Adjourning the enforcement of arbitral awards - IPBA 2012

Article VI of the Convention:
Adjourning the enforcement of arbitral awards
22 nd IPBA Annual Meeting & Conference
Chong Yee Leong
yee.leong.chong@rajahtann.com

Article V (1)(e) of the Convention:
Article V (1)(e):
1. Recognition and enforcement of the award may be refused, at the request of the party
against whom it is invoked, only if that party furnishes to the competent authority where the
recognition and enforcement is sought, proof that —
…
(e) the award has not yet become binding on the parties, or has been set aside or
suspended by a competent authority of the country in which, or under the law of which, that
award was made.

Article VI of the Convention:
Article VI:
If an application for the setting aside or suspension of the award has been made to a
competent authority referred to in Article V (1)(e), the authority before which the award
is sought to be relied upon may, if it considers it proper, adjourn the decision on the
enforcement of the award and may also, on the application of the party claiming
enforcement of the award, order the other party to give suitable security.
[emphasis added]

Article VI of the Convention:
Article VI considerations:
• When is it ―proper‖ to grant an adjournment
•Factors considered by different enforcing jurisdictions.
• Should security be ordered to be furnished

Context in which Article VI is invoked
Potentially different jurisdictions which could rule on an award:
Supervisory Jurisdiction / Court
(setting aside award)
vs
Enforcement Jurisdiction / Court
(refusal of enforcement)

Context in which Article VI is invoked
Potentially different jurisdictions which could rule on an award:
e.g. Distinctions made in:
•Far Eastern Shipping Co. v AKP Sovcomflot [1995] QB 520
• Russian award / Enforcement in UK
• Application to Russian Supreme Court to challenge the award.
•Cour d’Appel (Sovereign Participations International S.A. v. Chadmore Developments Ltd)
• Swiss award / Enforcement in Luxembourg
• Application for review of the award before the Swiss Supreme Court.
•Republic of Gabon v Swiss Oil Corp Int’l Arb. Rep. 3 (1988)
• French award / Enforcement in Cayman Islands
• Application to Court of Appeal in Paris

Applying Article VI
Balance of considerations:
• Facilitating the enforcement of awards
• Expediting dispute resolution
• By not frustrating enforcement
• Adjournment whilst awaiting the outcome of setting aside application could delay
enforcement
vs
• Protect losing parties that have a bona fide setting-aside claim
• By allowing adjournment so long as award is still open to ordinary recourse.
• Potential hardship if award enforced but later set aside

Applying Article VI
Options open to Court:
… the court may, if it considers it proper,
• adjourn the proceedings; and
• (on the application of the party seeking to enforce) order the other party to give suitable
security

Balance of considerations
When is it “proper” to grant an adjournment
• Courts of enforcing jurisdictions have used different approaches to Article VI:
• Some of considered one or more factors to determine whether it is ―proper‖ to
adjourn.
• Australia, Belgium, Canada, the Cayman Islands, England, Germany, Hong
Kong, Sweden, and the United States
• Some have generally refused to adjourn, irrespective of foreign annulment
proceedings.
• France

Balance of considerations
When is it “proper” to grant an adjournment Factors used:
• 1) Convention’s goal of facilitating enforcement of arbitral awards and expediting dispute
resolution
• Far Eastern Shipping Co. v AKP Sovocomflot [1995] 1 Lloyds Rep 520 –
―Plainly the rationale of the Convention is aimed at the enforcement of foreign
arbitral awards…‖
• Sovereign Participations International SA v Chadmore Developments Ltd –
“[the] principle of favor arbitrandum which permeates the Convention led its
drafters to promote enforcement as much as possible‖.

Balance of considerations
When is it “proper” to grant an adjournment Factors used:
• 2) Expected duration of proceedings in curial court – the shorter the time between
adjournment and setting-aside decision, the more likely the adjournment
• Republic of Gabon v Swill Oil Corporation – the Cayman Islands Grand Court
granted adjournment given setting-aside decision was expected in a matter of
days
• Toyo Engineering Corp v John Holland Pty Ltd – same reasoning
• Far Eastern Shipping – same reasoning, adjournment refused in expectation
of protracted foreign proceedings.

Balance of considerations
When is it “proper” to grant an adjournment Factors used:
• 3) Likelihood of adjournment-seeking party prevailing in setting-aside proceedings
• Hallen v Angledal – Supreme Court of New South Wales refused adjournment
on basis that setting-aside application had no prospect of success
• Toyo Engineering v John Holland – Resisting party (to setting-aside) had an
arguable case; adjournment granted
• Inter-Arab Investment Guarantee Corp v Banque Arabe et Internationale d’
Investissements – Brussels Court of Appeal denied adjournment on the basis
that resisting party’s application had no prospect of success.
• ―The appellant fails to supply the provisions of international public policy
applicable in Jordan on this subject, which would make the annulment of
the award plausible. Hence, we deny the request founded on Art. VI of
the New York Convention.‖

Balance of considerations
When is it “proper” to grant an adjournment Factors used:
• 4) Bona fides of resisting party in commencing action in the curial court
• IPCO (Nigeria) v Nigerian National Petroleum – The bona fides of the resisting
party’s application was considered.
• The application was found to be bona fide
• Continental Transfert Technique Limited v The Federal Government of Nigeria
and others – delay tactics in resisting party’s application

Balance of considerations
When is it “proper” to grant an adjournment Factors used:
• 5) Potential hardships suffered by the parties arising from an adjournment:
• Europcar Italia SpA v Alba Tours International Inc – adjournment granted on
the basis that respondent would suffer extreme prejudice if award was
enforced in enforcing jurisdiction but later set aside in original jurisdiction
• Powerex v Alcan Inc – adjournment granted on finding that it would not cause
inordinate delay or create more difficulty on the enforcing party to obtain
judgment

Balance of considerations
When is it “proper” to grant an adjournment Factors used:
• 6) Judicial efficiency
• Arab Business Consortium International Finance and Investment Co v Banque
Franco-Tunisienne – English High Court held that a court should have the
power to consider a stay on its own motion, as it is ―consistent with the Court
being entitled to consider whether its time should be taken up with other matter
while the… application is pending‖.
• Powerex v Alcan Inc – where it was held that it would be more convenient and
efficient for an American court to decide on questions of American law relevant
in the setting-aside application.

Balance of considerations
When is it “proper” to grant an adjournment Factors used:
• 7) International comity
• Europcar Canada – Ontario Court of Justice refrained from appearing to
interfere with the Italian judicial process, given that one of the issues was
deemed to be within the exclusive right of the Italian court to determine
• IPCO (Nigeria) v Nigerian National Petroleum – adjournment granted on the
basis that the award was a Nigerian domestic award between domestic
parties, and due deference was to be given to the local courts to decide on the
matter of its validity

Security
How to determine amount of security
• Various approaches:
• Entire award
• Percentage of award
• Grounds for refusal:
• Unnecessary due to substantial assets of resisting party
• Unjust as it would gravely injure party seeking adjournment