Enforcement of an arbitral award cancelled in its country of origin

Until recently, the Luxembourg courts have adopted a transnational concept of arbitration: in view of its private nature, they deemed that there was no reason to consider that the jurisdictions of the country in which the arbitration was seated had more authority over the awards handed down there than in other countries, in particular those in which the enforcement of such awards was pursued.

They therefore refused to take into consideration decisions to cancel foreign awards handed down in the country of origin of such awards and granted them exequatur in Luxembourg despite the cancellation to which they had been subject in their country of origin.

In a judgment of 27 April 2017, the Court of Appeal confirmed a movement that it had initiated in 2015 and refused to grant exequatur to an arbitral award handed down in Mexico which had in the meantime been set aside by the Mexican national courts.

It considered the State of the arbitration seat as determinant and underlined that the New York Convention of 10 June 1958 on the Recognition and Enforcement of Foreign Arbitral Awards, applicable both in Luxembourg and in Mexico, fix the arbitral award in the country in which, or under the law of which, it was handed down because it acknowledges that a competent authority of that country has the power to set aside or suspend the award.

The Court of Appeal further specified that in Luxembourg law, the existence of a foreign award effective in its country of origin constitutes a condition for the declaration of enforceability of the decision, it being understood that an award set aside in its country of origin is no longer effective.

The Court was able to conclude that the exequatur of an award set aside in its country of origin must be refused in Luxembourg, which is aligned with the solution virtually unanimously adopted throughout the world.