Section 68 of the Arbitration Act 1996 (UK): can “inadequate reasons” constitute a “serious irregularity”?

— Jack Davies

Section 68 of the Arbitration Act (UK) enables parties to challenge an arbitral award on the basis of a “serious irregularity affecting the tribunal, the proceedings or the award”.[1]  The section sets out an exhaustive list of irregularities on which an award may be challenged, including s 68(2)(d) — “failure by the tribunal to deal with all the issues that were put to it” — and s 68(2)(h) — “failure to comply with the requirements as to the form of the award”.[2]  In holding that “inadequate” or “insufficient” reasons cannot found a legitimate challenge under either s 68(2)(d) or s 68(2)(h), the English High Court’s decision in Islamic Republic of Pakistan v Broadsheet LLC has helpfully clarified the scope of those subsections.[3]  In short, the Court has taken a narrow, arbitration‑friendly approach to s 68, one which aligns with the purposes of s 68, the objectives of the wider Arbitration Act and international practice.  The Court also denounced prior case law that suggested a wider approach ought to be taken to the interpretation of s 68: this criticism was well warranted, and should lead to clarity in the law. 

Relevant facts

Broadsheet was engaged by Pakistan to trace and locate assets taken from various state-run institutions, and transfer them back to the government.[4]  As compensation, Broadsheet was to receive 20 per cent of the “amount available to be transferred”.  Approximately two years after signing its contract with Broadsheet, Pakistan (via the National Accountability Bureau) gave notice to rescind the contract, alleging that Broadsheet had committed repudiatory breaches of contract.  Broadsheet denied that allegation, and commenced arbitration proceedings against Pakistan.  The tribunal awarded Broadsheet USD 21,589,460 in damages.  Approximately USD 19m of that figure related to Broadsheet’s “loss of a chance” claim in relation to the Sharif family. 

Pakistan then challenged the award in the English High Court under s 68, alleging a serious irregularity that caused it substantial injustice. 

The High Court’s decision

Pakistan’s primary complaint was that the tribunal did not explain, in any material way, the method by which it calculated the value of the Sharif family claim (i.e. the value of the chance that Broadsheet lost to receive payment in respect of recoveries made from Mr Sharif and his family).[5]  Pakistan relied principally on another recent High Court decision, Compton Beauchamp Estates Ltd v Spence, to contend that a failure of reasoning may constitute a valid challenge under s 68(2).[6]

Moulder J did not accept Pakistan’s submissions.  The Judge’s reasoning comprised three primary points.  First, as a matter of statutory interpretation, the Judge said the juxtaposition of ss 57 and 70(4) with s 68 means that “inadequate reasons” cannot found a legitimate challenge against an award under s 68.[7]  Section 57 entitles a party to apply to the tribunal to correct its award, or to issue an additional award.  Section 70(4) allows an English court to require an arbitral tribunal to state the reasons for its award in further detail, if the court considers that the tribunal’s reasons are insufficient, or perhaps “inadequate”, such that the court is unable to properly consider the merits of a challenge to the award under s 68.

Secondly, Moulder J did not accept the reasoning in the Compton decision as representing good law;[8] instead, the Judge preferred the contrary analysis given in Margulead Ltd v Exide Technologies[9]and UMS Holding Ltd v Great Station Properties SA.[10]  Because all relevant prior case law comprised other High Court decisions, the Judge was free to choose between the various analyses under the English system of stare decisis

Finally, Moulder J noted that a major purpose of the Arbitration Act was to reduce intervention by the English judiciary in arbitrations and arbitral awards.[11]  She considered that to allow challenges premised on “inadequate reasons” would be to expand unduly the scope of the High Court’s supervisory function in light of the Arbitration Act’s principles and objectives.[12] 

Analysis and appraisal of the decision

Moulder J’s decision should be applauded.  The Judge’s reasoning reflects an informed and pragmatic     approach to a section that, if interpreted erroneously, might have serious consequences for the future of arbitration in England.

First, the Judge’s statutory-interpretation point is correct.  If the UK Parliament had intended an inadequacy of reasons to be able to found a challenge under s 68, and such a challenge might lead to the award being set aside with the result that the parties have to “start from scratch”, then why would it provide the tribunal with the ability to give further reasons either on application of a party (s 57) or direction of the High Court (s 70(4))?  From reading the judgment, it appears, crucially, that Pakistan was never able to answer that question.  Inadequacy of reasons is not listed as one of the nine enumerated grounds in s 68(2).    The specificity of those available grounds means it is clear that the UK Parliament gave them substantial thought.  A traditional canon of English statutory interpretation is expressio unius est exclusio alterius.[13]  Where a statutory proposition might have covered many factors but only mentions some, unless those mentioned are listed merely by way of example, the rest are taken to be excluded from the proposition.[14]  Although not discussed by Moulder J, that canon applies with full force to s 68(2) and reinforces her reasoning.

Secondly, the Judge was correct to reject the analysis of Morgan J in Compton.  In that case, Morgan J stressed the importance of reasons in an arbitral award: “an arbitrator should explain why he has decided the essential issues in the way in which he has”.[15]  He reasoned, therefore, that “[a]n award which did not contain such reasoning would not comply with [the duty of an arbitrator to give reasons under s 52(4)][16] and that would give rise to an irregularity within s 68(2) of the 1996 Act”.[17]  No judge, in any of the relevant cases, has argued that an arbitral tribunal does not have a duty to give reasons for its award under s 52.  And no judge has doubted the importance of such reasons.  It is only natural and correct that parties are entitled to know the grounds upon which the tribunal has come to its conclusions, unless they waive that right.[18]  But that point still does not answer the question that Moulder J asked above: if a deficiency of reasons can be cured by a further award or clarification under either s 57 or s 70(4), then why should an award be liable to be set aside under s 68?  That remains the most crucial point of interpretation when evaluating the correctness of the decision in Islamic Republic.  Setting aside an award is simply too drastic a course of action to have available to litigants, when the relevant deficiencies can be cured with no prejudice to the complaining party.

Lastly, Moulder J’s reliance on the Arbitration Act’s objective of reducing judicial intervention in arbitration deserves both elaboration and applause.  The Judge made that point briefly, and did not cite any of the Act’s legislative history.  However, when that history is examined, it becomes clear that this is perhaps the strongest point in favor of disallowing an inadequacy of reasons to found a valid challenge under s 68.  Aside from the Bill itself, the most important piece of les travaux préparatoires to the Arbitration Act is the Departmental Advisory Committee’s 1996 report on the Arbitration Bill, where all provisions of the Bill were discussed in detail by the drafters, including the clause which was to be enacted as s 68.[19]  The drafters said that s 68 was intended only to be applied “by way of support for the arbitral process, not by way of interference with that process”.[20]  Furthermore, that s 68 was “really designed as a long stop, only available in extreme cases where the tribunal has gone so wrong in its conduct of the arbitration that justice calls out for it to be corrected”.[21]  In the light of these statements, it is very hard to see how the UK Parliament envisaged judges to be entitled to cast critical eyes over the reasoning in arbitral awards with an eye to invalidating them, particularly when further reasons are able to be requested or mandated under other provisions of the Arbitration Act.  The Act’s legislative history, then, adds further weight to Moulder J’s conclusions. 

An international comparison also highlights the propriety of the decision in Islamic Republic.  In enacting s 68, the UK Parliament deliberately provided for a variety of procedural challenges to awards that are not be able to be made under standard international practice.[22]  For example, under s 68, an award may be challenged on the grounds that the arbitral tribunal failed “to comply with the requirements as to the form of the award”.[23]  In contrast, art 34 of the UNCITRAL Model Law on International Commercial Arbitration contains comparatively few provisions upon which a party may apply to set aside an arbitral award rendered in an international arbitration.[24]  Those provisions parallel art 36 of the Model Law, which sets out the grounds on which a court may refuse to recognize or enforce an arbitral award.  Those grounds, in turn, parallel the grounds listed under art V of the New York Convention.[25]  In short, art V only allows for setting aside on grounds of incapacity, lack of jurisdiction, or major violations of due process.

In contrast, the longer list of procedural irregularities which may found a challenge under s 68 reflects the old English judicial tradition of heightened interference in arbitration.[26]  It must therefore be recognized that, if the approach taken by Morgan J in Compton was to stand — the same approach urged upon Moulder J by Pakistan in Islamic Republic — English judicial supervision of arbitration could substantially increase.  England already allows for heightened scrutiny of awards in contrast to international practice on this point and, should supervision from the bench extend to assessing the “adequacy” or “sufficiency” of a tribunal’s reasoning, parties might seriously think twice before choosing to seat their arbitrations in London.  After all, one of the key selling points of arbitration is a streamlined adjudicatory process.  Even acknowledging that international arbitration is far more complex and time-consuming than it was 50 years ago, it remains that a lack of a right of appeal on the merits can be a drawcard in attracting parties to arbitration.[27]  Allowing parties to challenge the adequacy of a tribunal’s reasons would undermine this.

