. Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 587 (2008).
    Under Chapter 2 of the FAA, for awards recognized under the New York Convention, U.S. courts can refuse to confirm an arbitral award for the reasons discussed above. However, the courts cannot vacate, modify, or correct the award itself.

  31. Can the parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitration clause)?

    Although the Supreme Court has not yet decided the issue, at least one federal appellate court has held that, where the FAA governs, parties cannot “eliminate all judicial review of arbitration awards” because such waiver “would not only run counter to the text of the FAA, but would also frustrate Congress’s attempt to ensure a minimum level of due process for parties to an arbitration.” In re Wal-Mart Wage & Hour Emp’t Practices Litig., 737 F.3d 1262, 1268 (9th Cir. 2013); cf. MACTEC, Inc. v. Gorelick, 427 F.3d 821, 830 (10th Cir. 2005) (finding that contractual provision limiting the right to appeal from a district court’s judgment confirming or vacating an arbitration award was permissible so long as it is clear and unequivocal).

    Some states like California will allow pre-dispute waiver of judicial review where it is “clear and explicit.” See Emerald Aero, LLC v. Kaplan, 215 Cal. Rptr. 3d 5, 21 (Ct. App. 2017), as modified on denial of rehearing (Mar. 21, 2017), review denied (June 14, 2017). However, the courts have found that generic waivers of judicial review on the merits do not waive rights to judicial review based on the limited, enumerated circumstances in the California Arbitration Act. Id.; see also HUB Int’l Ins. Servs. v. Morales, No. E067095, 2018 WL 2978262, at *5 (Cal. Ct. App. June 14, 2018) (“we interpret the waiver as reflecting the standard appellate waiver that follows the submission to arbitration: The parties can only appeal based upon the limited grounds set forth ante, such as corruption and acts in excess of authority. All other issues have been waived.”)

  32. To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

    The FSIA, 28 U.S.C. § 1602, et seq., provides for two types of immunity: immunity from jurisdiction and immunity from attachment and execution. See 28 U.S.C. § 1605 and 28 U.S.C. §§ 1609–10, respectively. Therefore, a sovereign state’s assets are presumed to be immune from attachment and execution, and — in order to attach and execute against a sovereign state’s assets — the property at issue must fall within an exemption to the general immunity conferred by the FSIA on all property of a foreign sovereign.

    Under 28 U.S.C. § 1610(a), an exception to the general immunity against attachment and execution is provided for a foreign State’s property located in the U.S. if the property is used for “commercial activity” in the United States and if one of the following is met:

    (1) the foreign state has waived its immunity from attachment in aid of execution or from execution either explicitly or by implication, notwithstanding any withdrawal of the waiver the foreign state may purport to effect except in accordance with the terms of the waiver, or

    (2) the property is or was used for the commercial activity upon which the claim is based, or

    (3) the execution relates to a judgment establishing rights in property which has been taken in violation of international law or which has been exchanged for property taken in violation of international law, or

    (4) the execution relates to a judgment establishing rights in property—

    (A) which is acquired by succession or gift, or

    (B) which is immovable and situated in the United States: Provided, That such property is not used for purposes of maintaining a diplomatic or consular mission or the residence of the Chief of such mission, or

    (5) the property consists of any contractual obligation or any proceeds from such a contractual obligation to indemnify or hold harmless the foreign state or its employees under a policy of automobile or other liability or casualty insurance covering the claim which merged into the judgment, or

    (6) the judgment is based on an order confirming an arbitral award rendered against the foreign state, provided that attachment in aid of execution, or execution, would not be inconsistent with any provision in the arbitral agreement, or

    (7) the judgment relates to a claim for which the foreign state is not immune under section 1605A or section 1605(a)(7) (as such section was in effect on January 27, 2008), regardless of whether the property is or was involved with the act upon which the claim is based.
    Section 1610(b) contains the standard with regards to “property in the United States of an agency or instrumentality of a foreign state engaged in commercial activity in the United States[.]” The property of a “foreign central bank or monetary authority held for its own account” and property that is, or is intended to be, used in connection with a military activity are exempt from the exemption. 28 U.S.C. § 1611.

