THE PUBLIC POLICY EXCEPTION UNDER THE NEW YORK CONVENTION: HISTORY, INTERPRETATION AND APPLICATION, 2ND EDITION

Preface

About the Author

CHAPTER 1
Introduction

CHAPTER 2
Interpretation of International Conventions

CHAPTER 3
Drafting History of Article V (2) (b) of the New York Convention

I. Geneva Convention on the Execution of Foreign Arbitral Awards 1927
II. ICC Reviewed Geneva Convention and Prepared Preliminary Draft Convention

A. Study of Improvements to International Arbitration
B. ICC Draft Convention
C. ICC Draft Convention and Public Policy Exception

III. ECOSOC's Ad Hoc Committee Prepared Draft Convention

A. Ad hoc Committee to Submit a Draft Convention
B. Comments by Governments to ICC Draft Convention
C. Meeting of the Ad hoc Committee
D. Discussion of Public Policy Clause
E. Draft Convention of Ad hoc Committee

IV. Comments from Governments and NGOs to Draft Convention

A. Comments from Governments
B. Comments from NGOs
C. Comments and Recommendation of the Secretary-General
D. Memorandum by the Secretary-General
E. Further Comments
F. Consolidated Report by the Secretary-General

V. United Nations Conference on International Commercial Arbitration

A. General Debate
B. Proposals on, and Discussion of the Public Policy Clause in the Plenary Sessions
C. Discussion of Public Policy Clause
D. Working Party No. 3 for Articles III - V
E. Discussion of the Proposal of Working Party No. 3 and Decision on Wording
F. Drafting Committee
G. Final Text Approval
H. Resolution on Measures for Increasing Effectiveness of Arbitration
I. Signing

CHAPTER 4
Interpretation of Art. V (2) (b)

I. Limitation of Grounds

A. Literal Interpretation
B. Confirmed by Drafting History

II. Contrary to the Public Policy "of That Country"

A. Literal Interpretation
B. Not Governing Law nor Lex Arbitri
C. No Transnational Public Policy Intended
D. Differences Were Accepted

III. Literal Interpretation: "Public Policy" Is Not Identical with "Domestic Law"

A. Making Enforcement Easier Than under the 1927 Geneva Convention
B. Mistake in Fact or Law is Not Included in Art. V
C. Even the 1927 Geneva Convention Was Narrower Than "Domestic Law"
D. Differences in the Wording of the Public Policy Clause
E. Confirmed by Drafting History

IV. "May Also Be Refused"

A. Discretion
B. Pro-Enforcement Bias
C. Discretion Can Also Be Exercised in Implementing the Convention in Domestic Law

V. "Public Policy"--Narrow or Wide Interpretation?

A. Goal to Uphold Finality of an Award
B. Drafting Changes Support Narrow Interpretation
C. Guidance from Art. 34 and 36 UNCITRAL Model Law?
D. Pro-Enforcement Policy

VI. Relationship between Article V(1) and V(2)(b)

A. Art. V(1) Has Its Own Meaning and Is Not Included in Art. V(2)
B. Working Papers Support Back-up Position of Public Policy
C. Party Autonomy and Burden of Proof
D. ILA Recommendation

CHAPTER 5
The Application of the Public Policy Exception in Various Countries

I. Austria

A. Law
B. Public Policy: Violation Must Concern Basic Principles of the Austrian Legal System
C. Refusal of Recognition and Enforcement

1. No Distinction between Domestic and International Public Policy
2. Irreconcilable with Austrian Fundamental Principles

II. Canada

A. Law
B. Public Policy: Fundamental Notions and Principles of Justice

1. No Review of Facts or Law
2. Fundamentally Offensive to Canadian Principles of Justice and Fairness

C. Refusal is Permissive, Not Mandatory

III. England

A. Law
B. Public Policy: Clearly Injurious to the Public Good or Wholly Offensive

1. International Public Policy
2. Serious Irregularity
3. Contrary to Natural Justice
4. Harmful to International Relations
5. Illegality

C. Refusal of Recognition and Enforcement

1. Illegal English Contract
2. Uncompromisible Moral Principles

IV. France

A. Law
B. Blatant, Actual, and Concrete Violation of International Public Policy
C. Judge of the Award, Not the Dispute
D. Refusal of Recognition and Enforcement

1. Lack of Impartiality
2. Failure to Comply with Time-limit

V. Germany

A. Law
B. Ordre Public International
C. Only Severe Defects Can Violate International Public Policy

1. Grave Violation of Fundamental Principles of State and Economic Life
2. Decisive Impartiality
3. Violation of Competition Law
4. No Review of the Merits

D. Refusal of Recognition and Enforcement

VI. Hong Kong

A. Law
B. May Refuse
C. Narrow Interpretation

1. Violation of Most Basic Notions of Morality and Justice
2. International Public Policy

D. Refusal of Recognition and Enforcement

VII. Hungary

A. Law
B. Public Policy: Broad Interpretation
C. "High Amount" of Legal Fees are Contrary to Public Policy

VIII. Ireland

A. Law
B. Public Policy: Narrow Scope

IX. Italy

A. Law
B. No Review of the Merits
C. International Public Policy

X. Japan

A. Law
B. Public Policy: Basic Principles or Rules of Japanese Judicial Order

XI. Republic of Korea

A. Law
B. Public Policy: Narrow Interpretation
C. Good Morals and Social Order
D. Refusal of Recognition and Enforcement

XII. Malaysia

A. Law
B. Convention Award--Foreign Award
C. Public Policy: Malaysian Law, Governmental Policy, and Moral Values

XIII. Mexico

A. Law
B. No Review of the Merits
C. Public Policy
D. Exception: Amparo Lawsuits

XIV. New Zealand

A. Law
B. Public Policy: Breach of Fundamental Principle of Law and Justice
C. Public Policy: Obvious, Substantial Miscarriage of Justice