Key takeaways and conclusions

Moulder J’s decision in Islamic Republic is an excellent one.  She has taken an arbitration-friendly approach to s 68 of the Arbitration Act and has ruled that English judges cannot invalidate an arbitral award for want of reasons on the tribunal’s part.  Instead, they have the power to request additional reasons, or an additional award, from the tribunal to address any perceived deficiencies in this regard.  Parties can have confidence that their arbitral awards will not be scrutinized in painful detail, as judges pore over every aspect of the tribunal’s thinking.  Moulder J’s decision supports the intention of the drafters of the Arbitration Act that s 68 really only function as a “long stop … in extreme cases”. 

The fact remains, however, that Moulder J’s decision is only another High Court judgment to add to the list that was cited to her by the parties in Islamic Republic.  Putting its compelling reasoning to one side, the judgment technically has no more authority than the contrary decision in Compton, given the English tradition of stare decisis.  Furthermore, it has not yet been cited or endorsed by any other cases.  Until appellate guidance is given, or Parliament amends the wording of the Arbitration Act to clarify matters, the issue remains unresolved.  That said, I consider that practically speaking, Moulder J’s analysis is persuasive and future High Court judges are likely to apply it.

Jack Davies is an LL.M. Candidate in the International Business Regulation, Litigation and Arbitration Program at NYU School of Law.  Prior to enrolling at NYU, Jack clerked for the current Chief Justice of New Zealand, Dame Helen Winkelmann, and then practiced commercial litigation in Auckland.


[1]           Arbitration Act 1996 (UK), s 68(1). 

[2]           For any of the enumerated irregularities to lead to a successful challenge, the irregularity must have caused, or will cause, “substantial injustice” to the applicant: s 68(1).  Note also, in relation to s 68(2)(h), that pursuant to s 52(4) — a section titled “Form of award” — the award must “contain the reasons for the award unless … the parties have agreed to dispense with reasons”. 

[3]           Islamic Republic of Pakistan v Broadsheet LLC [2019] EWHC 1832 (Comm), [2019] WLR(D) 402. 

[4]           A broader summary of the background facts is given at [5]–[11] of the Court’s decision. 

[5]           See at [18(iii)]. 

[6]           Compton Beauchamp Estates Ltd v Spence [2013] EWHC 1101 (Ch). 

[7]           Islamic Republic of Pakistan v Broadsheet LLC, supra n 4, at [42].

[8]           Ibid. 

[9]           Margulead Ltd v Exide Technologies [2004] EWHC 1019 (Comm), [2005] 1 Lloyd’s Rep 324.

[10]          UMS Holding Ltd v Great Station Properties SA [2017] EWHC 2398 (Comm), [2018] Bus LR 650.

[11]          Islamic Republic of Pakistan v Broadsheet LLC, supra n 4, at [42].

[12]          Ibid.

[13]         FAR Bennion Understanding Common Law Legislation: Drafting and Interpretation (OUP, 2001, Oxford) at 88.

[14]          Ibid.

[15]         Compton Beauchamp Estates Ltd v Spence, above n 7, at [51].  Morgan J cited an older decision, Benaim (UK) Ltd v Davies Middleton (2005) 102 Cons LR 1 (QB), where the Court said in reference to s 68 at [95]: “It is strongly arguable that unless a party knows the reasons for an award there is automatically substantial injustice to him”. 

[16]          See footnote 3, supra. 

[17]          Compton Beauchamp Estates Ltd v Spence, above n 7, at [51].

[18]          See Arbitration Act 1996 (UK), s 52(4).

[19]         Departmental Advisory Committee on Arbitration Law “1996 Report on the Arbitration Bill” (1997) 13 Arbitration International 276.  See also Andrew Tweeddale and Keren Tweeddale Arbitration of Commercial Disputes: International and English Law and Practice (OUP, Oxford, 2005) at 765. 

[20]          At [280]. 

[21]          Ibid. 

[22]         Jean-François Poudret and Sébastien Besson Comparative Law of International Arbitration (2nd ed, 2007, Sweet & Maxwell, London) at 721. 

[23]          Section 68(2)(h). 

[24]         United Nations Commission on International Trade Law UNCITRAL Model Law on International Commercial Arbitration (1985, with amendments as adopted in 2006) accessible at: <https://www.uncitral.org/pdf/english/texts/arbitration/ml-arb/07-86998_Ebook.pdf>.

[25]         Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) (opened for signature 10 June 1958, entered into force 7 June 1959).   

[26]          Poudret and Besson, supra n 23, at 721. 

[27]         Frank-Bernd Weigand and Antje Baumann “Introduction” in Frank-Bernd Weigand (ed) Practitioner’s Handbook on International Commercial Arbitration (2nd ed, OUP, 2009, Oxford) 1 at 28.

Center hosts a conference entitled “The IBA Rules on the Taking of Evidence in International Arbitration”

On Tuesday, February 4th, 2020 (from 6.00 – 8.00 pm, in the Lester Pollack Colloquium Room, Furman Hall 900, 245 Sullivan Street, New York, NY 10012), the Center for Transnational Litigation, Arbitration, and Commercial Law will host a conference on the occasion of which the book authored by Roman Khodykin & Carol Mulcahy, “A Guide to the IBA Rules on the Taking of Evidence”,  Consultant Editor Nicholas Fletcher QC (Oxford University Press, 2019) will be discussed.

It is a great pleasure to be able to announce that Dirk De Meulemeester and Friedrich Rosenfeld will comment on the aforementioned book and that the co-authors Carol Mulcahy and Roman Khodykin will be present and respond to the comments.

Carol Mulcahy is a partner in the International Arbitration department of law firm Bryan Cave Leighton Paisner LLP. She has over 30 years of experience of dealing with commercial disputes in relation to a wide variety of transactions and industry sectors including disputes relating to joint ventures, energy projects, oil-trading, shareholder disputes and outsourcing agreements. Her arbitration practice includes proceedings under LCIA, SIAC, ICC and UNCITRAL rules, and with a variety of seats.  Carol is a Chartered Arbitrator and, in addition to her work as counsel, she sits as arbitrator in arbitrations conducted under the LCIA Rules. Carol also writes regularly for publications on a variety of topics related to international arbitration and other forms of dispute resolution. 

Roman Khodykin is a Partner at Bryan Cave Leighton Paisner LLP, and a Visiting Professor at the Centre for Commercial Law Studies at Queen Mary University of London. Roman is a dual qualified solicitor of the Senior Courts of England and Wales and a Russian advocate. He holds a PhD in Conflict of Laws. Between 2015 and 2018 Roman was an alternate member for Russia of the ICC International Court of Arbitration. In recent years Roman has acted in ICSID, LCIA, ICC, AAA and MKAS arbitrations. Roman also represented athletes before the Ad Hoc Division of the Court of Arbitration for Sport. In addition to his work as counsel he has sat as an arbitrator under the LCIA, SCC and  ICC Rules.  Roman is ranked as one of Who’s Who Legal’s Future Leaders 2018 in International Arbitration.  He is also named as Lawyer of the Year for work in International Arbitration in The Best Lawyers™ in Russia.

Dirk De Meulemeester is a partner at DMDB Law, a boutique law firm in Brussels and President of the Belgian Center for Arbitration and Mediation (CEPANI). He is a professor at the University of Gent and a visiting professor at the University of Leiden. He is a member of the Bar of Brussels and Paris (till 2017). Practicing dispute resolution for over 20 years, in both national and international commercial arbitration. Acting as counsel or arbitrator (co-arbitrator, sole arbitrator or presiding arbitrator) in over sixty arbitration proceedings, administered (incl. ICC, Swiss Rules, ICSID, PCA, CEPANI, WIPO, NAI) and ad hoc, governed by various procedural and substantive laws, both civil law and common law, and by international law. Extensive experience in Mediation, Mini-Trial, MedArb. Areas of specialization include joint venture, share purchase, M&A, sales, agency, distribution, IT, construction, energy, the pharmaceutical sector and investment arbitration.

Friedrich Rosenfeld is a partner at the arbitration boutique Hanefeld in Hamburg, Germany. Apart from his work as counsel in international arbitrations, Friedrich frequently sits as arbitrator. He has acted as president, co-arbitrator and sole arbitrator in arbitrations seated in Austria, Denmark, Germany, Greece, Israel, Switzerland and the United States. During this coming semester, Friedrich will teach international commercial arbitration at NYU School of Law as Global Hauser Professor from Practice. He is also a Visiting Professor at the International Hellenic University in Thessaloniki and a Lecturer at Bucerius Law School in Hamburg. Friedrich has published in leading journals on international arbitration. Most recently, he has co-edited and authored the book entitled “Inherent Powers in International Arbitration” (Juris, 2019).

There is no need to register for the event. Seats will be assigned on a first-come-first-served basis.

The Chatham House rule applies.

Center hosts conference on “CISG in International Arbitration”

The Center hosts, together with the International Centre for Dispute Resolution (ICDR) – the international branch of the American Arbitration Association (AAA), a conference on the “CISG in International Arbitration”. The CISG’s 40th anniversary seems an appropriate occasion to analyze some issues which are still generating controversy, such as the CISG’s applicability in international arbitration, the battle of the forms, the remedies available in case of fundamental breach of contract, as well as whether the CISG covers economic hardship. The event will take place on February 3, 2020, at NYU School of Law’s Furman Hall, 245 Sullivan St., Lester Pollack Colloquium Room, 9th floor, from 3:30-7:30 pm.

