Turkey: 60 Years Of The New York Convention

Introduction

The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("New York Convention" or "Convention") was concluded on 10 June 1958. This year, the New York Convention celebrates its 60th anniversary. The Convention has immensely influenced the field of international arbitration, and is accepted as one of the most successful treaties in the area of commercial law. The Convention has also influenced many international texts, and has served as a model. Notable examples include the UNCITRAL Model Law on International Commercial Arbitration ("Model Law"), and the UNCITRAL Arbitration Rules. It should be noted that the International Arbitration Act numbered 4686 is based on the Model Law, as well.

There are currently 157 States adhered to the Convention, which corresponds to approximately 80.5% of the entire World1. This article gives a brief account of the historical background of the New York Convention, a synopsis of what it deals with and, finally, discusses whether there is need to revise the Convention.

Historical Background

Previous to this Convention, the validity and enforcement of arbitration agreements and foreign arbitral awards was subject to the Geneva Protocol on Arbitration Clauses of 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927. The Geneva treaties, and the regime they provided, were burdensome and, thus, led to the start of the work on the draft of the Convention2. The International Chamber of Commerce ("ICC") was the first to commence this work, and established a 'Preliminary Draft Convention' in 1953. In the following year, the United Nations Economic and Social Council established the Committee on the Enforcement of International Arbitral Awards, and replaced the ICC. The Committee produced a draft on 18 March 1955. This draft formed the basis of the New York Convention and the text of the Convention was provisionally approved on 9 June 1958 following discussions and comments received from different countries. The New York Convention is accepted as a 'substantial improvement, since it provides for a simpler and more effective method of obtaining recognition and enforcement of foreign awards' and that 'it gives much wider effect to the validity of arbitration agreements than that given under the Protocols'3.

The Scope of the Convention

The Convention deals with two main issues: the recognition and enforcement of (i) arbitration agreements and (ii) foreign arbitral awards; namely, those awards made in other jurisdictions, and sets out the requirements for the same.

Recognition and Enforcement of Arbitration Agreements

Article II of the Convention is the relevant article that deals with the enforcement of arbitration agreements, and sets out the maximum requirements for a valid arbitration agreement. This means that arbitration agreements cannot be submitted to stricter requirements under national laws. Therefore, any arbitration agreement which fulfills the form requirement of Article II (2) of the Convention must be enforced by the courts of a contracting state, regardless of any stricter form requirement of national arbitration laws. A similar restriction has been provided for arbitral awards in Article III of the Convention which states as follows: "... There shall not be imposed substantially more onerous conditions or higher fees or charges on the recognition and enforcement of arbitral awards to which this Convention applies than are imposed on the recognition and enforcement of domestic arbitral awards."

According to Article II of the Convention, arbitration agreements need to be in writing. The said article provides a narrow definition of writing, and contains two alternatives: an arbitral clause in a contract, or an arbitration agreement. The second paragraph of this article covers agreements "signed by parties, or contained in an exchange of letters or telegrams".

This provision has been criticized as there is a view arguing that a liberal approach should be taken and, if not, the article needs to be interpreted in accordance with modern necessities. Thus, some advocate that the requirement should be relaxed, if not abolished. However, it should be added that the Model Law has reduced the importance of writing, and does not require signatures. Furthermore, national courts have widely interpreted the writing requirement of the New York Convention, as it can be seen in the Sphere Drake Insurance PLC v Martine Towing, Inc.4 case where the US courts gave priority to intent over form, and stated that arbitration clauses do not have to be signed, provided they constitute a part of the contract. Therefore, the court held that the phrase after the comma did not apply to both of the antecedent clauses, but only to the latter one. Similarly, in Compagnie de Navigation et Transport SA v Mediterranean Shipping, the Swiss Supreme Court held that arbitration clauses do not have to be signed5. By contrast, there are other courts where this requirement has been interpreted very strictly6.

It is argued that importance should be given to the parties' intent to arbitrate which is the key requirement of an arbitration agreement. Where the parties' consent to arbitration is clear, despite the non-fulfillment of the formal requirement, the courts have resorted to considerations of good faith and estoppel to uphold the validity of the arbitration agreement.

Recognition and Enforcement of Foreign Arbitral Awards

The second issue the New York Convention deals with is the recognition and enforcement of foreign arbitral awards. The party seeking enforcement of an award only needs to submit (i) the duly authenticated original award, or a duly certified copied thereof, and (ii) the original arbitration agreement referred to in Article II, or a duly certified copy thereof7 and, if necessary, the translation of these documents.

