Mastering Dispute Resolution Clauses: Three Drafting Tips To Improve Arbitral Award Enforcement

• Published date: 03 April 2024
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Law Firm: Steptoe LLP
• Author: Mr Steven Davidson, Michael Baratz, Molly Bruder Fox and Steven Kaplan

First Tuesday Update is our monthly take on current issues in commercial disputes, international arbitration, and judgment enforcement.

This month, we look at three practical tips to improve your dispute resolution provision should you need to enforce an arbitral award. When parties select arbitration, they typically focus their attention on the arbitration agreement (rules, location, procedures, etc.) but often neglect to consider including provisions to help enforce an award. In the United States, most parties include the Federal Arbitration Act's (FAA) standard language from Section 9 that "[i]f no court is specified in the agreement of the parties, then such application [for confirmation] may be made to the United States court in and for the district within which such award was made." This month, we suggest that you include provisions selecting a particular venue and consenting to personal jurisdiction in that forum for enforcing an award; appointing an irrevocable agent to accept service of process for enforcement purposes; and contractually agreeing to a post-judgment interest rate.

1. Consent to Personal Jurisdiction and Venue'Select a Forum for Enforcing an Award

Parties often neglect to consider enforcing an award'commonly failing to select a forum for converting the award into a judgment, even though in the non-arbitration context, these issues are almost always explicitly addressed in dispute resolution provisions.

This omission can present real issues as courts require award-creditors to establish personal jurisdiction and venue over the award-debtor to enforce the award. See, e.g., Mobil Cerro Negro, Ltd. v. Bolivarian Republic of Venezuela, 863 F.3d 96, 124-25 (2d Cir. 2017); Compania de Inversiones Mercantiles, S.A. v. Grupo Cementos de Chihuahua S.A.B. de C.V., 970 F.3d 1269, 1292 (10th Cir. 2020); Conti 11. Container Schiffarts-GMBH & Co. KG M.S., MSC Flaminia v. MSC Mediterranean Shipping Co. S.A., 91 F.4th 789, 795 n.3 (5th Cir. 2024); First Inv. Corp. of the Marshall Islands v. Fujian Mawei Shipbuilding, Ltd., 703 F.3d 742, 748 (5th Cir. 2012). Other courts have entertained forum non conveniens challenges. See, e.g., Monegasque Du Reassurances v. Nak Nafogaz of Ukraine, 311 F.3d 488 (2d Cir. 2002). Regardless of your view of these decisions, parties can control this issue through proactive drafting of dispute resolution clauses.

It is true that the FAA includes a venue provision. Section 9 of the FAA provides: "If no court is specified...