The event’s speakers are Prof. Kevin Davis (NYU), Prof. Clayton P. Gillette (NYU), Dr. Friedrich Rosenfeld (Visiting Professor, NYU), Prof. Marco Torsello (Verona University),  and Gretta Walters (Chaffetz Lindsey LLP, New York). The event will be moderated by Mr. Rafael Carmona (ICDR) and Prof. Franco Ferrari, the Center’s Director.

Professor Franco Ferrari appointed to the Advisory Committee of the Saudi Center for Commercial Arbitration

At the end of November 2019, Professor Franco Ferrari, the Center’s Director, was appointed as a member of the Advisory Committee of the Saudi Center for Commercial Arbitration (SCCA). The Advisory Committee is composed of 14 Committee members (residing in 11 different countries with 10 different nationalities), each of whom was selected after a vigorous process of identifying leading international arbitration specialists. The Committee’s main task will be to advise the SCCA on its services and products to secure and promote international best practices and standards. In particular, the Committee will provide guidance on future revisions of the SCCA’s rules and procedures.

Professor Ferrari reappointed as President of the Thailand Arbitrator Committee

On September 23, 2019, Professor Ferrari, the Director of the Center, was reappointed as President of the Thailand Arbitrator Committee established at the Thailand Arbitration Center (THAC) for a period of three years. The tasks of the President of the Arbitrators Committee are outlined in the Arbitrator Committee Rules. In light of these Rules, Professor Ferrari will preside of the meetings in which the Thailand Arbitrator Committee will take decisions regarding the challenges to arbitrators. As President of the Arbitrator Committee, Professor Ferrari will, however, be the sole responsible for appointments and removals of arbitrators.

The Center hosts Italian Supreme Court Justice Francesco Cortesi

The Center will once again host Italian Supreme Court Justice Francesco Cortesi, a two-time scholar-in-residence at the Center, for this coming week. Justice Cortesi, who graduated in 1994 cum laude from Bologna University School of Law, and specialized in international commercial law at Tilburg University School of Law (Netherlands) under the supervision of Professor Franco Ferrari, the Center’s Director who at the time was professor at Tilburg University, was appointed Judge at Court of Bologna in 1999. In 2001, he was assigned to the Court of Rimini, where he mainly dealt with disputes regarding contracts, consumer law issues and professional malpractice torts. In 2007, he moved to the Court of Forlì, where he was able to focus on those very same areas of law. During his tenure there, he also rendered some of the most relevant decisions concerning the United Nations Convention on Contracts for the International Sales of Goods, many of which have been translated into various languages, including English. In 2006, Justice Cortesi was appointed to the Government Committee for the revision of the Italian Civil Code. In January 2016, Justice Cortesi was appointed to the Italian Supreme Court, thus becoming one of the two youngest justices ever appointed to the Italian Supreme Court. During his visit, Justice Cortesi will meet with graduate and post-graduate students. Justice Cortesi will also give a talk at conference to take place on Thursday, October 17th, 2019, at the Thurgood Marshall U.S. Courthouse, 40 Foley Square, Courtroom 506, New York, NY. Professor Franco Ferrari, the Center’s Director, will also participate in the conference, which will provide an overview of the methods by which U.S. litigators obtain evidence in foreign jurisdictions for use in U.S. legal proceedings. The conference will be moderated by Honorable Reena Raggi, U.S. Circuit Judge for the U.S. Court of Appeals for the Second Circuit.

Micula vs Achmea = Investment Law vs EU Law?

The Center is pleased to announce a seminar entitled “Micula vs Achmea = Investment Law vs EU Law?”. The event will take place on Wednesday, October 16, 2019, from 6:00 PM to 8:00 PM, in the Lester Pollack Colloquium Room, Furman Hall 900 (245 Sullivan Street, New York, NY 10012).

It is a great pleasure to be able to announce that Ms. Nathalie Colin, Mr. Alexandre Hublet and Kevin D. Benish agreed to present their views on different aspects of the relationship between EU and Investment Law.

Nathalie Colin is a partner and the head of the Disputes practice of the Brussels office of White & Case. Nathalie has been a commercial litigator since 1994, and has extensive experience of cross-border and domestic litigation, arbitration and white collar/investigations. In the field of arbitration, Nathalie acts as counsel and arbitrator, and was recently appointed President of a CEPANI arbitral tribunal. Nathalie obtained a landmark decision from the Brussels Court of Appeal in 2016 in an important precedent for enforcement of foreign arbitral awards under Belgian law.  She regularly publishes articles and is a speaker at conferences on international arbitration matters. Since June 2019, she has been a member of the Board of Directors of the CEPANI.  Nathalie is currently working on the Belgian enforcement efforts in the Micula case.

Alexandre Hublet is an associate at the Brussels office of White & Case .We represents domestic and foreign clients in litigation, arbitration and white collar/investigations. Alexandre was recently appointed sole arbitrator by the CEPANI, and often acts as secretary of arbitral tribunals. Alexandre is a teaching assistant in international private law at the Université Libre de Bruxelles. He is a regular speaker at conferences and has also authored various publications on international arbitration. He holds an LLM degreed from NYU, where he specialized in international arbitration. He is admitted to the New York bar. Like Nathalie, Alexandre is currently working on the Belgian enforcement efforts in the Micula case

Kevin D. Benish is an associate at Holwell Shuster & Goldberg LLP, were he represents domestic and international clients in matters involving transnational litigation, arbitration, and matters of constitutional law. He is also an adjunct professor at the New York University School of Law, where he co teaches International Litigation and Arbitration with Professor Linda Silberman. As an experienced litigator, Kevin has advised clients on judgment- and award-enforcement matters under the Foreign Sovereign Immunities Act and the ICSID Convention, and is regularly involved in U.S. proceedings in aid of foreign litigation and arbitrations. In addition to his practice, Kevin is a frequent author and commentator on topics related to transnational litigation, civil procedure, conflict of laws, and comparative law. Recently, he was an External Scientific Fellow at the Max Planck Institute for Procedural Law in Luxembourg.

Please note that the Chatham House rule applies.

Due Process Conference in International Arbitration

The Center is pleased to announce a conference entitled “Due Process in International Arbitration.” The event will take place on Friday, October 18, 2019, from 8:30 AM to 6:15 PM, in the Lester Pollack Colloquium Room, Furman Hall 900 (245 Sullivan Street, New York, NY 10012).

This event will discuss the topics addressed in the national reports drafted on the basis of a questionnaire prepared by Professors Franco Ferrari, Dietmar Czernich, and Friedrich Rosenfeld. The ultimate goal behind the national reports and the discussion that will take place at the conference is to provide the background information for those involved in litigation as to the decision courts may take.

Professor Franco Ferrari appointed to the ICSID Panel of Arbitrators by the Federal Republic of Germany

On September 9th, 2019, the Federal Republic of Germany designated Professor Franco Ferrari, the Center’s Director, to the ICSID Panel of Arbitrators as per Article 13 ICSID Convention. This is Professor Ferrari’s second appointment by a government. In 2015, he was appointed by Saint Lucia to the ICSID Panels of Arbitrators and Conciliators. The appointment of Professor Ferrari comes after a vetting process by the competent German ministries. When reached, Professor Ferrari stated that he was “obviously very honored to be appointed by the Federal Republic of Germany.” Even though Professor Ferrari is not a German national, but an Italian national, he has links to Germany: Professor Ferrari was born and raised in Germany and also holds a post-graduate degree from Augsburg University School of Law. Professor Ferrari’s involvement in ICSID matters is extensive.

Professor Ferrari is not the only member of the NYU Law School community to have been appointed as arbitrators/conciliators to the ICSID by governments:

Professor Diego Arroyo, professor of law at Sciences Po Law School in Paris and former scholar-in-residence at the Center, was appointed by the Republic of Argentina

NYU Adjunct Professor Pedro Martinez-Fraga, partner and co-leader of the international arbitration practice at Bryan Cave Leighton Paisner, was appointed by the United States

NYU Adjunct Professor Brian King appointed by Saint Lucia

Colombia’s Constitutional Court declares that constitutional injunctions (tutela) proceed against awards in international arbitration

I. Introduction

On 6 August 2019, the Fifth Revision Chamber of Colombia’s Constitutional Court (the “Court”) issued judgment T-354/19 resolving a constitutional injunction (tutela) submitted by a state-owned company and its subsidiary against an international arbitral award (the “Tutela”). [1] In its decision, the Court recognized the admissibility of constitutional injunctions against awards issued in international arbitrations seated in Colombia. However, it concluded that the Tutela was not admissible in the specific case because the annulment proceedings had not been exhausted.[2]

II. Background

On December 22, 2010, Gecelca S.A E.S.P (“Gecelca”) and its subsidiary Gecelca 3 S.A.S E.S.P (“Gecelca 3”), and the Consortium CUC-DTC, constituted by China United Engineering Corporation and Dongfang Turbine Co. LTD. (the “Consortium”), executed an EPC contract to build a thermoelectric plant in Córdoba, Colombia (the “Contract”). During the development of the Contract certain disputes arose between the parties regarding, inter alia, the term for performance of the Contract, Gecelca 3’s alleged delay in the payment of invoices, and the alleged breach of the Contract by the Consortium.

