Arbitration is defined as a special method of alternative dispute resolution that offers many advantages to the litigants including, inter alia, respecting the parties’ will with regard to the selection of their preferable method to resolve the dispute. Arbitration is faster and helps avoiding the routine litigation procedures applied in the courts and avoiding facing appeals and cassation appeals that are usually filed against court judgments, in addition to the fact that it lessens the load of normal judiciary system. Parties preferring the arbitration may provide for it in their contract “Arbitration Clause” or agree on arbitration in a separate instrument later. Arbitration can be conducted by an ad hoc committee or through specialized institutions.

Nowadays, the arbitration is the preferable method to resolve international commercial disputes. Therefore, the fast and smooth enforcement of arbitration awards has become an urgent need to secure the feasibility of arbitration system and the effect thereof in promoting the international commerce. It is well understood that unlike judgments passed by national judiciary, arbitral awards are not self-executing by force of law, given the fact that arbitral awards are passed by normal persons who neither represent the State nor any of its public authorities nor do they pertain jurisdiction or an official power to have their awards enforced. Therefore, the State’s judiciary interference is indispensible to order the enforcement of such awards.

The enforcement of the arbitral award is considered to be one of the prime subjects that is worth studying and analyzing. The success and preference of arbitration system for arbitration resolution on international or even national level is conditional and dependent on the enforceability of arbitral awards, especially in circumstances where enforcement is sought outside the country from which the arbitral award originates.

For the feasibility of arbitration system, enforceability of awards is the most fundamental matter, especially in international commercial arbitration. The venue of arbitration is usually selected to be suitable and convenient to the parties, despite that the losing parties may not have sufficient funds or properties in the State selected to have the venue of arbitration or from which the award originates. Therefore, the successful party shall seek enforcement in the state where the losing party has funds and properties, which is not less important than the enforcement of national arbitration awards. The enforcement of arbitration award resembles the minute of truth. Enforcement is the critical point when the debt is satisfied. Enforceability of arbitral award is the criterion of success of the arbitration system in whole. 

What is the next step when the judgment debtor refuses to comply with the award??!!  In this case, enforcement by force of law is necessary; i.e. by obtaining court order of enforcement. Therefore, modern national and international litigations have carefully addressed and regulated the issue of enforcement of arbitration awards.

 

When the losing party voluntarily complies with the award, the issue will be solved. However, it may occur that the losing party refuses to pay the awarded compensation or carry out the obligations set forth in the award, the enforcement proceedings will be necessary and the creditor (Claimant) shall seek judicial enforcement and protection by getting a court order compelling the debtor to comply with the award.

However, the judicial protection of court judgments in general, and of arbitral awards in particular, remains futile until the judgment/award is enforced. In circumstances where the court judgment or arbitral award sought to be enforced is issued by a national court or within the state, normal enforcement procedures are followed, as both judiciary authority that passed the judgment/award and the enforcement authority are under the same state sovereignty.  Nevertheless, when the judgment is passed under a foreign state sovereignty, and the enforcement/execution authority is under a different state sovereignty, we will be confronted with the issue of recognition of the executive effect of foreign judgments/awards in the state of enforcement. 

The issue of enforcement of arbitral awards may appear to be of a limited nature as long as it remains within the framework of domestic legal system of the State. Nevertheless, it becomes more serious when the enforcement is sought for awards that are originated from a different country, or for awards related to international commerce, especially in the absence of uniformed enforcement rules between the various countries. Therefore, many countries tried, collectively, bilaterally or otherwise, to overcome barriers that hinders the enforcement of the passed arbitration awards throughout entering into agreement. In this case, the enforcement of the foreign arbitral awards or the awards related to the international commerce would become easier.    

In spite of the great results achieved by the conclusion of such conventions/agreements, they failed, for some reason or another, to tackle all difficulties and issues impeding the enforcement of foreign arbitral awards

Bearing in mind the numerous advantages of enforcement of foreign arbitral awards pursuant to the agreed-upon law comparing to the enforcement of the same pursuant to the legal system of the state in which enforcement is sought, it is therefore preferable and encouraged by most of the states by way of concluding many bilateral and collective agreements/ conventions that compel the national judiciary of the member states to recognize the and enforce the foreign arbitral awards.

Convention on the Recognition and Enforcement of Foreign Arbitral Awards (Commonly known as the “New York Convention”) comes at the top of those conventions thanks to the flexibility, facilitations and suitability it offers compared to any other convention.

The court also plays a role in the enforcement of arbitral awards. In this regard, Lord Collins JSC, a British Judge, states that “the court before which recognition or enforcement is sought has a discretion to recognize or enforce even if the party resisting recognition or enforcement has proved that there was no valid arbitration agreement.”

The main goal of the New York Convention is expedite the enforcement of foreign arbitral awards by subjecting the enforcement to a limited number of conditions. Under Article V of New York Convention, the bases for refusing to enforce an arbitral award are restricted to a narrow list of defects affecting the arbitral procedure or the award. Article V(1) of the New York Convention refers to the grounds that a party shall consider in order to successfully resist enforcement of the award. The said article provides that the enforcement of the award may be refused if:

• "a party to the arbitration agreement was under some incapacity;
• the arbitration agreement was invalid;
• the procedure before the arbitral tribunal was affected by procedural unfairness;
• the award deals with issues falling outside the scope of the submission to arbitration;
• the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties or, absent such an agreement, the law of the arbitral seat;
• the award has not yet become binding on the parties; or
• the award has been set aside in the country where it was made".

Despite that Geneva Convention of 1927 had the precedence as an attempt to find suitable solutions for enforcement of foreign arbitral awards, it did not achieve yet the goals intended by it. On the other hand, the scope of its application might limit the efficiency thereof, as it is confined to the arbitration awards passed based on an arbitration clause or terms of reference that fulfills the controls and requirements sent for under Geneva Protocol of 1923, originates from a member state, and passed by persons who are subjected to its judiciary. 

In 1953, the International Chamber of Commerce (ICC) produced the first draft Convention on the Recognition and Enforcement of International Arbitral Awards to the United Nations Economic and Social Council. With slight modifications, the Council submitted the convention to the International Conference in the Spring of 1958,

After the committee completed the draft convention, the two councils invited to a diplomatic conference to study and approve it. On 10 June 1958, the conference approved the draft convention after applying many amendments thereon, making it moderate between the previous conventions and the draft made by the Chamber of Commerce. The Convention came into force on 7th June 1959, and was acceded to by many states. The Convention applies to foreign arbitral awards, whether an ad hoc arbitration or institutional arbitration, between normal persons or juridical persons (or subjects of law), civil or commercial dispute, and regardless or the underlying legal relation; i.e. contractual or non-contractual relation, of whether it is a normal arbitration or reconciliation,

The Convention is applicable no matter whether the parties to the arbitration are from two different states or from the same state, and whether the two parties have the nationality of the country of origin or the country in which the enforcement is sought or even none of the two countries. Nevertheless, in order for the Convention to be applicable, the award sought to be executed shall be passed based on an a written arbitration agreement (Article 2/2 of the Convention)