To what extent might a third party challenge the recognition of an award?
International Arbitration (2nd Edition)
In general, arbitral awards do not bind third parties, who will likewise lack the capacity to challenge the recognition of awards. Malaysian courts are typically hesitant to lift the corporate veil to allow the enforcement of an award against a non-party to the arbitration. However, it remains unconsidered by Malaysian courts if a non-party can challenge the recognition of an arbitral award.
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.
In Portugal, only the parties in the proceedings (and not a third party) are entitled to challenge the recognition of an award.
If a third party is affected by the decision, it can intervene by a tierce opposition to dispute a decision rendered without it being a party to the proceedings.
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.
Generally, a party is entitled to challenge an award if the party is adversely affected by the award (and be it only by the decision on costs). Accordingly, a third party might be entitled to challenge an award if the award has a res iudicata effect on it. This primarily covers instances where the scope of the award’s legal effect extends to the third party.
As a general rule, only parties to the case on recognition and enforcement of an arbitral award are allowed to challenge the court decision on this matter. However, where a third party believes that the decision affects its rights and obligations, it may also bring an appeal against such decision.
The Panama Arbitration Law expressly provides that the party that can challenge the recognition of an award is the party against which the award is being invoked. The Law is silent as to whether a third party might challenge the recognition of an award.
There are no statutory provisions whereby a third party may challenge the recognition of an arbitral award.
UAE Off-Shore Jurisdictions
DIFC Arbitration Law & ADGM Regulations.
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.
See question 22 above. As long as a third party does not become bound by the legal effect of the award due to involvement in the procedure, the third party will not become authorized to challenge the recognition of an award.
Section 41.1 of the SAA specifies that and award may be set aside if the applicant alleges and proves certain requisites. Nevertheless, the referred Section does does not specify what should be understood by the term “applicant”. Due to such ambiguity we have to attend to what Spanish case law has understood.
In general terms, it has to be pointed out that Spanish case law is prone to consider that by “applicant” the legislator wanted to include both the parties to the arbitral proceedings as well as third parties to it. However, third parties will have to have a legitimate interest in the subject matter and will also have to prove that they hold a direct interest in the annulment action.
As an example the ruling issued by Madrid’s High Court of Justice on the 28th of November 2016, denied a third party to the arbitral agreement to exercise and annulment action due to the fact that they didn’t sufficiently prove a legitimate interest in the subject matter.
A third party is not entitled to challenge the recognition of an award. What would be possible is for a third party which has a legal interest to oppose the recognition of an award to intervene in the recognition proceedings. In this scenario, the third party would have the position of an intervenor, and would be able to put forward legal arguments, furnish evidence, file legal remedies etc.
There is no specific provision in the ADR Act, Arbitration Law and the Special ADR Rules that allows a third party to challenge the recognition of an award. Moreover, the provisions on confirmation, recognition and enforcement, vacation, setting aside and refusal of recognition in the Special ADR Rules refer only to a party to the arbitration proceedings. Thus, considering that a third person is not privy to the arbitral award, such third party does not have basis to challenge the recognition of an award.
There is no provision wherein a third party can challenge the award.
Third parties cannot challenge the recognition of an award.
Third parties may not challenge the recognition of an award that will not be enforceable against them.
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.
Third party may oppose recognition of the award only for procedural reasons.
For foreign awards falling within the scope of the New York Convention, recognition of an award may be challenged only for the reasons stated therein.
For the foreign awards recognized in accordance with the Arbitration Act, the grounds for refusal of recognition are the same as the grounds for refusal of enforcement (please refer 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 award is in conflict with the public policy of Croatia, while the existence of other reasons has to be invoked and proved by the opposing party.
The decision of the court in recognition proceedings is subject to an appeal.
As a matter of procedure, third parties are not normally included as parties to the court proceedings for the recognition of an award since the award is not addressed to them and therefore they are not affected by the procedure so as to be entitled to oppose its recognition.
Nevertheless, in certain circumstances, third parties might be purposefully inserted as Respondents on the title of the court application for recognition of the award by the party wishing to have the award recognised and are served with the relevant application. In such cases, they are free to oppose the said application and raise grounds why they award shall not be recognised within the jurisdiction.
In addition, if the third-parties can show that the recognition of the award would affect their interests, they can in principle apply to the Court and request leave to intervene in the proceedings. However, we are not aware of any caselaw where a third-party managed to intervene in the proceedings and successfully challenged the recognition of an arbitral award in Cyprus.
In a recent decision (see Paris Tribunal de grande instance, 25 April 2017, Case 15/17869), a third-party challenge made against the enforcement order of a foreign arbitral award was declared admissible, although the challenge failed on the ground that the arbitral tribunal did not hold the third party liable to the award-creditor. However, due to the specific facts of the case it is unclear whether this decision will set a strong precedent for third party challenges of arbitral awards. Moreover, a third party may be more interested in directly challenging an award itself on the merits (rather than the order granting recognition or enforcement, which is made after a very limited review of the award), which is not currently permissible under French law.
See question No. 30 above.
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).
Awards are generally recognised without even hearing the opposing party to the arbitration.
U.S. courts have interpreted the FAA to allow only parties to an arbitration to challenge or intervene in a challenge to the recognition of an award. See Acuff v. United Papermakers & Paperworkers, 404 F.2d 169, 171 n. 2 (5th Cir. 1968). For example, where a collective bargaining agreement provides for arbitration between a union and an employer, the individual employee does not have standing to challenge the arbitration award even though the outcome of the arbitration may affect him or her. See Melander v. Hughes Aircraft Co., 194 Cal. App. 3d 542, 547, 239 Cal. Rptr. 592, 595 (Ct. App. 1987). At least one state court has extended this rule to awards rendered under the Uniform Arbitration Act. Eisen v. State Dep’t of Pub. Welfare, 352 N.W.2d 731, 736 (Minn. 1984).
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.
A third party that is not a party to an arbitration agreement but was affected by the proceeding has no status in the application to set aside the arbitral award or in the application to ratify it. However, it may take other legal steps to protect its rights. Thus, it may file a petition to the court for a declarative judgment, and the time bars as applicable in the Arbitration Law to an application to set aside an arbitral award will not apply to it.
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 request filed in order to obtain the recognition and enforcement of an arbitral award is settled by the court following the subpoena of the parties that participated in the arbitral proceedings. Therefore, usually, third parties cannot challenge the recognition of an award.
The enforcement of an arbitral award, same as the awards of a foreign court, cannot be directly done through enforcement offices in Turkey. The enforcement of such an award can be resolved by a Court decision. Therefore, the third party involved may present the Court of such a case with an intervention petition, and request to be a party to judgment, should they have a right to action.