Zusammenfassung
Summary Week 7 – Recognition and Enforcement of Mediated Settlement Agreements, Arbitral Awards and Court Judgments
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- Hochschule
Contains: Week 7 tutorial notes, Q&A session notes, readings summaries
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CHAPTER 7 – Recognition and Enforcement of Mediated Settlement Agreements, ArbitralAwards and Court Judgments
Each of the preceding chapters on litigation, ADR (including mediation) and arbitration, would be
meaningless in case ‘foreign’ mediated settlement agreements, arbitral awards or court judgments
would not be enforceable.
This chapter provides for paralleled treatment of the issue of ‘recognition and enforcement’ of mediated
settlement agreements, arbitral awards, and court judgments respectively. This chapter further makes
notice of, perhaps, a breakthrough: July 2, 2019 a Convention on the Recognition and Enforcement of
Foreign Judgments in Civil and Commercial Matters under the auspice of the Hague Conference on
Private International Law was concluded (cf. below, regulatory materials).
7.1 Mediation
Mediation and court assisted enforcement is a somewhat odd combination. After all, when parties settle
with the help of a mediator, any obligation arising from such settlement is agreed by the parties. One
would expect to perform any obligation voluntarily agreed upon in the context of mediation.
Practice, however, may be more difficult. In view thereof, in August of this year the United Nations
Convention on International Settlement Agreements Resulting from Mediation (the “Singapore
Convention on Mediation”) was agreed.
7.2 Case study 1
You may remember the case discussed in week 1, in particular the dispute between De Wit and VDLI.
You may be surprised that, eventually, De Wit and VDLI have come to the negotiation/mediation table.
The mediator is the honourable judge David Weinstein, better known in the mediation world by his
nickname 'The Settleboy'. For a hefty fee of USD 10,000 a day, Weinstein comes to settle your case.
Weinstein turns out to be worthy of his nickname, at least to a certain degree. Although De Wit is
unwilling to come to a settlement on behalf of VDLI, she is keen to settle on the claims alleged by
Sunshine/Naber against her in her private capacity. Excluding this risk is worth the USD 35,000 she's
agreed to pay to Sunshine, which agreement is recorded in a settlement agreement. The compensation is to
be paid within 60 days of the settlement agreement.
De Wit subsequently fails to make the payment, and Sunshine now seeks your advice on the enforceability
of the settlement agreement. What would your advice be?
What is the risk of concluding a settlement agreement? No enforceability. It’s one of the main disadvantages of
mediation and negotiation. It’s a contract like many other.
What would you do as a lawyer? Start all over again: litigation or arbitration. Discouraging effect of court
proceedings. (that what courts does: discouraging the victims).
Court proceedings, in accordance with the fact here, where is De Wit residing?
Recast EU
But still national law provisions run dead in view of enforcement. It may be hard to get a court enforced in
Florida. It could be different if other (article 73: MS: hang out we concluded a bilateral convention with the US:
we promise not to enforce a judgement against US citizen.)
start court proceeding in Florida: you can ask yourself: is it worth it?
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,-go to court and enforce it (settlement agreement), depends on the national system
-court will then enforce it (contract, settlement)-decision to pay money
-order from the court
-from today’s lecture: consent awards slide PowerPoint from lecture-if they reach agreement which is
not incorporated in award they cannot be enforced; consent on some middle ground without third party
-some complications-de Wit lives in Florida, she might not have assets in EU
-NYC applicable-on enforcement? Yes, If the agreement incorporated in arbitral award but this is not a
case in our situation; it is not about enforcing contractual agreement
-to enforce contract sunshine should start court proceedings across Atlantic in Florida, minimum
applies doctrine, their courts will accept jurisdiction; starting court proceed in EU possibly yes but
harsh jurisdiction rules of country where plaintiff resides for defendant in 3 rd counri-73.3 article-not to
enforce court judgment-but many EU MS promised many 3rd countries not to enforce court judgments
in accordance to art 73.3
Regulatory instruments
- UNCITRAL Model Law on International Commercial Conciliation 2002.
- Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 on certain
aspects of mediation in civil and commercial matters.
- United Nations Convention on International Settlement Agreements Resulting from
Mediation (the “Singapore Convention on Mediation”), available at
https://www.singaporeconvention.org/convention-text.html.