    Finally, as a threshold requirement, the FSIA requires that a “reasonable period of time” elapse following entry of judgment, before attachment or execution “shall be permitted” under either § 1610(a) or (b). 28 U.S.C. § 1610(c).

  33. In what instances can third parties or non-signatories be bound by an award? To what extent might a third party challenge the recognition of an award?

    As discussed above, whether a non-signatory can be bound by an arbitration agreement is governed by applicable state contract law. Although it is not settled case law, some courts have held that the same standard applies to arbitration awards.

  34. Have courts in your jurisdiction considered third party funding in connection with arbitration proceedings recently?

    While courts in the U.S. have not yet weighed in on third party funding in connection with arbitration, third party funding has continued to become more prevalent. ICSID has proposed amendments to its rules including a requirement that a funded party disclose that it has third party funding and the funder’s name. See ICSID, Proposed Rule 21. The SIAC rules give tribunals the power to order the disclosure of the existence of and, where appropriate, details of the third party funder’s interest as well as liability for adverse costs. See SIAC Rule 24(l). Some treaties, like the Canada-EU Trade Agreement, now include mandatory disclosure of the presence and identity of third party funders. Recently, the ICCA and Queen Mary Law School recently published an extensive report on third party funding in international arbitration.

  35. Is emergency arbitrator relief available in your country? Is this frequently used?

    While the FAA does not address this issue, emergency arbitrator relief is provided for by most institutions that conduct arbitrations in the United States including the AAA, CPR, and JAMS. In 2018, out of 993 commercial cases, ICDR reported 92 emergency arbitrator relief applications. The same year, the ICC reported that out of 842 cases, it received 24 applications for emergency arbitrator relief, and the LCIA reported 3 applications out of 317 cases..

  36. Are there arbitral laws or arbitration institutional rules in your country providing for simplified or expedited procedures for claims under a certain value? Are they often used?

    While the FAA does not provide for expedited or simplified procedures, many of the U.S.-based arbitral institutions have adopted rules for expedited procedures. For example, in 2018, out of 993 cases, the ICDR reported 104 expedited cases. The same year, the ICC reported that out of 842 cases, it received 96 applications for expedited procedures, and the LCIA reported 23 applications out of 317 cases.

    The ICDR expedited procedures provide for the appointment of a sole arbitrator, submission of initial submissions that include “all of the evidence then available on which such party intends to rely”, and an evidentiary hearing within 60 days of the procedural order — or, if the dispute is less than $100,000, no hearing at all — and an award within 30 days of the hearing. These rules “shall” apply in any case where no disclosed claim or counterclaim exceeds $250,000 exclusive of interest and the costs of arbitration, unless the parties agree or the ICDR determines otherwise. See ICDR International Arbitration Rules art. 1(4); ICDR International Expedited Procedures arts. E1–E10.

  37. Have measures been taken by arbitral institutions in your country to promote transparency in arbitration?

    Yes. Several arbitral institutions that are based in the U.S. have adopted measures to promote transparency. See, e.g., AAA-ICDR’s Online Caseload Tracker; CPR’s Screened Selection Process. ICSID also has a procedure through which hearings can be opened to the public and provides video-links for remote viewing. See ICSID Convention, Arbitration Rules § 32(2). Parties can decide whether they want their hearings to be public, but transparency is the default. Additionally, the draft ICSID rule amendments have the stated goal of ensuring that “the most important documents and information are made available to the public”. See Proposals for Amendments of the ICSID Rules, Working Paper #3, ¶ 152.

  38. Is diversity in the choice of arbitrators and counsel (e.g. gender, age, origin) actively promoted in your country? If so, how?

    Yes. The U.S. is at the forefront of promoting diversity among both arbitrators and counsel. For example, the American Bar Association recently adopted a resolution urging “providers of domestic and international dispute resolution to expand their rosters with minorities, women, persons with disabilities, and persons of differing sexual orientations and gender identities (‘diverse neutrals’) and to encourage the selection of diverse neutrals”. See American Bar Association, Res. 105. It also publishes statistics on diverse appointments. Many U.S. law firms and arbitral institutions are also signatories to the Equal Representation in Arbitration Pledge, and JAMS recently added an inclusion rider to its Clause Workbook (“The parties agree that, wherever practicable, they will seek to appoint a fair representation of diverse arbitrators (considering gender, ethnicity and sexual orientation), and will request administering institutions to include a fair representation of diverse candidates on their rosters and list of potential arbitrator appointees.”). Additionally, ArbitralWomen, a non-profit that promotes women and diversity in international dispute resolution, recently launched a Diversity Toolkit, which was supported by funding from the AAA-ICDR, that offers training to help international dispute resolution professionals “see the role played by biases and explore ways to address and overcome bias.” Another initiative launched last year, the Equity Project, provides financing for commercial litigation and international arbitration matters led by women.

