How supportive are the local courts of arbitration (domestic and international)? How long does it typically take to enforce an award?
Construction (2nd edition)
The Australian courts are very supportive of international and domestic arbitration. Applications made to the courts in support of an arbitration, such as an application to stay court proceedings, interim measures and orders relating to the taking of evidence, are addressed swiftly and in an arbitration friendly manner. It is difficult to set aside an award or to challenge enforcement as the Australian courts have considered the grounds for challenge in a manner that is consistent with international practice.
Enforcement of an award where there is no challenge takes approximately 3 to 4 months. If there is an application to challenge enforcement, then the process may take 6 to 8 months depending upon the complexity of the grounds for challenge. The process may take a further 6 to 8 months if the court’s decision is appealed.
Belgium is very arbitration friendly. Awards are enforced expediently, also due to the limited grounds upon which they can be challenged.
Local courts have always been a strong support to enforcing domestic arbitration awards. In 2018, the Supreme People’s Court released Provisions of the Supreme People's Court on Several Issues Concerning the Handling of Cases by People's Courts to Enforce Arbitration Awards, providing further comprehensive systematic assurance and support for the enforcement of arbitration awards.
In respect of international arbitration, China is a member state to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) and China acknowledges and enforces the arbitration awards issued in the territory of another member state pursuant to New York Convention. Nevertheless, the New York Convention also provides that if a court believes the dispute cannot be resolved through arbitration according to the applicable law in the place where such arbitral award is to be recognised or enforced, or the recognition and enforcement of the arbitral award will violate any local public policies, the court is entitled to reject the enforcement of such arbitral award.
In addition, given the special relationship between mainland China, Hong Kong Special Administrative Region and Macau Special Administrative Region, the recognition and enforcement in mainland China of arbitral awards conferred by arbitration institutions in Hong Kong and Macau is governed by the Arrangements of the Supreme Court on the Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region and the Arrangement of the Supreme Court on Mutual Recognition and Enforcement of Arbitral Awards Made in the Mainland and Macau SAR, the composition of which draws on the principles in New York Convention.
If one party fails to enforce the award, other entitled parties may apply to a court for enforcement, the term of which, theoretically, is six months following the receipt of the foregoing application for the enforcement by the relevant court. In practice, however, this regulation about enforcement term is not always observed, in which case, the applicant may apply for enforcement to a court of higher level and such higher level court may instruct the award to be enforced within given time, but such time given for enforcement has no specific limitation in law. At the same time, as respondents often apply for revocation of the award or non-enforcement of the award in order to delay the procedures, the enforcement of an arbitral award may sometime take forever.
Local courts are obliged by the law to enforce a local arbitral award, as if it were a judgement of a Croatian court. Foreign arbitral awards are subject to the proceedings under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Therefore, the enforcement of an arbitral award does not differ from the enforcement of the judgement of the court.
In Germany, arbitration tribunals are formed on the basis of contractual agreements. The German code of civil procedure (ZPO, sec. 1025 et subseq.) is arbitration friendly and state courts usually accept arbitral awards also of international arbitration tribunals. An arbitral tribunal may rule on its own jurisdiction and in this connection on the existence or validity of the arbitration agreement (sec. 1040 ZPO).
The duration of arbitration depends on the subject matter and the scope of the dispute. Procedures usually last between 6 to 18 months.
Greek courts are generally respect and uphold both domestic and international arbitration clauses to the extent these are valid and apply to the dispute in question. Greece has ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and in addition, as regards international arbitration taking place in Greece, has enacted Law 2735/1999, which incorporated the UNCITRAL Model Law into Greek law.
In terms of enforcement of an arbitral award issued outside Greece, a two-stage process needs to be followed. The first stage involves the filing of an application for declaring the award enforceable in Greece. This is done through the voluntary procedure ('ekousia dikaiodosia'), which leads to the issuance of a decision by the Greek courts in roughly 2-6 months from filing. The second stage involves the enforcement of the Greek decision declaring enforceable the foreign arbitral award, which is carried out under the ordinary procedure in Greece. If the award has been issued in Greece, the process will be faster, as the aforementioned first stage will not be necessary.
Domestic courts are rather supportive of arbitration. They can be asked to nominate the members of the arbitral tribunal if such members are not appointed within a reasonable deadline. Ordinary courts may also be asked to order interim measures as well as to support the arbitral tribunal if the evidence gathering or any other procedural act requires the assistance of the official authorities. In certain situations, an award may be appealed to the ordinary courts or to the Federal Supreme Court. Timing for the enforcement highly depends on the merits of the case.
