NON-DOMESTIC AWARDS
QUALIFY FOR RECOGNITION
UNDER THE NEW YORK CONVENTION
By:
Georges R. Delaume
Washington, D.C.
Lander Company, Inc. v. MMP Investments, Inc. (107 F.3d 476 (7th Cir. 1997)) is the most recent contribution made by U.S. courts to the recognition and enforcement of arbitral awards falling within the scope of the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards (the "Convention"). This case concerned the recognition of an award made in New York City in connection with a dispute between two American firms arising out of a contract for the distribution in Poland of products manufactured in the United States. The question at issue was whether the award qualified for recognition under the New York Convention.
The Lander decision can be placed in proper perspective by relating it to the Bergesen case, which was the first to address this type of issue. (Bergesen v. Joseph Muller Corp., 710 F.2d 928 (2d Cir. 1983).) Bergesen concerned the recognition of an award rendered in New York in connection with a dispute between a Norwegian ship owner and a Swiss company. The defendant objected to recognition by arguing that the convention applied only to awards "made in the territory of another Contracting State" (the so-called reciprocity clause). However, recognition was granted on the ground that, even though the award did not meet this territorial test, it could qualify as an award "not considered as domestic" within the meaning of the Convention.
The Court found additional support in Chapter II of the Federal Arbitration Act for the view that awards rendered in the United States may qualify for recognition under the Convention. Noting that ¤ 203 of the Act had been construed as providing jurisdiction for disputes involving two aliens, the Court found that it would be anomalous to hold that U.S. Courts could direct two aliens to arbitrate in the United States merely to deny recognition of the resulting award under the Act specifically enacted for that purpose.
Following Bergesen, a subsequent decision of the Second Circuit Court of Appeals also granted recognition to a New York award rendered in a dispute between American and foreign corporations (Productos Mercantiles v. Faberge S.A., 23 F.3d 41 (2d Cir. 1994)).
By applying the same reasoning to a New York award between two U.S. citizens, Lander closes the circle. In this connection, it is worth noting that ¤ 202 of Chapter 2 of the Federal Arbitration Act, which implements the Convention, authorizes the enforcement of arbitral awards in disputes wholly between U.S. citizens if the dispute arises out of a contract involving performance in a foreign country. See Fuller Co. v. Compagnie des Bauxites de GuinŽe, 421 F. Supp. 938 (W. D. Pa. 1976). This was the case in Lander. Since under Article VII of the Convention, the Convention does not deprive a party seeking recognition of an award from doing so on the basis of domestic rules if those are more favorable to recognition than those of the Convention (see International Report November 1996, page 2, "Enforcement against a Foreign State of an Arbitral Award Annulled in the Foreign State"), the Court could have entertained jurisdiction on the basis of the Act. However, in this case, the Court clearly applied the Convention, noting in this respect that Lander differed from Bergesen only insofar as the nationality of the parties was concerned and that this difference was irrelevant for the determination of the case.