Arbitration
Arbitration as a mode of cross-border commercial dispute resolution is highly appreciated, not in the
least because of the ‘world-wide’ endorsement of e.g. the 1958 New York Convention on the
recognition and enforcement of foreign arbitral awards. One of the main principles underlying this law
source is that as the awards results from the parties’ common choice to submit their dispute to an
arbitration panel in a certain legal order, non-enforcement of an award may be ordered on restricted
grounds only.
While contemplating to challenge an arbitration award one should always distinguish where action is to
be taken (id est in the arbitration ‘seat’ or in the legal order(s) where enforcement is sought), and on
which ground(s). Also vacation and/or annulment of awards must be given notice.
7.3 Case study 2
In 2000 SunnyTours Plc., a tour operating company established in London (UK) and a series of hotels
operating world-wide concluded a cooperation contract on ‘tourist package deals’ (all inclusive travel
arrangements). SunnyTours Plc. takes care of commercial advertising, logistics, insurance, etc. All
hotels participating in provide for annual turnovers ratings. Profits shall be shared on a 30 (SunnyTours
plc.)/70% (hotels) basis.
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, From the very outset of the cooperation project onwards hotel X in EU MS B was ‘reputed’ for not
reaching minimum targets, due to ‘poor’ management’. Over the past two years communications
between SunnyTours Plc. and Hotel X concerning compensation sums to be paid by the latter to the
former X have been dragging on without result.
December 2015 SunnyTours Plc. and Hotel X contractually decide to submit their dispute to an
arbitration Panel in the Netherlands. The contract provides for the following:
‘(1) All matters arising from contract shall be submitted to an arbitration panel under the auspice of the
NAI (Nederlands Arbitrage Instituut/Netherlands Arbitration Institute -
http://www.nai-nl.org/en/info.asp?id=378.) in Amsterdam,
(2) The substance of the dispute is governed by the law of country C.
(3) Recognition and enforcement matters are governed by the UN Convention on the Recognition and
Enforcement of Foreign Arbitral Awards 1958 (The ‘New York’ Convention).’
June 2016 the arbitration award is delivered to the conflicting parties. Hotel X is ordered to pay a sum
of €190.000- over the period 2000-2013, but the lawyers of Hotel X are determined to fight the award
as the arbitration panel erroneously ignored the limitation statute of the law of country C according to
which they are convinced that only damages after 2010 could have been ordered.
Questions:
1. How would you characterize the contractual arrangement providing for arbitration in this
specific case? It is about international relations, commercial contract. It is submission agreement (they decided to submit dispute...),
included in the agreement Article 7 of the Uncitral. Submission agreement-art 7
uncitral
It is submission agreement because dispute has already arisen-UNCITRAL art 7
2. Which actions can be taken by Hotel X? What are your expectations about the effectiveness of
any such action? Under the law of NL (lex arbitrae), it can be jurisdictional, substantive issue (they ignored limitation statute), it is
about merits and less about jurisdiction... Expectations: Ordre public is very, very last resort, arbitrability, enforcement, if no arbit
agreement then go to court... if award is vacated and if parties do not agree on award national court might still enforce award
The limitation statute: public policy? it would be worth a try but no.
There is no appeal in situations in arbitration starting point for reasoning if an award is
lying on the table res judicata: it’s over and done with. Mistakes are too bad for you no
appeal unjustified at first sight: just not fair, however: litigation band for arbitration panel:
parties consent, don’t start complaining after.
Nothing on the merit of the case.
Hotel X (once the award has be vacated – fighting the award) : two ways:
- In the arbitration seat
- In different legal order (where assets to be enforced)
Not likely to happen: professional suicide.
-----------------------------------
Answer today:
-it asks which actions can be taken by hotel X and what are your expectations on the effectiveness?
-actions: try to set aside in court of the seat of arbitration-vacating award; or to have award nullified
in place where award is to be enforced-nullify award in enforcing legal order(s) where responding
party has assets (position of these legal orders presupposing that seat and enforcing states are all
party to NYC)
-estimation on effectiveness: attempt to set aside award on the basis of mistakes on the merits of the
case/court is not very promising so I wouldn’t advise client to set aside
-logical thinking-arbitration emanates from party autonomy, they mutually gave consent and put
trust to arb panel-idea of res judicataarbitration is made for smooth proceedings, swift, informal,
no appealres judicatawhat you see what you get;
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