Enforcing international commercial arbitration agreements and awards in U.S. Courts: is the New York convention a 'self-executing' treaty?

• Author: David P. Stewart
• Position: Professor from Practice at Georgetown University Law Center, where he co-directs the Center for Transnational Business and the Law as well as the Global Law Scholars Program
• Pages: 167-208

ARTICLES

ENFORCING INTERNATIONAL COMMERCIAL

ARBITRATION AGREEMENTS AND AWARDS IN

U.S. COURTS: IS THE NEW YORK CONVENTION A

“SELF-EXECUTING” TREATY?

DAVID P. STEWART*

ABSTRACT

The contemporary system of international commercial arbitration rests on

compliance with the United Nations Convention on the Recognition and

Enforcement of Foreign Arbitral Awards (the “New York Convention”), to

which the United States has been a party for over 50 years. Questions have

recently been raised, however, about the status of the Convention in U.S. law –

in particular, whether it can properly be considered directly applicable in state

courts (as a “self-executing” treaty) notwithstanding its legislative implementa-

tion through the Federal Arbitration Act. This article considers (i) whether a

duly-ratified treaty can simultaneously be directly applicable and legislatively

implemented, (ii) whether a U.S. court could, in the context of a specific pro-

ceeding involving private parties, override the decision of the constitutionally

empowered “treaty makers” regarding the treaty’s implementation, and (iii)

whether such a decision could give the federal government greater authority to

compel compliance by state courts than the implementing statute. Answering

those questions in the negative, it offers an alternative solution.

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168

II. THE STATUS OF TREATIES IN U.S. LAW . . . . . . . . . . . . . . . . . . 171

III. MAKING THE SELF-EXECUTING/NON-SELF-EXECUTING

DISTINCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176

IV. IMPLEMENTATION OF THE NEW YORK CONVENTION . . . . . . . . . . 183

V. THE CONVENTION AND THE MCCARRAN-FERGUSON ACT . . . . . . 187

VI. THE FEDERALISM IMPLICATIONS. . . . . . . . . . . . . . . . . . . . . . . . 194

* David P. Stewart is a Professor from Practice at Georgetown University Law Center, where he

co-directs the Center for Transnational Business and the Law as well as the Global Law Scholars

Program. Among other positions during his career in the Office of the Legal Adviser at the U.S.

Department of State, he served as Assistant Legal Adviser for Private International Law. He was an

elected member of the Inter-American Juridical Committee (2008–16) and a co-reporter for the

RESTATEMENT (FOURTH), FOREIGN RELATIONS LAW OF THE UNITED STATES (2019), and he formerly

chaired the Board of Directors of the American Branch of the International Law Association.

V

C 2022, David P. Stewart.

167

VII. AN ALTERNATIVE SOLUTION . . . . . . . . . . . . . . . . . . . . . . . . . . 204

VIII. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207

I. INTRODUCTION

The United Nations Convention on the Recognition and Enforcement

of Foreign Arbitral Awards (commonly referred to as the “New York

Convention”)

1

provides a critical cornerstone of the global system of

international commercial arbitration. It requires States Parties to recog-

nize and enforce certain agreements to arbitrate as well as the resulting

awards.

2

The United States acceded to the Convention in 1970 and imple-

mented it in U.S. law through Chapter 2 of the Federal Arbitration Act

(FAA), which states that the Convention “shall be enforced in United

States courts in accordance with this chapter.”

3

The recently completed RESTATEMENT OF U.S. LAW OF INTERNATIONAL

COMMERCIAL AND INVESTOR-STATE A

4

RBITRATION recognizes the New York

Convention’s central role in international as well as U.S. law. Surprisingly,

however, it reflects some hesitation about whether the Convention in

fact applies in the state (as well as federal) courts of the United States.

Although the ARBITRATION RESTATEMENT affirms that “[t]he [U.S.]

Supreme Court has repeatedly held that federal law preempts conflicting

state grounds for declining to enforce domestic arbitration agreements in

both federal and state court,”

5

the Reporters observe that the Court “has

not yet dealt with the preemptive effect of the FAA as applied to interna-

tional arbitration.”

