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CHAPTER 10 – CHALLENGE OF ARBITRAL AWARDS
A challenge to an award (usually) takes place in the courts of
the seat of the arbitration and it is an attempt by the losing
party to invalidate the award on the basis of the statutory
grounds available under the law of the seat. In contrast, actions
opposing enforcement may take place in any jurisdiction in
which the winning party seeks to enforce an award as long as
the state of enforcement is a signatory to the New York
Convention, the party against whom enforcement is sought has
the opportunity to rely on the limited exceptions contained in
Article V to block such enforcement.
- Purpose of Challenge
To have that court declare all, or part, of the award null and
void. If an award is set aside or annulled by the relevant court,
it will usually be treated as invalid, and accordingly
unenforceable, not only by the courts of the seat of arbitration,
but also by national courts elsewhere.
Under both the New York Convention and the Model Law, a
competent court may refuse to grant recognition and
enforcement of an award that has been set aside by a court of
the seat of arbitration.
Following complete annulment, the claimant can recommence
proceedings because the award simply does not exist—that is,
the status quo ante is restored.
The reviewing court cannot alter the terms of an award nor can
it decide the dispute based on its own vision of the merits.
Unless the reviewing court has a power to remit the fault to the
original tribunal, any new submission of the dispute to
arbitration after annulment has to be undertaken by
commencement of a new arbitration with a new arbitral
tribunal.
- Preconditions to Challenge
Before challenging an award before the relevant court, it will
usually be necessary to consider other available remedies,
which may include (a) any available process of appeal or review
under the applicable rules or law (i.e. provision in the
agreement for second-tier tribunals), and (b) any available
provision for the correction of the award or for an additional
award. (provided for by the rules or national legislation)
- time limits for challenge
Time limits for applying to correct or amend an arbitral
award, or to challenge an award by an application to the
relevant national court, are likely to be short and strictly
enforced. The position in each case will depend upon the
relevant rules or legislation.
Methods of Challenge
- Internal Challenge
The rules under which an arbitration was conducted may
provide for review of the award.
A party who is dissatisfied with the award of an ICSID
arbitral tribunal may apply for the interpretation, revision,
By: Atty. Anna De Jesus (Philippines)
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or annulment of the award. The grounds for so doing include Remission of award - Powers of remission are derived from
that the tribunal ‘was not properly constituted’, that the national arbitration statutes. remissions will occur in the
tribunal has ‘manifestly exceeded its powers’, that there ‘was context of a party’s application to the courts of the seat of the
corruption on the part of a member of the tribunal’, that Arbitration. the power to remit is essentially a means to
there has been ‘a serious departure from a fundamental rule ‘cure’ awards that might otherwise need to be set aside.
of procedure’, or that the award has ‘failed to state the
reasons on which it is based’.1 - Recourse to the Courts
Two preliminary issues that need to be addressed before
considering the typical grounds for challenging an award:
- Correction and Interpretation of awards; additional
awards; remission of awards 1. Place of challenge - Any challenge to the validity or
effect of an award must be addressed to the
Correction - a provision in the relevant arbitration rules, or designated competent court of the seat of the
in the law governing the arbitration, for the correction of arbitration. One notable exception to this general
computational, clerical, or similar errors that are obvious on rule, although it is probably more theoretical than
the face of the award. real: the freedom of the parties to an international
arbitration to decide how it should be conducted is
Interpretation - to invite an arbitral tribunal to revisit the generally taken to include freedom to subject the
merits of its decision, it is intended only to resolve any arbitration to the procedural law of a country other
uncertainty as to the precise meaning of an award and than that in which the arbitration is held.
therefore the manner in which it is to be performed.
2. Exclusion and Waiver of Challenge
Additional Award - power is given to an arbitral tribunal a. In some jurisdictions, parties to arbitrations
under some rules to deal with any claims that were may be able to exclude their right to challenge
presented in the arbitral proceedings, but which the tribunal an award.
omitted to address in its award. certain national laws also b. a waiver of a right to challenge must be
provide for tribunals to revisit their awards where evidence express.
is later produced of fraud, forgery, or concealment of c. Parties are unlikely to succeed on any
evidence. challenge to an award based on an objection

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ICSID system is a self-contained system governed by the ICSID Convention,
which does not permit judicial challenge of awards. The internal review
mechanism therefore effectively replaces the system of judicial challenge.

By: Atty. Anna De Jesus (Philippines)

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that they have failed to raise during the b) the aggrieved party was not given proper notice of
arbitration. This is because they will usually the appointment of the arbitral tribunal, or the
be deemed to have waived that objection. arbitral proceedings, or was otherwise unable to
courts may refuse to set aside an award where present its case;
the party challenging the award fails to raise c) the award deals with matters not contemplated by, or
its complaint with sufficient force and clarity falling within, the arbitration clause or submission
during the arbitral proceedings agreement, or goes beyond the scope of what was
submitted;
Grounds for Challenge d) the composition of the arbitral tribunal or the arbitral
procedure was not in accordance with the agreement
There are essentially three broad areas on which an arbitral of the parties, or with the mandatory provisions of
award is likely to be challenged before a national court at the the Model Law itself;
seat of the arbitration. e) the subject matter of the dispute is not capable of
settlement by arbitration under the law of the state in
1. First, an award may be challenged on jurisdictional which the arbitration takes place; and/or
grounds—that is, the non-existence of a valid and f) the award (or any decision within it) is in conflict
binding arbitration agreement—or other grounds with the public policy of the state in which the
that go to the admissibility of the claim determined arbitration takes place
by the tribunal.
An application under the Model Law for setting aside an
2. Secondly, an award may be challenged on what may award must be made within three months from the date on
broadly be described as ‘procedural’ grounds, such as which the aggrieved party receives the award. The
failure to give a party an equal opportunity to be designated court will establish its own procedure for the
heard. application to be made.

