Changing Rules for Foreign Arbitral Awards

Counsel charged with prosecuting or defending against actions involving foreign arbitral awards should be aware of rapidly evolving rule changes that may define foreign arbitration recognition and enforcement law for years to come. The Second Circuit in particular is uncertain. It is fielding a flurry of challenges to the rules governing the recognition and enforcement of such awards. The rulings will likely impact the speed and ease of foreign arbitral award enforcement. In Mobil Cerro Negro Ltd. v. Bolivarian Republic of Venezuela, Mobil filed an ex parte petition in the U.S. District Court for the Southern District of New York after obtaining an award, seeking recognition pursuant to the New York Civil Practice Law and Rules. The petition was signed the same day, converting the award into an enforceable judgment. Venezuela objected to Mobil’s petition, then appealed to the Second Circuit. The parties argued before a panel that appeared skeptical of the ex parte procedure.

Micula v. Government of Romania, before the Second Circuit, concerns issues similar to Mobil. Harrison v. Republic of Sudan explores what would happen if the Second Circuit invalidates the ex parte procedure and arbitral award holders are forced to institute a plenary action pursuant to the Foreign Sovereign Immunities Act.

Litigants seeking to enforce arbitral awards should stick to the S.D.N.Y. when possible, given the hostility of other districts to the ex parte recognition procedure. An adverse Second Circuit ruling, however, could reset the calculus.