On December 29, 2014, the Consortium submitted a request for arbitration under the arbitration clause of the Contract. The tribunal, seated in Bogota, was constituted on March 11, 2015 from the list of “international arbitrators” of Bogota’s Center of Arbitration.[3] The Parties disputed whether the arbitration was to be conducted as a national or an international arbitration.

On May 8, 2015, the Tribunal issued a partial award deciding that the arbitration was international because two of the four criteria provided for in Article 62 of Law 1563 of 2012 (Statute of National and International Arbitration) were met in the specific case,[4] i.e. that the parties were domiciled in different States at the time of execution of the arbitral clause and that the dispute affected international trade interests (the “Partial Award”).

On December 4, 2017, the Tribunal issued a final award declaring that Gecelca 3 had breached the Contract and ordering the payment of USD $40.827.427,7 to the Consortium (the “Final Award”).

On January 11, 2018, Gecelca 3 filed an action to set aside the Final Award before the Third Section of the Council of State (the “Third Section”), because, inter alia, it was inconsistent with Colombia’s international public order.

On February 28, 2018, Gecelca and Gecelca 3 (the “Gecelca companies”) presented a constitutional injunction (tutela) against the Final Award alleging that the Tribunal had violated their fundamental rights to due process and access to justice. Additionally, the Gecelca companies requested interim measures to suspend the payment ordered in the Final Award.

The Tutela was declared inadmissible in first and second instance. On July 26, 2018, the Fourth Section of the Council of State – the first instance competent judge –declared that the Tutela was inadmissible considering that this mechanism could not be used to re-open a legal debate addressed during the arbitral proceedings.  On September 12, 2018, the Fifth Section of the Council of State –the second instance competent judge– confirmed the first instance judgment and clarified that, since constitutional injunctions are subsidiary mechanisms, the Tutela was inadmissible because the decision to set aside the Final Award was still pending.

On October 29, 2018, the Constitutional Court selected the Tutela for revision.

III. The Constitutional Court’s decision

The first question facing the Court was whether the Tutela was admissible. To address this matter, the Court divided its analysis in three main issues: (i) the exceptional nature of constitutional injunctions against arbitral awards; (ii) the application of said exceptional nature to awards issued in international arbitrations; and (iii) whether the Tutela complied with the applicable requirements to be admitted.

  • The exceptional nature of tutelas against arbitral awards

Recalling previous jurisprudence on this matter,[5] the Court concluded that arbitral awards are materially equivalent to judicial decisions considering that both are issued in the exercise of jurisdictional functions and have res judicata effects. For this reason, the admissibility of constitutional injunctions against arbitral awards must be analyzed under the same requirements applicable to judicial decisions.[6] However, said requisites must be more rigorously applied to  arbitral awards than to judicial decisions, considering that arbitral awards derive from the express will of individuals deciding to depart from the jurisdiction of the courts.[7]

Accordingly, the admissibility of constitutional injunctions against arbitral awards must be determined on the basis of the following criteria:[8] (i) constitutional relevancy: the arbitral award must have violated fundamental rights directly; (ii) subsidiarity: applicable remedies must have been previously exhausted (according to Article 40 of Law 1563 of 2012,[9] the only applicable remedy to arbitral awards is annulment); and (iii) compliance with “specific admissibility requirements”, which refer to the existence of substantive, organic, procedural, or factual defects of the award or the tribunal’s constitution, also known as the doctrine of “vías de hecho”.[10]

  • The very exceptional nature of tutelas against arbitral awards in international arbitration

The Court concluded that the same criteria applicable to analyze the admissibility of arbitral awards issued in national arbitrations, must be applied to awards issued in international arbitrations. Additionally, it stressed that three additional issues must be taken into consideration in regard to international arbitral awards. First, the express prohibition of judicial intervention in international arbitrations provided for in Article 67 of Law 1563 of 2012.[11] Second, the applicable law to the arbitration. And third, the grounds for annulment in international arbitration.

As to the prohibition of judicial intervention in international arbitrations incorporated in Article 67 of Law 1563 of 2012,[12] the Court concluded that said proscription does not supersede the primacy of the Constitution and the right of any individual to access the tutela as a mechanism for constitutional protection. Therefore, such prohibition cannot be applied to proscribe –in the abstract and in general– the admissibility of tutelas against arbitral awards in international arbitration.

As to the applicable law, the Court concluded that when the substantive law applicable to the arbitration is foreign, constitutional judges shall only apply Colombia’s international public order as parameter of constitutional control. In consequence, “specific admissibility requirements” are only applicable when the award is “partially governed by Colombian law”, not when the substantive law applicable to the arbitration is foreign.

As to the grounds for annulment of international arbitral awards, the Court concluded that the admissibility of tutelas against international awards is even more exceptional than in the case of national awards, considering that the only competent authority to determine if the international arbitral award is contrary to Colombia’s international public order –which cannot be invoked as a ground to set aside an award issued in a national arbitration– is the one resolving the request to set aside the international arbitral award. Therefore, for a constitutional injunction to be admissible against an award issued in an international arbitration, annulment proceedings must be previously exhausted.

Based on the above, the Court concluded that tutelas against arbitral awards are admissible only in exceptional circumstances (“procedencia excepcional”) and tutelas against awards in international arbitrations seated in Colombia are admissible in very exceptional circumstances (“procedencia excepcionalísima”).

  • Admissibility of the Tutela presented by the Gecelca companies

The Court concluded that the Tutela filed against the Final Award was not admissible considering that the Gecelca companies had not previously exhausted the proceedings to set aside the award, which are still pending before the Third Section of the Council of State. C

IV. Comments

The Court’s decision leaves several questions unresolved.

First, despite the fact that Colombia is a contracting party to the New York Convention of 1958 (the “Convention”), the Court did not address the interplay between Colombia’s international obligations under the Convention (Article V(1)(e) of the Convention) and the domestic legal regime.

Second, the Court’s analysis regarding the relation between “the law governing the award” and the admissibility of constitutional injunctions is unclear. The Court states that in those cases where the “the law governing the award” is foreign, there is no room to analyze the admissibility of a tutela in light of criteria different than Colombia’s international public order. Conversely, in those cases where “the law governing the award” is, at least partially Colombian, the constitutional judge may apply “specific admissibility requirements”, referring to the doctrine of “vías de hecho”, a catalogue of substantive, organic, procedural, and factual defects in which the award or the tribunal may incur. For instance, an award would incur in a “substantive defect” when the interpretation or application of a rule in a specific case, ignores constitutional judgments with erga omnes effects that have defined its scope.

While it is far from clear what the Court means by with “the law governing the award”, it seems to be referring to the substantive applicable law. If this is so, then a constitutional judge –when analyzing the admissibility of a tutela in an international arbitration where Colombian law is applicable to the merits– may review the merits of the case to determine if the arbitral tribunal incurred in vías de hecho.

Third, the Court states that national awards are “materially equivalent” to judicial decisions because arbitrators are temporarily invested with the function of administering justice according to Article 116 of the Constitution.[13] The Court seems to conclude that the same equivalency applies to awards issued in international arbitrations but does not explain how it arrives to such conclusion.

The Court does not explain whether, and if so, why an international arbitrator shall be deemed as a “judge” while acting as arbitrator in a particular case. To add another ingredient to the confusion, one of the Justices of the Court clarified its vote to the effect that, in his view, international arbitrators are not judges. Does it mean that the court considers that the arbitrators of the Tribunal were acting as judges?  If so, then may a non-Colombian be considered a Colombian judge exercising jurisdiction in Colombia? May non-Colombian arbitrators seated in an arbitration in Colombia trigger the international responsibility of the Colombian State?

V. Conclusion

This is a decision of one of the Chambers of the Court, not a decision of the plenary of the Court nor a decision to unify jurisprudence, and therefore it only applies to the specific case and may be revisited. 

In its review of the case, the Court invited scholars and institutions to provide comments on several questions related to the Tutela, the key one being whether constitutional injunctions should be admitted against awards issued in international arbitrations seated in Colombia. The majority of the opinions were in the negative based on the same point of departure: arbitrators in international arbitrations seated in Colombia are not judges, public officials, or private parties exercising public functions. The Court, however, seems to have departed from this premise and based its analysis on the thesis that international arbitrators comply with public functions.

*Eduardo Zuleta, Partner, Zuleta Abogados Asociados S.A.S; international arbitrator; lecturer at Georgetown University.

*Maria Camila Rincón, Associate, Zuleta Abogados; former adviser, Colombia’s National Agency for the Legal Defense of the State; former adviser, Colombia’s Directorate of Foreign Investment and Services of the Ministry of Trade, Industry and Tourism; lecturer at Universidad del Rosario.


[1] The tutela is a constitutional injunction that aims to protect fundamental constitutional rights when they are violated or threatened by the action or omission of any public authority. This mechanism is incorporated in Article 86 of the Constitution. Tutelas proceed when: (i) fundamental constitutional rights are violated or threatened; (ii) when there are no other means to protect the right; and (iii) when by action or omission of a private individual in the event that said individual provides a public service, or exercises public functions; and (iv) when the actor is in a situation of defenselessness or subordination with respect to the individual against whom the tutela is brought.

