CHALLENGES TO ENFORCEMENT OF FOREIGN ARBITRAL AWARDS UNDER PUBLIC POLICY EXCEPTION

Abstract

Arbitration of international commercial disputes hasincreased and is likely to continue to grow. Many businessesprefer arbitration to litigation in court because of its relativepromptness, privacy and economy. However, in someinstances, arbitration requires the support of national courtsto be effective when arbitral awards are not satisfied throughvoluntary compliance of the parties. Among many claims, thepublic policy defense under the New York Convention is mostfrequently invoked and has also become one of the mostcontroversial grounds for refusing to enforce arbitralawards. This paper examines examples and case laws thatdeal with objections to enforcement of foreign arbitralawards based on substantive public policy by analysing thegeneral international understanding. It was found that thedivergent and inconsistent application of the policy betweennational court systems create additional barriers to theenforceability of arbitral awards highlighting the need for aclearer international definition in order to create a uniformstandard of interpretation for the exception.