Congratulations, you’ve won a money award in an arbitration. What are your next steps? How does that award find its way into your bank account? Below we outline the steps you should take to enforce your award, to make sure that all the necessary pieces of this puzzle fit together and that you have your award at the end.
Determine which laws govern the enforcement procedure
There are several sets of regulations that are set up for arbitration settlements around the country and around the world. If at least one party is not a citizen of the United States, or all parties are U.S. citizens but there is some reasonable relation with one or more foreign states, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), implemented by Chapter 2 of the Federal Arbitration Act (FAA) apply. The Panama Convention applies if the parties have expressly agreed to its application, or if most of the parties to the arbitration agreement are citizens of a state that are governed by the Panama Convention and are member states of the Organization of American States.
The domestic arbitration provisions in Chapter 1 of the FAA are specifically for maritime awards or foreign or interstate commerce awards not governed by the New York Convention.
State arbitration law applies for:
- State court enforcement of a foreign award from a country that is not a party to the New York Convention,
- If the award did not involve foreign elements or interstate commerce at all,
- If the parties expressly provided for the application of state law in the arbitration agreement, or
- When the time for enforcement has expired under the New York Convention or Chapter 1 of the FAA.
Apply to confirm your award and plead sufficient facts
The next piece in the puzzle of enforcing your arbitration award is drafting an application to confirm your award. You or your attorney will draft a motion or petition (depending on the jurisdiction) that establishes the identity of the parties, the arbitration agreement, the arbitration award, and a statement of the relief sought. Depending on whether the arbitration award is governed by the New York Convention rules or the FAA, several other steps are required. Your attorney can help you determine which steps apply to your case.
Next, you “plead sufficient facts” to show that you have a viable claim. This just means that the court will confirm an award if the petitioner sufficiently shows that certain conditions were satisfied. The parties must have agreed to arbitrate their dispute and the arbitration must have resulted in an award. The parties must have agreed that judgment may be entered on the award, and the application to confirm the award must be made within the time prescribed, without being modified or vacated.
There are several other procedural considerations under both chapters 1 and 2 of the FAA that you should review with your attorney to determine which pieces fit your arbitration puzzle.
Review potential defenses
Under the New York Convention, a court may refuse to enforce an arbitral award if certain conditions are met:
- the arbitration agreement was invalid or the parties were deemed incapable of making the agreement;
- the losing party was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings, or was otherwise unable to present its case;
- the award deals with an issue not within the terms of the arbitration agreement;
- the composition of the arbitral tribunal or arbitral procedure violated the parties’ agreement or the governing law;
- the award is either not yet binding or has been set aside by an authority of the country in which the award was made;
- the subject matter of the parties’ dispute is not subject to arbitration under the law of the enforcing state; or
- recognition or enforcement of the award would be contrary to the public policy of the enforcing state.
Under the New York Convention, a court may also refuse to recognize and enforce an award on other grounds. The specific terms under which this is possible are complex we recommend looking them over with your attorney only if they apply to your case.
Be prepared to argue against a motion to vacate
Consider applying for confirmation after the three-month time limit for filing to vacate, modify, or correct an award. The following are possible grounds for a motion to vacate:
- that the award happened via corruption, fraud, or other undue means;
- that there was partiality or corruption in any or all the arbitrators;
- that the arbitrators were guilty of misconduct in refusing to postpone the, in refusing to hear pertinent evidence, or by any other misbehavior that may have prejudiced them; or
- that the arbitrators exceeded their powers or were ineffective by failing to submit a mutual, final, and definite award on the subject matter.
Note any objections
Any objections must be waived not raised during arbitral proceedings in a clear and timely manner. The timeliness of an objection depends on both when the information that the objection is based on first became known to the complaining party; and what has occurred in the time between when the party learned of the relevant information and when it asserted its objection.
As you can see, the pieces of the arbitration puzzle are complicated and interrelated. Consult an experienced attorney from Robinson and Henry to make sure that you have all the necessary pieces of this puzzle, and that they fit together so you have your award at the end. Call 303-688-0944 for your initial free, no obligation case assessment.