The United States recognizes, and its courts will enforce, foreign arbitral awards pursuant to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (known as the New York Convention). The New York Convention was incorporated into U.S. Law through Chapter 2 of the Federal Arbitration Act (FAA). See 9 U.S.C. Sec. 201, et seq. In order for the award to be enforceable in the United States, the arbitral award must be final and binding on the parties in the foreign country were the award was rendered. U.S. courts look to the law of the foreign country where the award was rendered in determining whether the award is enforceable and final. U.S. courts will not, however, enforce an arbitration award if the scope of the arbitration award exceeds the scope of the agreement to arbitrate or where the party against whom the award was issued did not receive proper notice of the proceedings or was not afforded an opportunity to present its case.
U.S. courts also recognize and enforce domestic arbitration awards. Like international arbitration awards, enforcement of domestic arbitral awards is governed by the FAA. The only instances in which U.S. courts refuse to enforce arbitral awards is when the award was procured through fraud, where there is evidence the arbitrators were not impartial, where the arbitrators were found guilty of misconduct or where the arbitrators exceeded their powers. The party opposing enforcement of the arbitration award bears the burden of proving the award should not be enforced.
The FAA provides the framework and procedures for the enforcement of arbitration awards in the United States. In order to enforce an arbitral award, the party seeking enforcement must commence a petition or motion to confirm the award in either the state or federal courts. These proceedings are intended to be summary in nature, thereby speeding the enforcement process. Nevertheless, the timing for enforcement varies considerably in the United States depending upon the forum in which the enforcement action is brought. In most cases, the time between filing the enforcement action and confirmation of the award can take between several months to over a year. Enforcement proceedings must be commenced within three years of the award. See 9 U.S.C. Sec. 207
The courts are very open to arbitration. In some cases, courts put pressure on the parties to terminate their dispute out of court through mediation.
The Cyprus courts support arbitration to a large extent: the domestic Cyprus Arbitration Law (Cap. 4), which only regulates domestic arbitrations, is officially designed to support arbitration. Moreover, arbitration proceedings are governed, apart from the Cap. 4, by the International Arbitration in Commercial Matters Law 101/1987 (the “IACM”), which adopts the basic approach of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards and regulates disputes deriving from international arbitration agreements. Cyprus law recognizes an arbitral award issued by a foreign or international tribunal as binding and enforceable, regardless of the country in which it was issued.
Brazil is among the leading countries in the use of arbitration, and both domestic and international arbitration chambers have played an important role in this successful story throughout the years. Brazil counts on very well reputed courts of arbitration that provide excellent administration services to tribunals and parties. The increase of arbitration procedures in Brazil has also brought the attention to renown international courts, such as ICC, which decided to incorporate a physical branch in the city of São Paulo.
Arbitration in Ireland is governed by the Arbitration Act 2010. An arbitrator’s award is binding on the parties and is enforceable in Court.
Ireland is a signatory to the New York Convention (the "Convention") and it is incorporated into its legislation in section 24 of the Arbitration Act 2010. Article 35(1) of the Model Law, incorporated in section 6 of the 2010 Act, provides that an arbitral award, irrespective of the country in which it was made, shall be recognized as binding and, upon application in writing to the competent court, shall be enforced. International and domestic arbitral awards will be equally enforced by the Irish courts.
The courts will refuse to enforce an award in limited circumstances, such as those set out in Article V of the Convention. These include instances in which:
(i) a party to the arbitration agreement was under some incapacity;
(ii) the arbitration agreement was not valid under its substantive law;
(iii) a party against whom it is to be enforced was not given proper notice or was unable to present its case;
(iv) the tribunal lacked jurisdiction;
(v) there was a procedural irregularity; and/or
(vi) it would be contrary to public policy to recognise or enforce the award.
Local courts are very supportive to arbitration. Society organizations and people dedicated to arbitration have done very strong efforts in order to empower the arbitration alternative method to resolve disputes. Actually, legislation is very strict and does not allow the Judges to review the essence of the cases and obligate them to have as valid arbitration awards. The exceptions of the foregoing are very restricted.
In general the proceeding to execute an arbitration award lasts no longer than a year (between 6 and 9 months).
The English courts are extremely supportive of arbitration: the Arbitration Act 1996 is designed to support arbitration, and no distinction is made between domestic and international arbitration.
There are limited grounds of appeal. Although there is a right to appeal on a point of law, that right is often deleted from contracts.
There is a procedure in place for swift enforcement of arbitral awards, but in practice the need to apply to the court to enforce is rare.
It does not usually go to the arbitration route for the resolution of disputes between the developer and the builder of the building. In the event that this has been agreed, they would be subject to Law 6/2003, of December 23th, on Arbitration (Official Gazette of the State No. 309, of December 26, 2003).
