The New York Convention and the American Federal System

Abstract

This article outlines three models of the implementation of arbitration conventions in a federal system to illustrate how the U.S. might have implemented its obligations under the New York Convention Convention, and finds two of the models — the federal preemption model and the access model — consistent in part with U.S. implementation of the New York Convention. The potential implications of this analysis are many.

First, state courts as well as federal courts are obliged to enforce international (as well as domestic) arbitration agreements. Even if the New York Convention is not self-executing (which it may be, in this respect anyway), FAA section 2 would apply through section 208 and make international arbitration agreements “valid, irrevocable, and enforceable” in federal court and state court.

Second, the obligation of state courts to enforce arbitration awards under the New York Convention is less clear. FAA Chapter Two provides for subject matter jurisdiction in federal court and permits removal of New York Convention cases from state court to federal court, seeming to follow the access model of convention implementation. Nothing in Chapter Two of the FAA expressly makes the Convention grounds for denying recognition or enforcement applicable in state court. Moreover, the provisions of the New York Convention dealing with award recognition and enforcement may well not be self-executing given the need to define what constitutes a “competent authority” under the Convention.

Third, the New York Convention does not regulate the grounds for vacating international arbitral awards (other than possibly through implied limitations resulting from the obligation to enforce arbitration agreements). FAA section 207 by its terms applies only in federal court, as does FAA section 10. Accordingly, states likely can provide for vacatur of awards in state court on grounds other than those in the FAA — subject to an implied constraint from their obligation to enforce arbitration agreements.

Many questions about the scope of FAA preemption — particularly preemption by Chapter Two and the New York Convention — remain to be answered. This analysis suggests, however, that state law may be able to play a bigger role in some international arbitration matters than it has so far.