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Recognition and Enforcement of Annulled Foreign Arbitral Awards

An Analysis of the Legal Framework and its Interpretation in Case Law and Literature

Series:

Claudia Alfons

When state A, in which an arbitral award was rendered, decides to annul the award in accordance with its national laws, it does not necessarily mean the award is effectively null and void. Rather, the initially prevailing party X may still be granted enforcement of the award in state B. The situation gets even worse, if a second arbitration is conducted in state A, this time rendering an award in favour of the former underlying party Y. Now party Y may in turn – successfully – seek the enforcement of the second award. This book aims to analyse the legal framework and the national case law resulting in such out-comes and gives recommendations how legal certainty may be assured – de lege lata and de lege ferenda.

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C. Recognition and Enforcement of Nullified Awards 73

Extract

73 C. Recognition and Enforcement of Nullifi ed Awards In the light of international comity, national courts generally favour recognition of decisions rendered by competent authorities of other sovereign states. 272 A foreign court decision annulling an arbitral award would thus generally be recognised, whereupon the principle of ‘ex nihilo nil fi t’ would hinder enforcement of the award. 273 However, despite the multitude – or maybe due to the multitude – of national and international legislation on enforcement of foreign awards, inconsis- tent approaches to enforcement of vacated awards are to be recorded. I. Local Standard Annulment Such awards, annulled by a competent authority in their forum state or in ac- cordance with the stipulated applicable law, and therefore on the basis of “local particularities” have been identifi ed as “Local Standard Annulments”. 274 In order to maintain arbitration as an internationally approved and feasible mechanism of alternative dispute resolution, the upholding of an utterly “Local Standard An- nulment” should be avoided, to the greatest possible extent, since “[t]he choice of a particular place of arbitration should not facilitate such subterfuge by dint of an unusual or internationally unusual local rule”. 275 While opponents object that “ignorance” of such annulments “is no excuse”, the author of the “Local Standard Annulment” conception counter “it would be unfortunate and unnecessary to al- low the system of international arbitration to be a minefi eld for the unwary.” 276 To date, a number of national courts, including those in the United States, France, Belgium,...

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