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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

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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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F. Recommendations 165

Extract

165 F. Recommendations In light of the obvious gaps of the current interaction of international regimes it has often been criticised and suggested for revision. 601 The latest added multilat- eral act was the Brussels I Regulation, but lacking essential impact on matters of arbitration, this Regulation was not capable of reaching a legislative improvement, consis tent interpretation or uniform conception to the open issues. There is still disunity on internationally acknowledged grounds for nullifi cation of awards or uniform standards on the exercise of discretionary power on enforcement deci- sions. Not only do the parties principally expect their award to be fi nal, such fi nal- ity is also essential for maintaining and promoting international arbitration as a feasible instrument to settle disputes in international business matters. 602 Besides, “[p]articipants in international transactions should play according to the same rules.” 603 These “rules” however, need to balance the tension between the parties’ equal interest in the fi nality and the fairness of the issued award. I. Recommendations De Lege Ferenda The controversial and intensely debated decisions in favour of enforcement of vacated awards basically emerged, because not only courts (and laws) of the forum state, but also courts (and laws) of the enforcing state are equally permitted to determine the validity of arbitral awards. 604 Therefore, it is of vital importance to defi ne the interaction of forum states and enforcing states when assessing the legal effectiveness of arbitral awards. 601 Freyer/Gharavi (1998), op. cit., 113; Webster (2006)...

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