Understanding Public Policy as an Exception to the Enforcement of Foreign Arbitral Awards

Abstract

The paper, as the title suggests, aims at understanding and exploring the doctrine of public policy as a ground for refusing enforcement of foreign arbitral awards. Public Policy is one such ground provided in the New York Convention as well as in the uncitral Model Law, which is most often invoked in the national courts to challenge or refuse the enforcement of foreign arbitral awards. What makes it more complicated is the lack of common world-wide definition of public policy or practice on its application, as the same varies from State to State. The traces of ambiguity, subjectivity (at the hands of the courts in terms of interpretation of the concept), and unpredictability associated with the concept of public policy have at times significantly thwarted the effectiveness and efficiency of international commercial arbitration. This paper attempts to understand and explore the enigma of public policy as an exception to the enforcement of foreign arbitral awards. Apart from revisiting various scholarly works on this issue, interpretation of this concept by various judicial institutions across the globe (with special focus on India, Pakistan, Bangladesh and Sri Lanka) has been attempted, followed by a comparative analysis, to analyse its application on the ground. This paper argues and suggests that a more desirable method of interpreting public policy, i.e. narrow interpretation, is the need of the hour, keeping in consideration the growing demands of international trade and commerce.

Public Policy: An Amorphous Concept in the Enforcement of Arbitral Awards

“…According to some opinions (Sattar 2011), this text may be excessive because arbitrability is part of public policy and included in Article V (2) (b). Others (Dar 2015) argue that rules regarding the arbitrability of disputes do not always rise to the level of public policy. Although legal provisions determining arbitration are always mandatory, some commentators argue that restrictions on certain disputes' arbitrability may not reflect national policies of such a fundamental character to qualify them as public policy issues.…”