  39. Have there been any recent court decisions in your country considering the setting aside of an award that has been enforced in another jurisdiction or vice versa?

    Three key cases in this area are Corporacion Mexicana De Mantenimiento Integral, S. De R.L. De C.V. v. Pemex-Exploracion y Produccion, 832 F.3d 92, 107 (2d Cir. 2016), cert. dismissed, 137 S. Ct. 1622 (2017) and Thai-Lao Lignite (Thailand) Co. v. Gov’t of Lao People’s Democratic Republic, 864 F.3d 172 (2d Cir. 2017), and Getma Int’l v. Republic of Guinea, No 16-7087 (D.C. Cir. July 7, 2017). Both cases considered the definition and application of “public policy” in the context of recognizing an annulled arbitral award.

    In Pemex, the Second Circuit confirmed an annulled award that had been set aside in the seat, Mexico, under Chapter 3 of the FAA (the Panama Convention). The Second Circuit agreed with the district court’s finding that recognizing the annulment — which was based on a law that had been enacted after the award was rendered — would violate U.S. public policy. The district court found that the decision to vacate the award violated “basic notions of justice” and on that basis, confirmed the award. In Thai-Lao Lignite, the Second Circuit recognized its authority to enforce awards annulled at the seat, but found that the annulment — which was based on a finding that the arbitrators exceed their jurisdiction — did not offend basic notions of what is decent and just. In Getma Int’l, the D.C. Circuit refused to confirm an annulled award that had been set aside in the seat, the Common Court of Justice and Arbitration of the Organization for the Harmonization of Business Law in Africa (the “CCJ”), under Chapter 2 of the FAA (the New York Convention). The D.C. Circuit stated that it would not second-guess a competent authority absent extraordinary circumstances. It went on to clarify that extraordinary circumstances were not simply conflicts with U.S. public policy, but had to arise to the level of violating the U.S.’s “most basic notions of morality and justice.” The D.C. Circuit then went on to find that, setting arbitral fees against the parties’ wishes does not violate the most basic notions of morality and justice in the United States, and refused to confirm the annulled award.

  40. Is corruption an issue that is regularly raised in your jurisdiction? What standard do local courts apply for proving of corruption?

    No. Corruption is not an issue that is regularly raised in the U.S.-seated arbitrations or courts. The U.S. ranked 22 out of 180 countries on Transparency International’s 2018 Corruption Perceptions Index with a score of 71/100. This is a slight drop from its rank of 16 out of 180 in 2017.

    Under Chapter 1 of the FAA, awards may be vacated where “there was evident partiality or corruption in the arbitrators, or either of them[.]” 9 U.S.C. § 10. Courts have interpreted this provision to require that the moving party show that the corruption was (1) not discoverable upon the exercise of due diligence prior to the arbitration, (2) materially related to an issue in the arbitration, and (3) established by clear and convincing evidence. See, e.g., Weirton Med. Ctr., Inc. v. QHR Intensive Res., LLC, 682 F. App’x 227, 228 (4th Cir. 2017); Inversiones y Procesadora Tropical INPROTSA, S.A. v. Del Monte Int’l GmbH, 921 F.3d 1291, 1306 (11th Cir. 2019), cert. denied sub nom. Inversiones Y Procesadora v. Del Monte Int’l GMBH, No. 19-117, 2019 WL 4922743 (U.S. Oct. 7, 2019); Certain Underwriting Members of Lloyds of London v. Fla., Dep’t of Fin. Servs., 892 F.3d 501, 505 (2d Cir. 2018).

  41. Have there been any recent court decisions in your country considering the definition and application of “public policy” in the context of enforcing or setting aside an arbitral award?

