A Comparison Of The Use Of The Public Policy Defence By Different Countries To Resist The Enforcement Of International Arbitral Awards – A Rising Star Or Setting Sun?

A Comparison Of The Use Of The Public Policy Defence By Different Countries To Resist The Enforcement Of International Arbitral Awards – A Rising Star Or Setting Sun?

The inability of commentators to provide a precise definition of public policy is not a recent development. In the 19th Century, parties have been warned against relying on public policy:
“Public policy … is a very unruly horse, and once you get astride it you never know where it will carry you. It may lead you from the sound law. It is never argued at all but when other points fail.”
Though there is no transnational definition of public policy, some countries have included the following under the auspices of public policy in order to refuse the enforcement of foreign arbitral awards:

  •  the award conflicted with a previous judgment of the courts of the forum;
  •  the award ordered the party resisting recognition and enforcement to pay interest at an amount considered excessive according to the standards of the lex fori;
  •  the parties to the arbitration settled secretly from the arbitral tribunal and the claimant in the arbitration failed to stop the arbitration so as to acquire an award condemning the respondent to pay twice the same debt;
  •  the award contravened mandatory rules of the forum in the area of competition law, consumer protection, foreign exchange regulation or bans on exports;
  •  the award was contrary to core constitutional values such as the separation of powers and sovereignty of Parliament;
  •  the award was contrary to the national interest of the forum State.

An examination of the perspectives of different countries reveals a difference between the stance taken by many developed countries when compared with that of developing countries.

A pro-enforcement bias towards the New York Convention is seen by several developed countries as the spirit that drives the Convention, without which the essence of the convention will be lost. As such it has been observed faithfully by several countries including the United Kingdom where the English national courts have shown an unwillingness to refuse enforcement of an award on the basis that it is contrary to public policy.

Funke Adekoya

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