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ACCA Applied Skills · Corporate and Business Law (Global) · Alternative dispute resolution mechanisms

Gamma Co, based in Country X, obtains an arbitral award against Delta Co, whose assets are in Country Y. Both countries are parties to the New York Convention 1958. Delta Co refuses to pay. What is the effect of the Convention for Gamma Co?

Country Y's courts should recognise and enforce the award, refusing only on limited specified grounds such as invalid agreement or public policy. The New York Convention prevents a re-hearing of the merits, which makes arbitral awards easier to enforce internationally.

  1. AGamma Co must start the whole dispute again in Country Y's courts
  2. BCountry Y's courts must re-examine the merits of the dispute before enforcing
  3. CThe award can only be enforced if Country X's government requests it
  4. DCountry Y's courts should recognise and enforce the award, refusing only on limited specified groundsCorrect

Explanation

The New York Convention requires contracting states to recognise and enforce foreign arbitral awards, with refusal permitted only on narrow grounds such as invalid agreement or public policy. There is no re-hearing of the merits.

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