    Three key cases in this area are Corporacion Mexicana De Mantenimiento Integral, S. De R.L. De C.V. v. Pemex-Exploracion y Produccion, 832 F.3d 92, 107 (2d Cir. 2016), cert. dismissed, 137 S. Ct. 1622 (2017) and Thai-Lao Lignite (Thailand) Co. v. Gov’t of Lao People’s Democratic Republic, 864 F.3d 172 (2d Cir. 2017), and Getma Int’l v. Republic of Guinea, No 16-7087 (D.C. Cir. July 7, 2017). Both cases considered the definition and application of “public policy” in the context of recognizing an annulled arbitral award.

    In Pemex, the Second Circuit confirmed an annulled award that had been set aside in the seat, Mexico, under Chapter 3 of the FAA (the Panama Convention). The Second Circuit agreed with the district court’s finding that recognizing the annulment — which was based on a law that had been enacted after the award was rendered — would violate U.S. public policy. The district court found that the decision to vacate the award violated “basic notions of justice” and on that basis, confirmed the award. In Thai-Lao Lignite, the Second Circuit recognized its authority to enforce awards annulled at the seat, but found that the annulment — which was based on a finding that the arbitrators exceed their jurisdiction — did not offend basic notions of what is decent and just. In Getma Int’l, the D.C. Circuit refused to confirm an annulled award that had been set aside in the seat, the Common Court of Justice and Arbitration of the Organization for the Harmonization of Business Law in Africa (the “CCJ”), under Chapter 2 of the FAA (the New York Convention). The D.C. Circuit stated that it would not second-guess a competent authority absent extraordinary circumstances. It went on to clarify that extraordinary circumstances were not simply conflicts with U.S. public policy, but had to arise to the level of violating the U.S.’s “most basic notions of morality and justice.” The D.C. Circuit then went on to find that, setting arbitral fees against the parties’ wishes does not violate the most basic notions of morality and justice in the United States, and refused to confirm the annulled award.

  42. Have there been any recent court decisions in your country considering the judgment of the Court of Justice of the European Union in Slovak Republic v Achmea BV (Case C-284/16) with respect to intra-European Union bilateral investment treaties or the Energy Charter Treaty? Are there any pending decisions?

    Yes. In Micula v. Gov’t of Romania, No. 17-CV-02332 (APM), 2019 WL 4305533 (D.D.C. Sept. 11, 2019), a district court held that Romania had failed to show — under the FSIA jurisdictional exceptions — that the Achmea decision had divested it of jurisdiction by invalidating the underlying arbitration clause. However, the applicability of Micula to other intra-EU cases is unclear. The district court found, inter alia, that Achmea did not apply in Micula because all of the key events occurred before Romania’s accession to the EU (including the entry into force of the bilateral investment treaty, the revocation of the incentives and the launch of the arbitration) and because the dispute before the ICSID tribunal in the Micula case did not relate to the interpretation or application of EU law. Finding that it had jurisdiction, the Court confirmed the arbitral award.

    In Masdar Solar & Wind Cooperatief U.A. v. Kingdom of Spain, No. CV 18-2254 (JEB), 2019 WL 4564533 (D.D.C. Sept. 18, 2019), the same district court, with a different presiding judge, granted a stay of confirmation proceedings until an ICSID committee has ruled whether Achmea invalidates the arbitration agreement on which the award was based. A stay was also granted in Infrastructure Servs. Luxembourg S.A.R.L. & Energia Termosolar B.V. v. Spain, No. 18-1753 (D.D.C. Aug. 28, 2019), under nearly identical circumstances, i.e., pending annulment proceedings before ICSID committee on the basis of the Achmea decision.

  43. Have there are been any recent decisions in your country considering the General Court of the European Union’s decision Micula & ors (Joined Cases T-624/15, T-694/15 and T-694.15), ECLI:EU:T:2019:423, dated 18 June 2019? Are there any pending decisions?

    As discussed above, a district court has confirmed the arbitration award underlying the General Court of the European Union’s Micula decision. Micula v. Gov’t of Romania, No. 17-CV-02332 (APM), 2019 WL 4305533 (D.D.C. Sept. 11, 2019).