Many international business transactions integrate an arbitration clause into the agreement as companies choose to keep potential disputes out of the court systems. Enforcement of the awards rendered pursuant to such agreements is straightforward in the United States thanks to the Federal Arbitration Act, as long as the United States is the forum for the arbitration proceeding. Even if the forum is outside of U.S. jurisdiction, several treaties, namely the Panama Convention and the New York Convention, provide for recognition of a foreign arbitrated award by U.S. courts, as well as recognition by U.S. courts of any annulment or suspension judgments rendered by courts in the State where the arbitration proceeding took place. However, two recent cases heard by the United States Court of Appeals for the Second Circuit have shed light on the intricacies of enforcing foreign judgments, specifically when such judgments annul arbitrated awards that have already been recognized by U.S. courts. The first case being Pemex which presents an unusual situation where a U.S. court declined to nullify a foreign arbitral award, despite the courts of the foreign jurisdiction granting an annulment. The second case, Thai-Lao Lignite, sees the Second Circuit side with the foreign jurisdiction, and vacate a judgement based on an annulled foreign award. The two cases together provide a road map to this relatively narrow issue for parties who may seek recognition (or to avoid recognition) of a foreign arbitral award in the Second Circuit, or in other U.S. jurisdictions where the Second Circuit provides persuasive guidance. This article will summarize the Pemex and Thai-Lao Lignite cases and then synthesize their respective tests for whether an annulled foreign arbitral award should nonetheless be given effect in the United States.
Foreign Arbitral Awards and the Second Circuit: Enforcement Considerations for Annulments,
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