[2] Colombian Constitutional Court, Judgment T-354 of 2019. Avaible at: http://www.corteconstitucional.gov.co/relatoria/2019/t-354-19.htm

[3] Bogota’s Chamber of Commerce, Arbitration and Conciliation Center. Available at: http://www.centroarbitrajeconciliacion.com

[4] Law 1563 of 2012, Article 62: “It is understood that an arbitration is international if: (a) The parties to an arbitration agreement have, at the time of the execution of said agreement, their domiciles in different States; or (b) The place of performance of a substantial part of the obligations or the place with which the object of the dispute has a closer relationship is located outside the State in which the parties have their domiciles; or (c) The controversy submitted to arbitration decision affects the interests of international trade.” Available at: http://www.secretariasenado.gov.co/senado/basedoc/ley_1563_2012_pr001.html#62

[5] Constitutional Court, Judgment SU-033 of 2018. Available at: http://www.corteconstitucional.gov.co/relatoria/2018/SU033-18.htm

[6] Constitutional Court, Judgment C-590 of 2005, Considerations of the Court, para. 25

[7] Constitutional Court, Judgment SU-500 of 2015.

[8] Constitutional Court, Judgment SU-174 of 2007. Available at:  http://www.corteconstitucional.gov.co/relatoria/2007/SU174-07.htm

[9] Article 40, Law 1563 of 2012 (free translation): “Against the arbitral award only proceeds the extraordinary request to set aside the award, which must be duly substantiated, before the arbitral tribunal, indicating the grounds invoked, within thirty (30) days following its notification or that of the ruling that resolves the clarification, correction or addition of the award. The secretariat of the tribunal will refer the matter to the other party within fifteen (15) days without the need of a specific ruling ordering it. Upon expiration of that term, within the next five (5) days, the secretary of the tribunal shall send the briefs presented by the parties together with the file to the judicial authority competent of resolving the annulment request.” Available at: http://www.secretariasenado.gov.co/senado/basedoc/ley_1563_2012.html#40

[10] Judgment T-466 of 2011, Consideration of the Court, para. 3.4 (free translation):

I. Substantive defect: It occurs when (i) the arbitrators base their decision on a rule that is clearly inapplicable to the specific case, and because of that, they do not directly recognize a fundamental right; (ii) the award lacks material motivation or its motivation is manifestly unreasonable; (iii) the interpretation or application made of the rule in the specific case, ignores judgments with erga omnes effects that have defined its scope; (iv) the interpretation of the rule is made without taking into account other provisions applicable to the case and which are necessary to make a systematic interpretation; and (v) the rule applicable to the specific case was neglected and therefore was left unapplied.

II. Organic defect: Occurs when the arbitrators have absolutely no competence to resolve the matter submitted to their consideration, either because they have manifestly acted outside the scope defined by the parties or because they have ruled on non-arbitrable matters.

 III. Procedural defect: It occurs when the arbitrators have issued the award in a manner completely contrary to the procedure established contractually or in the law, and thus have incurred in a direct violation of the right of defense and contradiction. For the aforementioned irregularity to be of sufficient magnitude to constitute a vía de hecho, it is necessary for it to have a direct impact in decision, so that if the tribunal would not have incurred in such irregularity, the decision reached by the tribunal would have been diametrically opposite.

IV. Factual defect: It occurs when the arbitrators (i) have not assessed evidence crucial for the case’s resolution; (ii) have made their assessment of the evidence directly violating fundamental rights, or (iii) have based their assessment of the evidence on a manifestly unreasonable legal interpretation. For the Court, it is necessary that the error in the assessment of the evidence has been decisive with respect to the decision. Available at: http://www.corteconstitucional.gov.co/RELATORIA/2011/T-466-11.htm

[11] Article 67, Law 1563 of 2012: “In matters governed by this section, no judicial authority may intervene, except in cases and for the purposes in which this section expressly so provides.” Available at: http://www.secretariasenado.gov.co/senado/basedoc/ley_1563_2012_pr001.html#67

[12] Article 67, Law 1563 of 2012: “In matters governed by this section, no judicial authority may intervene, except in cases and for the purposes in which this section expressly so provides.” Available at: http://www.secretariasenado.gov.co/senado/basedoc/ley_1563_2012_pr001.html#67

[13] Article 116 of Colombia’s Political Constitution (free translation): “private individuals may be temporarily invested in the function of administering justice in the condition of jurors in criminal, conciliators or arbitrators cases authorized by the parties to issue judgments in law or in equity, under the terms determined by law.” Available at: http://www.secretariasenado.gov.co/senado/basedoc/constitucion_politica_1991_pr003.html#116

Facebook’s Libra in the context of international transactions and the CISG

This is to announce this academic year’s first session of the Forum of the Center for Transnational Litigation, Arbitration, and Commercial Law, entitled “Facebook’s Libra in the context on international transactions and the CISG”. The event will take place on Monday, September 23rd, 6.00 – 8.00 pm, in the Lester Pollack Colloquium Room, Furman Hall 900 (245 Sullivan Street, New York, NY 10012).

It is a great pleasure to be able to announce that on the occasion of that session, Prof. Sebastian Omlor will give a talk on the aforementioned topic.

Sebastian Omlor, who holds an LL.M. degree from NYU, an s.j.d. and an LL.M. degree from Saarland University in Germany, is full professor and Director of the Institute for Comparative Law at Marburg University in Germany. At Marburg University, he holds the chair for private law, commercial and business law, banking law and comparative law. His research also focuses on banking and company law, the law of payment and financial services, the law of digitalisation, and the legal concept of money. As a legal expert, he advised, inter alia, the German parliament (Bundestag) and the German Federal Ministry of Finance.

Professors Franco Ferrari and Stefan Kröll edit book on “Conflict of Laws in International Arbitration”

Professor Ferrari, the Center’s Director, and Professor Stefan Kröll from Bucerius Law School in Hamburg (and two-time scholar-in-residence at the Center) have just published the second edition of their book entitled “Conflict of Laws in International Arbitration”, first published in 2011. The book covers the most disparate areas in which conflict of laws issues may arise in the arbitration context, including in the context of determine the law applicable to the extension of arbitration agreements to third parties, the assignment of claims subject to an arbitration agreement, the effect of overriding mandatory rules on the arbitration agreement, arbitrability, the arbitral tribunal’s power, the taking and evaluation of evidence in international arbitration, legal privilege, etc. For the table of contents, please click here.

Professor Franco Ferrari receives honorary degree from the University of Athens

On May 24, 2019, Professor Franco Ferrari, the Director of the Center, was awarded an honorary ph.d. from the National & Kapodistrian University of Athens in the presence of the President of the Hellenic Republic, Mr. Prokopis Pavlopoulos. The award ceremony took place at the end of a conference on “The Future of Global Law” and was preceded by a talk by President Pavlopoulos. On that occasion, after the laudatio by Professor Haris Pamboukis, Professor Ferrari gave a talk entitled “A New Paradigm for International Uniform Substantive Law Conventions”. For the full program, click here.

Professor Ferrari lectures at the Hague Academy of International Law

On Monday, July 29, 2019, Professor Franco Ferrari, the Director of the Center for Transnational Litigation, Arbitration, and Commercial Law, will start teaching a special course on private international law at the prestigious Hague Academy of International Law. The course is entitled “Forum shopping despite the unification on substantive law” and will examine the reasons why the claims that the unification of substantive law prevents forum shopping is not tenable, a topic which has been the focus of Professor Ferrari’s scholarship for some time.

Founded in 1923, the Hague Academy is a center for research and teaching in public and private international law, with emphasis on further scientific and advanced studies of the legal aspects of international relations. Because the Academy does not have a permanent teaching staff, its scientific body, the Curatorium, invites academics, practitioners, diplomats, and others to give courses in the form of lectures.

The summer courses take place over six weeks, with private international law running during the second three-week session from the end of July until mid-August. The lectures are usually published in the Collected Courses of the Academy of International Law.

Ferrari joins other distinguished NYU Law faculty who have taught courses at the Hague Academy, including Professors José Alvarez, Theodor Meron, Linda Silberman, and the late Professors Thomas Franck and Andreas Lowenfeld.

The Ground for the Refusal of the Recognition and Enforcement of Foreign Arbitral Awards for Breach of Due Process: Analyzing Relevant Jurisprudence in Latin America

Montserrat Manzano[1]
Rafael Francisco Alves[2]

In June 2018, the international community celebrated the 60th anniversary of the adoption of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, known universally as the ‘New York Convention’. At the time of writing, the New York Convention has 159 state parties[3], including each of the developed and developing economies of Latin America. The drafters of the New York Convention intended for such regime to provide for the prima facie recognition and enforcement of foreign arbitral awards, and for the exclusive grounds that rebut this presumption, found in Article V of the Convention, to be construed narrowly by national courts.

