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The Public Policy Exception under Art. V (2) (b) of the New York Convention

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 anton.maurer@cms-hs.com 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

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  1. 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 anton.maurer@cms-hs.com Tel: +49 172 7333696

  2. 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

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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

  8. 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

  9. 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

  10. 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

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

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