XV. Republic of the Philippines

A. Law
B. Mixed Application

XVI. Singapore

A. Law
B. Purpose of the International Arbitration Act: Establishing an International Arbitration Center
C. Primary and Secondary Jurisdiction
D. Public Policy: Extremely Narrow Interpretation
E. Application of Public Policy of Singapore under Art. V (2) (b)

XVII. Spain

A. Law
B. Foreign Award
C. No Review of the Merits
D. International Public Policy

XVIII. Sweden

A. Law
B. Public Policy: Clearly Incompatible with Basic Principles

XIX. Switzerland

A. Law
B. Public Policy: Art. V (1) is Lex Specialis to Art. V (2)
C. International Public Policy
D. Refusal of Recognition and Enforcement

XX. United States of America

A. Law
B. Public Policy: Pro-Enforcement Bias, and Very Narrow Interpretation

1. M/S Bremen, and Scherk
2. Most Basic Notions of Morality and Justice
3. Antitrust Claims
4. Manifest Disregard of the Law
5. Violations of U.S. Sanctions
6. Inconsistent Testimony and Forged Agreements
7. High Legal Fees

C. Refusal of Recognition and Enforcement

CHAPTER 6
The Application of the Public Policy Exception in Brazil, Russia, India and China

I. Brazil

A. Law
B. Foreign Awards
C. Brazilian Public Policy: No Review of the Merits

1. Public Policy is Defined by Doctrine
2. Assessment of Formal Requirements Only
3. No Refusals Based on Public Policy

D. Refusal of Recognition and Enforcement

II. Russian Federation

A. Law
B. Public Policy: Basic Principles of Russian Law

1. Basics of the Social Formation of the Russian State
2. Informational Letter No. 96

C. Enforcement Despite Broad Interpretation of Public Policy
D. Refusal of Recognition and Enforcement
E. Very Broad Interpretation Leading to Refusal

1. Social and Economic Interest
2. Review of Merits
3. Mandatory Russian Rules and National Property
4. Missapplication of Russian Law

F. Other Ways to Refuse Enforcement: Third Party Litigation
G. Very Mixed Picture

III. India

A. Implementation of the New York Convention

1. Foreign Awards (Recognition and Enforcement) Act, 1961
2. Arbitration and Conciliation Act, 1996

B. Foreign Awards--Two Major Restrictions

1. Foreign Awards under the New York Convention
2. Foreign Awards under the Foreign Awards Act, 1961
3. Foreign Awards under the Arbitration and Conciliation Act, 1996
4. Was Limitation "Governed by Indian Law" Dropped?
5. Indian Definition of “Foreign Award” Violates New York Convention

C. Public Policy Exception--Statutory Law

1. Foreign Awards Act 1961
2. Arbitration and Conciliation Act 1996

D. Public Policy is Not Limited to Fraud, and Corruption
E. The Philosophy of Legal Interpretation of the Supreme Court of India
F. Application of the Public Policy Exception by the Supreme Court of India: from Narrow to Broad Interpretation

1. Public Policy Doctrine--Modifications and Expansion
2. Application of the Public Policy Exception under the Foreign Awards Act
3. Application of the Public Policy Exception under the Arbitration and Conciliation Act 1996

G. Public Policy Exception as Gateway to Full Judicial Review
H. Is There New Hope?

IV. People's Republic of China

A. Law

1. Notice of the Supreme People's Court
2. Arbitration Law and Several Other Laws are Applicable

B. Foreign Awards

1. Foreign Arbitral Institution
2. Two Years' Deadline

C. Centralized Decision by Supreme People's Court in Case of Refusal
D. Public Policy: Contrary to Social and Public Interest and Fundamental Principles
E. Inconsistent Interpretation of the Public Policy Exception

1. Insensitive to Feelings of Chinese People
2. Breach of Mandatory Provisions of PRC Laws
3. Mere Unfairness or Injustice
4. Violation of China's Judicial Sovereignty

F. More Successes Than Failures

CHAPTER 7
Conclusion

Bibliography

Index

Dr. Anton G. Maurer, LL.M. has been actively involved in international arbitration for more than 20 years, concentrating on commercial, post M&A, and corporate disputes, and the enforcement of foreign arbitral awards. He is also actively involved in international litigation and has been professionally involved in disputes in more than 55 countries and in over 80 jurisdictions. He graduated with a law degree as well as a PhD in public international law from the University of Tübingen, Germany, and a Master of Laws in U.S. and Global Business Law from Suffolk University, Boston, MA. Anton Maurer has been a Partner with CMS Hasche Sigle since 1987. He started his career with Sigle Loose Schmidt Diemitz & Partners in Stuttgart, Germany and then worked as a foreign attorney with Johnson & Swanson in Dallas, Texas. He currently serves on the board of directors of the International Association of Defense Counsel; as Chair of the Advisory Board of The Southwestern Institute for International and Comparative Law; and, as a member of the Advisory Board of the Institute for Transnational Arbitration, and the Board of Trustees, all with the Center for American and International Law, Plano, Texas.