Struggles in Implementing Non-Financial Rewards: A Look at Award Enforcement Challenges
Enforcing non-monetary arbitral awards, such as specific performance, injunctions, and declarations, can present unique challenges. These challenges arise primarily from the nature of these awards, which often require ongoing judicial supervision, involve public policy concerns, and necessitate procedural scrutiny.
Jurisdictional Challenges and Procedural Irregularities
Parties often challenge the jurisdiction and authority of arbitrators to grant specific non-monetary relief, or question the enforcement jurisdiction of courts. Allegations of procedural irregularities during arbitration can also pose significant enforcement obstacles.
Compliance with Public Policy and Practicality
Non-monetary relief must not contravene the enforcing jurisdiction’s public policy. Moreover, non-monetary awards can be difficult to enforce compared to monetary awards due to their inherent complexity.
The New York Convention and Courts' Discretion
Under the New York Convention, which governs recognition and enforcement of foreign arbitral awards, courts have limited discretion in refusing enforcement, focusing on procedural and jurisdictional propriety, fairness, and public policy criteria. Courts often have the discretion to remit awards back to the arbitral tribunal if procedural fairness concerns are raised, rather than outright refusal, as seen under jurisdictions such as the UK with Section 68 challenges.
U.S. Legal Perspective and Trends
In the U.S., courts confirm that arbitral awards operate like final judgments for monetary sums, enforcing via writs of execution rather than contempt. However, jurisdictional challenges to enforcement petitions are common, especially when personal jurisdiction over the respondent is questionable. Non-monetary awards may face additional hurdles due to the potential need for judicial oversight and enforcement complexity.
Enforcement of Non-Monetary Awards
Enforcing non-monetary awards can be complex and may require specific consideration. Courts may be reluctant to enforce awards that would require extensive judicial supervision. The enforcement of non-monetary awards, such as declarations, injunctions, and orders for specific performance, in international arbitration can be particularly complex.
In the case of Roadpost Inc. v Beam Communications Pty Ltd [2025] FCA 120, the court directed the parties to remove the words "and declare" from an order characterized as specific performance because the making of a declaration was not considered 'enforcement' of the award.
Ambiguity and Enforcement
Ambiguity in non-monetary orders can lead to arguments that the court should not enforce an award due to lack of clarity or precision. Enforcing courts may be asked to make orders additional to or different from the terms of the award to resolve ambiguity, raising questions about the scope of an enforcing court's jurisdiction to modify an award.
Considerations for Clients and Practitioners
Parties seeking non-monetary relief should carefully consider the enforceability of resulting awards and try to ensure that non-monetary awards are crafted carefully to reduce hurdles to enforcement. The issues discussed are important for clients and practitioners to consider, including when formulating claims for relief at the outset of an arbitration.
In summary, the challenges in enforcing non-monetary arbitral awards arise primarily from their nature—requiring ongoing judicial supervision, potential public policy conflicts, and procedural scrutiny—leading courts under the New York Convention to exercise discretionary, limited, and cautious enforcement by focusing on formal compliance, fairness, and public policy criteria rather than on the substantive merits of the award.
Education and self-development can benefit parties by providing them with a deeper understanding of the complexities and challenges associated with enforcing non-monetary arbitral awards. This knowledge can help them make informed decisions when formulating claims for relief at the outset of an arbitration, ensuring that non-monetary awards are carefully crafted to reduce hurdles to enforcement.
In the face of these challenges, clients and practitioners must be mindful of the technicalities and potential issues that can arise during the enforcement process, such as arguing against ambiguity in non-monetary orders, ensuring compliance with public policy, and addressing procedural irregularities.
