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 United Kingdom signed and ratified the New York Convention in 1975, subject to the ‘reciprocity’ reservation which means that courts in the United Kingdom will enforce awards made in a state which is also party to the Convention. Arbitration proceedings in England are governed by the Arbitration Act 1996 (‘the 1996 Act’) which covers domestic arbitration as well as international arbitration. Section 103(3) of the 1996 Act includes public policy as one of the grounds for refusal of recognition or enforcement of a foreign arbitral award.
The United Kingdom courts have decided cases adopting a restrictive approach and have shown reluctance in refusing enforcement of an award on the basis that it is against public policy. For instance, in the case of Soinco SACI & anor. v. Novokuznetsk Aluminium Plant & Ors., the court refused to grant an application to refuse enforcement of an arbitral award on the ground that compliance with the award would offend the law of the place of incorporation of the respondent company. In Westacre Investment Inc. v Jugoimport-SPDR Holding Co Ltd, the parties entered into a contract governed by Swiss law, for the purpose of selling military equipment to Kuwait. The respondent contended in the arbitral proceedings that the contract was a legal nullity because it involved the claimants bribing different Kuwaiti representatives. This contention was rejected by the arbitrators and an award was rendered in favour of the claimants. The respondent sought to set aside the award upon an application to the Swiss court. Upon refusal of the Swiss court to set aside the award, the respondent sought to have the award set aside in England. The respondent contended in the lower court that since the contract involved the applicant trying to bribe Kuwaiti officials, it contravened English public policy. Upon rejection at the lower court, the respondent appealed. In adopting a pro-enforcement stance, the appeal court held that a contract involving a bribe would only be contrary to English domestic public policy if it contravenes the domestic public policy of the country where it is to be performed.