New York Convention

• 17 Feb 2021

Why in News

Recently, Cairn Energy has filed a case, in accordance with the New York Convention, in the USA district court to enforce a USD 1.2 billion arbitration award it won in a tax dispute against India.

Key Points

• About:
  
  • The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the "New York Arbitration Convention" or the "New York Convention", is one of the key instruments in international arbitration.
    
    • Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators (an independent person/body) who make a binding decision on the dispute.
  • It applies to the recognition and enforcement of foreign arbitral awards and the referral by a court to arbitration.
  • The Convention was adopted by the United Nations (UN) following a diplomatic conference held in May and June 1958 at the UN Headquarters in New York, and entered into force on 7^th June, 1959.
• Parties to Convention:
  
  • The Convention has 166 state parties (Countries).
  • India is a party to the Convention.
• Aim:
  
  • The Convention's principal aim is that foreign and non-domestic arbitral awards should not be discriminated against by courts asked to enforce them.
    
    • It obliges Contracting States to ensure foreign awards are recognised and generally capable of enforcement in their jurisdiction in the same way as domestic awards.
  • To require courts of Contracting States to uphold valid arbitration agreements and stay court proceedings in respect of matters which the parties have agreed should be resolved by arbitration.
    
    • By signing up to the Convention, a state agrees that its courts will respect and enforce parties' agreements to arbitrate, and to recognise and enforce any resulting arbitral award in its jurisdiction subject to only very limited grounds for refusal.

Source:TH