An extract from GAR’s Challenging and Enforcing Arbitration Awards Know-how. The whole publication is available at Global Arbitration Review.
Applicable requirements as to the form of arbitral awards
1. Must an award take any particular form?
The Federal Arbitration Act (FAA) does not explicitly state what form an arbitral award must take. However, the FAA requires that a party that is moving to confirm, modify or correct an award must file a copy of the award with the court, implying that awards must be in writing. Likewise, the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) requires presentation of a ‘duly authenticated original award or a duly certified copy thereof’ as a condition for recognition.
Generally, an award and related documents are authenticated through a short affidavit from counsel, though local rules specific to each court may contain additional requirements.
A tribunal need not provide reasons for its award under US federal law unless a reasoned award is required by the arbitration rules applicable to the dispute or by the parties’ arbitration agreement. If a reasoned award is required, there appears to be a consensus among several federal courts of appeal that a reasoned award is one that provides more explanation than a simple announcement of a result, but that explanation need not provide detailed findings of fact and conclusions of law.
The FAA does not apply to awards made by the International Centre for Settlement of Disputes (ICSID). Those awards are governed by the Washington (ICSID) Convention, which requires that awards be in writing and provide reasons. The ICSID Convention is implemented in the United States by 22 USC section 1650a.
Applicable procedural law for recourse against an award (other than applications for setting aside)
2. Are there provisions governing modification, clarification or correction of an award? Are there provisions governing retractation or revision of an award? Under what circumstances may an award be retracted or revised (for fraud or other reasons)? What are the time limits?
The FAA allows a party to move to modify or correct an award so as to effect the intent of the award and promote justice between the parties if (1) the award contains ‘an evident material miscalculation of figures or an evident material mistake in the description of any person, thing or property’, (2) the arbitrators decided a matter not submitted to them, or (3) the form of the award is imperfect, and that imperfection does not affect the merits of the controversy. Any petition for modification or correction must be served within three months of the parties receiving the award. US courts may not revise or retract an award.
3. May an award be appealed to or set aside by the courts? What are the differences between appeals and applications to set aside awards?
The FAA does not permit the appeal of an arbitral award. However, it does provide for the set aside of awards rendered in the United States on the statutory grounds listed in the FAA or, possibly, in cases of ‘manifest disregard of the law’ (where that doctrine survives).
ICSID awards cannot be set aside in US courts. A party wishing to annul an ICSID award must file an application for annulment with ICSID.
Applicable procedural law for setting aside of arbitral awards
4. Is there a time limit for applying for the setting aside of an arbitral award?
Under the FAA, notice of a motion to vacate an award must be served on the adverse party within three months of the award being filed or delivered (9 USC section 12). Service can be time-consuming, particularly when the adverse party is a foreign state. Accordingly, it is advisable to file a motion to vacate an award as soon as possible after the award is filed or delivered to allow sufficient time to effect service.
5. What kind of arbitral decision can be set aside in your jurisdiction? Can courts set aside partial or interim awards?
US courts generally recognise the right of arbitrators to issue partial or interim awards prior to the final award. Although in general only a final award can be set aside under the FAA, several federal courts will consider a partial or interim award to be ‘final’ when it conclusively disposes of a separate and independent claim, even if it does not dispose of all the claims submitted to arbitration.
6. Which court has jurisdiction over an application for the setting aside of an arbitral award? Is there a specific court or chamber in place with specific sets of rules applicable to international arbitral awards?
The federal district court in the district where the award was made has jurisdiction to set aside the award. The United States does not have a specialist arbitration court, and all applications to set aside arbitral awards are therefore brought in courts of plenary jurisdiction.
7. What documentation is required when applying for the setting aside of an arbitral award?
The setting aside of an arbitral award is usually sought by filing a petition to vacate the arbitral award, accompanied by a copy of the award itself. In addition, parties seeking to set aside an arbitral award will routinely submit a memorandum of law with factual and legal support. Typically, the award and related documents are authenticated through a short affidavit from counsel confirming that the copies are true and correct. The party commencing the action will also need to submit certain forms, such as a civil cover sheet and a corporate disclosure statement, and obtain a summons from the court. Local court rules may contain additional requirements.
8. If the required documentation is drafted in a language other than the official language of your jurisdiction, is it necessary to submit a translation with the application for the setting aside of an arbitral award? If yes, in what form must the translation be?
