Public policy is still today ofsignificant importance to any national court that seeks to process arbitral awards.The differences in public policy across national courts is why we see differentcorporations and indeed countries under contractual agreements seeking mutualgrounds (different courts than their own) to settle arbitrary disputes, and whyno universal guidelines have been fully explored or written down in terms oftheir entailment, and leads to a lack of precision and uncertainty in reachingoutcomes. If agreements are to be reached it is evident that more internationallegal initiatives need to be in place in order to give greater clarity topublic policy defences that hold up the current loose-endedness of defence inarbitration cases. 1Aswell as clarity of public policy use in arbitration cases we should also beaware of being unjust, and the penalties that these interferences have oneither the claimant or the defendants development either financially orotherwise. 2Ithas been argued that due to the differences in public policy across borders aswell as its changing nature within any particular nation that strict andprecise legal guidelines can never be set to benefit each party in reaching anagreement and this is why the idea has been disputed so exhaustively. The 1958 New York Convention or”The Convention” aims to recognise the increasingimportance of international arbitration in settling commercial disputes acrossborders as well as provide common legal standards for their recognition andenforcement in non-domestic arbitral awards. A non-domestic award in asense is seen to be as such even in cases where an award has been granted in astate of enforcement, 3mainlydue to the fact of an element which does not adhere to its proceedings or itslaws relating to justice, here we can see that another nation’s courts i.
e. theseated decision’s laws are implemented, which do not adhere to their own(enforcement court’s) idea of justice. One main indication of the convention isnot to discriminate against foreign, non-domestic or even domestic awards, thishighlights a key contradiction of the capability of enforcement across borders,4althoughit may be possible in their own state, a further idea of the New Yorkconvention is to give each party the ability to action arbitration agreementswhen either of the agreed are in breach of it, denying said parties access tothe courts if they have this breach, furthermore delivering clarity of the useof public policy as a defence in judicial proceedings. 5Thispaper critically discusses the changing nature of public policy across nationsin relation to the enforcement or arbitral awards under the 1958 New YorkConvention in connection to set aside proceedings at the seat of arbitration. Understanding the enforcement of arbitralawards requires us to first consider the prominence of public policy, as itallows common opinions to be found between international domains and allows usto recognise the influences of different interpretations of public policy andcontradictions it creates between different legal systems and in this casearbitral awards, allowing national courts to acquit a foreign or non-domesticarbitral award merely by finding a public policy discharge for it6,without real reason.
The changes in public policy interpretation acrosscountries depend on the clarity of the damage of upholding an award, e.g.:proving that he award would damage the public must be clear and offersubstantiated evidence, however this depends on said country’s required levelof damage to the public, or their ceiling for what is deemed a violation ofpublic policy, hence leaving a court to decide if a violation to public policyhas been committed this “level” of damage is what has led to, in part, legislativeenforcement becoming a prominent tool and allows an arbitral award to remainunenforced7.
Countries that hold a legal system based oncivil law on which society’s moral, political and economic order rests Pertainto public policy as its root, whereas in nations which hold common law as thebasis of its legal identity public policy is more narrowly defined as an”abstract set of values”8.In the united states, for the award to be in violation of public policy it hasto be opposed to the legal system’s “most basic concept of morality andjustice”9,whereas in the UK, the clarity of injury has to be absolute in its nature toput the idea forward that not only legal aspects are being taken into account. In the case of public policy, wemust also take recommendations from cases that allow its application.
There aresuch cases where a prevailing standard has been substantive in their approachto the implementation of public policy in arbitral awards cases. Specifically,the Court of Appeal in DST v Rakoilapplies a public policy exception to various jurisdictions with the use of ageneralised approach10.Whilst implementing the public policy exception in this case there has beensome record that enforcing an award would present the idea of “clearlyinjurious” appropriation would be committed towards the public good, hencepresent illegality in its enforcement11. Internationalisationand even globalisation sees the goals of different states converging, meaningthat we are also seeing the same effect on public policy, hence the need forinternational public policy and arbitration regulation under a universalstandard as a contesting practice. This discussion has allowed us alook into the public policy exception and its meaning of serious violation offundamental rules of a certain society. The rules of a particular ‘public” arebased on societal values, political and legal concepts, which, in its turn,depend on many different factors. The vagueness of the public policy concept,which stems from the way it changes in any particular country, has created theneed to regulate it internationally rather than domestically. The New York Convention 1958 encompasses twobasic actions, firstly it looks at recognising and enforcing arbitral awardsmade in a foreign state, or for the purposes of understanding another nationfrom which the pre-requisite to the award was made, the application ofenforcement here depends upon a particular state’s rules and procedures, inthat they must enforce the award in accordance with those, and recognise theaward as binding, however in many cases grounds for refusal are brought forthto the enforcing court and or can be brought to attention by the court itselfon the grounds of public policy12,in other words the decision of approval by the seated court can be adjourned ifreasonable grounds for refusal of enforcement are evident in the country oforigin’s own law or public policy and that of the enforcing court.
