What does it mean when a party "was otherwise unable to present his case"?

Article V.1(b) of the New York Convention sets a two pronged test based on procedural rights for when a court may refuse to enforce an arbitration award against a party. The first prong test whether a party was given notice of appointment of the arbitrator and the arbitral process and the second prong is the phrase “was otherwise unable to present his case” (“Phrase”) incorporating basic notion of procedural fairness.[1]

UK and Australia

In the UK, the Phrase is incorporated into language in subsections 103(1) and 103(2)(c) of the Arbitration Act, 1996 (the “Act”). Colman J in Minmetals said:[2]

Article V of the Convention protects the requirements of natural justice reflected in the audi alterem partem rule. Therefore where the tribunal is procedurally entitled to conduct its own investigations into the facts, the effect of this provision will be to avoid enforcement of an award based on findings of fact derived from such investigations if the enforcee has not been given any reasonable opportunity to present its case in relation to the results of such investigations.

In Uganda Telecom, the court, interpreting similar Australian legislative language, supported enforcement against such a defence, found that a party had actually received notice and had the opportunity to present its case, but simply chose not to do so.[3]

In Kanoria, the award against a party was not enforced because that party was unable on account of sickness to present his case.^[4]  In Dallah (and developing Dardana) the court said that once a defence to enforcement under the Convention is made, the court is constrained to not enforce the award retaining no further discretion to enforce an award with no further consideration of whether the procedural irregularity materially affected the final award. ^[5]

In the British Virgin Islands, the Court of Appeal surveyed the attitudes of courts in reviewing Convention defences.^[6] It identified two broad streams of jurisprudence, 1) Southeast Asian cases where courts retain discretion to enforce even if a Convention defence is made, as long as there is no material impact on the final award, and 2) English cases where the courts stop the analysis when the defence is made, with no further review.

South East Asia

In a Singapore case, the court quotes another leading case, Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd., saying that “even if there had been a breach of the rules of natural justice, there had to be a causal nexus between the breach and the award made.”[7]

United States

In Generica, the court, after describing the basic components of due process, said:^[8]

parties that have chosen to remedy their disputes through arbitration rather than litigation should not expect the same procedures they would find in the judicial arena.

The court ruled that although a party was not allowed to cross-examine a witness, that witness was not the only possible source of evidence of that party’s assertion, and that the arbitrator was justified in not finding that the particular witness’s testimony was “central to the liability issue.”^[9] In Fitzroy, the court said demonstrating the inability to present one’s case requires convincingly showing that it “affected the outcome of the proceedings” and that merely failing to appear, without good excuse, will not satisfy the test.[10]

Thus, a party resisting award enforcement on the basis of the inability to present its case will face slightly differing burdens depending on the jurisdiction of enforcement. Unlike in the UK, in pro-enforcement jurisdictions in Asia and the US, the resisting party may be required to additionally prove that the lack of due process materially impacted the final award.

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[1] Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), 10 June, 1958, 330 UNTS 4739 (entered into force on 7 June 1959) [Convention]

[2] Minmetals Germany Gmbh v Ferco Steel Ltd, [1999] 1 All E.R. (Comm.) 315; [1999] C.L.C. 647 [Minmetals]at 657

[3] Uganda Telecom Limited v. Hi-Tech Telecom Pty Ltd., Federal Court of Australia, NSD 171 of 2010, 22 February 2011 [Uganda Telecom]

^[4]  Ajay Kanoria
, Esols Worldwide Limited, Indekka Software Pvt Limited v. 
Tony Francis Guinness, [2006] EWCA Civ 222. [Kanoria]

^[5] Yukos Oil Company V. Dardana Limited, [2002] EWCA Civ 543 [Dardana], an earlier case where the court in its analysis appears to better reflect the pro-enforcement bias of the text of the Convention, and yet opened the door to the later cases by inferring that the word “may” in section 103(2) is an indication of revived remedies for parties resisting enforcement under Article V.1(b). Dallah Real Estate and Tourism Holding Company v. The Ministry of Religious Affairs, Government of Pakistan, [2010] UKSC 46 [Dallah] at para 67. As with Kanoria, the English court appears to be reviewing a foreign law decision on the merits, See para 140 for a concession that the tribunal’s analysis of the law was in consonance with French law. Paras 132 to 142 are a wholesale re-examination of the facts.

[6] British Virgin Islands No. 3, Pacific China Holdings Ltd v. Grand Pacific Holdings Limited, Court of Appeal, Territory of the Virgin Islands, 20 September 2010, in Albert Jan van den Berg (ed), Yearbook Commercial Arbitration 2011 - Volume XXXVI, Yearbook Commercial Arbitration, Volume XXXVI (Kluwer Law International 2011) pp. 262 – 265.

[7]  Dongwoo Mann+Hummel Co Ltd v Mann+Hummel GmbH [2008] SGHC 67 at 126

^[8] Generica Limited, Plaintiff-appellee, v. Pharmaceutical Basics, Inc., United States Court of Appeals, Seventh Circuit.125 F.3d 1123[Generica] at para 33.

^[9] Ibid at para 38.

[10]  Fitzroy Engineering Ltd. v. Flame Engineering Ltd., No. 94-C- 2029, 1994 U.S. Dist. LEXIS 17781 at para 14.