Refusal of recognition and enforcement of foreign arbitral Award

Q: The standard for determining whether the public policy of the enforcing country would be violated by the recognition and enforcement of arbitral awards in light of Article 5.2 (b) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), which provides grounds for refusal of recognition and enforcement of foreign arbitral awards

A: Article 5 of the New York Convention limits the grounds to refuse enforcement of arbitral awards. Article 5.2 (b) provides that a court of law in the country where the recognition and enforcement is sought may refuse if either the recognition or the enforcement of the award would be contrary to public policy of that country. A refusal is not contrary to public policy if the recognition and enforcement of a foreign arbitral award does not effect the fundamental moral norms and social order of the enforcing country is preserved. In determining whether public policy is violated, a court of law should consider not only the internal circumstances of the enforcing country, but also the impact on the country's international transactions. Accordingly, the grounds for refusing recognition or enforcement must be narrowly interpreted, and thus, the recognition and enforcement of an arbitral award shall be refused only if concrete results of its recognition would be contrary to sound social policy and other social order of the enforcing country.

Q: Whether a court of law may apply Article 5.2 (b) of the New York Convention to refuse execution of an arbitral award, where a ground for objection to the claim occurred after an arbitral award had been issued (affirmative)

A: A judgment of execution provides a compulsory execution procedure so that a foreign arbitral award may be executed under the laws of the Republic of Korea. The executive force of a foreign arbitral award shall be judged at the close of pleadings., In a case where there is a ground for a demurrer under the Civil Execution Act, for example, performance occurred after an arbitral award, the enforcement of the award may be refused as being contrary to public policy as provided by Article 5.2 (b) of New York Convention. It was revealed in the pleadings that allowing a compulsory execution procedure merely based on the arbitral award would be against the fundamental principles of the laws of the Republic of Korea.

Reference Provisions

Article 5.2 of the Convention on the Recognition and Enforcement of Foreign Awards

2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that:

(b) The recognition or enforcement of the award would be contrary to the public policy of that country.

Article 37 of the Arbitration Act (Recognition or Enforcement of Arbitral Award) (1) Recognition or enforcement of an award shall be confirmed by the judgment by a court.

Article 39 of the Arbitration Act (Arbitral Award in Foreign Country) (1) Recognition or enforcement of a foreign award which is subject to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, shall be governed by that Convention.

Article 26 of the Civil Execution Act (Compulsory Execution by Foreign Judgment) (1) A compulsory execution based upon the judgment of a foreign court may be conducted only if a court of the Republic of Korea has made a declaration of its legality by means of a judgment of execution.

(2) A lawsuit seeking a judgment of execution shall be under the jurisdiction of the district court located at the debtor's general forum, and if there exists no general forum, it shall be under the jurisdiction of the court having jurisdiction over a lawsuit against the debtor under the provisions of Article 11 of the Civil Procedure Act.

Taejin Kim, partner attorney at K&P Law Firm

taejin.kim@kimnpark.com

Please visit our homepage :Click 

Original Source : Click