1. Judicial Enforcement of Arbitral Agreements
The Supreme Court has consistently emphasized the importance of enforcing agreements reached by parties to have their disputes submitted to binding arbitration, particularly in the international context. Soon after the United States implemented the New York Convention, the Supreme Court stated:
“A parochial refusal by the courts of one country to enforce an international arbitration agreement” would frustrate “the orderliness and predictability essential to any international business transaction.” Scherk v. Alberto-Culver Co., 417 U.S. 506, 516 (1974).
“The “liberal federal policy favoring arbitration agreements,” Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U. S. 1, 460 U. S. 24 (1983), manifested by this provision and the [Federal Arbitration] Act as a whole, is at bottom a policy guaranteeing the enforcement of private contractual arrangements: the Act simply “creates a body of federal substantive law establishing and regulating the duty to honor an agreement to arbitrate.” Id. at 460 U. S. 25, n. 32. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 625 (1985).
The Supreme Court has also emphasized in the domestic context that:
“The legislative history of the [Federal Arbitration] Act establishes that the purpose behind its passage was to ensure judicial enforcement of privately made agreements to arbitrate … The Act, after all, does not mandate the arbitration of all claims, but merely the enforcement – upon the motion of one of the parties – of privately negotiated arbitration agreements.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 219 (1985).
As a result, federal courts in New York applying Supreme Court precedent have recognized that “broad” arbitration agreements covering “any controversy, claim or dispute between the Parties arising out of or relating in any way to this Agreement … finally settled by arbitration” are to be enforced in line with “the federal policy favoring liberal enforcement of arbitration clauses … applie[d] with particular force in international disputes.” Paramedics Electromedicina Comercial, Ltda v. GE Med. Sys. Info. Techs., Inc., 369 F.3d 645, 653-4 (2d Cir. 2004).
This same pro-arbitration policy can be found in the decisions of the New York state courts. The New York Court of Appeals has repeatedly emphasized “the long and strong public policy in favor of arbitration,” and reiterated that “New York courts interfere as little as possible with the freedom of consenting parties to submit disputes to arbitration.” Stark v. Molod Spitz DeSantis & Stark, P.C., 9 N.Y.3d 59, 66 (N.Y. 2007).
2. Judicial Enforcement of Arbitral Awards
Courts in the United States favor the enforcement of arbitral awards and construe the limited grounds for non-enforcement under Article V of the New York Convention narrowly, consistent with international practice. Federal courts recognize that the seven grounds for non-enforcement must be interpreted narrowly because the Convention’s “basic thrust … [was] to liberalize procedures for enforcing arbitral awards.” Parsons & Whittemore Overseas Co., Inc. v. Societe Generale de L’Industrie du Papier (RAKTA), 508 F.2 969, 973 (2d Cir. 1974).
For this reason, arbitration compared with litigation offers many benefits including “relatively quick and inexpensive resolution of contractual disputes by avoiding the expense and delay of extended court proceedings” aligned with the “well-settled proposition that judicial review of an arbitration award should be, and is, very narrowly limited.” Diapulse Corp. v. Carba, Ltd., 626 F.2d 1108, 1110 (1980).
Moreover, “[t]he confirmation of an arbitration award is a summary proceeding that merely makes what is already a final arbitration award a judgment of the court.” Yusuf Ahmed Alghanim & Sons v. Toys “R” Us, Inc., 126 F.3d 15, 23 (2d Cir. 1997).
The U.S. Supreme Court has recognized that “the efficacy of the arbitral process requires that substantive review at the award-enforcement stage remain minimal.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 637 (1985).