The advantages of arbitration for the resolution of international commercial disputes are universally recognised: neutrality, flexibility, rapidity, confidentiality and responsiveness to complex technical issues.
In particular, by reason of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 ("New York Convention") to which over 100 countries are signatory, an arbitral award is more easily enforceable internationally by court action than a judgment of a national court, which depends on the existence of bilateral treaties for reciprocal enforcement.
Unfortunately, this does not mean that the time taken to obtain enforcement of an award, even if eventually granted, is in all cases rapid. It is clearly dependent on the attitude of the local courts where enforcement of an award is sought. This note concerns the delays encountered in Romania in enforcing an international arbitral award.
Proceedings were instituted before the Romanian courts by a statutory corporation established under Zimbabwean law against a trading company incorporated in Romania and successor-in-title to a Romanian government owned and controlled foreign trade corporation for enforcement of an arbitral award in favour of the Zimbabwean corporation (the "Award"). The arbitration had been conducted according to the rules of arbitration then in force of the International Chamber of Commerce ("ICC") (1) , an international organisation with its seat in Paris.
By decision of the Commercial Department of the Bucharest Tribunal (2) , the request for exequatur of the Award was refused on the procedural grounds that the document evidencing the Award submitted to the court had not been "over-authenticated" according to article 162 of Romanian law 105 of 1992, entitled "Settlement of Private International Law Relations", which provides, as a general rule, that:
"Official documents drawn up or authenticated by a foreign authority may be used before Romanian instances only if they are over-authenticated in the hierarchical administrative way, and, further, by the diplomatic missions or by the official Consular Offices of Romania in order to guarantee the authenticity of the signatures and of the seal."
In practical terms, this meant in the present case that the copy of the arbitral award submitted, which had been certified by the Secretariat of the ICC to be a true copy of the original, had to be certified by the French Ministry of Justice, the French Ministry of Foreign Affairs and the Romanian Consulate in Paris.
The manner in which the Romanian lower court applied the article 162 requirement of over-authentication to the Award is not in accordance with Articles III and IV of the New York Convention.
Moreover, article 162 expressly provides for an exemption from the requirement of over-authentication where otherwise provided by law, by an international agreement to which Romania is party or on a reciprocity basis. The Romanian court made no reference to this express exemption, enacted to give effect to Romania's obligations under international treaties, including the New York Convention.
The conditions for application of the New York Convention to the Award were indeed satisfied:
- the the Award was made in Paris (3) and enforcement sought in Romania (4) ;
- each of France and Romania are "Contracting States" (5) ; and
- the Award is final. (6)
Articles III and IV of the New York Convention provide as follows:
"Each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the following articles. There shall not be imposed substantially more onerous conditions or higher fees or charges on the recognition or enforcement of arbitral awards to which this Convention applies than are imposed on the recognition or enforcement of domestic arbitral awards."
"1. To obtain the recognition and enforcement mentioned in the preceding article, the party applying for recognition and enforcement shall, at the time of the application, supply:
(a) the duly authenticated original award or a duly certified copy thereof…"
Article IV sets up a simple procedure for establishing prima facie the enforceability in a Contracting State of an award made in another Contracting State. "Article IV is set up to facilitate the request for enforcement by requiring a minimum of conditions to be fulfilled by the party seeking enforcement" (7) . The party seeking enforcement is only required to produce the duly authenticated original arbitral award or a duly certified copy thereof together with the original arbitration agreement or duly certified copy thereof. "The conditions mentioned in Article IV are the only conditions with which the party seeking enforcement of a Convention award has to comply." (8) "In fulfilling these conditions, the party seeking enforcement produces prima facie evidence entitling him to obtain enforcement of the award." (9) The award may, however, be refused enforcement on any of the substantive grounds enumerated in Article V. This note is not concerned with those substantive grounds of refusal of enforcement, but only with the Article IV conditions for establishing the prima facie right to obtain enforcement in Romania of an award made under the auspices of the ICC in Paris.