The secondaction is based on the courts referral to arbitration where one or more of theparties has requested it and the arbitrary agreement includes both partiessubmissions of differences that may arise and have arisen, not only this butboth contractual and non-contractual dispute equivalencies (article ii (1)),that not only look at specific contracts, but also claims in tort and alsoinvolve the consideration of arbitration clauses that either they must besigned contractual documents or agreements made in writing in exchangedmessages this under article ii (2) of the New York Convention 1958 13. When considering the changing nature ofpublic policy and indeed the interpretation of the convention it is importantto mention that public policy not only differs from state to state, but alsofrom international to domestic public policy, the grounds for refusal concernsin this case the application of public policy in “audi et alteram partem” or the principles of fair and adverseproceedings. 14 Theconstricted interpretation of this comes to light when considering domesticnotions of due process are considered above that of international ones, in thiscase there can be grounds to refuse the enforcement of an arbitral award, andgrant one as domestic violation of due process that pertains to public policymay not be considered so where the award is foreign. International disputes in this case usuallyfall under public policy fewer times than domestic ones due to the, due to theenforcement court holding less bias towards any particular party or anyspecific domestic country’s public policy, but rather a favourable view oninternational public policy.
Here the application of arbitral awards failurecould be said to be one negative of the interpretation of domestic vs internationalpublic policy and should be denied enforcement only when the asserted publicpolicy “would violate the forum State’s most basic notions of morality and justice”15. Other cases where public policy could be taken intoaccount under the convention include; impartiality and non-disclosure ofreasons. Being impartial at the seat or arbitration is a basic requirementhere, this means that under the convention an individual arbitrator shouldn’thave any pre-requisite involvement before the arbitration of a case, if thiswas to take place the enforcement court could easily acquit the arbitral award16. Itmust also be made clear that the initial arbitration must contain reasonspertaining to the arbitral decision grounds if not the award simply becomes nulland void, however in countries that have a common law system, do notparticularly have to state said reasons for the granting of an award.International if the awarding court is under common law it is general practiceto assume that the enforcement in a county where reasons are mandatory wouldgrant these cases without valid reasons and the seated courts decision would beupheld17.Arbitral awards generally refer to anequivalent to a court of law judgement by an arbitration tribunal, and does notnecessarily refer to monetary gains by either party, but rather and award ofvalue to the claimant in a case, where we see failure of the claims no feeshould be paid by either party. Arbitral awards can be defined as “any decisionof the arbitral tribunal on the substance of a dispute, submitted to it andincluding interim, interlocutory, or partial arbitral award” Cal Code Civ Proc § 1297.21 (a).
In thiscase it must be noted that the court can at any time bring in new material towhich it may enhance its construction in concluding an arbitral award 18. Deference in judiciary systems iscurrently being weakened more and more by lower courts, in their decision to prioritizedomestic public policy in arbitral awards cases, although the awards do notbreach any legal regulation or Act, or lead to contractual misconduct by anyparty, it causes the “lower” enforcement courts in question to engage injudicial activism19, therefore a substitutionof domestic commercial justice is sometimes made, being replaced by the perceivedvalues of justice of the arbitrator. Arbitral awards here have a directconnection to public policy as they can be greatly impacted by the use ofpublic policy to grant or deny an arbitral award, depending on theinterpretation of said public policy at the seated court and that ofenforcement as well as in a set aside judgment20.The decision making processbecomes extremely complex whilst coming to an agreement, in that the courtenforcing the decision should have understanding of their extent of concessionto the decision of the seat of arbitration.
