Recall that in the Northrop case we studied in class, a U.S. court ruled it would enforce an ICC arbitration clause but would change the seat from Caracas to a district in Mississippi. Assume that the following further events took place:
The arbitration was conducted. Venezuela participated fully. An award was rendered in
late 2015 calling for Venezuela to pay Northrop $55million (US). Within the period required by Venezuelan law, Venezuela sought set aside in a Caracas court. It did soon two bases:
First, it asserted that the arbitration had not been conducted in accordance with the agreement of the parties because the parties had agreed on Caracas as the seat, not Mississippi.
Second, it argued that the tribunal was without jurisdiction because under a Venezuelan law that took effect in January 1, 2016, no arbitration agreement in a contract with an agency of the Venezuelan government is valid unless specifically authorized by a particular bureau within the Executive branch (that is, part of the branch of government occupied by the President). Assume the ICC clause in the contract in question had not been so approved.
The Venezuelan court heard both sides, and ruled the award was a nullity. It applied article 34 of the Model Law, upon which Venezuelan arbitration law is based. It held that both of Venezuela's theories of set aside were valid. Soon thereafter, Northrop discovered that Venezuela had commercial accounts in a third county, called Ruritania (R). R is a UN Model Arbitration Law country, and is a party to the New York Convention.
Northrop sought enforcement of the award in R, under the New York Convention. R has not encountered this situation in its courts before, and its courts are free to adopt any approach.
ASSIGNMENT: You are a consultant to the R court. Write a paper analyzing the court's options based on existing or theoretical approaches to the problem of annulled awards. Suggest the analysis the court should follow and the outcome.
Be thorough, but do not exceed 7 pages at normal margins and 1.5 spacing at 12 pt font. This limit includes footnotes, which are encouraged. Do not waste space on memo formatting or wordy introductions; the more analysis, the better-jettison the "fluff."
As always, do your own work (discuss your approach, answer, with no one) and do not quote, paraphrase, or rely upon a source without supplying appropriate source and crediting indications.
Do recall that you received material relevant to your inquiry in class.