Tuesday, 17 May, 2022

Enforcing a Foreign Arbitral Award: Global Perspective

Md. Fahmedul Islam Dewan

Enforcing a Foreign Arbitral Award: Global Perspective
Md. Fahmedul Islam Dewan

Western ideas and practices have long been used to model international arbitration ideas and studies. However, the number of arbitration cases in the East has now surpassed that in the West. After increasing international trade relations, arbitration was generally accepted as an effective and fast resolution method. This thought guided efforts to boost the efficiency and enhance the execution of the awards issued by arbitration institutions, resulting in the conclusion of various treaties, including the 1958 New York Convention.

Western courts have not been threatened by the treaty and have not felt obligated to interpret the protectionist convention fashion. The United States Supreme Court has sustained international arbitration provisions in several settings involving the New York Convention. The court has continuously acknowledged the necessity to apply the convention widely in multiple instances involving various contractual ties to strengthen the US position as a participant in multilateral accords and international trade. Parties contesting the execution of arbitral rulings in the United States were mainly unsuccessful in 2007. The US District Court upheld almost all international arbitration rulings.

However, Thailand, the Philippines, Vietnam, and Malaysia have all moved to align domestic arbitration legislation with international norms in a pro-enforcement way since 2001. However, the truth is that judicial meddling continues to be widespread. Although the Philippines is a signatory to the New York Convention, it has not had the expected pro-enforcement impact. Instead, the Philippines' courts have embraced a broad definition of public policy. The Court of Appeals overturned the trial judge's verdict in Luzon Hydro Corp. v. Transfield Philippines Inc, ruling that the trial judge's approach to expenses was inconsistent with Philippine law or principles and contradicted public policy.

By reforming the Arbitration Act of 1940, Bangladesh has adopted the Arbitration Act 2001. Under section 2(k) of the Arbitration Act 2001, “Foreign arbitral award” means an award made in pursuance of an arbitration agreement in the territory of any state other than Bangladesh. However, it does not include an award made in the territory of a specified state. The Act was passed to speed up arbitration processes, notably the enforcement of international arbitral judgments in Bangladesh. Furthermore, the Act requires Bangladeshi national courts to enforce international arbitral rulings as if they were court decrees.

In the case of Smith Co-Generation (BD) Pvt. Ltd. vs. Bangladesh Power Development Board 2010, it was held that Sections 45 and 46 of the following Act of 2001 would provide an appropriate forum for seeking remedy against the execution of an arbitral award. Thus, a court shall execute a foreign arbitral award upon an application being made to it by any party under the Code of Civil Procedure 1908.

Sara Koleilat-Aranjo, an Arbitration Lawyer in DIFC, Dubai, the UAE, noted that the Middle East is not renowned for being “easy” on enforcement. Moreover, half of the 15 Middle East jurisdictions that have become parties to the New York Convention have done so without reservations, including her home jurisdiction, the United Arab Emirates. While there are no reservations, in theory, the courts' attitude has been relatively cautious in reality. By relying on the public policy exemption or the legitimacy of the arbitration agreement provision, judges, according to Pinsolle, may make enforcement nearly tricky. The New York Convention adopts a method, in which the arbitration agreement is governed by a single statute, which some argue is outdated.

Currently, resolving disputes through arbitration is somewhat new in Bangladesh compared to other jurisdictions, and it is nonetheless in the development stage. Hence, the enforceability of an enforceable award may be delayed if challenged in a court of law, which is often the case. Consequently, despite its efficacy in the commercial context, unless the other party is willing and realistic, the arbitration process in Bangladesh may result in further delays and possibly eventual litigation. Those disputes often possess different legal systems and demand a platform to settle. The public court system where the business or its foreign trade partner is located might solve the dispute. However, it is stressed that litigation through national courts implicates several flaws.

Bangladesh is a potential future destination for further international investment. Thus, it may be time to modernize the Arbitration Act by removing present barriers. Commercial arbitration has a significant advantage over court action in terms of enforceability. Consequently, it is time to consider establishing a specialist bench in the High Court Division to deal with international commercial arbitrations and expedite the enforcement of foreign decisions. There should also be a deadline for the arbitration processes to be completed.


The writer a recipient of the prestigious DLA Piper Scholarship, and serves as the General Secretary of North South University Law & Mooting Society (NSULMS)