6

In different parts of their analysis, the Reporters note

that, if Article II(3) of the New York Convention were declared “self-exe-

cuting,” it would “supplant FAA § 2 as the source of authority making

1. Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10,

1958, 21 U.S.T. 2517, 330 U.N.T.S. 38 [hereinafter New York Convention].

2. The Convention applies to “the recognition and enforcement of arbitral awards made in

the territory of a State other than the State where the recognition and enforcement of such

awards are sought, and arising out of differences between persons, whether physical or legal. It

shall also apply to arbitral awards not considered as domestic awards in the State where their

recognition and enforcement are sought.” Id. art. 1.

3. 9 U.S.C. § 201. The New York Convention was implemented, and made directly applicable

in all U.S. courts, by Chapter 2 of the Federal Arbitration Act, Pub. L. No. 91-368, § 1, 84 Stat. 692,

692 (1970) (codified at 9 U.S.C. §§ 201–208). The Act became effective and the Convention went

into force for the United States on December 29, 1970.

4. RESTATEMENT OF THE LAW: THE U.S. LAW OF INTERNATIONAL COMMERCIAL AND INVESTOR-

STATE ARBITRATION (AM. L. INST., Proposed Final Draft No. 9, 2019) [hereinafter ARBITRATION

RESTATEMENT].

5. See id. § 1.6 cmt. b.

6. Id. § 1.6 reporters’ note a.

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168 [Vol. 53

international arbitration agreements enforceable in state and federal

court”

7

and “[i]f Article V of the New York Convention were a self-execut-

ing treaty provision, it would be binding on state courts of its own force

and in combination with the Supremacy Clause of the Constitution ....”

8

Given the importance of continued U.S. compliance with the New

York Convention, one may wonder about the source of this concern

over the possible preemptive effect of the Convention, especially since

the ARBITRATION RESTATEMENT does not point to any clear instance of

non-compliance by state or federal courts. The answer appears to lie in

a then-recent article by Professor Gary Born raising doubts about the

Convention’s enforceability in state courts.

9

That Article contended

that, notwithstanding its legislative implementation, the Convention

can and should be determined by a federal court to be a directly appli-

cable “self-executing” treaty and thus more effective as pre-emptive law

in state courts.

10

While Born’s 2018 Article cited no instance where a

state court decision had been clearly contrary to the Convention, it

expressed concern about the possibility.

11

In the end, the ARBITRATION RESTATEMENT observed that

whether Article II(3) of the New York Convention is self-exe-

cuting does not affect the scope of FAA preemption because

7. Id. § 1.6 reporters’ note a(iv).

8. Id. § 1.9 reporters’ note b(iv).

9. Gary B. Born, The New York Convention: A Self-Executing Treaty, 40 MICH. J. INT’L L. 115, 115–

16 (2018) [hereinafter Born, New York Convention].

10. Id. at 115–16; see also id. at 185 (“It is important to the Convention’s continued role in

providing an effective legal framework for international arbitration that the Convention be

treated as self-executing”). Born is not the first to argue that the New York Convention (or at least

parts of it) should properly be considered “self-executing.” Cf. Christopher R. Drahozal, The New

York Convention and the American Federal System, 2012 J. DISP. RESOL. 101, 112 (2012).

11. Professor Born actually went much further in his 2018 Article, contending (erroneously)

that “[i]f the Convention were not self-executing, there would be no basis for its application in

U.S. state courts, which would likely place the United States in material breach of its obligations

under the Convention . . . .” Born, New York Convention, supra note 9, at 116 (emphasis added); see

also id. at 184 (“[U]nless the Convention is self-executing, nothing in the FAA (or otherwise) makes its

terms applicable in state courts—an unsatisfactory result that would place the United States in

material breach of its international obligations—while important provisions of the Convention

would arguably not apply in U.S. federal courts.”) (emphasis added). While directed at the New

York Convention, these arguments would seem to apply to the Inter-American Convention on

International Commercial Arbitration, adopted Jan. 30, 1975, O.A.S.T.S. No. 24384, 1438 U.N.T.S.

245 (entered into force for the United States on Oct. 27, 1990) [hereinafter Panama

Convention]. The Panama Convention was implemented by Ch. 3 of the Federal Arbitration Act.

See Pub. L. No. 101-369, § 1, 104 Stat. 448, 448 (1990) (codified as amended at 9 U.S.C. §§ 301–

307).

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