As a general rule of thumb it hasbeen considered that it would be inappropriate for the enforcement court toundermine the decision made by the court at the seat, which made the decisionto either grant or deny an arbitral award. 21Wherethere is international arbitration the seat’s role must also be considered, asthis will change across borders, for instance US courts would usually concedeto decisions made by the judicial court that holds the seat, whereas the Frenchapproach would be to ignore these decisions, which would not be the correctproceeding under the New York Convention 1958, unless circumstances arise wherethe decision is made with evidence made only in part by the seat, considered as”exceptional circumstances”, or if the nations principles of justice areundermined, with this in mind the violation of public policy must also be takeninto account, where the proper use of the word justice22.Theories that are relative to the importance of the seat are also in disputewith each other such as duty vs. discretion.The different interpretations of the role ofthe seat and its importance levels in different states causes strain on its ownrelationship with the enforcement court of the resulting arbitral award, thishappens precisely when the enforcement court is asked to reach an outcome onenforcing an award that has been set aside by the seat.
NikolayViktorovich Maximov v Open Joint Stock Company 2017 EWHC1911 (Comm) serves a reminder that the defense of a annulmentbased on non-disclosures of public policy and therefore the arbitrability ofoffences raised at the seat can be upheld after an award has been granted andthen deferred based on evidence not being raised during the set aside hearing,this was done so under proceedings at the seat set forth by the enforcing courtunder the New York Convention 195823. Later there is a sought enforcement of an award inthree different states, this is why there is need for international/ global legal initiatives to set consistent andtangible guidelines for public policy as it will stop larger parties seekingsettlement on favourable enforcement courts as this case saw from Paris astheir judicial system allows many limitations for the refusal of enforcement ofan arbitral award, simply the Paris court of appeal overruled the defendantsclaims that there was a failure of disclosures and the setting aside of thearbitration was not an excuse for annulling an award. Enforcement was also sought from TheAmsterdam District court, whom determined that the annulment decision couldonly be overturned if there was reasonable grounds to assume that the set asidejudgement from the enforcement court would violate their own public policy, asthey were not satisfied that there were exceptional circumstances they woulduphold the annulled arbitral award, after an appeal was launched, followingthis experts were then involved to give evidence relative to the fairness of the proceedings that were set aside by the Russian proceedingsthat had taken place, the court still decided that the original annulleddecision should remain as there was not sufficient evidence to uphold thenotion of an unfair trial, or that the decision would damage their publicpolicy and the decisions were not partial and dependent and were simply aprovision of justice. Further to the previous sought enforcements anotheraction was brought to London where no conclusion was reached due to a number ofreasons, firstly on the basis of bias in proceedings of the set aside awardthere was no evidence to suggest that these were unfair or that the manner ofdelivery was pre-obstinate and the rationality for this being pursued wasincoherent, after this the grounds for setting the award aside were examined.The grounds of non-disclosure at the set aside hearing were un-surmountable inthat an un supportable conclusion was made rather than making a rationaldecision, however the public policy ground was found to be favorable for thedefendant as it is arguable by the standards of the seated court, finally thefinding of non-arbitrary nature of the offences were found to be courageousalthough not unsupported in evidence. What this case shows us is that in this and manycases, claimants looking to have an arbitral award enforced that has alreadybeen set aside at the seat can be nullified under the grounds of public policy,which can cause problems both domestically and internationally, due to the changingnature of public policy over time as well as differences across nations, eventhose under the sanction of the New York Convention, in retrospect this couldbe overturned by commercial courts, however they are likely to come to the sameverdict, so not to undermine the public policy of aparticular county, unless proceedings were shown to be bias in the annulment ofthe set aside seated judgement.
The approaches of different national courts, aswell as the enforcement of awards in different cases where updated domestic andinternational public policy has not been taken into account shows that there isa lack in conforming to the use of international public policy under the NewYork convention as it undermines domestic capabilities of public policy and infersthe misappropriation of courts from seated to set aside through to enforcedjudgements based on domestic principles, yet more reason for parties to bethoughtful when choosing their seat of arbitration.24 In the respect of public policy and its changingnature we can see that the variances in public policy has allowed threedifferent courts to make different decisions on weather or not an arbitralaward that is set aside at the seat and under the states where the New YorkConvention is applied should be granted and enforced or not. It is important tomention that the main objectives of different jurisdictions, when applyingpublic policy exception concept are entirely separate, hence in this case therewas different outcomes from each nation, this would imply that although we cansee the generalisation and globalisation of some values in the world public,simply different political, economical and societal values differ too much forpublic policy and arbitral awards to be regulated internationally, althoughthere is a need for it due to the use of this exception to escape makingdifficult decisions 25incases where clearly there is no reason to set aside decisions or even to denyenforcement based on public interest, as many of the cases involve privateorganisations. Overall Referencecore texts 1 P. Lascoumes and P.
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