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On Arbitration, Recognition and Enforcement of Foreign Arbitral Awards

The 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards regulates the peculiarities of recognition and enforcement of foreign arbitral awards in different countries. The Republic of Armenia joined the Convention in 1998. Adoption of this Convention has created a very positive background for extension of arbitration in relations among transnational business entities and resolved the problem of the enforcement of foreign arbitral awards. 

It is necessary to note that the concept of “arbitral awards” in the sense of this document includes awards of arbitrations specially founded for consideration of the specific dispute (ad hoc), as well as permanently operating arbitration bodies. Disputes may be submitted both to local RA arbitration and international arbitration. The order of consideration of the disputes in commercial arbitrations of the Republic of Armenia is regulated by the Law of the RA “On commercial arbitration”, civil legislation and international treaties of the Republic of Armenia.

According to the Law “On commercial arbitration”, arbitrations in the Republic of Armenia consider commercial disputes, contractual and non-contractual. The disputes may arise from agreements between banks and financial organizations, agreements on the delivery of goods, rendering services, and other commercial relations. Arbiters shall be chosen by the consent of the parties and their quantity must be uneven. In case if the parties didn’t determine the order of appointing of arbiters, the party may apply to the court by the motion on appointing a judge. The decision of the Court of Common Jurisdiction on the appointment of judges cannot be appealed.

Taking into account that the RA legislation in the sphere of international private law is governed by the principle of party autonomy, the parties are free to choose the material law applicable to their relation. For example, if an RA company concludes an agreement on delivery of goods with a German company, the requirements to goods, terms of delivery, refunding damages and so on may be heard under both the RA and German legislation. The parties may also choose the law of the third country as an applicable law to their relation. The parties establish the applicable law in their contract or by separate agreement. At the same time international business conduct, for example, fixed in UNCITRAL and UNIDROIT acts, can also be used as a legal base for a relation between the parties.

Commercial disputes shall be submitted to arbitration on the grounds of an arbitral clause in a contract or an arbitration agreement, signed by the parties, or contained in an exchange of letters or telegrams. The New-York Convention names such agreements “agreements in writing”. Arbitral awards are obligatory for the participants of the Convention and must be enforced in accordance with their procedural legislation without using discriminative conditions with respect to awards of international arbitrations. If the said award or agreement is not made in an official language of the country in which the award is relied upon, the party applying for recognition and enforcement of the award shall produce a translation of these documents into such language, the translation shall be certified by an official or sworn translator, or by a diplomatic, or consular agent 

All questions which regulate arbitration proceeding shall be determined in accordance with chosen legislation. The parties may coordinate individual procedure for consideration of their dispute. They may use proceeding models of various countries, whether the Republic of Armenia, The Republic of France, the Russian Federation and so on. But one must remember that enforcement of arbitral award will be carried out in accordance with the law of the country where it is presented for enforcement.

If you want to enforce arbitral award with respect to the property of another party through the courts in the Republic of Armenia, the procedure of enforcement will be conducted in accordance with the legislation of the Republic of Armenia on enforcement proceeding (Law “On compulsory enforcement of judicial acts“). According to New-York Convention, recognition and enforcement of the award may be refused at the request of the party against whom it is invoked, only if that party proof that:

  • the parties were under incapacity under the law applicable to them;
  • the agreement between the parties is not valid under the law to which they have subjected it, or failing any indication thereon, under the law of the country where the award was made;
  • the party was not given proper notice of the appointment of the arbitrator, or of the arbitration proceedings;
  • the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties (the law of the country where the arbitration takes place);
  • the award has not become binding on the parties, has been set aside, or suspended by a court of the country in which that award was made;
  • the subject of a dispute is not capable of settlement by arbitration, or enforcement of the award would be contrary to the public policy.

At the same time if the award is not binding on the parties, set aside or suspended by the court of the country of applicable law, on the application of the party the court may order the other party to give suitable security till resolution of the question on enforcement of the award. All this allows the parties to keep flexible business relations between each other and when disputes do emerge, to resolve them quickly and at low cost.