An arbitration award (or arbitral award) is a determination on the merits by an arbitration tribunal in an arbitration, and is analogous to a judgment in a court of law. It is referred to as an 'award' even where all of the claimant's claims fail (and thus no money needs to be paid by either party), or the award is of a non-monetary nature.
Although arbitration awards are characteristically an award of damages against a party, tribunals usually have a range of remedies that can form a part of the award.
Arbitration is particularly popular as a means of dispute resolution in the commercial sphere (for a summary of the various arenas in which arbitration is usually chosen, see the specific article on "arbitration"). One of the reasons for doing so is that, in international trade, it is often easier to enforce an arbitration award in a foreign country than it is to enforce a judgment of the court.
Under the New York Convention 1958, an award issued in a contracting state can generally be freely enforced in any other contracting state, only subject to certain, limited defences. Those defences are:
Virtually every significant commercial country in the world is a party to the Convention, but relatively few countries have a comprehensive network for cross-border enforcement of judgments of the court. [1] Hence in many countries, particularly in emerging markets, a foreign arbitration award is much easier to enforce than an award of the court. For example, it is very difficult to enforce foreign judgments in the former CIS countries, but it is considerably easier to enforce awards of an arbitration tribunal.
The other characteristic of cross-border enforcement of arbitration awards that makes them appealing to commercial parties is that they are not limited to awards of damages. Whereas in most countries only monetary judgments are enforceable in the cross-border context, no such restrictions are imposed on arbitration awards and so it is theoretically possible (although unusual in practice) to obtain an injunction or an order for specific performance in an arbitration proceeding which could then be enforced in another New York Convention contracting state.
The New York Convention is not actually the only treaty dealing with cross-border enforcement of arbitration awards. The earlier Geneva Convention on the Execution of Foreign Arbitral Awards 1927 remains in force, but the success of the New York Convention means that the Geneva Convention is rarely utilised in practise.
In judicial proceedings in many countries, governments enjoy sovereign immunity from suit. However, governments can submit to arbitration, and certain international conventions exist in relation to the enforcement of awards against nation states.
Although it is common to talk of an arbitration award as a single concept, in most legal jurisdictions there are several sub-categories of award.
The legal requirements relating to the making of awards vary from country to country and, in some cases, according to the terms of the arbitration agreement. Although in most countries, awards can be oral, this is relatively uncommon and they are usually delivered in writing.
By way of example, in the United Kingdom, the following are requirements under the Arbitration Act 1996 which the award must comply with, unless the parties agree to vary them under section 52 of the Act:
Many countries have similar requirements, but most permit the parties to vary the conditions, which reflects the fact that arbitration is a party-driven process.
It is sometimes said that arbitration awards are not normally subject to appeal (often another reason given in favour of using arbitration), but that is usually an oversimplification.
Most countries in the world allow arbitration awards to be "challenged" in the court, although they usually limit the circumstances in which such challenges may be brought. The two most commonly permitted grounds of challenge are:
Arbitration awards are non-justiciable. Distinguish from an "expert determination" where the expert determines a matter of fact (which is ordinarily not subject to any form of appeal at all, except in cases of obvious bias or manifest error or bad faith). [14]
In addition, although not by way of challenge, many countries permit appeals on a point of law (although almost no countries permit appeals to be made in relation to findings of fact). This right is usually closely circumscribed to avoid undermining the commercial efficacy of arbitration. [15]
Arbitration, in the context of the law of the United States, is a form of alternative dispute resolution. Specifically, arbitration is an alternative to litigation through which the parties to a dispute agree to submit their respective evidence and legal arguments to a neutral third party for resolution. In practice arbitration is generally used as a substitute for litigation, particularly when the judicial process is perceived as too slow, expensive or biased. In some contexts, an arbitrator may be described as an umpire.
The Permanent Court of Arbitration (PCA) is a non-UN intergovernmental organization located in The Hague, Netherlands. Unlike a judicial court in the traditional sense, the PCA provides services of arbitral tribunal to resolve disputes that arise out of international agreements between member states, international organizations or private parties. The cases span a range of legal issues involving territorial and maritime boundaries, sovereignty, human rights, international investment, and international and regional trade. The PCA is constituted through two separate multilateral conventions with a combined membership of 122 states. The organization is not a United Nations agency, but the PCA is an official United Nations Observer.
Expert determination is a historically accepted form of dispute resolution invoked when there is not a formulated dispute in which the parties have defined positions that need to be subjected to arbitration, but rather both parties are in agreement that there is a need for an evaluation.
The International Centre for Settlement of Investment Disputes (ICSID) is an international arbitration institution established in 1966 for legal dispute resolution and conciliation between international investors and States. ICSID is part of and funded by the World Bank Group, headquartered in Washington, D.C., in the United States. It is an autonomous, multilateral specialized institution to encourage international flow of investment and mitigate non-commercial risks by a treaty drafted by the International Bank for Reconstruction and Development's executive directors and signed by member countries. As of May 2016, 153 contracting member states agreed to enforce and uphold arbitral awards in accordance with the ICSID Convention.
