To what extent might a third party challenge the recognition of an award?
International Arbitration (3rd edition)
Third parties may not challenge the recognition of an award that will not be enforceable against them.
Usually, third parties cannot intervene with the procedure for the recognition of the award since they were not part of the arbitration agreement or the dispute. However, the party in favor of which the decision was given, may add a third party as a Respondent on the petition for recognition of the said award. The third party may oppose to that petition and demand the awards recognition to be condemned by the court since such recognition would have a negative effect upon their interest.
Although the possibility of a third party challenging the recognition of the award is possible, there are no court decisions granting such request.
According to the Arbitration Act only the parties to the arbitration can challenge an award.
As a general rule, a third party cannot challenge the recognition of an award, as it was not part of the proceedings.
A third party is not entitled to challenge the recognition of an award.
A possibility exists for a third party, which has a legal interest, to oppose the recognition of an award and to intervene in the recognition proceedings. Should that be the case, the third party, if granted such status in the court proceedings, would have the position of an intervener, and would be able to put forward legal arguments, furnish evidence, file legal remedies etc.
Under Article 58 of the Arbitration Law, only parties to arbitration can apply for setting aside of the arbitral award. As for enforcement, Article 9 of Provisions of the Supreme People’s Court on Several Issues Concerning the Handling of Cases by People’s Courts to Enforce Arbitration Awards provide that a third party may apply for non-enforcement of an award, if the following conditions are met: (1) there is evidence proving that the party concerned in the arbitration case applies for arbitration for malicious or false purposes to impair its lawful rights and interests; (2) the enforcement of the object involved in the lawful rights and interests claimed by the outsider has not been concluded; and (3) the application is filed within 30 days of the date on which the outsider knows or should know the people's court has taken measures to enforce the object.
a. A third party, who is not bound by the award, cannot challenge it.
A third party could challenge the recognition of an award in case the action for recognition was for some reason filed against such party (e.g. as a legal successor) or if a third-party have otherwise became a party to recognition proceeding. In general, it is believed, however, that an award, even if recognized, can have no legal effects against third parties, and this may be argued in any proceeding where such effects could be at issue.
As a general rule, a separate challenge of the recognition of an award is generally – for the parties bound by an arbitration award – not available under Swiss law, as there is no special separate procedure for the recognition of an award. Only the decision of the Swiss court that decides on the recognition within the enforcement procedure may be challenged.
As a rule, the effects of an award on the merits only extents to the parties involved in the arbitral proceedings and the award does generally not have any effect vis-à-vis third parties. Therefore, a third party will in ordinary circumstances lack the necessary legitimate interest to challenge the recognition of an award.
UAE - Federal
There are no statutory provisions whereby a third party may challenge the recognition of an arbitral award pursuant to the UAE Arbitration Law.
UAE - Free-zone Jurisdictions
The DIFC Arbitration Law (Article 44) and the ADGM Regulations (Regulation 53) do not provide for an arbitral award to be challenged by a third party.
Only a party to the proceedings may (upon notice to the other parties and to the tribunal) apply to the court challenging any award of the arbitral tribunal as to its substantive jurisdiction or on the ground of serious irregularity affecting the tribunal, the proceedings or the award (sections 67 and 68 of the 1996 Act).
The recognition of an award cannot be challenged unless by parties who have a direct interest in the case.
Only parties to an arbitration can challenge or intervene in a challenge to the recognition of an award, even in instances where a third party’s rights might be affected by the outcome of the proceedings. See Acuff v. United Papermakers & Paperworkers, 404 F.2d 169, 171, n. 2 (5th Cir. 1968).
There is, as a general rule, no right of a third party to challenge the recognition of an award. A third party conceivably may only challenge the recognition of an award if it is the award debtor. In practice, it seems very unlikely that this situation could arise.
Both the Lagos Law and the ACA make no provisions on the right or the extent to which third party can challenge the recognition of arbitral awards. However, Nigerian courts have held that a third party that is likely to be affected by the outcome or the recognition of an arbitral award has the right to challenge an arbitral award on that basis. See Statoil (Nigeria) Limited et al. v FIRS (2014) LPELR-23144(CA).