New York University’s professor Franco Ferrari posed an interesting question from which we have started this paper: How international should international arbitration be? Should it be as international as possible, subject only to the recognition of the applicable law chosen by the parties? While it is true that Article III of the Convention provides that courts are to enforce awards in accordance with their own rules of procedure, is it imperative that the standards of procedure applied to such an exercise are international, and not domestic? Following Professor Ferrari’s premise and the New York Convention’s purpose, it would be reasonable to expect that procedure would be interpreted autonomously in relation to domestic standards in order to achieve a uniform application of the New York Convention among its signatories.[4]

This text is prepared with our reflections after the Conference on the Application of the New York Convention in Latin America held at New York University School of Law on September 13, 2018. In it, we examine examples of recent Latin American case law and analyze the extent to which those courts apply the Article V(1) New York Convention grounds for refusal of recognition/enforcement in alignment to such autonomous international standards. Our focus in this paper is directed towards the grounds enshrined in Articles V(1)(b) of the Convention, which provides in general terms for the opposition to recognition/enforcement of foreign awards on the grounds of denial of due process.

In undertaking this task, we extracted case law materials from two primary sources: the New York Convention Guide (www.newyorkconvention1958.org) and the ICCA Yearbooks on Commercial Arbitration. A cursory glance at each of these sources will reveal the limited nature of the published case law emanating from Latin America. While there are 20 Latin American signatories of the New York Convention, only 12 have had a decision regarding the application of the New York Convention published in either of the aforementioned sources; and of those 12 states, 7 have had less than five decisions published since ratifying the Convention. Unsurprisingly, the states with the most published decisions are among the most developed economies in Latin America, with the Brazilian courts the most documented by far. With that in mind, we wish to stress that this text does not purport to (i) analyze all of such decisions exhaustively or even (ii) identify definitive trends throughout Latin America as a whole. This text is merely designed to draw tentative conclusions based on what presently exists in the public sources referred to in this paper.

I. The Relationship between Domestic law and the New York Convention

Most international conventions create rights and obligations that primarily benefit and oblige sovereign states directly. The New York Convention, however, has the uncommon characteristic of being designed to apply in domestic fora. National courts apply the Convention and it is for the benefit of private entities that have been subject to a foreign arbitral award. Accordingly, while most international conventions may carry out their effect while being left solely in the realm of international law, it is essential that the New York Convention has some means of translating into the domestic arenas of its signatories.

The implementation of treaties into domestic law is not a uniform exercise across the globe. Commentators commonly dichotomize the various legal systems into ‘monists’ and ‘dualists’. For a legal system to be ‘monist’ means that not all treaties need be implemented into domestic law by a separate piece of domestic legislation for a national court to be able to apply them, they must simply be approved by the state. Such legal systems include, inter alia, those in Mexico, Chile, Colombia, China, France, Germany, the Netherlands and Switzerland. In such states national courts can be expected to apply directly those international conventions that do not require implementation, unless the legislature decides to enact an implementing law in any event. In a ‘dualist’ system, conversely, international law must be positively ‘internalized’ into the domestic system in order for the treaty to have any normative effects in the jurisdiction. Such systems include, inter alia, those in the United Kingdom and nearly all other British Commonwealth states, in addition to most Nordic states. Courts in dualist systems do not apply the treaty directly – they apply the accompanying piece of domestic law that implements it and will only ever use the treaty at most to guide the interpretation of that domestic instrument. The position in Brazil is the subject of substantial debate, as its ratification process of international treaties requires approval by both the Brazilian legislative body and then the President. Recent case law would seem to suggest, however, that Brazil is at least a moderate monist system, if not dualist.[5]

UNCITRAL research reported in 2008 found that the clear majority of signatories viewed the New York Convention as self-executing and therefore directly applicable in their national courts, however for other states implementing legislation was deemed necessary for the Convention to gain force in their jurisdictions.[6] The attitude of Latin American signatories has concurred with the majority, however in accordance with international attitudes reinforced by UNCITRAL, many have nevertheless given effect to the New York Convention by way of enacting domestic legislation. In monist Mexico, for instance, the provisions of the New York Convention are incorporated into the Mexican Commerce Code and accordingly Mexican enforcing courts regularly apply the Commerce Code in lieu of the Convention. In Brazil, the New York Convention was adopted in 2002 by a Legislative Decree[7] followed by a Presidential Decree[8] promulgating the text of the Convention within the Brazilian territory. However, Brazilian judges (particularly the Superior Court of Justice – STJ, the competent court for the exequatur of foreign arbitral awards) continues to apply, in general, Brazilian domestic law on arbitration (Law 9,307/96 – the so-called Brazilian Arbitration Act), which provides for similar grounds for the refusal of exequatur of arbitral awards[9]. Accordingly, even if the STJ still applies the Brazilian Arbitration Act in most cases, it usually follows international standards when granting exequatur to foreign arbitral awards, as will be detailed in this article.

Naturally, in monist and dualist systems there exists differing degrees of attention to the substantive provisions of the New York Convention. However, it should not be forgotten that even in the most dualist systems there remains an irreducible minimum applicability of the New York Convention, and similarly even in the most monist systems domestic norms will be required to supplement the New York Convention’s application. There will always exist lacunae in each law that the other is required to fill. Where implementing legislation is unclear, in accordance with Articles 31-33 of the Vienna Convention on the Law of Treaties (to which all 12 of the aforementioned Latin American states are party, save for Venezuela), courts are to look to the context of the New York Convention and its text as a whole in forming an interpretation. Similarly, where a court applies the New York Convention directly (as the Colombian courts regularly do), we shall see below that ambiguities in the Convention may be resolved by reference to the enforcing court’s most fundamental domestic standards. As Professor Strong summarizes, the Convention does not “operate in isolation” – but it is buttressed by “national arbitration laws, institutional rules, soft law, and persuasive authority”.[10]

II. The Enduring Prevalence of Party Autonomy

Article V(1)(b) of the New York Convention, which like all the Article V(1) grounds may only be submitted by the party opposing recognition/enforcement, provides that the court may refuse to recognize and enforce the award if:

(b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case”.

The question of whether ‘proper notice’ has been given to the parties under Article V(1)(b) was elucidated in the historic 1977 Mexican enforcement decision in Presse Office S.A. v Centro Editorial Hoy S.A.[11] In that case, an award was issued in favor of Presse Office in an ICC arbitration seated in Paris against Hoy, and Presse Office subsequently sought enforcement before the Mexican courts (Eighteenth Civil Court of First Instance for The Federal District of Mexico). Hoy opposed enforcement under Mexican Public Policy and Article V(1)(b) of the New York Convention, as it submitted that as a principle of Mexican public policy the first notice of summons should be served personally upon a respondent – whereas Hoy served it by mail (postal service) pursuant to the ICC Arbitration Rules. The Court held that the arbitral procedure did not violate the formal requirements detailed in Article 619 of the Code of Civil Procedure and Articles 14 and 16 of the Mexican Constitution. By inserting the arbitral clause into the contract the parties were considered to have autonomously waived the formalities established by Mexican procedural legislation in order to instead be governed by the ICC Arbitration Rules and to French law.

A near identical decision was reached later that same year by the Mexican courts (Tribunal Superior de Justicia, Court of Appeals -fifth chamber- for the Federal District of Mexico), in Malden Mills Inc v Hilaturas Lourdes S.A (1977).[12]  In that case the Court overturned the Civil Court of First Instance, who denied enforcement of the award on the grounds that all notices had been served by mail, in violation of Mexican public policy. Just as in Presse Office, the Court held that the parties had waived Mexican procedural formalities when agreeing to arbitrate (in this case under the rules of the AAA).[13]

The more recent Keytrade (2013)[14] case decided by the Brazilian Superior Court of Justice confirms a party-autonomy-centric approach. In this case the complainant submitted that it had not been duly notified of the arbitration, however the Court held that, under Brazilian law, a party to a foreign arbitration residing or domiciled in Brazil may be notified of the appointment of the arbitrator or the arbitration proceeding in the manner prescribed by the procedural law of the place of arbitration (in this case, England). It held that because the English Arbitration Act does not set requirements for notification other than “by effective means”, the complainant was duly notified[LOB1] , as it appeared from the file that it had in fact received the e-mails sent to it for this purpose. The enforcing court looked to the autonomous will of the parties exercised in the arbitration agreement to determine the rules that govern the arbitral process, just as in the aforementioned Mexican cases.

This party-autonomy-centric approach is consistent with doctrine applied by enforcing courts across the globe, as occurred, for instance,  in Egyptian Concrete Company et al. v. STC Finance et al. (1996),[15] and in Kammergericht (2008).[16] It has the benefit of restricting the application of domestic standards to only those that the parties have autonomously selected when agreeing to arbitrate, and it accordingly engenders a uniform approach to the recognition and enforcement of awards globally – as the drafters of the New York Convention intended. Ultimately, the goal of the Convention is to ensure that one court enforcing a certain award follows the same process as another court enforcing that same award – and the approach described above does precisely that.

III. The Application of International Standards of Due Process

In addition to the above, Article V(1)(b) has a separate sub-ground for the opposition of recognition/enforcement:

(b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case”.

In effect, this objection is that there was a violation of due process. It was considered by the Supreme Court of Colombia in the Petrotesting (2011) case.[17]

Petrotesting and Ross Energy were members of a consortium working together under an oil exploration and production contract with Empresa Colombia de Petróleos. As part of their relationship, the consortium members entered various agreements to regulate their respective rights and obligations to each other in the performance of the contract. Each of these agreements contained arbitration clauses providing for settlement by the ICDR. These agreements also provided for those disputes to be conducted in English, and seated in Colombia, and that any translation costs would be incurred individually by the parties. Ross Energy defaulted under the agreements due to its financial impecuniosity, and Petrotesting filed a request for arbitration before the ICDR, as per the agreements.

