The 1958 New York Convention created a unified legal framework for the recognition and enforcement of foreign arbitral awards and played an important role in the promotion of international trade and investment by providing a reliable and efficient mechanism for resolving cross-border commercial disputes. Although Vietnam is a member of the 1958 New York Convention, applying the Convention in practice to recognize and enforce foreign arbitral awards in Vietnam still meets certain challenges. In this article, BLawyers Vietnam presents an overview of some key points as follows:
I. A brief introduction to the 1958 New York Convention
The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the 1958 New York Convention, signed in New York, USA on 10 June 1958 and valid from 07 June 1959. It is an important international treaty that facilitates the enforcement of arbitration agreements and foreign arbitral awards. The 1958 New York Convention includes five main contents as follows:
- Recognition and enforcement of arbitral awards: The Convention requires the Courts of Contracting States to recognize and enforce arbitral awards made in other Contracting States, subject to specific exceptions.
- Arbitration agreement: The Convention requires the Courts of Contracting States to recognize and enforce arbitration agreements, ensuring that disputes covered by such agreements are referred to arbitration.
- Grounds for refusal: The Convention outlines limited grounds on which recognition and enforcement of an arbitral award can be refused, such as incapacity of the parties, invalidity of the arbitration agreement, or lack of proper notice. In addition, it can be refused if the award deals with matters beyond the scope of the arbitration agreement.
- Non-discrimination: The Convention ensures that foreign and non-domestic arbitral awards are not discriminated against and are treated equally with domestic awards.
- Procedural requirements: The Convention specifies the procedural requirements for applying for recognition and enforcement, including the need to provide the original arbitration agreement and the original award or certified copies.
The 1958 New York Convention has 172 state parties, including 169 of the 193 member states of the United Nations, with the Cook Islands, the Vatican, and the State of Palestine. Vietnam has been a member of the New York Convention since 1995.
II. The role of the 1958 New York Convention
The 1958 New York Convention plays an important role in the promotion of international trade and investment by providing a reliable and efficient mechanism for resolving cross-border commercial disputes. The main and fundamental benefits of becoming a member of the 1958 New York Convention can be summarized in the following fields: (a) Enforcement of arbitration awards; (b) Promotion of international trade; (c) Legal certainty and uniformity; (d) Limited grounds for refusal; and (e) Support for arbitration agreements.
Regarding enforcement of arbitral awards, the Convention ensures that arbitral awards made in one member state are recognized and enforceable in other member states, providing a reliable mechanism for resolving cross-border disputes. By providing a predictable and effective mechanism for cross-border dispute resolutions, the 1958 New York Convention encouraged international trade and investment and became a motivation for the promotion of international trade.
The Convention creates a unified legal framework for the recognition and enforcement of foreign arbitral awards, reducing uncertainty and complexity related to international arbitration. From such unified legal bases and frameworks, the Convention also specifies limited grounds to limit the non-recognition and enforcement of an arbitral awards, under which recognition and enforcement can be refused, ensuring that arbitration awards are generally maintained unless there are important issues. At the same time, to assist arbitration agreements, the Courts in member states are required to respect and enforce arbitration agreements, ensuring that parties can rely on their agreement to resolve disputes.
III. Challenges when applying the 1958 New York Convention in Vietnam
The 1958 New York Convention brought great benefits as presented in Item II above. However, as in many other countries when applying it in practice, the application of this Convention in Vietnam still faces many challenges as follows:
- The first is the problem of inconsistent interpretation. Sometimes, there may be the same content in the Convention, but courts in different countries have inconsistent interpretations and applications of that content, leading to difficulties when enforcing foreign arbitral awards. A situation occurs where it is almost impossible to predict whether or not the Court will accept the arbitral award.
- The second is the public policy exception that allows Courts to refuse to enforce an award if it is contrary to the public policy of the country. Sometimes, public policies can be interpreted broadly in terms of meaning, creating uncertainty as to whether a foreign arbitral award is consistent with those public policies. Another major problem is that a state’s immunity can lead to problems in enforcing an award against a state or state entity due to claims of state immunity, hindering the implementation process.
- The third are other obstacles such as court procedural issues when considering arbitration awards under Vietnamese law. For example, the Court’s requirement to provide the original or certified/consularized copy of the arbitration agreement and arbitral award, may create difficulty for the application of the Convention if arbitration agreements and arbitration awards have been signed electronically or issued under a digital arbitration process.
The above is not official advice from BLawyers Vietnam. If you have any questions or suggestions about the above, please contact us at info@blawyersvn.com. BLawyers Vietnam would love to hear from you.
Date: 21 November 2024
Writer: Thuyet Tran