"Authenticated" in Article IV of the New York Convention means evidence of the genuineness of the signature. There is no fixed rule as to which law determines this question: it can be either the laws of the country where enforcement is sought or where the award was made. (10)
The Romanian lower court applied Romanian law 105 and refused exequatur on the grounds that, inter alia, the award was not "over-authenticated". The plaintiff had submitted a copy of the Award certified as being conform to the original by the Secretariat of the ICC. While the Romanian courts are entitled to apply Romanian law to the authentication procedure, it is well established that the spirit of the Convention is for ease of enforcement and not the contrary. (11) Article III of the Convention proscribing "more onerous" procedural rules underlines this reasoning. Cases of refusal for enforcing a foreign arbitration award on procedural grounds for failure to comply with Article IV (1)(a) are rare.(12) In all the reported cases refusing enforcement for failure to comply with Article IV (1)(a) of the New York Convention, no original of the award to be enforced was submitted, but only a copy. Hence, they deal with the question of the due certification of the copy of the award required under Article IV (1)(a) and not authentication as such. Moreover, there have been several cases where the original award is considered as sufficient, without any extra requirement as to authentication being imposed. (13)
Romanian Law 105 states that over-authentication is required for "official documents drawn up or authenticated by a foreign authority". (14) From the drafting of this obligation, it is clear that "over-authentication" is a procedure different from, and in addition to, authentication, from the use of the prefix "over" and the fact that it applies to documents, which are already "authenticated". Hence, the imposition of this requirement on an arbitral award otherwise subject to the New York Convention is in breach of both Articles III and IV of the New York Convention. In particular with regard to Article III, there is no requirement of over-authentication for the enforcement of local Romanian awards in Romania. All that is required is the authentication of the award by the body, which issued it.
Not only is the requirement of over-authentication in breach of international law embodied in the New York Convention, it is also in breach, on its face, of Romanian law. As stated in paragraph 3 above, Romanian law 105 provides in Article 162 that an exemption from the requirement of over-authentication "is allowed, according to law, to an international agreement to which Romania is part or on a reciprocity basis". (15)
First, the New York Convention, as shown above, is clearly opposed to any such procedure of over-authentication.
Secondly, the party seeking exequatur informed the court that the Bilateral Treaty between France and Romania for Judicial Co-operation dated November 5, 1974, which came into force on September 1, 1975, exempts from over-authentication:
"Documents issued by judicial authorities or other competent authorities of one of the two States, as well as documents which such authorities certify the date, the signature or conformity to the original, are exempt from authentication, when they are produced in the territory of the other State." (English translation) (16)
The Romanian lower court, however, considered that there was no exemption from over-authentication pursuant to the Franco-Romanian Treaty, since the Award was not issued by a "competent authority" of France, but an international organisation, which just happens to have its seat in Paris.
Whether or not this is the correct interpretation, the French authorities consider that arbitral awards made in France pursuant to the rules of the ICC are within the ambit of the exemption from over-authentication provided by the Treaty. For this reason, the French authorities refused to over-authenticate the Award when requested. (17) Hence, on the basis of reciprocity as provided in article 162 of the Romanian law 105, the Romanian lower court should not have required over-authentication of the Award.
Reciprocity and the application of the Franco-Romanian Treaty is the source of the "Catch 22" situation in which the Zimbabwean corporation finds itself. The Romanian court required over-authentication of the Award but when the applicant attempted to comply, the French authorities refused over-authentication on the grounds that there is a legal impossibility to over-authenticate arbitral awards made in France for the purposes of enforcement in a Romanian jurisdiction because of the exemption provided by the Franco-Romanian Treaty.
Accordingly, there would seem to be no basis under the New York Convention for the Romanian lower court refusing on procedural grounds the prima facie case for enforcement of the Award in favor of the Zimbabwean corporation by the presentation of the Award, duly authenticated by the body issuing it, the ICC.
An appeal was made against the judgment of the lower court. The Bucharest Court of Appeal (18) upheld the appeal on the grounds that the lower court had incorrectly rejected the request for exequatur as being inadmissible because of the plaintiff's failure to submit over-authenticated documents as the appeal court was of the opinion that the question of over-authentication was of the merits and not as to inadmissibility of the claim. Thus, the request has been returned to the lower court for reconsideration of the question of over-authentication on the merits.
The original request for exequatur was filed in the first quarter of 2000. As a result of the decision of the lower court and the appeal therefrom, more than one year has passed, and the plaintiff finds itself in exactly the same position as when the request was originally filed.
The moral of the story is that the champagne should never be opened when an arbitral award is issued. It can go very flat pending enforcement.