3. Thirdly, and most rarely, an award may be challenged - Adjudicability
on substantive grounds, on the basis that the arbitral
tribunal made a mistake of law. § Incapacity or invalid agreement to arbitrate -
Article 34(2)(a)(i) of the Model Law
Grounds under the Model Law (art. 34)
a) lack of capacity to conclude an arbitration agreement, § Arbitral tribunals excess of powers - This ground of
or lack of a valid arbitration agreement; challenge contemplates a situation in which an
award has been made by a tribunal that did have

By: Atty. Anna De Jesus (Philippines)

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jurisdiction to deal with the dispute, but which 2. risk that the arbitral tribunal may not do its work as
exceeded its powers by dealing with matters that competently or as professionally as it should if its
had not been submitted to it. awards are not subject to substantive scrutiny, either
by an arbitral institution106 or by a competent court.
§ Arbitrability - an award can be challenged if ‘the
subject matter of the dispute is not capable of Disadvantages in having a system of arbitration that gives an
settlement by arbitration unrestricted right of appeal from arbitral awards

1. decisions of national judges may be substituted for
- Procedural grounds the decisions of an arbitral tribunal
2. party that agreed to arbitration as a private method
§ Lack of due process: procedural irregularity – “Fair of resolving disputes may find itself brought
hearing”. Failure to observe these rules of unwillingly before national courts that hold their
procedure may be a ground for the challenge of an hearings in public.
award, the arbitral tribunal must respect 3. appeal process may be used simply to postpone the
fundamental rules of due process. day on which payment is due, so that one of the main
purposes of international arbitration—the speedy
§ Further procedural issues - An award is also at risk resolution of disputes—is defeated.
of challenge where the composition of the arbitral
tribunal and the procedure adopted in the The extent of court intervention permitted by different
arbitration are not in conformity with the states may be viewed as a spectrum. à a very limited control
agreement of the parties or, failing such over international arbitral awards and permit certain
agreement, with the law. parties to ‘contract out’ of control by the courts of the seat
altogether. In the middle of the scale, a large number of
- Substantive Grounds states have adopted (either in full or with some
modifications) the limited grounds of recourse laid down in
a) Mistake of Law the Model Law, which mirror the grounds for refusal of
enforcement under the New York Convention. The United
Obvious risks in having a legal system that leaves arbitral States also exercises a similar level of control over awards in
awards entirely free from appeal or judicial review. its territory. At the other end of the spectrum are countries
(advantages of court intervention) such as England, which operate a range of controls, including
1. risk of inconsistent decisions as the same or similar a limited right of appeal on questions of law, which the
points come before different tribunals. parties may agree to waive

By: Atty. Anna De Jesus (Philippines)

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Article 5 of the Model Law proclaims that, ‘[i] n matters matters of form, or of a purely domestic nature; rather, it
governed by this Law, no court shall intervene except where would look to the broader public interest
so provided in this Law’. of honesty and fair dealing.

The principal justification for allowing an appeal from the Effects of Challenge
award of an arbitral tribunal on questions of law is that it is
in the public interest that the law should be certain, and that, The effects of a successful challenge differ depending upon
in particular, there should not be different findings by the grounds of the challenge, the relevant law, and the
different tribunals as to the meaning and effect of the same decision of the court that dealt with it. This decision in itself
words in different contracts may take several forms. The court may decide to confirm the
award, refer the award back to the arbitral tribunal for
b) Mistake of Fact reconsideration, vary the award, or set the award aside, in
whole or in part.
There can be no such general interest in the findings of fact
of a particular tribunal in a particular case. They may be When an award is set aside, it is unenforceable in the country
wrong—even badly wrong—but that is likely to be of in which it was made, and it will usually be unenforceable
interest only to the parties. Accordingly, almost all states elsewhere.
with developed laws of arbitration refuse to allow appeals
from arbitral tribunals on issues of fact. set aside for procedural defects à the party who won the
arbitration, but lost the challenge, will have to resubmit the
c) Public Policy dispute to arbitration and the process will start over again.

An arbitral award may usually be set aside if a national court set aside for void arbitration agreement à Resort to
of the place of arbitration finds (on its own initiative) that Litigation may be considered
the award is in conflict with the public policy of its own
country.

A workable definition of ‘international public policy’ could
be found, it would provide an effective way of preventing an
award in an international arbitration from being set aside
for purely domestic policy considerations. International
public policy would not concern itself with

By: Atty. Anna De Jesus (Philippines)