International Arbitration 101: Enforcing Awards Across Borders

Enforcing an international arbitration award in the United States requires strategy, speed, and a keen awareness of overlapping legal regimes. Foreign corporate counsel often secure a favorable award abroad only to face the next challenge: converting that award into a U.S. judgment and collecting against assets located in the United States. This process is far from automatic.

This post explains the practical path to recognition and enforcement in U.S. courts. We will cover the step-by-step process, common defenses you might face, and enforcement tactics that preserve the value of your recovery. Understanding these elements is crucial for turning an award into a tangible result.

An international arbitration award is a final and binding decision issued by an arbitral tribunal to resolve a cross-border commercial dispute. Unlike a domestic court judgment, an award’s enforceability across borders depends on international treaties and the domestic laws that implement them.

In the United States, the primary legal pathways for enforcement are established by the Federal Arbitration Act (FAA) https://www.law.cornell.edu/uscode/text/9 and the state laws. The choice between these pathways depends on the nature of the award, the countries the parties are from, and whether there is relationship with a foreign country (such as property abroad, enforcement or performance abroad).

• The New York Convention: Chapter II of the FAA implements the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly known as the New York Convention. This treaty is the cornerstone of international arbitration, providing a streamlined process to enforce an international arbitration award in over 170 signatory countries, including the U.S.
• The Panama Convention: Chapter III of the FAA implements the Inter-American Convention on International Commercial Arbitration, adopted Jan. 30, 1975. The arbitral awards are enforced under this Chapter if they were made on the territory of the signatory State, and based on the principles of reciprocity of this Convention. 9 USCS Sec. 304.
• Maritime and Commercial Arbitration - Default Rules: Chapter I of the FAA provides general rules of arbitration and the enforcement of arbitration awards based on maritime transactions and contracts “evidencing a transaction involving commerce." 9 USCS Sec. 2, 208, 307. In some specific cross-border cases, this chapter may also apply. Chapter I is a gap filler for situations when Chapter II or Chapter III are silent.

Successfully navigating the U.S. legal system to enforce an award involves a clear, methodical approach. Following these steps can provide a smooth and efficient process.

1. Confirm the Award Is Final and Ready for Enforcement

Before you can enforce an international arbitration award, you must confirm its status. It's also important to understand the rules of the arbitral institution that administered your case, such as the International Chamber of Commerce (ICC) or the International Centre for Dispute Resolution (ICDR). These rules dictate procedures for finality, corrections, and challenges at the arbitration stage, often with strict time limits.

An arbitration award is usually final, unless there are ways to appeal or request reconsideration in the arbitration center's rules https://www.cooley.com/news/insight/2023/2023-07-31-the-main-institutions-of-international-arbitration. Review the rules of the arbitral institution that governed your proceedings to ensure all post-award procedural steps are complete.

2. Determine the Correct U.S. Enforcement Regime

Your next step is to identify the correct legal framework.In the U.S., there are two judicial systems: federal courts and state courts. Which one to choose, depends on several factors: whether the award falls under the FAA, will the award will need to be enforced across several jurisdictions in the U.S., whether the debtor will likely oppose the enforcement, whether you are concerned about inconsistent state-court rulings, whether the federal case law provides better interpretation of the defenses to enforcement, whether the assets are located only in one state, whether any particular state has personal jurisdiction over the debtor, whether the state law provides simplified enforcement procedures, and the like.

The FAA

If your award was issued in a country that is a signatory to the New York Convention and involves a commercial relationship, you will likely proceed under Chapter II of the FAA. If the award was issued in a country that is a signatory to the Panama Convention, and which reciprocates with the U.S., then the rules of Chapter III of the FAA will likely apply. Chapter I of the FAA may still apply if Chapters II or III do not have relevant provisions. The distinction is important, as it affects jurisdiction, timing, and the specific defenses a debtor can raise. For example, the timing of award confirmation varies from 1 year to 3 years, depending on the chapter of the FAA. Grounds for vacating the award also vary.

When determining jurisdiction, consider where the debtor’s assets are held, whether local enforcement remedies will be required, and other factors listed above.

