Challenging an award may be an active challenge or a passive challenge. The active challenge involves the unsuccessful party in the arbitration filing an application before the court at the place of the seat, for the setting aside of an award.

On the other hand, a passive challenge is when the unsuccessful party attempts to prevent the enforcement of the award and not by challenging it.

Challenging an arbitral award is an action of which the term is used interchangeably with ‘appeal’ and ‘recourse’.

As a matter of fact the term appeal is used in Common Law countries, where an appeal is made to the relevant court in order that it may:

  • vary the award;
  • send it back to the arbitrators for reconsideration;
  • or, the award to be set aside in part or in whole.

The term used in civil law countries is ‘recourse to a court against an award’ to establish grounds for the court to set aside an award.[1]

The purpose of challenging an award before a national court at the seat of arbitration is to have the award modified or declared annulled (set-aside) in whole or in part. [2]

If an award is set-aside it will be considered as invalid and ‘unenforceable’ by the national courts at any other jurisdiction as per the New York Convention and the Model Law which stipulate that courts in a different jurisdiction have the right to refuse to grant enforcement to an award that has been set aside by a court at the seat of arbitration.[3]

International arbitral awards enforceability is assured by bilateral and multilateral conventions. It is final and binding on all parties to the dispute as arbitration is considered maybe the sole alternative to litigation and it is an alternative that can be abided to without resorting to litigation.

In reality, after the award is rendered, the losing party will usually challenge the award so it may be set aside by the relevant court.

Annulment is usually brought before courts at the seat of arbitration and an action of enforcement of the award is initiated in front of national courts of the country where enforcement of the award is required.

Jurisdictional authority of national courts over annulment actions are not governed by conventions or multilateral agreements. This is governed exclusively by domestic legislations and national courts. The New York Convention covers mostly, the procedures of recognition and enforcement of awards and not of annulments.[4]

Posted by Mohamed Raffa- LLM, FCIARB, ICCA

[1] J. Morrissey & J. Graves, International Sales Law and Arbitration: Problems, Cases and Commentary, Kluwer Law International (2008). p.586

[2] The English terminology for annulment is “setting aside”, Oxford Dictionary of Law, 6th ed. Oxford University Press(2006)

[3] New York Convention, A. V(1)(e); UNCITRAL Model Law A36(1)(a)

[4] Hamid Gharavi, The International Effectiveness of the Annulment of an Arbitral Award, Kluwer Law International, The Hague (2002)

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