The annulment of an arbitral award at the seat of arbitration has traditionally been regarded as a major impediment to its enforcement abroad. In practice, however, the position is far from absolute. International arbitration continues to reveal divergent judicial approaches to annulled awards, reflecting the tension between territorial control by national courts and the transnational nature of arbitral proceedings.
This divergence is largely rooted in differing interpretations of Article V(1)(e) of the New York Convention, which provides that recognition and enforcement of an arbitral award ‘may’ be refused where “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.” Significantly, the provision is framed in permissive rather than mandatory terms, thereby leaving national courts with varying degrees of discretion at the enforcement stage.
French courts have adopted one of the most enforcement-friendly approaches to annulled arbitral awards. Under French law, the annulment of an award at the seat does not automatically bar its recognition and enforcement in France. This position is based on the view that international arbitral awards are not necessarily tied to the legal order of the seat and may therefore continue to exist independently despite being set aside abroad. Hence, French courts may still recognise and enforce an annulled award provided it satisfies the requirements of French international public policy and the applicable provisions of French arbitration law.
The position in England and Wales is more restrained. English courts retain discretion to enforce annulled awards, particularly where the foreign annulment decision is considered contrary to public policy or tainted by bias, bad faith, or judicial irregularity. However, the threshold for disregarding a foreign annulment decision remains exceptionally high, and English courts generally exercise caution out of respect for principles of comity and the authority of the courts at the seat.
The United States adopts a less uniform approach. While US courts generally give considerable weight to annulment decisions issued at the seat, they have, in exceptional circumstances, enforced annulled awards where refusing enforcement would offend fundamental notions of justice or public policy. At the same time, US courts remain mindful of international comity and will ordinarily respect foreign annulment decisions unless the proceedings leading to the annulment are shown to be seriously flawed or unjust.
Thus, the annulment of an arbitral award at the seat does not necessarily mark the end of its enforceability. Depending on the jurisdiction where enforcement is sought, annulled awards may still survive and produce legal effects, particularly in states that adopt a more transnational and enforcement-oriented conception of international arbitration.
