A comparison of the enforcement regimes under the New York and Washington Conventions —
A tale of two cities

There are two principle treaties governing the enforcement of international arbitral awards in foreign jurisdictions, namely: the Convention on the Recognition and Enforcement of Foreign Arbitral Awards June 10, 1958 (the New York Convention) and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the Washington Convention).

The success of international arbitration, both commercial and investment treaty arbitration, can be attributed in large part to the global enforcement regimes created under these treaties. In this article, we compare a few key differences between the enforcement regimes under these two treaties.

The New York Convention and the Washington Convention

The New York Convention is arguably one of the most successful United Nations treaties in the area of international trade law. It requires contracting States to recognize and enforce foreign arbitral awards (i.e. awards made in jurisdictions other than that in which enforcement is sought) as if they were domestic awards.
 
The Washington Convention created the International Centre for Settlement of Investment Disputes (ICSID) under the auspices of the World Bank. ICSID is a forum for arbitrating disputes arising under contracts, local investment laws and international treaties between a ratifying state and a national of another ratifying state. The Washington Convention also creates enforcement mechanisms for awards issued under the Washington Convention. ICSID awards are “automatically” enforceable in any ratifying State as a fi judgment of the national courts.

The New York Convention has a broader application in scope and slightly more States have adopted it, as compared to the Washington Convention. At present, 157 States have ratified the New York Convention, including all the large trading nations. In comparison, 154 States have ratified the Washington Convention, with Brazil, South Africa, India and Poland being significant exceptions.

However, as set out in the table below, the New York Convention, while having a broader scope, does contain more grounds for resisting enforcement than exist under the Washington Convention.

While both conventions streamline enforcement, widely disparate implementing national laws can complicate enforcement. For instance, in China, enforcement of a foreign arbitral award under the New York Convention can be delayed by the Prior Report System, which requires the Higher Court’s approval for annulment of an award, and that process can be extremely time consuming (some reports indicating on average 870 days for enforcement and 597 for annulment). Parties should carefully consider the procedures and attitudes of the national courts not only when initiating enforcement proceedings but also at the time of drafting the contract. Under the New York Convention, for example, a lack of a valid arbitration agreement is a ground for resisting enforcement.

A comparison of the two convention enforcement regimes

The views expressed in this article are the views of the authors and not necessarily the views of Norton Rose Fulbright. The authors would like to thank Nkisu Kaindama, trainee, for his contribution to this article.