U.S. courts require specific documents to consider a petition for enforcement. You will need to prepare:

• A certified copy of the original arbitration award.
• The original or a certified copy of the arbitration agreement.
• Certified English translations of both documents if they are in a foreign language.

Failing to provide properly authenticated and translated documents can lead to delays or having your petition dismissed.

4. File the Petition/ Application in the Appropriate Court

With your documents in order, you can file a petition to recognize and confirm the award. While state courts sometimes have jurisdiction, federal district courts are the primary venue for enforcing awards under the New York Convention. Selecting the correct court depends on factors like where the debtor’s assets are located or where they conduct business.

5. Navigate Objections

A debtor is unlikely to simply allow the award to be enforced. Anticipate and prepare to counter common defenses. The New York Convention and the Panama Convention list a narrow set of grounds for refusing enforcement, which are the exclusive defenses available. These include:

• Invalidity of the arbitration agreement.
• Lack of proper notice or inability to present one's case.
• The award deals with a dispute not contemplated by the arbitration agreement.
• Improper composition of the arbitral tribunal.
• The award has not yet become binding or has been set aside.
• The subject matter is not capable of settlement by arbitration under U.S. law.
• Enforcement would be contrary to U.S. public policy.

The FAA lists other grounds for vacating an award (corruption/ fraud / undue means, arbitrators’ partiality or corruption, arbitrator’s misbehavior or misconduct, or when the arbitrators exceeded their powers (9 USCS Sec. 10). U.S. courts interpret these defenses narrowly, placing a high burden of proof on the party resisting enforcement.

State courts largely mimic the New York Convention, but may vary in the interpretation of the grounds for vacatur.

6. Execute against the assets

Once the court grants your petition and confirms the award, it is converted into a legally enforceable U.S. judgment. This judgment has the same force and effect as one from a U.S. court. You can then begin collection efforts, which may include garnishing bank accounts, placing liens on real property, or seizing other assets held within the United States.

Even with a confirmed award, challenges can arise during the collection phase. Being aware of these potential hurdles is essential for effective planning.

• Asset Tracing Across Jurisdictions: Debtors may actively try to hide or move assets to make them difficult to find. Tracing assets across multiple jurisdictions can be complex and costly, often requiring the coordination of forensic accountants, investigators, and legal counsel in different locations.
• Parallel Litigation: A common delay tactic is for the debtor to launch collateral attacks on the award in other courts, either in the U.S. or abroad. These parallel lawsuits aim to create confusion and stall the enforcement process, even if they have little legal merit.

Asset Protection Strategies: Sophisticated debtors may use complex corporate structures, trusts, or move assets to jurisdictions known for non-cooperation with foreign judgments. Overcoming these strategies requires proactive and creative legal action.

For foreign counsel and claimants, proactive planning can make all the difference.

• Choose arbitration-friendly jurisdictions in contracts: When drafting your initial arbitration clause, select an arbitral institution and a seat of arbitration that facilitate straightforward enforcement. Clear language regarding governing law can prevent disputes later.
• Include clear governing law and enforcement clauses: If you believe a debtor might move assets, consider applying for provisional measures like an asset freeze. U.S. courts can grant attachments or other orders to secure assets even before the award is formally converted into a judgment.
• Work with counsel experienced in cross-border enforcement: Work with lawyers who specialize not only in confirmation proceedings but also in post-judgment enforcement and asset recovery. This dual expertise is vital for a coordinated and effective strategy.
• Consider interim measures and asset freezes early: Before you even begin, identify the debtor’s likely assets, related corporate entities, and the jurisdictions where they are located. This map will help you prioritize your actions and secure assets before they disappear.

To enforce an international arbitration award in the United States, you must first have it confirmed by a U.S. federal or state court and then execute it against assets. Success hinges on early planning, a firm grasp of procedural requirements, and swift action when assets are at risk.

Foreign counsel and claimants who partner with experienced cross-border litigators gain a significant advantage. A skilled team can move quickly to convert an award into an enforceable U.S. judgment and aggressively pursue collection.

Facing a cross-border arbitration award? Regardless of where assets are held, our lawyers specialize in ensuring swift and effective enforcement. Schedule a call today to see how we can help.