Meaning
Treaties governing the international trade regime allow a court to refuse enforcement of a foreign arbitral award if that award has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made. This specific ground for refusal, located in Article V 1 E New York Convention, protects parties from having to comply with decisions that have already been declared invalid by the primary jurisdiction. The enforcement court retains discretionary power but almost always defers to the home jurisdiction to maintain systemic coherence.
Jurisdictional Defense
Invoking this defense requires the party resisting enforcement to present certified evidence that the original award has been legally annulled. Under Article V 1 E New York Convention, the challenge must target a final decision by the courts of the country where the arbitration occurred. A pending action to set aside the award does not automatically trigger this provision, though it may justify a stay of the local enforcement proceedings.
Procedural Barrier
Courts in China strictly apply this standard to prevent the execution of foreign decisions that no longer hold legal force in their origin country. The Supreme People’s Court guides lower tribunals to respect the judicial sovereignty of the supervising state when reviewing applications under Article V 1 E New York Convention. This protocol avoids the risk of conflicting rulings across different national jurisdictions.
Arbitral Nullification
The invalidation of an award by the seat of arbitration removes the statutory foundation needed for cross-border enforcement. This limitation under Article V 1 E New York Convention enforces the principle of judicial review by the seat.
