Limitation Periods for Enforcement of Foreign Arbitration Awards

One of the primary advantages of international arbitration as compared to litigation is the enforceability of arbitration awards internationally. However, the period in which international arbitration awards must be enforced internationally varies drastically depending on the place of enforcement. In the table below (Section IV), we provide a quick reference guide, summarizing the limitation periods for recognizing and enforcing foreign arbitral awards in several countries around the globe, based on the third edition of the ICC Guide to National Procedures for Recognition and Enforcement of Awards under the 1958 New York Convention (the “NYC”), which reflect the state of the various national laws as at 1 October 2018. Prior to displaying the table, we also include a few key takeaways, including that the limitation periods for recognizing and enforcing foreign arbitral awards (if any) vary substantially between the countries examined (Section I), along with some important terminological clarifications, i.e., the meaning of the terms “foreign awards”, “recognition”, “enforcement” and “execution” (Section II), as well as a brief explanation of why these limitation periods are governed by national laws (Section III).

I. Key Takeaways

Recognition and enforcement of an arbitral award before State courts come into play, normally, when the award debtor does not voluntarily comply with an award, thus making judiciary intervention necessary, to allow the award creditor to receive the awarded proceeds.

1. Length of Limitation Periods (If Any) Varies From 2 to 30 Years 

Limitation periods for recognizing and enforcing a foreign arbitral award before State courts vary substantially amongst the countries examined, i.e., from a minimum of two years (in China) up to 30 years (e.g., in Austria and Monaco), while there are also countries that impose no explicit time limitations at all (for instance, Sweden, Japan and the United Arab Emirates). A notable amount of countries, including France and Cyprus, are silent on the issue, meaning that there is no statute specifying the limitation period for recognizing and enforcing a foreign arbitral award, and/or this issue has not come up for consideration before State courts and/or there are divergent views on the topic. A prudent approach adopted in many of these countries, i.e., where the law and/or jurisprudence is silent or unclear in terms of the limitation periods applicable to recognition and enforcement of foreign awards, is to apply by analogy the time limits applicable to enforcement proceedings of domestic awards or judgments or to apply general time limits for bringing claims, which are commonly found in Civil (or Civil Procedure) Codes.

2. The Starting Points of Limitation Periods Vary as Well

Similarly, the starting points from when the limitation periods begin to run also vary. Starting points include the date on which the award is rendered (or one day thereafter), the date on which the award is communicated to the parties (or to the enforcing party), as well as the date of the expiry of the time for voluntary compliance with the award. Ideally, award creditors should initiate enforcement proceedings promptly, especially when it is clear that the award debtors will not voluntarily comply with the award, and especially, when potential corporate restructuring of the losing party is on the horizon, which is a rather common tactic of losing corporate parties, leaving award debtors with a paper award but no assets to enforce it against.

3. Other Noteworthy Issues

In some States, e.g., Slovenia, the defence of the statute of limitations must be invoked by the party resisting enforcement and is not applied ex officio by the court. In some instances, for instance, in Switzerland, Slovenia and the Czech Republic, time limits are considered to be matters of substantive law, rather than matters of procedural law. That said, the relevant State court must determine which substantive law is applicable to the substance of the case, and then apply that law (which can be either its own law or a foreign law) in order to find the relevant limitation period. Also, courts in some jurisdictions, such as Russia and New Zealand, are more lenient and may waive the applicable limitation periods, if they consider it just to do so, when there is, for instance, a valid reason for non-compliance with such limitation periods.

II. Terminological Clarifications

The following legal terminology clarifications should be kept in mind.

1. Foreign vs. Domestic Awards

The time limitations mentioned in the table below refer only to foreign arbitral awards, as opposed to domestic ones, within the meaning of Article I of the NYC, i.e.:

i) “arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought”; and

ii) “arbitral awards not considered as domestic awards in the State where their recognition and enforcement are sought.”

2. Legal Recognition and Enforcement vs. Actual Execution

Recognition and enforcement of an arbitral award, on the one hand, and actual execution against the debtor’s assets, on the other hand, are distinct and consecutive proceedings. The former (recognition and enforcement) is governed by the NYC, in conjunction with the national procedural law of the country in which recognition and enforcement are sought, as provided in Article III of the NYC, which expressly directs the Contracting states to enforce an award under their own “rules of procedure”. To the contrary, the latter (actual execution), which is initiated once an award has been recognized and entered as a court judgment and which is, essentially, the last step in the process, is governed exclusively by the national law of the country where execution against the award debtor’s assets is pursued. The time limitations for the actual execution of a foreign award are out of the scope of this article.

3. Recognition vs. Enforcement

The NYC does not define the terms recognition and enforcement. In most countries, recognition and enforcement are sought together in a single court procedure. There are a few countries, however, such as, Spain, Australia, and El Salvador, where there are different limitation periods for recognition and enforcement, which suggests that recognition can be sought separately from enforcement. The difference between the two terms is, arguably, not easy to comprehend. Put simply, recognition normally refers to the process of considering an award as being binding, whereas enforcement refers to the process of giving effect to an award.

III. Time Limitations for Recognition and Enforcement of Foreign Awards Are Governed by National Laws

The NYC is silent on the applicable time limitations (if any) for bringing an action to recognize and enforce an arbitral award. This is when national laws come into play, pursuant to Article III of the NYC. Article III of the NYC stipulates that national “rules of procedure” apply, so long as they do not impose “substantially more onerous conditions or higher fees or charges on the recognition or enforcement of arbitral awards to which this Convention applies than are imposed on the recognition or enforcement of domestic arbitral awards.” The national “rules of procedure” related to time limitations for recognition and enforcement of a foreign award in more than 85 countries and territories are gathered and summarized in the table below.

IV. Table of Limitation Periods for Recognition and Enforcement of Foreign Awards

The table below consists of four columns: the first column contains the name of each country (or territory, in the case of Canada, for instance), in alphabetic order; the second column provides the applicable limitation period (if any); the third column contains the starting point of the limitation period; and the fourth column provides references to the relevant national statutes and/or jurisprudence, which impose these time limitations.