CHALLENGES TO ENFORCEMENT OF FOREIGN ARBITRAL AWARDS UNDER PUBLIC POLICY EXCEPTION

Abstract

Arbitration of international commercial disputes has increased and is likely to continue to grow. Many businesses prefer arbitration to litigation in court because of its relative promptness, privacy and economy. However, in some instances, arbitration requires the support of national courts to be effective when arbitral awards are not satisfied through voluntary compliance of the parties. Among many claims, the public policy defense under the New York Convention is most frequently invoked and has also become one of the most controversial grounds for refusing to enforce arbitral awards. This paper examines examples and case laws that deal with objections to enforcement of foreign arbitral awards based on substantive public policy by analyzing the general international understanding. It was found that the divergent and inconsistent application of the policy between national court systems create additional barriers to the enforceability of arbitral awards highlighting the need for a clearer international definition in order to create a uniform standard of interpretation for the exception.