1958 Convention: Material scope of application

To determine whether a particular award or agreement falls within the subject matter of the Convention, a court should ascertain whether it qualifies as an arbitration agreement or an arbitral award.

There is no definition of the term “arbitral award” in the Convention.Therefore, it is for the courts to determine what the term means for the purposes of the Convention. They must do so in two steps:

1. First, they must review whether the dispute had been submitted and resolved by arbitration. Not all out-of-court dispute-settlement methods qualify as arbitration. There are a variety of disputesettlement mechanisms involving private individuals that do not have the same characteristics as arbitration. Mediation, conciliation or expert determination are a few examples. The New York Convention covers only arbitration.

2. Second, they must review whether the decision is an award. Arbitral tribunals may issue a variety of decisions. Some of them are awards, others are not.

Courts have adopted two different methods to determine the meaning of the terms “arbitration” and “award” . They either (1) opt for autonomous interpretation or (2) refer to national law using a conflict-oflaws method.

The first step is to inquire whether the process at issue qualifies as arbitration. Arbitration is a method of dispute settlement in which the parties agree to submit their dispute to a third person who will render a final and binding decision in place of the courts. This definition stresses three main characteristics of arbitration. First, arbitration is consensual: it is based on the parties’ agreement. Second, arbitration leads to a final and binding resolution of the dispute. Third, arbitration is regarded as a substitute for court litigation. The second step is to review whether the decision at issue is an award. An award is a decision putting an end to the arbitration in whole or in part or ruling on a preliminary issue the resolution of which is necessary to reach a final decision. An award finally settles the issues that it seeks to resolve. Even if the tribunal would wish to adopt a different conclusion later, the issue cannot be reopened or revised. Consequently, the following arbitral decisions qualify as awards:

– Final awards, i.e., awards that put an end to the arbitration. An award dealing with all the claims on the merits is a final award. So is an award denying the tribunal’s jurisdiction over the dispute submitted to it;

– Partial awards, i.e., awards that give a final decision on part of the claims and leave the remaining claims for a subsequent phase of the arbitration proceedings. An award dealing with the claim for extra costs in a construction arbitration and leaving claims for damages for defects and delay for a later phase of the proceedings is a partialaward (this term is sometimes also used for the following category, but for a better understanding, it is preferable to distinguish them);

– Preliminary awards, sometimes also called interlocutory or interim awards, i.e., awards that decide a preliminary issue necessary to dispose of the parties’ claims, such as a decision on whether a claim is time-barred, on what law governs the merits, or on whether there is liability;

– Awards on costs, i.e., awards determining the amount and allocation of the arbitration costs;

– Consent awards, i.e., awards recording the parties’ amicablesettlement of the dispute.

An award issued by default, i.e., without the participation of one of the parties, also qualifies as an award to the extent it falls within one of the
categories listed above. By contrast, the following decisions are generally not deemed awards:

– Procedural orders, i.e., decisions that merely organize the proceedings;

– Decisions on provisional or interim measures. Because they are only issued for the duration of the arbitration and can be reopened during that time, provisional measures are not awards. Courts have held the contrary on the theory that such decisions terminate the dispute of the parties over provisional measures, but this is unpersuasive: the parties did not agree to arbitration in order to resolve issues of arbitral procedure.

Finally, the name given by the arbitrators to their decision is not determinative. Courts must consider the subject matter of the decision and whether it finally settles an issue in order to decide whether it is an award.

If, rather than using the preferred autonomous method for all the above questions, a court were to refer to a national law, it would start by deciding which national law will govern the definition of arbitral award. In other words, it would adopt a conflict-of-laws method. It could apply either its own national law (lex fori) or the law governing the arbitration (lex arbitri). The latter will generally be the law of the seat of the arbitration, much less frequently the law chosen by the parties to govern the arbitration (not the contract or the merits of the dispute, which is a
different matter).

Author: international