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?

In Europe, the European Court of Justice (‘ECJ’) jurisprudence has had an important effect on the European Union member states’ case law in relation to public policy and the enforcement of arbitral awards. In the landmark decision of the ECJ in Eco Swiss China Time Ltd. v Benetton International N.V. , the European Court dealing with questions submitted to it by the Supreme Court of Holland in the context of an action to set aside an award held thus:

“It is in the interest of efficient arbitration proceedings that review of arbitration awards should be limited in scope and that annulment of or refusal to recognize an award should be possible only in exceptional circumstances”.

This is a clear declaration of a pro-enforcement stance; as such an expansive view of the public policy defence has not taken hold in the courts of most European countries. This position, which is similar to that applied in the United Kingdom courts in Soinco Saci has been consistently applied by national courts in most Member States in relation to enforcement proceedings. In line with this approach, the French courts have generally maintained a very conservative approach in interpreting the public policy defence. In Gallay v Fabricated Metals, Cass. Fr., the Paris Court of Appeals refused to set aside an award based on a purported violation of European competition law.

The Paris Court of Appeals stated that the arbitrators had addressed the issue and had decided that there was no violation. In some cases, the French courts have drastically limited the very scope of public policy. The decision of the Paris Court of Appeals in Thalès v Euromissile is a good example of this. In that case, the award ordered Thalès to pay damages to Euromissile in a dispute concerning a licence agreement. None of the parties had argued that the agreement was incompatible with European competition law before the arbitral tribunal. Later, Thalès applied to have the award set aside on the ground that, inter alia, the agreement breached European competition law. The French court, referring to the Eco Swiss case, took a narrow approach on the public policy issue and refused to grant the request. According to the court, the public policy exception could only be invoked in circumstances where the enforcement of the award would be contrary to the ‘French legal order’ or would entail the ‘violation of a fundamental rule of law’.

Funke Adekoya

No Comments

Post a Comment