In Portugal, only the parties in the proceedings (and not a third party) are entitled to challenge the recognition of an award.
If an arbitral award affects the rights or obligations of a third party, for example in bankruptcy proceedings, that party may challenge the award. In accordance with the case law of Russian courts, a party to the arbitration proceedings may object to such challenge.
Where recognition or enforcement is sought the Irish courts may, if considered proper, order the requesting party to provide appropriate security if the arbitral tribunal has not already made a determination with respect to security or where such a decision is necessary to protect the rights of third parties.
The principal rule is that only the parties are bound by an arbitration award. Third parties are not bound by the award, and therefore generally not in position to challenge an award. Third parties will, however, have to respect the arbitration award to the same extent as they would be bound by an agreement between the parties to the arbitration case.
Any party that is adversely affected by the arbitration award is generally entitled to challenge the arbitration award and demand its setting aside. The extend of "adverse effect" may even be limited to the decision on costs. I.e. were the award has certain legal effect extending to the third party (res judicata effect on third party), such party is entitled to apply for a setting aside of the arbitral award.
A third party may oppose the recognition of the arbitral award only because of procedural reasons.
For foreign arbitral awards falling within the scope of the New York Convention, the recognition of an arbitral award may be challenged only for the reasons stated therein.
For foreign arbitral awards recognized in accordance with the Croatian Arbitration Act, the grounds for the refusal of recognition are the same as the grounds for the refusal of enforcement (please refer to our to answer to question 28). The court examines ex officio if the subject matter of the dispute is arbitrable under Croatian law and if the arbitral award is in conflict with the Croatian public order, while the existence of other reasons has to be invoked and proved by the opposing party.
The decision of the Croatian national court in the recognition proceedings is subject to appeal.
National and international arbitral awards in Chile only produce effects between the parties of the dispute. Therefore, third parties may not challenge the recognition of an arbitral award.
Under the Implementing Rules and Regulations of R.A. 9285, third parties may challenge the award’s recognition on jurisdictional grounds regarding their inclusion in the arbitration.
Prior to answering this question, the following clarification must be made: The petition for recognition and enforcement of foreign awards is tried under the rules set forth in articles 739 et seq. GrCCP controlling the so called “non-contentious proceedings” which do not follow closely the adversarial model which presupposes the existence of a plaintiff and of a defendant in any event. A request in “non-contentious proceedings” does not need to be addressed against an opposing party. For that reason, the applicable rules do not provide a definite answer on whether the award debtor shall be named defendant and/or summoned to the proceedings. The existing law is contradictory whereas in legal literature the prevailing view is that the award debtor shall be summoned to the proceedings under the NY Convention in order to be able to raise the defenses there provided as means of resisting the recognition and enforcement of the award. In the context of this controversy, those who purport the view that the award debtor shall not be named defendant nor summoned to the proceedings necessarily treat him as “third party” in order to allow him to bring afterwards a third-party-challenge under article 583 GrCCP against the decision rendered. The same holds true as regards not summoned third parties which are bound by the res judicata effect of the award.
As regards third parties to the arbitration proceedings per se, which are not bound by the res judicata effect of the award but are nevertheless otherwise adversely affected by it, the question whether they are allowed to bring a third-party-challenge under article 583 GrCCP is disputed. As noted above (see answer to the Question 30) a similar issue is posed with regard to the award itself i.e. it is disputed whether said third parties are allowed to bring a third-party-challenge against the award per se (reference is made obviously to awards made in Greece either in domestic or international commercial arbitral proceedings). However, the question in the context discussed here is somewhat different in the sense that the third-party-challenge is not brought against a foreign award (such a challenge would not be governed by Greek law and would not be tried by Greek courts) but against the decision recognizing and declaring it enforceable. Hence, it seems that such a remedy under article 583 GrCCP which generally allows third party challenges against court decisions may not be precluded as a matter of principle, assuming always that legal standing exists.