US federal courts require that documents be submitted in English and that foreign language documents be accompanied by a certified English translation. The translator must provide a certification that he or she is competent to translate the documents and that the translation is true and accurate to the best of the translator’s abilities.
9. What are the other practical requirements relating to the setting aside of an arbitral award? Are there any limitations on the language and length of the submissions and of the documentation filed by the parties?
A party commencing an action in federal court to set aside an arbitral award must pay a US$402 filing fee. Documents filed in US federal court must be in English, and any foreign language documents must be accompanied by a certified English translation. While there is typically no limit on the length of the initial submissions, it is important to check the local rules of the judicial district in which enforcement will be sought for any additional rules or requirements.
10. What are the different steps of the proceedings?
The party seeking to set aside the award must first file a petition to vacate the award, and then serve the adverse party with the petition within three months of the award being filed or delivered. Once service has been effected, the adverse party will have an opportunity to respond to the petition in writing.
Under the FAA, a petition to vacate an award is heard as a motion.
11. May an arbitral award be recognised or enforced pending the setting- aside proceedings in your jurisdiction? Do setting aside proceedings have suspensive effect? If not, which court has jurisdiction over an application to stay the enforcement of the award pending the setting aside proceedings, and what are the different steps of the proceedings?
Setting-aside proceedings do not have an automatic suspensive effect, and an award may be recognised or enforced pending setting-aside proceedings. As a matter of practice, however, US courts have jurisdiction to stay proceedings before them and will often stay recognition and enforcement proceedings upon application by a party if setting-aside proceedings are pending.
12. What are the grounds on which an arbitral award may be set aside?
The US Supreme Court has held that the FAA provides the exclusive grounds for vacating an arbitral award rendered in the United States (Hall Street Associates v. Mattel, 552 US 576 (2008)). Specifically, a court may vacate an arbitral award only if it finds that one of the following limited grounds applies:
- the award is a result of corruption or fraud;
- there was evident partiality or corruption of an arbitrator;
- there was arbitrator misconduct; or
- the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final and definite award was not made (9 USC section 10).
In addition to the four statutory grounds, US federal courts are split as to whether the ‘manifest disregard of the law’ doctrine remains a separate basis for set aside and, if so, whether it is a ‘gloss’ on the FAA grounds or a separate doctrine.
US courts have emphasised that they will not vacate awards lightly. Merely showing that the tribunal committed an error, even if that error is significant, is ordinarily not sufficient to set aside an award.
13. What is the effect of the decision on the setting-aside application in your jurisdiction? What challenges are available?
A decision on the setting-aside application is binding on the parties, and an award that has been set aside by a US court will not be enforceable in the United States. A party may contest a court’s decision on setting aside an arbitral award by filing an appeal.
14. Will courts take into consideration decisions rendered in relation to the same arbitral award in other jurisdictions or give effect to them (eg, in recognition or enforcement proceedings)?
Judicial determinations by a foreign court in a secondary jurisdiction (ie, outside the jurisdiction in which the arbitral award was rendered) generally will not be given preclusive effect by US courts in post-award actions, though they may have some persuasive effect in a particular case. A decision confirming or setting aside the award by a foreign court in the primary jurisdiction (ie, the jurisdiction in which the arbitral award was rendered) is often given greater deference, but that deference is not absolute.
Applicable procedural law for recognition and enforcement of arbitral awards
15. What is the applicable procedural law for recognition and enforcement of an arbitral award in your jurisdiction? Is your jurisdiction party to treaties facilitating recognition and enforcement of arbitral awards?
The FAA provides the applicable procedural law for recognition and enforcement of most foreign arbitral awards. Separately, actions to enforce ICSID awards are governed by the statute implementing the ICSID Convention (22 USC section 1650a).
In addition, US courts may apply procedural rules set out in the Federal Rules of Civil Procedure (FRCP), the local procedural rules of the judicial district in which the enforcement action is brought, and the individual practices of the judge adjudicating the enforcement action.
The United States is a party to the New York Convention (entered into force on 29 December 1970), the Inter-American Convention on International Commercial Arbitration (Panama Convention) (entered into force on 27 October 1990) and the ICSID Convention (entered into force on 14 October 1966).
16. Is the state a party to the 1958 New York Convention? If yes, what is the date of entry into force of the Convention? Was there any reservation made under article I(3) of the Convention?
The United States is a party to the New York Convention, which entered into force on 29 December 1970 and is incorporated into US law through Chapter 2 of the FAA. Although the United States did not make any reservations upon ratifying the treaty, it did make two declarations: the Convention applies only to the recognition and enforcement of awards made in the territory of another contracting state, and the Convention applies only to differences arising out of legal relationships that are considered commercial (contractual or not) under national law.
Recognition proceedings
17. Is there a time limit for applying for the recognition and enforcement of an arbitral award?
An action to enforce a foreign arbitral award must be brought within three years of when the award was made.
18. Which court has jurisdiction over an application for recognition and enforcement of an arbitral award? Is there a specific court or chamber in place with specific sets of rules applicable to international arbitral awards?
There is no single court with jurisdiction over all recognition and enforcement proceedings in the United States. Any court with subject-matter jurisdiction over the dispute and personal jurisdiction over the defendant may hear an application for recognition and enforcement of a domestic or foreign arbitral award. The United States does not have a specialist arbitration court, and all applications to recognise and enforce arbitral awards are therefore brought in courts of plenary jurisdiction.
19. What are the requirements for the court to have jurisdiction over an application for recognition and enforcement and for the application to be admissible? Must the applicant identify assets within the jurisdiction of the court that will be the subject of enforcement for the purpose of recognition proceedings?
A court must have subject-matter jurisdiction over the dispute and personal jurisdiction over the defendant.
In general, the FAA gives federal district courts subject-matter jurisdiction over recognition and enforcement of foreign awards that fall under the New York Convention, and 22 USC section 1650a gives federal district courts subject-matter jurisdiction over recognition and enforcement of ICSID awards.
Whether a court has personal jurisdiction over the award debtor will depend on the facts of a particular case. Personal jurisdiction in award enforcement cases can generally be satisfied by showing that the award debtor is either headquartered or incorporated in the forum in which proceedings are brought or has sufficient claim-related contacts or assets within that forum. A party seeking recognition and enforcement of an arbitral award need not identify in-forum assets if it can establish that a court has personal jurisdiction over the award debtor based on the award debtor’s incorporation or principal place of business in the forum, or claim-related contacts with the forum.
In an action to enforce an arbitral award against a state, including both ICSID and New York Convention awards, a US federal court will have jurisdiction if the petitioner has effected service in accordance with the Foreign Sovereign Immunities Act (FSIA). In an action against a foreign state, a court will not need to undertake a minimum contacts analysis as required by the Due Process Clause in the Fifth Amendment to the US Constitution; however such analysis is likely required if an action is brought against a state-owned entity (Gater Assets Limited v. AO Moldovagaz, 2 F.4th 42 (2d Cir. 2021)).
20. Are the recognition proceedings in your jurisdiction adversarial or ex parte? What are the different steps of the proceedings?
Recognition proceedings are adversarial. The party seeking recognition must first file a petition to recognise and enforce the award within three years of the award being made, and then serve the adverse party with notice of the petition. Once service has been effected, the adverse party will have an opportunity to respond to the petition in writing.
Under the FAA, a petition to recognise and enforce an award is heard as a motion.
21. What documentation is required to obtain recognition?
Recognition of an arbitral award is usually sought by filing a petition to recognise and enforce an arbitral award. Both the FAA and the New York Convention require a party seeking recognition and enforcement of an award to submit to the court a copy of the award and the parties’ arbitration agreement (9 USC section 13; New York Convention, article IV). The party commencing the action will also need to submit certain forms, such as a civil cover sheet and a corporate disclosure statement, and obtain a summons from the court. In addition to these required filings, parties seeking recognition and enforcement of an arbitral award routinely submit a memorandum of law with factual and legal support. Typically, the award and related documents are authenticated through a short affidavit from counsel confirming that the copies are true and correct. Local court rules may contain additional requirements.
22. If the required documentation is drafted in a language other than the official language of your jurisdiction, is it necessary to submit a translation with an application to obtain recognition? If yes, in what form must the translation be?
US federal courts require that documents be submitted in English and that foreign language documents be accompanied by a certified English translation. The translator must provide a certification that he or she is competent to translate the documents and that the translation is true and accurate to the best of the translator’s abilities.
23. What are the other practical requirements relating to recognition and enforcement? Are there any limitations on the language and length of the submissions and of the documentation filed by the parties?
A party commencing an action to recognise and enforce an arbitral award must pay a US$402 filing fee. Documents filed in US federal court must be in English, and any foreign language documents must be accompanied by a certified English translation. While there is typically no limit on the length of the initial submissions, it is important to check the local rules of the judicial district in which enforcement will be sought for any additional rules or requirements.
24. Do courts recognise and enforce partial or interim awards?
US courts generally recognise the right of arbitrators to issue partial or interim awards prior to the final award. Although in general only a final award is enforceable under the FAA, a number of federal courts will consider a partial or interim award to be ‘final’ and subject to recognition and enforcement when it conclusively disposes of a separate and independent claim.
25. What are the grounds on which an arbitral award may be refused recognition? Are the grounds applied by the courts different from those provided under article V of the New York Convention?
The FAA implements all seven of the non-enforcement grounds in the New York Convention, explicitly stating that ‘the court shall confirm the award’ unless it determines that one of the grounds has been met. US courts generally interpret these exceptions strictly and will limit, rather than expand, their discretion to refuse recognition of an award.
In addition, a US court could decline to recognise an arbitral award because it does not have jurisdiction over the defendant, and some US courts will apply the doctrine of forum non conveniens to recognition and enforcement actions.
US courts are even more limited in their power to refuse to recognise an ICSID award and will generally only refuse to do so if they lack personal jurisdiction over the award debtor.
26. What is the effect of a decision recognising an arbitral award in your jurisdiction?
Once a petition to confirm an arbitral award is granted, the court enters a judgment for the relief provided in the award. The award creditor may then seek to execute upon the award by attaching, garnishing or seizing assets of the award debtor as necessary to discharge the debt owed under the award. FRCP Rule 69 governs the procedure for executing a judgment in federal court. Rule 69 provides that a judgment is enforced in accordance with the law of the appropriate state, which is usually the state in which the assets sought to be executed against are located.
Typically, US courts do not permit immediate execution of a judgment. For example, FRCP Rule 62(a) provides for an automatic stay of 30 days, during which a party may appeal the judgment. In addition, if the judgment is rendered against a state or a state-owned entity, the party seeking to enforce the judgment must comply with the FSIA.
27. What challenges are available against a decision refusing recognition in your jurisdiction?
A party may appeal a court’s decision refusing recognition.
28. What are the effects of annulment proceedings at the seat of the arbitration on recognition or enforcement proceedings in your jurisdiction?
US courts have discretion to stay proceedings seeking to recognise an arbitral award when an annulment proceeding is pending at the seat of the arbitration. In considering whether to stay enforcement proceedings, courts will generally consider six criteria:
- the general efficiency objectives of arbitration;
- the status of, and estimated time required to resolve, the foreign proceedings;
- whether the award will be subject to greater scrutiny in the foreign proceedings;
- the characteristics of the foreign proceedings;
- a balance of possible hardships to each party; and
- any other relevant circumstances (Europcar Italia v. Maiellano Tours, 156 F.3d 310 (2d Cir. 1998)).
29. If the courts adjourn the recognition or enforcement proceedings pending annulment proceedings, will the defendant to the recognition or enforcement proceedings be ordered to post security?
A US court has the power to order security pursuant to article VI of the New York Convention, including in circumstances when an enforcement action is stayed pending a foreign annulment.
A court has broad discretion over these matters and there are no bright-line rules governing the exercise of that discretion.
30. Is it possible to obtain the recognition and enforcement of an award that has been fully or partly set aside at the seat of the arbitration? If an arbitral award is set aside after the decision recognising the award has been issued, what challenges are available?
US courts will ordinarily decline to recognise and enforce awards that have been set aside at the seat of arbitration. The Second Circuit’s decision in the Pemex case, however, confirms that US courts may recognise and enforce an award that has been set aside at the seat of arbitration if giving effect to the set-aside decision would be ‘repugnant to fundamental notions of what is decent and just’ in the United States (Corporación Mexicana de Mantenimiento Integral v. Pemex-Exploración y Producción, 832 F.3d 92 (2d Cir. 2016)). The few decisions that have considered the issue since Pemex have declined to enforce awards that were set aside at the seat of arbitration (see, for example, Thai-Lao Lignite (Thailand) Co v. Government of the Lao People’s Democratic Republic, 864 F.3d 172 (2d Cir. 2017)). A number of cases seeking enforcement of annulled awards are pending, however, and so further developments are expected during the course of 2022.
In the event that a decision setting aside an award is issued after a US court has recognised or enforced an award, a party can file a motion for relief from judgment under FRCP Rule 60 (see, for example, Compañía De Inversiones Mercantiles S.A. v. Grupo Cementos De Chihuahua, S.A.B. De C.V., Civil Action No. 1:15-cv-02120-JLK, 2021 WL 2213193 (D. Colo. Apr. 30, 2021)).
Service
31. What is the procedure for service of extrajudicial and judicial documents to a defendant in your jurisdiction? If the extrajudicial and judicial documents are drafted in a language other than the official language of your jurisdiction, is it necessary to serve these documents with a translation?
For a suit in federal court, service must accord with FRCP Rule 4. If the award debtor is located within the district in which enforcement proceedings are brought, then service can usually be effected by delivering copies of the relevant documents to the defendant or a person of suitable age and discretion at the defendant’s home or place of business, or by delivering copies to an agent authorised by appointment or by law to receive service of process. Additional ways to effect service vary by court and the US state in which the court is located.
There is no specific rule concerning the service of documents in a language other than English. As a practical matter, however, all documents filed with the court must be in English or accompanied by a certified English translation. Accordingly, parties are often required to serve translations of foreign language documents because the translations have been filed with the court.
32. What is the procedure for service of extrajudicial and judicial documents to a defendant outside your jurisdiction? Is it necessary to serve these documents with a translation in the language of this jurisdiction? Is your jurisdiction a party to the 1965 Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (Hague Service Convention)? Is your jurisdiction a party to other treaties on the same subject matter?
The United States is a party to the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (the Hague Service Convention). Accordingly, if the defendant is located in a state that has ratified the Hague Service Convention, then the procedures provided in that treaty will apply including, in many cases, a requirement that the documents be accompanied by translations into the state’s official language. The United States is also a party to the Inter-American Convention on Letters Rogatory and its Additional Protocol (IACAP).
If the defendant is an individual and is located in a state that has not ratified the Hague Service Convention or IACAP (and no other treaty or agreement between the parties applies), then the defendant must be served according to FRCP Rule 4(f)(2), which may require compliance with the foreign country’s service requirements. If the defendant is a corporation, partnership or association, and is located in a state that has not ratified the Hague Service Convention or IACAP, then the defendant must be served according to FRCP Rule 4(h), which may require compliance with the foreign country’s service requirements.
Identification of assets
33. Are there any databases or publicly available registers allowing the identification of an award debtor’s assets within your jurisdiction? Are there any databases or publicly available registers providing information on award debtors’ interests in other companies?
There are several publicly available registries that can be used to identify an award debtor’s assets within the United States. They include real estate property registries, motor vehicle registries, watercraft registries, aircraft registries, Uniform Commercial Code (UCC) filings (to determine whether the debtor has disclosed any collateral in UCC filings), state and federal civil litigation filings (to determine whether the debtor has previously received, or may soon expect, an award or settlement), Securities and Exchange Commission filings (to determine whether a debtor that is a publicly traded company has made disclosures concerning assets), and intellectual property registries. Several publicly available business intelligence databases (Capital IQ, Orbis, Bloomberg, LexisNexis Public Records) can be used to identify an award debtor’s interests in other companies. Many of these registries are available only within the relevant state (as opposed to nationwide) and a fee may be payable for use. Parties can also use specialist tracing services to help identify assets.
34. Are there any proceedings allowing for the disclosure of information about an award debtor within your jurisdiction?
An award creditor may ask a US court to authorise discovery for use in identifying and attaching assets to satisfy an award. FRCP Rule 69 allows for post-judgment discovery from any person, including the award debtor. This rule is often interpreted broadly, which means that an award creditor will be able to request documents from the debtor (and any institution that may hold the debtor’s assets), and to depose people with relevant information.
In addition, 28 USC section 1782 may allow for the disclosure of information about an award debtor. Section 1782 authorises a district court to ‘order [a person residing or found in the district] to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal’ if the request is made by an ‘interested person’. Section 1782 can allow litigants to obtain evidence in the United States to aid in post-judgment execution proceedings pending abroad.
Enforcement proceedings
35. What kinds of assets can be attached within your jurisdiction?
Most states permit attachment against a wide range of assets. Some states and federal statutes exempt certain specific types of property from attachment, such as a debtor’s primary residence or retirement funds.
Under the FSIA, the property of a foreign state is immune from attachment unless it is used for a commercial activity in the United States.
36. Are interim measures against assets available in your jurisdiction?
US courts may grant interim relief, including freezing orders, by granting a temporary restraining order or a preliminary injunction. However, there is a high bar to obtaining interim relief. To succeed on an application for a preliminary injunction, an applicant must show irreparable harm plus a likelihood of success on the merits. Alternatively, the applicant may succeed by showing irreparable harm, plus sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in the applicant’s favour. The standard to obtain an ex parte temporary restraining order is higher still, and requires that (1) it clearly appears from specific facts shown by affidavit or by the verified complaint that immediate and irreparable injury, loss or damage will result to the applicant before the adverse party or that party’s attorney can be heard in opposition, and (2) the applicant’s attorney certifies to the court in writing the efforts, if any, that have been made to give the notice and the reasons supporting the claim that notice should not be required.
FRCP Rule 65 requires that the movant for either a preliminary injunction or a temporary restraining order post as security an amount the court deems fit to indemnify the adverse party in the event the order is later found to be improper.
Under the FSIA, the property of a foreign state is generally immune from pre-judgment attachment. Property can be attached only once an award has been recognised unless the state has explicitly waived its immunity from pre-judgment attachment and the purpose of the attachment is to secure satisfaction of an eventual judgment, rather than to obtain jurisdiction (28 USC sections 1609, 1610(a), 1610(d)).
37. What is the procedure to apply interim measures against assets in your jurisdiction?
Provisional relief can be obtained by applying to a US court for either a preliminary injunction, which may be done only through an inter partes hearing, or for a temporary restraining order, which may be obtained ex parte.
38. What is the procedure for interim measures against immovable property within your jurisdiction?
Provisional relief can be obtained by applying to a US court for either a preliminary injunction, which may be done only through an inter partes hearing, or for a temporary restraining order, which may be obtained ex parte.
39. What is the procedure for interim measures against movable property within your jurisdiction?
Provisional relief can be obtained by applying to a US court for either a preliminary injunction, which may be done only through an inter partes hearing, or for a temporary restraining order, which may be obtained ex parte.
40. What is the procedure for interim measures against intangible property within your jurisdiction?
Provisional relief can be obtained by applying to a US court for either a preliminary injunction, which may be done only through an inter partes hearing, or for a temporary restraining order, which may be obtained ex parte.
41. What is the procedure to attach assets in your jurisdiction?
Post-judgment attachment proceedings in the United States are generally governed by the law of the state where the court is located, but a federal statute governs to the extent it applies (see FRCP Rule 69). There is no uniform rule across the states as to the procedure for attachment.
42. What is the procedure for enforcement measures against immovable property within your jurisdiction?
Post-judgment attachment proceedings in the United States are generally governed by the law of the state where the court is located, but a federal statute governs to the extent it applies (see FRCP Rule 69). There is no uniform rule across the states as to the procedure for attachment.
43. What is the procedure for enforcement measures against movable property within your jurisdiction?
Post-judgment attachment proceedings in the United States are generally governed by the law of the state where the court is located, but a federal statute governs to the extent it applies (see FRCP Rule 69). There is no uniform rule across the states as to the procedure for attachment.
44. What is the procedure for enforcement measures against intangible property within your jurisdiction?
Post-judgment attachment proceedings in the United States are generally governed by the law of the state where the court is located, but a federal statute governs to the extent it applies (see FRCP Rule 69). There is no uniform rule across the states as to the procedure for attachment.
45. Are there specific rules applicable to the attachment of assets held by banks? Is it possible to attach in your jurisdiction sums deposited in bank accounts opened in a branch or subsidiary of a foreign bank located in your jurisdiction or abroad? Is it possible to attach in your jurisdiction the bank accounts opened in a branch or subsidiary of a domestic bank located abroad?