Arbitration, unlike judicial proceedings before the Courts and Tribunals, are much quicker and less formal. Undoubtedly, it should go to arbitrators experts in the matter, should it be indicated in the arbitration agreement, which ends with a resolution or award that has an executive character before the Courts of Justice, which can be used in the case of that is breached by the party bound to compliance.
Turkey is a party to New York Convention and the fundamental principles of arbitration is recognised under Turkish law. In parallel with this, the practices of Turkish courts can be regarded as ‘arbitration friendly’ based on the recent decisions rendered on enforcement of arbitration awards. A proceeding for enforcement of an arbitral award is expected to take 9 to 12 months depending on the particulars of the matter and the workload of the relevant court.
Historically, the post-1994 democratic government has been sceptical of arbitration. It has traditionally been seen as a privatisation of the dispute resolution process and an attempt to circumvent the racial transformation objectives of the judiciary. It has only recently been reprioritised with the introduction of a new act applicable to international arbitration specifically, namely the International Arbitration Act of 2017.
Domestic arbitration proceedings are discretely regulated, by an Arbitration Act which dates back to 1965 and which has been criticised as facilitating judicial interference in the arbitral process. Nontheless, the South African courts are deferent to, and strongly supportive of arbitration in relation to both process and enforcement, which makes South Africa an attractive and cost effective seat for African arbitration.
Local courts are willing to give effect to domestic arbitration awards, provided that the respective arbitration agreement is valid and not against public policy. The courts are empowered to set aside arbitration awards but will only do so in limited circumstances; for example, if the arbitrator committed a gross irregularity in the conduct of the arbitration or has exceeded his/her powers. The enforcement of arbitration awards is subject to the Arbitration Act of 1965.
Enforcement of foreign arbitration awards is subject to the International Arbitration Act which is based on the UNCITRAL model law. This Act provides for the recognition of foreign arbitral awards in South Africa, as required by the New York Convention. Foreign arbitral awards, once made an order of the court, are enforced as any judgment or order of the court.
Arbitration is recognized and arbitration awards are upheld under French law. The French Courts have a limited right to control and review the awards. The timing for the enforcement will depend on each specific cases.
Local courts are supportive of arbitration and Swedish awards are enforceable upon applying to the Enforcement Agency. Foreign awards will be upheld by Swedish courts after an application to the Svea Court of Appeal and in accordance with international multi- and bilateral conventions and agreements and EU regulations. Judgements from EU or EFTA jurisdictions are arguably the easiest to enforce.
Arbitration awards are generally recognized and enforced by the ordinary court system. An award can be enforced after 14 days.
Denmark is party to the New York Convention on the Recognition and Enforcement of Foreign Arbitration Awards of 1958. Foreign arbitration awards can usually be enforced in Denmark.
- The Korean courts are considered to be very arbitration-friendly. The Korean Arbitration Act is consistent with the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration 1985, including its 2006 amendments. Korean courts, in implementing the act, have consistently sought to do so in accordance with international best practices. Korean courts are therefore known for refusing to interfere with ongoing arbitrations and for enforcing arbitral awards in almost all cases.
- The Korean Arbitration Act also empowers the Korean courts to enforce interim measures issued by arbitral tribunals seated in Korea. This offers a considerable benefit for disputes related to ongoing projects in Korea, as it means that any interim measures granted by a tribunal to secure the project site or to carry out certain works while the arbitration is pending can be enforced by court decree. Courts are also empowered by the Act to issue interim measures in aid of arbitrations, whether they are seated in Korea or abroad.
- South Korea is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the “New York Convention”. As such, a foreign arbitral award rendered in a New York Convention jurisdiction is readily enforceable in Korea, subject only to the very limited grounds for challenge set out in the New York Convention, such as the absence of due process or a failure to abide by the parties’ arbitration agreement. Even these grounds for challenge have been interpreted narrowly by Korean courts.
- Similarly, awards rendered in Korea are enforceable under the provisions of the Korean Arbitration Act, which in turn closely mirror the provisions of the UNCITRAL Model Law on International Commercial Arbitration and the New York Convention. The grounds for refusing enforcement of an award rendered in Korea or for setting it aside are therefore as narrow as they are under the New York Convention.
- A recent amendment to the Korean Arbitration Act in 2016 provides that arbitral awards can be enforced by a mere “decision” of the court, which does not require an in-person hearing, as opposed to a “judgment”, which requires an in-person hearing. As a result, the process for enforcement has become simpler and faster.
- A decision granting enforcement is usually issued within 6 to 9 months from the application of a party to have an award recognized or enforced, unless strong grounds exist to resist enforcement of the award.