Many companies who engage in worldwide business must agree to undergo arbitration before the China International Economic and Trade Arbitration Commission. If your business wins an arbitration decision before CIETAC, you may also need to pursue enforcement of the agreement in the United States.
Familiarize yourself with the considerations involved when seeking enforcement of a CIETAC award.
The New York Convention
This international treaty is officially known as the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards. If you need to enforce a Chinese arbitration decision, your argument will fall under the New York Convention. Under this law, any of the 158 signatory countries will enforce your written agreement to arbitrate with certain limited exceptions. In the United States, the Federal Arbitration Act requires adherence to the New York Convention.
The enforcement process
If your company must pursue an arbitration action, your legal team must file the claim within the statute of limitations in the appropriate court. In general, you must present the written arbitration agreement to the U.S. court in question. This court must enforce and carry out the arbitration award unless:
- The agreement is not legally valid.
- The defendant did not receive property notice of the arbitration.
- The disagreement in question falls outside the scope of arbitration.
- The arbitration tribunal did not have the proper composition.
- The subject matter of the decision is not subject to arbitration under U.S. law.
- Enforcement of the agreement would conflict with U.S. public policy.
U.S. case law supports a narrow reading of these exceptions, which appear in Article V of the New York Convention. Challenges to an arbitration award on these grounds rarely succeed. For example, the Southern District of Florida upheld a $900,000 arbitration award for breach of confidentiality although the defendant argued that the case was invalid because arbitration should have been domestic rather than international. However, Chinese and other foreign companies seeking CIETAC enforcement in the United States should ensure their claim does not fall within the above exceptions.