The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly known as the New York Convention, was adopted by a United Nations diplomatic conference on 10 June 1958 and entered into force on 7 June 1959. The Convention requires courts of contracting states to give effect to private agreements to arbitrate and to recognize and enforce arbitration awards made in other contracting states. Widely considered the foundational instrument for international arbitration, it applies to arbitrations that are not considered as domestic awards in the state where recognition and enforcement is sought.
In law, the enforcement of foreign judgments is the recognition and enforcement in one jurisdiction of judgments rendered in another ("foreign") jurisdiction. Foreign judgments may be recognized based on bilateral or multilateral treaties or understandings, or unilaterally without an express international agreement.
An arbitration clause is a clause in a contract that requires the parties to resolve their disputes through an arbitration process. Although such a clause may or may not specify that arbitration occur within a specific jurisdiction, it always binds the parties to a type of resolution outside the courts, and is therefore considered a kind of forum selection clause. It is also known as the "Scott v. Avery clause."
International arbitration is arbitration between companies or individuals in different states, usually by including a provision for future disputes in a contract.
Arbitration, a form of alternative dispute resolution (ADR), is a way to resolve disputes outside the judiciary courts. The dispute will be decided by one or more persons, which renders the 'arbitration award'. An arbitration decision or award is legally binding on both sides and enforceable in the courts, unless all parties stipulate that the arbitration process and decision are non-binding.
An arbitral tribunal or arbitration tribunal, also arbitration commission, arbitration committee or arbitration council is a panel of unbiased adjudicators which is convened and sits to resolve a dispute by way of arbitration. The tribunal may consist of a sole arbitrator, or there may be two or more arbitrators, which might include a chairperson or an umpire. Members selected to serve on an arbitration panel are typically professionals with expertise in both law and in friendly dispute resolution (mediation). Some scholars have suggested that the ideal composition of an arbitration commission should include at least also one professional in the field of the disputed situation, in cases that involve questions of asset or damages valuation for instance an economist.
International Commercial Law is a body of legal rules, conventions, treaties, domestic legislation and commercial customs or usages, that governs international commercial or business transactions. A transaction will qualify to be international if elements of more than one country are involved.
Alternative dispute resolution (ADR), or external dispute resolution (EDR), typically denotes a wide range of dispute resolution processes and techniques that parties can use to settle disputes, with the help of a third party. They are used for disagreeing parties who cannot come to an agreement short of litigation. However, ADR is also increasingly being adopted as a tool to help settle disputes alongside the court system itself.
A contract is a legally enforceable agreement that creates, defines, and governs mutual rights and obligations among its parties. A contract typically involves the transfer of goods, services, money, or a promise to transfer any of those at a future date. In the event of a breach of contract, the injured party may seek judicial remedies such as damages or rescission. Contract law, the field of the law of obligations concerned with contracts, is based on the principle that agreements must be honoured.
Justice Jean-Paul Beraudo is a lawyer, academic and author of legal works. He was Justice at the French Supreme Court and Vice-Chairman of the International Court of Arbitration. He lectures on International Private Law and International Trade Law at Panthéon-Sorbonne University and on Company law at Sciences-Po, Paris. The International Institute for the Unification of Private Law (UNIDROIT) appointed him correspondent for France and a member of the scientific committee.
Investor-state dispute settlement (ISDS) or investment court system (ICS) is a system through which investors can sue countries for discriminatory practices concerning foreign direct investment. The purpose of the ISDS is to benefit the countries that voluntarily adhere to it; these countries benefit because foreign investors are motivated to invest under the protection that ISDS affords.
The Arbitration Act 1996 is an Act of Parliament which regulates arbitration proceedings within the jurisdiction of England and Wales and Northern Ireland.
The Arbitration Act 1979 (c.42) was an Act of the Parliament of the United Kingdom that reformed arbitration law in England and Wales. Prior to 1979, arbitration law was based on the Arbitration Act 1950, which allowed use of the "Case Stated" procedure and other methods of judicial intervention, which marked English arbitration law as significantly different from that of other jurisdictions. The prior law significantly increased the cost and time required for arbitration, which made England an unpopular jurisdiction to conduct such negotiations in. As a result, while London maintained its traditional position as a centre for arbitration in insurance, admiralty and commodities trading, it failed to attract more modern forms of trade. Following pressure from industry groups, the Lord Chancellor introduced the Arbitration Bill into Parliament, having it passed hours before the dissolution of James Callaghan's government. It was given the Royal Assent on 4 April 1979, and commenced working on 1 August 1979.
Philippines v. China, also known as the South China Sea Arbitration, was an arbitration case brought by the Republic of the Philippines against the People's Republic of China (PRC) under Annex VII of the United Nations Convention on the Law of the Sea concerning certain issues in the South China Sea, including the nine-dash line introduced by the Republic of China (Taiwan) since as early as 1947. A tribunal of arbitrators appointed the Permanent Court of Arbitration (PCA) as the registry for the proceedings.
Arbitration in the British Virgin Islands is regulated principally by the Arbitration Act, 2013 which came into force on 1 October 2014. Prior to that date, arbitration was regulated by the Arbitration Cap, 1976.
Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974), is a US labor law case, concerning arbitration with collective agreements for labor rights.