Unless the parties to an arbitration settle their claims, an arbitral award terminates the arbitration. An arbitral award is analogous to a judgment of a state court, such that an arbitral award has, between the parties, the effect of a final and binding court judgment (see supra 1.1.).
1. The New York Convention
Once the arbitral award is rendered at the seat of arbitration (see supra III.), it may be enforced in another country on the basis of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, currently 159 states worldwide are a party to this convention (see supra 1.1.). As so many countries are signatories to the New York Convention, including those actively engaged in international trade and commerce, it is fair to say that the relative ease and scope of enforceability is the primary advantage of international arbitration over state court litigation.
2. Article V of the New York Convention
The core provision of the New York Convention is Article V that contains the grounds on which recognition and enforcement of an arbitral award may be refused. These grounds are similar to the grounds upon which an arbitral award rendered in Austria may be set aside (see supra VII.). Certain defences against the enforcement or recognition of an arbitral award must be raised by the party against whom the arbitral award is invoked, such as:
the incapacity of a party under the law applicable to it, or the invalidity of the arbitration agreement, either pursuant to the law chosen or absent an agreement on the applicable law, the law at the seat of arbitration;
it was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or any other inability of such party to present its case in the arbitration;
the arbitral award containing a decision ultra petita (i.e. the arbitral award deals with a dispute, which is outside the scope of the arbitration agreement);
failure to meet requirements of the arbitration agreement or the law at the seat of arbitration, due to a defective composition of the arbitral tribunal, or due to procedural irregularities in the conduct of the arbitration proceedings; and
the arbitral award is not yet binding on the parties or has been successfully set aside or suspended.
Certain defences against enforcement or recognition are considered directly by the court, of which the recognition or enforcement of the arbitral award is sought:
the non-arbitrability of the dispute, meaning that the subject matter of the dispute is not capable of settlement by arbitration under the law of the country where the recognition or enforcement is sought; and
violations of public policy of such country (material ordre public).
Settlement or voluntary compliance with an arbitral award is, however, the most common outcome of arbitral proceedings.