Articles V(1) and (2) of the Convention are of crucial importance, and set out the grounds for national courts to resist enforcement. These include:

  • The invalidity of the arbitration agreement, or that the parties to the agreement did not possess the capacity to sign the agreement;
  • Lack of notice where the party against whom the award is invoked was not given proper notice regarding the proceedings, including the appointment of the arbitrator, and violations of due process (i.e a party being unable to present its case before the tribunal);
  • The lack of jurisdiction of the tribunal that includes cases where the tribunal deals with a difference not contemplated by, or not falling within, the terms of the submission to arbitration;
  • Irregularities in the composition of the arbitral authority or the arbitral procedure, as it was not made in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place;
  • The award is not yet binding on the parties, as it may have been set aside or suspended;
  • Where the subject matter of the difference is not arbitrable; and
  • Public policy considerations.

The Convention provides national courts' discretion to reject an application for the recognition and enforcement of arbitration awards. Therefore, this discretion has led to different approaches.

The Convention also gives priority to domestic regimes that are more favorable to recognition and enforcement that again leads to differences between the contracting states (Article VII(1)).

Should the New York Convention be revised?

One of the issues that has been subject to debate in the past century relates to whether it is necessary to revise or amend the Convention. One group argues that the New York Convention should be left alone as it has been in force for so long and has established case law and, just simply, because it works. Emmanuel Gaillard, who supports this view, states that the New York Convention should not be revised, and summarizes his position as what he calls the "three NOs": there is no need, no hope, and no danger8.

However, on the other hand, there are others who criticize the Convention and its application, and claim that there is room for update. They argue that the different interpretations of national courts have resulted in unsatisfactory decisions, and the Convention should be revised. Linda Silberman states the deficiencies of the New York Convention, and asserts that there are areas in which the Convention has failed to create harmony, including the treatment of awards that have been set aside by the arbitral seat9, and this imbalance in the application is an acknowledged fact.

It is important to realize that even if a revision is made, there is great risk that contracting states will not be willing to sign a new convention. There is even a greater risk if some states sign the new draft and some reject to, as adaption of a new treaty is not an easy task. The credibility of the Convention, which has been recognized as a tool promoting international arbitration is at stake. A good analysis needs to be made, and there should be justifiable grounds to compel such revision. The work is ongoing and there are many proposals that need to be meticulously considered.

Many events and conferences will take place this year that will discuss the impact of the Convention, and also consider future challenges that may be faced with an aim to tackle the current issues. As Paulsson puts it, "possibilities are countless when mapping the future." Let us see what the future brings.

Footnotes

1 For the full list of signatories please see: http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYConvention_status.html

2 Article VII(2) of the New York Convention expressly states that the Geneva treaties shall cease to have effect between the Contracting States on their becoming bound and, to the extent that they become bound, by this Convention.

3 Chapter 11. Recognition and Enforcement of Arbitral Awards', in Nigel Blackaby, Constantine Partasides et al., Redfern and Hunter on International Arbitration 6th edition (© Kluwer Law International; Oxford University Press 2015) pp. 605 – 662.

4 16 F.3d 666, 669 (5th Cir. 1993).

5 The Court has stated "the need for a signature inevitably diminishes, especially in international commerce, and the different treatment reserved to signed and unsigned documents is under discussion."

6 Examples include Robobar v Finncold SAS, a decision of the Italian Supreme Court, and Kahn Lucas Lancaster Inc. v Lark International Ltd. (186 F.3d 210 (2d Cir. 1999), a decision of the US Court of Appeal.

7 Please see Article IV of the New York Convention.

8 Emmanuel Gaillard, The Urgency of Not Revising the New York Convention in 50 Years of the New York Convention, ICCA Congress Series No. 14, Dublin, A.J. van den berg ed., Kluwer Law International, 689 (2009).

9 Linda Silberman, The New York Convention After Fifty Years: Some Reflections on the Role of National Law GA. J. INT'L & COMP. L. Vol 38:255 2009 pp. 26-46.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Oncel, Aydın, Duman & Uygun Attorney Partnership
Kolcuoglu Demirkan Kocakli Attorneys at Law
GSI Meridian
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Oncel, Aydın, Duman & Uygun Attorney Partnership
Kolcuoglu Demirkan Kocakli Attorneys at Law
GSI Meridian
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions