a successful challenge will usually result in the award being set aside and therefore ceasing to exist, at least within the jurisdiction of the court setting it aside.
Assignment No.1- Nguyen Thi Yen – 05/11/2013 Should arbitral awards that have been set aside be enforced in a different jurisdiction ? Sometimes the award debtor can prevent the award creditor from securing its remedy before arriving at enforcement proceeding by challenging the award. Although many arbitration agreements and arbitration rules stipulate that the awards resulting from them will be final and binding ,there is almost always the posibility for a party to challenge the award. The result of a sucessful challenge is the award being set aside and therefore ceasing to exist, at least within the jurisdiction of the court setting aside. The positions of the disputing parties are set back to the way they were before the arbitration began. It is noted that an action to set aside an award is quite different from an appeal. It is designed to ensure that a state, through its courts, exercises a minimum level of control over the procedural and jurisdictional integrity of international arbitration taking place within its territory. More specifically, there are only four circumstances in which a foreign-related award can be set aside under the PRC arbitration law,as set out in Art 260 (1) of the civil procedure law: Firstly, the parties have neither included an arbitration clause in their contract nor subsequently reached a written arbitration agreement ; Secondly, the person against whom the pplication is made was not requested to appoint an arbitrator or take part in the arbitration proceedings or the person was unable to state his opinions due to reasons for which he is not responsible; Thirdly, the composition of the arbitration tribunal or the arbitration procedure was not in conformity with the rules of arbitration; Finally, matters decided in the award exceed the scope of the arbitration agreement or are beyond the arbitral authority of the arbitration institution. It is clear that only the courts of the place of arbitration should have jurisdiction to hear any challenge of any award or action to set aside. In Art.34 UNCITRAL, there are six grounds on which a court may set an award aside: the incapcity of a party or invalidity of the arbitration agreement; a failure to notify an arbitrator appointment or initiation of proceedings; the award was beyond the scope of the arbitration agreement; invalid constitution of the arbitral tribunal; the subject matter was not arbitratable (not capable of resolution by arbitration); and violation of public policy. Assignment No.1- Nguyen Thi Yen – 05/11/2013 Furthermore, it is difficult in practice to establish the grounds for setting aside an award in arbitration-friendly jurisdiction. If the award is set aside in part, the result is essentially a modified award, provide that the defect only affects a part of the award that is separable from the others. In contrast, if the entire award is set aside, the effect is, in theory ,that the entire award ceases to exist and cannot be enforced. The more common position is that an award that has been set aside cannot be enforced anywhere. In many countries, the New York Convention is effectively the country’s law on the recognition and enforcement of international arbitral award. However, a state may also have, alongside the New York Convention and any other relevent treaties to which it is a party, its own domestic laws governing the enforcement of international arbitral awards. In conclusion, most jurisdictions round the world are likely to refuse enforcement of an award that has been set aside in another country. However, this is not universal position: courts in certain countries have been receptive in the past to enforcing awards set aside elsewhere based on local annulment standards,and this trend may grow as international arbitration around the world becomes more transnational in character and less deferential towards the place of arbitration.