Enforcement of Taiwan Award in the US October 02 2014

8/15/2019 Enforcement of Taiwan Award in the US October 02 2014

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October 02 2014

Facts

New York Convention

New York Convention and Taiwan

Uniform Foreign Money Judgment Recognition Act

Comment

In Clientron Corp v Devon IT, Inc a US federal trial court recently refused

to confirm an arbitration award rendered in Taiwan on the grounds that

Taiwan is not a signatory to the 195 United !ations "on#ention on the

$ecognition and %nforcement of &oreign 'rbitral 'wards (the )!ew *or+ "on#ention),-(1, The Clientron decision reinforces the significance of

seating an arbitration in a !ew *or+ "on#ention signatory state. as well

as the im/ortance of considering li+ely enforcement #enues at the clause

drafting stage-

Facts

The underlying dis/ute in Clientron concerned the breach of a su//ly and

/urchase agreement for the manufacture and deli#ery of com/uter /arts-

Taiwanese cor/oration "lientron alleged that ennsyl#ania cor/oration

e#on had failed to ma+e /ayments for three /roducts that were not

s/ecifically mentioned in the agreement. and commenced arbitration

against e#on before the "hinese 'rbitration 'ssociation in Taiwan to

resol#e its dis/ute-

"lientron /re#ailed in the arbitration and was awarded 3.54.543-1 by

the tribunal- "lientron subseuently commenced enforcement /roceedings both in Taiwan and before a federal court in ennsyl#ania- In

the ennsyl#ania enforcement /roceedings. "lientron sought to enforce

the award /ursuant to the !ew *or+ "on#ention as well as ennsyl#ania)s

#ersion of the Uniform &oreign 6oney 7udgment $ecognition 'ct-(2, In

res/onse to "lientron)s enforcement actions. e#on commenced

/roceedings in Taiwan to set aside the award and also o//osed

enforcement in ennsyl#ania-

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8hile the US enforcement /roceedings were underway. the Taiwanese

court granted "lientron)s /etition to confirm the award- owe#er. the US

federal court refused to enforce the award under either the !ew *or+

"on#ention or the Uniform &oreign 6oney 7udgment $ecognition 'ct-(:,

New York Convention

The !ew *or+ "on#ention. which currently has 150 signatories.

generally reuires the national courts of a signatory state to enforce

foreign arbitral awards as national ;udgments of the enforcing court-

'rticle I-: of the !ew *or+ "on#ention further /ro#ides that contracting

states may ma+e a reci/rocity reser#ation. /ursuant to which they willrecognise and enforce only awards that were rendered in other contracting

states-

's the court noted. the United States made a reci/rocity reser#ation at the

time it ratified the !ew *or+ "on#ention- 'ccordingly. US courts are

obliged to recognise and enforce only s/ecifically. the

Taiwan $elations 'ct of 199. which was designed to define the non?

di/lomatic relations between the United States and Taiwan-(5, 'fter considering that act. the court concluded that although Taiwan is not

recognised as an inde/endent so#ereign nation by the United States. the

court was ne#ertheless


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!ew *or+ "on#ention on the grounds that Taiwan was not a contracting

state-(,

Uniform Foreign Money Judgment Recognition Act

In addition to arguing that the !ew *or+ "on#ention reuired

enforcement of the award. "lientron also contended that the award should

be enforced /ursuant to ennsyl#ania)s enactment of the Uniform &oreign

6oney 7udgment $ecognition 'ct- This uniform act has been ado/ted by

a ma;ority of US states and generally reuires the recognition and

enforcement of foreign court money ;udgments-

The court first concluded that the Uniform &oreign 6oney 7udgment$ecognition 'ct does not /ro#ide a basis for recognising and enforcing a

foreign arbitral award. which is not a


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For further information on this topic please contact JP Duffy , Priha

Chadha or Erica R Iverson at K& !ates "y telephone #$% % '()

(*++, fa- #$% % '() (*+% or email # JP.Duffy/0l1ates.com ,

priya.chadha/0l1ates.com or erica.iverson/0l1ates.com . The K&!ates 2e"site can "e accessed at 222.0l1ates.com.

Endnotes

(1, 1:?053:4. 2014 8@ :9290 (% a 'ugust 2014,-

(2, 's an alternati#e a//roach. "lientron also sought to enforce the award

under the Treaty of &riendshi/ between the United States and the

$e/ublic of "hina (Taiwan,-

(:, The court similarly declined to enforce the award based on the Treaty

of &riendshi/-

(4, 2014 8@ :9290. at A2-

(5, 22 US" B ::01 et se3.

(3, 2014 8@ :9290. at A1 n2-

(, "hina ratified the !ew *or+ "on#ention in 19 and the treaty

entered into force there the same year-

(, The court also concluded that a 1943 treaty between the United States

and the $e/ublic of "hina (Taiwan, which contains a /ro#ision

addressing the enforcement of arbitral awards did not su/ersede the !ew

*or+ "on#ention. which came into force in the United States in 190.

a//ro=imately one year before the United !ations Ceneral 'ssemblyadmitted "hina to the United !ations-

(9, 2014 8@ :9290. at A12-

(10, The court granted e#on)s motion to dismiss with res/ect to the !ew

*or+ "on#ention. but denied without /re;udice e#on)s motion to

dismiss on the Uniform &oreign 6oney 7udgment $ecognition 'ct /oint-

The court cited lac+ of clear /rocedural /recedent for cases decided under

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the act and o/ted instead to con#ert e#on)s motion to dismiss to one for

summary ;udgment-

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Documents

Enforcement of Taiwan Award in the US October 02 2014