The Second Circuit Court of Appeals issued an opinion on July 2, 2025, which strengthens the recognition and enforceability of foreign arbitration awards by curtailing collateral attacks. The case arose from an arbitration held in Geneva that resulted in an award for damages resulting from breach of a joint venture agreement together with declaratory relief, plus costs and attorneys’ fees. Inverting the usually posture of a case brought under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the losing party petitioned the U.S. federal court to vacate the award under U.S. law on the grounds of fraud, alleged arbitrator partiality, refusal to hear new evidence, and the awards’ disregard for New York law, which was governing under the contract. Petitioners further asserted that the Federal Arbitration Act’s vacatur provision applied equally to foreign awards.
The Second Circuit rejected the position and held that under the Federal Arbitration Act and New York Convention, a court may only decline to enforce a foreign arbitration agreement when one of the five (5) grounds in Article V of the Convention are satisfied. The opinion explained, “The Convention was not intended to provide a vehicle for the second-guessing and invalidation by one jurisdiction of arbitral awards generated in another; it was designed to enhance the portability of awards by streamlining the process by which they could be recognized and enforced abroad. Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al., 24-2209-cv, slip op. at 33 (2nd Cir 2025).
The Court’s full decision is available here.
For more information about the recognition and enforcement of arbitration awards in the U.S., please contact: info@chaloslaw.com