Recognition and Enforcement of Foreign Arbitral Awards vs. Pending Lawsuits

Today’s post concerns the recognition and enforcement of a foreign arbitral award in Italy when there is a pending lawsuit that may set aside the award in the Country where the arbitration proceeding takes place (in the case at stake, Singapore).

The dispute in arbitration arose out of a purchase agreement signed by an Italian producer and a Chinese buyer with respect to a three sheet-glass washing machines. The losing party appealed against the Award before the Singapore High Court on the basis of three different grounds: first, the arbitrator failed to follow the procedure agreed on by the parties, which decided not to burden the evidence gathering phase with technical expertise; second, the arbitrator failed to comply with the principle of equality of arms, for not having given the losing party the very same chance to work on its own technical expertise to rebut the adverse party’s one; third, the arbitrator failed to resort to CISG in blatant breach of the private international law of the site.

While the proceedings to vacate the Award was still pending before the Singapore High Court, the winning party applied with the Court of Appeal of Milan to have the Award recognized and enforced within the Italian territory. The losing party filed an opposition against the recognition and the enforcement of the Award, leveraging on the same grounds already brought before the Singapore High Court.

In the meanwhile, the Singapore High Court confirmed the Award rejecting the appeal filed by the losing party. The losing party immediately appealed (again) the High Court’s decision before the Singapore Court of Appeal.

The Court of Appeal may, within the recognition/enforcement proceedings in Italy, declare the Award enforceable whenever the opposition has no material chances of success.

At the hearing within the Court of Appeal of Milan to discuss the application for the Award to be declared enforceable in Italy, the winning party relied on the fact that the Award had already been confirmed before the Singapore High Court and, therefore, any further appeal does not seem to have any material chances of success. The losing party rebutted that the Award, as well as the High Court’s decision, are both flawed and that the further  appeal before the Singapore Court of Appeal had indeed a clear likelihood of success, thus, preventing the Court to grant the recognition and the enforceability of the Award.

The Court of Appeal upheld the application and declared enforceable the Award.

Which side would you be on?

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