The day before the preliminary hearing, Ross Energy’s representative stated that it would only participate in it if the hearing was held in Spanish, despite the arbitration clause stating that proceedings would be held in English. The parties and tribunal declined, and Ross Energy informed the tribunal and the Claimants that it declined to participate in the hearing because its impecuniosity meant that it was unable to pay for the hearings to be translated. Ross Energy’s representative stated that by insisting on the use of English, Ross Energy’s right to defend itself was denied. Months later, Ross Energy also declined to participate in the hearing on the merits.

By an award of 19 June 2006, a sole arbitrator found in favor of Petrotesting, holding that Ross Energy breached its obligations under the agreements. Petrotesting sought enforcement of the award before the Colombian Supreme Court.

Ross Energy resisted enforcement on several grounds, including “forgery”, “litispendence”, “arbitrability”, “public policy”, “excess of authority”, and in particular, “due process”. Under Article V(1)(b), Ross Energy submitted that because the proceeding had been held in English and because it did not have the financial means to pay for a translation and hire a lawyer to represent it in arbitration in the US, due process had been violated.

The Court explained that as Ross Energy’s impecuniosity and language-barrier complaints are not specifically provided for in Article V(1) of the New York Convention as grounds for refusing enforcement, enforcing courts often decide the question of due process under their legal system’s principles regarding procedure. It should be stressed that the Court considered that the application of its own legal system is strictly limited only to the system’s most “fundamental procedural guarantees”—which includes the notification to the defendant so that he can appropriately present his defense—, and not to its specific rules.[18]

Thus, in determining the standard of due process the court applied the Colombian principle of “the protection of fundamental rights”, which is derived from Article 29 of its Political Constitution. This provides that the minimum guarantees to be protected are, inter alia:

  1. the right to access the administration of justice before a natural judge;
  2. the right to be informed of the acts that lead to the creation, modification or extinction of a right or to the imposition of an obligation or sanction;
  3. the right to express freely and openly one’s opinions;
  4. the right to contradict or discuss claims or objections raised;
  5. the right to the conclusion of the proceeding within a reasonable time and without unjustified delays; and, of course,
  6. the right to submit evidence and discuss the evidence supplied [by the other party].

The Court held that as Ross Energy was duly informed of the commencement of the proceeding, and it was both able to and did present its case (since it both submitted a statement of reply and supplied evidence), Ross Energy was afforded the right to defend itself in the proceeding. It simply did not attend the hearings.

Also, it was held that the language difficulty faced by Ross Energy could not be deemed a violation of due process, because in the exercise of its autonomy the parties agreed in the arbitration agreement that the language to be used would be English and this was the language used to draw up the contracts between the parties. Thus, the Court held that Ross Energy could not claim to have been “surprised by a strange language”.

The Court also held that Ross Energy’s argument that it was economically impossible for it to hire a US lawyer could not be taken into account by the Court, as it was not raised in the arbitration proceeding and that the “cost of an arbitration” has not been deemed “a valid ground not to participate therein”. Ross Energy’s refusal to participate in the proceeding was based at the time solely on the language barrier – it did not mention any issue in hiring a lawyer. Moreover, the court considered that the fact that the parties agreed in their contracts that disputes would be decided by “such a specialised and reputed centre as the ICDR” meant that it could not possibly be accepted that Ross Energy was surprised by the costs of the proceedings. To do so would run contrary to the principles of pacta sunt servanda and of good faith expected between contracting parties.

Following similar reasoning, the Colombian Supreme Court laid down its judgment in the Drummond (2011) enforcement case.[19] In this case the party opposing enforcement of an ICC award rendered in Paris submitted that because it was in liquidation at the time of the arbitration the proceedings should not have been allowed to continue – as the party was unable to present its case. Just as in Petrotesting, the Court stated that the application of Article V(1) of the New York Convention to this question is not specifically provided for, and that the standards of the New York Convention are “imprecise” – so the Court once again applied the “fundamental procedural guarantees” of Colombian law to determine whether there had been a breach of due process. The Court found that the opposing party participated in the arbitration through two representatives, raised defenses and communicated to the tribunal that it was in liquidation; and that therefore “the minimum guarantees that constitute the hard core of due process were complied with”[20] in the arbitration. Further, the Court held that being represented by a liquidator is not a violation of due process.

When reading each of these cases, it is clear that the Colombian court was determined to apply the Article V(1) grounds of the New York Convention exhaustively. In Petrotesting, for instance, the Court explicitly rejected Ross Energy’s opposition on the ground of ‘res judicata’ by stating that “[t]he defence relied on is not included in the exhaustive list of Article V of the Convention. This is sufficient reason not to take it into consideration”. When the Court does consider the application of Article V(1)(b) to a case, since there is no defined “international standard”, this article was analyzed in light of the ‘fundamental procedural guarantees’ of the Colombian legal system. In doing so, it might seem that the Colombian Supreme Court has in Petrotesting and Drummond applied a domestic standard, derived from the Colombian constitution, to its application of the New York Convention grounds for refusal. As we stated earlier, however, while Article V is critical in identifying and safeguarding general principles of procedural law, it does not “operate in isolation”,[21] but rather in order to create a dispute resolution regime that prioritizes justice and consistency. As can be seen from the referred cases, Article V is applied “in tandem with national arbitration laws, institutional rules, soft law, and persuasive authority”.[22] Further, and fundamentally, research conducted by Peter Rutledge has found that the fundamental procedural rules of national constitutions and international due process norms are not mutually exclusive, but rather that the latter norms are derived from the former.[23] Thus, the Colombian Supreme Court’s limitation of its supplementation of the New York Convention to “fundamental procedural guarantees” enshrined in the Colombian constitution means that it, in reality, limited the supplementation to international standards of due process despite technically applying domestic law.

The Argentine Supreme Court of Justice decision in Milantic (2016)[24] approached the interpretation of Article V(1)(b) similarly but cast the interpretation as being supplemented by the “the Argentine international public order” rather than specifically by “fundamental procedural guarantees”. These phrases are evidently not wholly dissimilar, however, as the court stated:

“the validity and application of international conventions is carried out in our country if the resolution being executed (in this case, the award) has been the result of a process where the principles, guarantees, guidelines or canons that are established expressly in our national constitution or that may be undoubtedly derived from its provisions have been complied with”.[25]

Thus, the principle of due process given effect to in Article V(1)(b) of the New York Convention was applied in Milantic by reference to “the Argentine international public order”, which the court defines as consisting of the principles and guarantees enshrined in the Argentine Constitution. Though the Argentine court did not qualify the reference to only Argentina’s most “fundamental” constitutional norms, as the Colombian courts did in Petrotesting and Drummond, the fact that such norms must be derived from the Argentine constitution means that a largely similar approach was followed.

IV. Final reflections

The New York Convention has as its main objective the establishment of a uniform and pro-recognition enforcement regime, which Professor Ferrari asserts requires that arbitration be “as international as possible”, meaning that a nationalistic approach when interpreting the Convention shall generally be avoided, even in respect of those national provisions that transpose the New York Convention into domestic law. This, he notes, is essential so that the different interpreters of the Convention do not reach irreconcilably inconsistent conclusions. Accordingly, under his interpretation countries have a duty to analyze international arbitration by referring to “international standards” rather than domestic ones.

Crucially, however, the New York Convention cannot operate in isolation. Where ambiguities exist in the wording of the Convention, it is right that enforcing courts find solutions in light of not only Articles 31-33 of the Vienna Convention, but also in light of that jurisdiction’s most fundamental procedural guarantees enshrined in its constitution. This is so by virtue of the reality elucidated by Professor Rutledge – that international norms of due process are derived from those same fundamental principles.[26]The cases we have examined specifically regarding ground V(1)(b), the Petrotesting (2011) and Drummond (2011) cases, elucidate this reality. The Colombian Supreme Court contemporarily applied the Convention’s grounds restrictively and exhaustively – and supplemented ambiguities or lacunae in them with the most fundamental procedural principles enshrined in the Colombian Constitution, rather than any specific domestic rules. While Colombian national law was indeed applied by the court to buttress the New York Convention, those fundamental principles that it applied are considered to be the very source from which “international standards” are derived.

So how international should international law be? In our view, Professor Ferrari’s position that international law should be as international as possible holds true, but to resolve ambiguities in the Convention by resorting to domestic fundamental procedural guarantees does not frustrate that ideal. Nor, as we have explained, does applying the law autonomously chosen by the parties.


[1] Partner of Von Wobeser y Sierra, S.C. The author wishes to acknowledge the assistance of Ana Toimil and Alex Barnes in the preparation of this article.

[2] Partner of L.O. Baptista Advogados Associados. LL.M. New York University (NYU), Class of 2010, Arthur T. Vanderbilt Scholar.

[3] Information available at https://treaties.un.org/pages/ViewDetails.aspx?src=TREATY&mtdsg_no=XXII-1&chapter=22&lang=en.