Generally, a US court can order attachment of bank accounts that are located within the court’s territory. However, state laws are not uniform with respect to attachment of bank accounts outside the court’s territory. Notably, New York courts treat different branches of the same bank as separate entities. Accordingly, a New York court cannot order the attachment of accounts at a branch outside New York, even if it is a foreign branch of a domestic bank or a foreign bank with a branch within New York.
Recognition and enforcement against foreign states
46. Are there any rules in your jurisdiction that specifically govern recognition and enforcement of arbitral awards against foreign states?
The FSIA provides the sole jurisdictional basis for bringing claims in the United States against a foreign state, including actions to recognise and enforce arbitral awards. The FSIA provides an exception from sovereign immunity in an action to confirm an arbitral award if the arbitration agreement or award is governed by a treaty such as the New York, Panama or ICSID Conventions (see 28 USC section 1605(a)(6)).
47. What is the procedure for service of extrajudicial and judicial documents to a foreign state? Is it necessary to serve extrajudicial and judicial documents with a translation in the language of the foreign state?
Under US law, service on foreign states and state-owned entities must be made pursuant to the FSIA, which provides a four-step process for service in descending order of preference and is strictly enforced: (1) pursuant to a special arrangement between the plaintiff and the foreign state; (2) as prescribed in an applicable international convention; (3) via mail from the clerk of court to the head of the foreign state’s ministry of foreign affairs; or (4) via diplomatic channels (28 USC section 1608(a)).
The FSIA provides a similar process for serving state-owned entities (28 USC Section 1608(b)).
Where service of process on a foreign state or its agency or instrumentality is made pursuant to methods described in points (3) and (4), above, each document required to be served must be translated into the official language of the foreign state (28 USC section 1608(a), paragraphs (3) and (4)). International conventions that satisfy the method described in point (2), above, may also include translation requirements.
48. May a foreign state invoke sovereign immunity (immunity from jurisdiction) to object to the recognition or enforcement of arbitral awards?
Sovereign immunity can be invoked as a jurisdictional defense. Under the FSIA, foreign states are immune from the jurisdiction of US courts unless an enumerated exception applies (see 28 USC Section 1604). One such exception is in an action to confirm an arbitral award if the arbitration agreement or award is governed by a treaty such as the New York, Panama or ICSID Conventions (see 28 USC Section 1605(a)(6)). The FSIA also permits an action against a foreign state that has waived its immunity from suit (see 28 USC Section 1605(a)(1)).
The award creditor typically bears the burden of producing evidence showing that an exception to sovereign immunity applies. Assuming that burden of production is met, the foreign state bears the ultimate burden of persuading the court that the claimed exception does not apply.
49. May award creditors apply interim measures against assets owned by a sovereign state?
Under the FSIA, the property of a foreign state is generally immune from pre-judgment attachment (28 USC Section 1609). Property used for commercial activity in the United States is not immune if the foreign state has explicitly waived its immunity from pre-judgment attachment and the purpose of the attachment is to secure satisfaction of an eventual judgment and not to obtain jurisdiction (28 USC Sections 1610(a), 1610(d)).
50. Are assets belonging to a foreign state immune from enforcement in your jurisdiction? Are there exceptions to immunity?
Under the FSIA, the property of a foreign state is generally immune from attachment or execution. However, certain exceptions exist. For example, when the attachment or execution is based on an order confirming an arbitral award rendered against a foreign state, the FSIA allows for execution on the state’s property if the property is located and used for commercial activity in the United States (28 USC section 1610(a)(6)). To execute on non-immune sovereign property, an award creditor must comply with other FSIA requirements, including 28 USC section 1610(c).
51. Is it possible for a foreign state to waive immunity from enforcement in your jurisdiction? What are the requirements of waiver?
Under the FSIA, a foreign state can waive immunity from post-judgment execution ‘either explicitly or by implication’ (28 USC section 1610(a)(1)). An explicit waiver can take the form of a contractual provision (see, for example, Karaha Bodas Company, LLC v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara ('Pertamina'), 313 F.3d 70 (2d Cir. 2002)). Implied waivers from execution are narrowly construed and rarely established.
52. Is it possible for a creditor of an award rendered against a foreign state to attach the assets held by an alter ego of the foreign state within your jurisdiction?
US courts generally recognise that when a judgment creditor meets its burden to show that an instrumentality or corporation is sufficiently controlled by the foreign state to be considered its alter ego, the judgment creditor can recover against the alter ego’s assets within the jurisdiction.
