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Dr Piotr Wiliński

Professional Support Lawyer - Houthoff

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Matters not Falling within the Terms of the Submission to Arbitration

I. Introduction

1.

A party may resist enforcement of a non-ICSID arbitral award pursuant to the New York Convention on the ground that the award deals with “matters not falling within the terms of the submission to the arbitration”.

2.

According to Article V(1)(c) of the New York Convention, the enforcement court may refuse to recognize and enforce the arbitral award if:

[it] deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced (...)

3.

This ground is rarely invoked and successful.1 Occasionally it may be invoked with other grounds included in Article V of the Convention.2

II. General remarks

A. Party's duty to invoke a ground for challenge

4.

As with other grounds included in the exhaustive list of Article V(1) of the Convention, (i) this ground must be raised by a party itself,3 which (ii) has the burden of proving that refusal is justified.4 Courts will not intervene ex officio.5 See further Recognition and Enforcement of Non-ICSID Awards.

B. Pro-enforcement spirit of the Convention

5.

Following the pro-arbitration philosophy of the Convention, enforcement courts are generally reluctant to accept challenges brought under Article V(1)(c) of the Convention.6

6.

Importantly, even if the ground is proven by the party resisting enforcement, the enforcement court may still use its discretion7 8 to nonetheless enforce the award (or at least part of the award). See further paragraph 8 below.

C. No review on the merits

7.

The enforcement court cannot review the merits of the tribunal’s decision.9 Accordingly, courts will not evaluate whether the arbitral tribunal reached correct or incorrect factual or legal conclusions.10 The limited scope of the court’s control has to focus therefore on “verifying whether a ground under Article V exists”.11

D. Partial enforcement

8.

Article V(1)(c) of the Convention allows for a partial enforcement of the award.12 As such, healthy part of the award can be separated from a defective one (dealing with matters falling outside the terms of submission to arbitration) and enforced.13 See further paragraphs 5-6 above.

III. Interpretation of Article V(1)(c) of the New York Convention

9.

The language of Article V(1)(c) of the Convention is not easily comprehensible, inviting potentially a plethora of different interpretations.

10.

The difficulty in application arises from the fact that the proviso is descriptive in nature. The text may suggest two separate hypotheses subsumed therein, namely (i) the award that deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, and (ii) the award includes decisions on matters beyond the scope of the submission to arbitration.

11.

In practice, this ground is often used as a challenge to the scope of the tribunal’s jurisdiction (excess of jurisdiction), where the “submission to arbitration” is then interpreted as the agreement to arbitrate (potentially modified by the subsequent Terms of Reference, if applicable).14 See further Recognition and Enforcement of non-ICSID Awards.

12.

Reviewing the scope of the "submission to arbitration", however, should also entail the analysis of the parties' subsequent submissions and not only agreement to arbitrate.15 Consequently, a tribunal decision awarding more than was claimed (ultra petita) falls under Article V(1)(c) of the Convention.16

13.

By contrast, an award that fails to address all the issues submitted to the tribunal (infra petitia) escapes the court's scrutiny under Article V(1)(c) of the Convention.17

14.

In addition, there should be a causal link between the excess of the tribunal's authority and the defect in the award, although this requirement is not explicitly mentioned in Article V(1)(c).18

IV. Application of Article V(1)(c) of the New York Convention in a context of investment treaty arbitration

15.

There are only a handful of reported cases in which parties have used Article V(1)(c) to resist enforcement of non-ICSID arbitral awards.19 To date, no challenge has succeeded.

A. Deferential review of non-ICSID awards by the enforcement courts

16.

Enforcement courts generally apply the same principles and deference to non-ICSID investment awards that are applied to international commercial arbitration awards. For example, a U.S. enforcement court concluded that “[…]the Tribunal's decision is entitled to substantial deference and that it ultimately acted well within its permissible scope to arbitrate.20 See further paragraphs 4-8 above. 

B. Examples of unsuccessful attempts of invoking Article V(1)(c) of the Convention

17.

Awards have been enforced when the award-debtor asserted that:

  1. The tribunal valued assets that predated the date of expropriation;21
  2. The tribunal considered claims falling under the contract with the investor rather under the BIT;22
  3. The dispute fell outside the provisions of the agreement to arbitrate;23 and
  4. The award exceeds the scope of consent to arbitration, because the company did not qualify as an investor.24

Bibliography

Wolff, R. (ed.), New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958: Article-by-Article Commentary, 2nd ed., 2019.

International Council for Commercial Arbitration, ICCA's Guide to the Interpretation of the 1958 New York Convention, 2012.

UNCITRAL, UNCITRAL Secretariat Guide on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 2016.

Reisman, W.M. and Richardson, B., Tribunals and Courts: An Interpretation of the Architecture of International Commercial Arbitration, in van den Berg, A.J. (ed.), Arbitration – The Next Fifty Years, 2012, pp. 17-66.

Azeredo da Silveira, M. and Lévy, L., Transgression of the Arbitrators’ Authority: Article V(1)(c) of the New York Convention, in Gaillard, E. and Di Pietro, D. (eds.), Enforcement of Arbitration Agreements and International Arbitral Awards. The New York Convention in Practice, 2008, pp. 639-678.

Kronke, H., Nacimiento, P., Otto, D. and Port, N.C. (eds.), Recognition and Enforcement of Foreign Arbitral Awards: A Global Commentary on the New York Convention, 2010.

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