Editor’s Note: The Fourth Seminar of the International Commercial Expert Committee of the Supreme People’s Court and Reappointment (New appointment) Ceremony of Expert Members was held successfully on September 25, 2024. Over 40 experts from more than 20 countries and regions focused on the theme of the “Collaborative Dialogue, Diverse Integration, Peaceful Development” during the seminar. Extensive and in-depth discussions were held within the framework of four specific issues. The texts of speeches delivered by the members of expert committee and distinguished guests during the discussion session on Topic Two International commercial transactions from a comparative law perspective: navigating legal intersections of international and domestic law would be posted on the CICC’s website.

The Cross-Border Enforcement of Arbitration Awards: Challenges and Divergences Between Common Law and Civil Law Jurisdictions

 Lei Chen

Deputy Dean of the Durham Law School

Director of the Durham International Dispute Resolution Institute, Durham University

Arbitration has become the preferred method of dispute resolution in international commercial transactions. However, the enforcement of arbitration awards across different jurisdictions presents a unique set of challenges, particularly when navigating the divergences between common law and civil law systems. This issue underscores the broader theme of how international and domestic laws intersect and interact in complex ways, shaping the outcomes of international commercial disputes.

The New York Convention and its Role

The cornerstone of the global framework for the recognition and enforcement of foreign arbitral awards is the New York Convention of 1958. The Convention is a powerful tool that promotes the predictability and stability of international trade by ensuring that arbitration awards are enforceable in a wide range of jurisdictions.

However, while the New York Convention provides a uniform framework, its application is not entirely consistent across jurisdictions. The interpretation and enforcement of the Convention’s provisions can vary significantly between common law and civil law systems, leading to unpredictability in how arbitration awards are treated in different countries.

Judicial Review and Public Policy

In common law jurisdictions, courts tend to take a more interventionist approach when reviewing arbitration awards. While they generally respect the finality of arbitration, courts in these jurisdictions may scrutinize the awards more closely, particularly on grounds of procedural fairness and adherence to public policy. For example, in the United Kingdom, courts have demonstrated a willingness to refuse enforcement of awards if they are found to violate the principles of natural justice or if there is evidence of serious procedural irregularities.

In contrast, civil law jurisdictions often adopt a more deferential stance towards arbitration. Take French Courts, for example; they are typically more reluctant to interfere with arbitration awards, adhering closely to the principle of party autonomy and respecting the decisions of arbitral tribunals arising from the competence-competence principle. However, civil law courts may be more stringent when it comes to the application of public policy exceptions. In France, enforcement may be denied if the award is found to be manifestly contrary to the nation’s public policy, which can be interpreted more broadly than in common law jurisdictions.

Arbitrability

Another significant area of divergence is the concept of arbitrability, which concerns whether certain types of disputes can be resolved through arbitration. In common law jurisdictions, the scope of arbitrability is generally broad, with courts often willing to allow a wide range of disputes to be settled by arbitration, including those involving complex commercial issues.

Civil law jurisdictions, on the other hand, may impose stricter limitations on what can be arbitrated. Certain matters, particularly those involving public law, family law, or even competition law, may be deemed non-arbitrable. This difference can lead to situations where an arbitration award that is perfectly enforceable in a common law jurisdiction may be denied enforcement in a civil law country on the grounds that the underlying dispute was not arbitrable under that country’s laws.

Jurisdiction issues

Next, the differences on jurisdiction issues  can be illustrated through various case studies. For instance, in the case of Dallah Real Estate and Tourism Holding Company v. Ministry of Religious Affairs, Government of Pakistan, the UK Supreme Court refused to enforce an arbitration award on the grounds that the government of Pakistan was not a party to the arbitration agreement, highlighting the rigorous scrutiny applied by common law courts.

In contrast, the French courts in Société Hilmarton v. Société OTV enforced an award that had been set aside in Switzerland, demonstrating a civil law approach that emphasizes the autonomy of the arbitral process and the finality of awards, even when they conflict with another jurisdiction’s decisions. The Cour de cassation held that the award rendered in Switzerland was an international award which was not integrated into the legal order of that State and, therefore, continues to exist, notwithstanding that it had been set aside and its recognition in France was not contrary to international public policy.

Conclusion

The divergences between common law and civil law jurisdictions in enforcing arbitration awards have significant implications for international trade. The choice of arbitration as a dispute resolution mechanism, while generally beneficial, must be carefully considered in light of the potential challenges in enforcing awards. The cross-border enforcement of arbitration awards is a complex issue that highlights the broader challenges of navigating the intersections between international and domestic law. The divergences between common law and civil law jurisdictions, particularly in the areas of judicial review, public policy, and arbitrability, can significantly impact the outcome of international commercial disputes. 

*The original text is Chinese and has been translated into English for reference only. If there is any inconsistency or ambiguity between the Chinese version and the English version, the Chinese version shall prevail.