[4] Franco Ferrari, ‘How International should International Arbitration be? A Plea in Favour of a Realistic Answer’, 853.

[5] Rafael Alves: https://blogs.law.nyu.edu/transnational/2014/11/the-cisg-has-definitely-entered-into-force-in-brazil/

[6] UNCITRAL Report, 2008 – A/CN.9/656.

[7] Legislative Decree nº 52, 25 April 2002.

[8] Decree nº 4.311, 23 July 2002, available at http://www.planalto.gov.br/ccivil_03/decreto/2002/D4311.htm

[9] Rafael Alves, Jura Novit Arbiter under Brazilian law, in: Iura Novit Curia in International Arbitration, NYU Center for Transnational Litigation, Arbitration and Commercial Law, JurisNet, 2018, p. 50-53.

[10] S. I. Strong, ‘General Principles of Procedural Law and Jus Cogens’, Penn State Law Review (2018), 382-83.

[11] Reported in ICCA as Mexico No. 1 (Yearbook Commercial Arbitration 1979, Volume IV, pp. 301-302), Presse Office S.A. v Centro Editorial Hoy S.A., Tribunal Superior De Justicia, Eighteenth Civil Court of First Instance for The Federal District of Mexico, 24 February 1977.

[12] Reported in ICCA as Mexico No. 2 (Yearbook Commercial Arbitration 1979, Volume IV, pp.302-304), Malden Mills v. Hilaturas Lourdes SA, Tribunal Superior, Court of Appeals (5th Ch.) for the Federal District of Mexico, 1 August 1979.

[13] id. at page 303. The Mexican court stated that: “Even though it is clear that in this case the summons was not made with the formalities established in Arts. 116 and 117 of the Code of Civil Procedure, it is also clear that the parties agreed that any controversy arising from the purchase and sale agreement […] should be resolved through arbitration in the city of New York or Boston, […] in accordance with the existing Rules of the American Arbitration Association or the Arbitration Council […] It should be taken into consideration that, as in this case, if an express contract exists which provides for submission to the Rules of the American Arbitration Association, it results that the summons was made in correct form since the parties waived the formalities established by the Mexican procedural legislation regarding notices, and submitted themselves to the Rules of the American Arbitration Association, which permit notices by mail, and the lower court judge was not just in considering that the defendant should have been summoned in a different manner.”

[14] Reported in ICCA as Brazil No. 34, (Yearbook Commercial Arbitration 2014, Volume XXXIX, .364-366) Keytrade AG v. Ferticitrus Indústria e Comércio de Fertilizantes Ltda) Superior Tribunal de Justiça, 7 August 2013, SEC no. 4024.

[15] Egyptian Concrete Company & Hashem Ali Maher v. STC Finance & Ismail Ibrahim Mahmoud Thabet & Sabishi Trading and Contracting Company, Court of Cassation, Egypt, 27 March 1996, 2660/59.

[16] Kammergericht [KG], Berlin, Germany, 17 April 2008, 20 Sch 02/08.

[17] Reported in ICCA as Colombia No. 7 (Yearbook Commercial Arbitration 2012, Volume XXXVII, p.200-204) Petrotesting Colombia S.A. et al. v. Ross Energy S.A., Supreme Court of Justice of Colombia, 11001-0203-000-2007-01956-00, 27 July 2011.

[18] Petrotesting Colombia S.A., Southeast Investment Corporation v. Ross Energy S.A.S. / 11001-02-03-000-2012-02952-00, page 54. The Court stated: “As the standards of the New York Convention are vague and imprecise in respect of these issues, courts seized with an exequatur procedure have opted in several cases, when deciding on the recognition or enforcement of awards, for carrying out this scrutiny in the light of the procedural principles of their country, without applying specific rules but rather fundamental procedural guarantees. In the United States of North America, for example, this question was highlighted in the famous case ‘Parsons & Whittemore v. Rakta, US no. 7”.

[19] Reported in ICCA as Colombia No. 8 (Yearbook Commercial Arbitration 2012, Volume XXXVII, p.205-209), Drummond Ltd. v. Instituto Nacional de Concesiones – INCO et al., Corte Suprema de Justicia, Civil Cassation Chamber, 19 December 2011.

[20] Empresa Colombiana de Vias Ferreas Ferrovias (Colombia) v Drummond Ltd (US) / 11001-03-26-000-2003-00034-01(25261), page 42.

[21] see supra note 6.

[22] S. I. Strong, ‘General Principles of Procedural Law and Jus Cogens’, Penn State Law Review (2018), 382-83

[23] Peter B. Rutledge, Arbitration and the Constitution, 145-59 (2013).

[24] Corte Suprema de Justicia, 30 March 2016, causa A. 69.572 (Milantic Trans S.A. v. Ministerio de la Producción (Astilleros Río Santiago y otro)); not in the ICCA yearbook but full judgment accessible at: http://public.diariojudicial.com/documentos/000/067/912/000067912.pdf.

[25] id. at page 43

[26] see supra note 10.

The Center co-hosted an arbitration training program in Bangkok

One of the goals of the Center is capacity building in the areas on which the Center focuses. Over the years, the Center has hosted many capacity building events around the globe. From 10 to 14 June 2019, the Center, together with the Thailand Arbitration Center, once again hosted such an event, this one aimed at practitioners and government lawyers operating in Thailand and surrounding countries. The speakers included Professor Franco Ferrari, the Center’s Director, Dr. Friedrich Rosenfeld, a Global Adjunct Professor at NYU Law in Paris, as well as Mr. Darius Chan, a graduate NYU and Of Counsel with Norton Rose Fulbright (Asia) LLP.

Professor Ferrari and Dr. Rosenfeld give talks in Seoul

On 10 June 2019, Professor Franco Ferrari, the Center’s director, and Dr. Friedrich Rosenfeld, currently a Global Adjunct Professor at NYU Law in Paris, a visiting Professor at the International Hellenic University in Thessaloniki and Lecturer at Bucerius Law School in Hamburg, will speak at a seminar entitled “Inherent Powers of Arbitrators” held in Seoul. The seminar, organized by the Center together with KCAB, will explore a fundamental question that commonly arises during international arbitrations: what are the boundaries of the powers of arbitrators? Are these powers limited to those explicitly provided for in the relevant laws or rules, or should there be some margin of flexibility, so that arbitrators may invoke powers which can be deduced from the characteristics and goals of their function? For the conference flyer, please click here.

Professor Ferrari edits new issue of the European International Arbitration Review

Professor Franco Ferrari, the Center’s Director, has just edited the new issue of the European International Arbitration Review (“EIAR”). The EIAR is a law review that publishes monothematic issues, since Professor Ferrari took over as its editor-in-chief in 2016. The latest issue, EIAR 7.2, is dedicated to “Soft Law in International Arbitration”. Apart from contributions by Prof. José E. Alvarez (NYU) and Prof. Franco Ferrari himself, the issue features papers by authors who are all linked to NYU and the Center, more specifically, Prof. Gary Bell (a former scholar-in-residence at the Center), Mr. Ian Ming Choo (‘18), Prof. Giuditta Cordero-Moss (a former scholar-in-residence at the Center), Prof. Diego Fernandez Arroyo (a former Global Professor of Law at NYU Paris and a two-time scholar-in-residence at the Center), Prof. Caroline Kleiner (who will join the Center as scholar-in-residence), Dr. Friedrich Rosenfeld (a Global Adjunct Professor of Law at NYU Paris, who will join NYU next year as visiting professor), and Prof. Marco Torsello (a Global Professor of Law at NYU Paris and two-time visiting professor at NYU). The table of contents of issue 7.2. can be found here.

Professor Ferrari publishes a paper on contracts of carriage and international conventions

Professor Franco Ferrari, the Center’s Director, has just published a paper in the Oslo Law Review. The paper addresses the contentious relationship between uniform substantive law conventions and private international law rules in relation to contracts of carriage. In the paper, Professor Ferrari discusses why resort to private international law has to give way to the application of uniform substantive law conventions. The paper, which was presented at a  conference that took place in Oslo in May 2018, as well as other papers presented at the conference (convened by Professor Giuditta Cordero-Moss, a former scholar-in-residence at the Center) can be found here.

Center hosts conference of costs and damages in international arbitration in Vienna

The Center, together with Bucerius Law School and McGill University, will hold a conference entitled “Costs and damages in international arbitration”. The conference will address the most disparate issues, including how hermeneutics misshape reasoning and lead to increased costs, how to improve trust and transparency in arbitrator time reporting, and how costs are being allocated in international arbitration. The conference will take place on April 12, 2019, from 9.30 am to 4.30 pm, in the  Juridicum, Room U18, University of Vienna, Schottenbastei 10-16, 1010 Vienna. The event is graciously hosted by the University of Vienna just prior to the commencement of the 26th annual Willem C. Vis International Commercial Arbitration Moot. For the detailed program, please click here

The Center for Transnational Litigation, Arbitration, and Commercial Law aims at the advancement of the study and practice of international business transactions and the way to solve related disputes either through litigation or arbitration. As commercial transactions become increasingly international, it is vital to the legal and business communities to understand and analyze the practices and legal principles that govern relationships between firms and between firms and consumers in the international arena