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The Public Policy Exception under Art. V (2) (b) of the New York Convention. Dr. Anton G. Maurer, LL.M. CMS Hasche Sigle Schoettlestr . 8 D 70597 Stuttgart [email protected] Tel: +49 172 7333696. Art. V (2) (b).

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the public policy exception under art v 2 b of the new york convention

The Public PolicyExceptionunder Art. V (2) (b) of the New York Convention

Dr. Anton G. Maurer, LL.M.

CMS Hasche Sigle

Schoettlestr. 8

D 70597 Stuttgart

[email protected]

Tel: +49 172 7333696

art v 2 b
Art. V (2) (b)

" Recognition andenforcement of an arbitralawardmay also berefusedifthecompetentauthority in thecountrywhererecognitionandenforcementissoughtfindsthat:

  • thesubject matter of thedifferenceis not capable of settlementbyarbitrationunderthelaw of thatcountry; or
  • therecognitonorenforcement of theawardwouldbecontrary to thepublicpolicy of thatcountry"

The Public PolicyException |25. Juni 2014 Dr. Anton G. Maurer

interpretation of art v 2 b
Interpretation of Art. V (2) (b)

The publicpolicyexception was discussedcontroverselyandextensivelyduringthedraftingofthe New York Convention, especiallybetweenthecivillawcountryandthecommonlawcountryrepresentatives.

Howisthepublicpolicyexceptiontobeinterpreted?

Isit "international publicpolicy"?

The Public Policy Exception |22. Juni 2014 Dr. Anton G. Maurer

the public policy exception
The Public PolicyException

Final result:

It must beinterpretednarrowly!

This was unanimouslyapprovedbythe Working Party No. 3 whichdraftedthe final wordingof Art. V.

Itis not "international publicpolicy", but a narrowinterpretationofdomesticpublicpolicy.

However, some countries apply an evennarrower international publicpolicystandard!

The Public Policy Exception |22. Juni 2014 Dr. Anton G. Maurer

narrow interpretation
Narrow Interpretation

Report by Mr. de Sydow for Working Party No. 3:

As regards Art. V (2) (b) "the Working Party feltthattheprovisionallowingrefusal of enforcement on grounds of publicpolicy

should not begiven a broadscope of application.

Itthereforeagreed to recommendthedeletion of references to thesubject matter of theawardand to fundamental principles of law."

(Summary Record of the 17th Meeting, U.N. DOC E/CONF. 26/SR. 17 at 3)

The Public Policy Exception |22. Juni 2014 Dr. Anton G. Maurer

international standard parsons whittemore overseas inc v societe generale de l industrie du papier
International Standard: Parsons & WhittemoreOverseas Inc. v. Societe Generale de L\'Industrie du Papier

U.S. Court of Appeals forthe Second Circuit:

"The general pro-enforcementbiasin formingtheConvention … pointstoward a narrowreadingof thepublicpolicydefense. …

Weconclude, therefore, thattheConvention\'spublicpolicydefenseshouldbeconstruednarrowly. Enforcement of foreignawardsmaybedeniedon thisbasisonlywhereenforcementwouldviolatetheforum\'sState\'smostbasicnotion of moralityandjustice."

(508 F.2d 969 et seqq. (December 23, 1974)

The Public Policy Exception |22. Juni 2014 Dr. Anton G. Maurer

germany
Germany

Germany: "Ordre Public International"

  • Not everyviolationofmandatorylaw (iuscogens) will violate German publicpolicy.
  • "Onlyseveredefectsin thearbitralproceedingortheawardcouldviolate German publicpolicy. The defectsmust violate fundamental principlesofstateandeconomiclife."
  • Recognition of a foreignawardcanonlyberefusediftheproceedingortheawardsuffered a grave defectwhichisintolerably at oddswiththe fundamental principlesofstateandeconomiclife.
  • Possibleerroneousawards must beaccepted.

The Public Policy Exception |22. Juni 2014 Dr. Anton G. Maurer

france
France

France: International Public Policy

  • An arbitralawardshallberecognizedifitis"not manifestlycontraryto international publicpolicy."
  • The violation must beblatant, actual, andconcrete.
  • When all oftheparties, themembersofthearbitraltribunal, andeventhemembersoftheICC Court of Arbitration havefailedtoseetheallegedviolation, French courtsdid hold thattheallegedviolation was not blatant, real, andconcrete.

The Public Policy Exception |22. Juni 2014 Dr. Anton G. Maurer

china
China

China: Chinese Public Policy

  • isviolatedwhen an awardmaybedeemedtoviolatethesocialandpublicinterest
    • Whentheawardviolatesthebasicprinciplesreflected/regulated in theConstitutionortheFour Fundamental Principlesof China;
    • Will damagethesovereigntyor State securityof China;
    • Is in violationofthe fundamental rulesof Chinese law;
    • IsagainstChina\'sobligationsunder international treaties;
    • Isagainsttheprinciplesoffairnessandjusticein international law.
    • The Four Fundamental Principlesare:

Adhereto(a) thesocialistroad, (b) thepeople\'sdemocraticdictatorship, (c) theleadershipoftheCommunist Party, and (d) toMarxism-LeninismandMao\'sthought.

The Public Policy Exception |22. Juni 2014 Dr. Anton G. Maurer

russia
Russia

Russia: Public PolicyoftheRussianFederation

Awards maybefoundtobeagainstthepublicpolicyoftheRussianFederationwhen, as a resultoftheenforcementoftheaward, actsareaffectedthat

  • aredirectlyprohibitedbylaworharmthesovereigntyorthesecurityofthe State;
  • affecttheinterestof a large socialgroup;
  • areincompatiblewiththeprinciplesofconstructingtheeconomic, politicaland legal systemsofthe State;
  • harmtheconstitutionalrightsandfreedomofcitizens; or
  • areagainstthebasicprinciplesofthecivil State, such astheequalitiyofitsmembers, theinviolabilityofpropertyandfreedomofcontract.

The Public Policy Exception |22. Juni 2014 Dr. Anton G. Maurer

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