Cutting the Gordian Knot: Enforcing Awards where an Application has been made to set aside the award at the seat of arbitration

One of the grounds where a New York Convention award may be refused recognition and enforcement is where the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made. A similar provision exists in the English Arbitration Act 1996 s.103(2)(f). Under both the New York Convention and the Arbitration Act 1996 the word “may” is used which indicates that even if the award has been set aside at the seat of the arbitration it might still be enforced in another country. This article focuses on recent developments under English law as to how the courts have dealt with the enforcement of annulled awards. We also examine the Arbitration Act 1996 s.103(5) which provides that where an application for the setting aside or suspension of the award has been made to the relevant court, the court before which the award is sought to be relied upon may, if it considers it proper, adjourn the decision on the recognition or enforcement of the award. In countries which have adopted modern arbitration laws there is an almost universally held pro-enforcement attitude when considering international arbitration awards. However, when an award is challenged, or has been set aside at the seat of the arbitration, the enforcing courts may have to consider the status of the award. One view is that an award that has been set aside at the seat has no legal status and therefore there is nothing to enforce. An opposing view is that the annulment of the award at the seat of the arbitration does not affect its validity. The English courts have, however, approached the question in a pragmatic way. They have rejected an approach based on legal theory and simply applied a test as to when an award, which has been set aside, should or should not be enforced.