Enforcement of Arbitral Awards: Navigating the Uncertainties of Public Policy Defence

Arbitration has long been celebrated as a cornerstone of commercial dispute resolution. Its appeal lies in its neutrality, efficiency, and finality—qualities that make it an indispensable tool in cross-border commerce. Yet, despite its supposed finality, the enforcement of arbitral awards remains vulnerable to resistance, particularly through the invocation of the public policy defence.

Finality in Principle, Uncertainty in Practice

While arbitral awards are meant to bring closure to disputes, in practice, award debtors frequently seek to delay or frustrate enforcement by relying on the limited grounds available under national arbitration laws or international conventions. Among these, public policy stands out as one of the most unpredictable and malleable.

Public policy is not a fixed legal principle; it is a reflection of a nation’s moral, social, economic, and political identity at any given time. This fluidity allows courts considerable discretion in determining whether an arbitral award offends the foundational values of their jurisdiction. Consequently, what one state considers a violation of public policy may appear entirely unproblematic in another.

The Expanding Frontiers of Public Policy

In recent years, courts across the world have shown a willingness to broaden the interpretation of public policy. A striking example comes from Russia, where courts have refused enforcement of arbitral awards on the grounds that either the award creditor or the arbitrators were nationals of countries designated as “unfriendly” under Russian legislation.

This development represents a troubling expansion of the public policy defence into the realm of geopolitics. It underscores how shifts in international relations can infiltrate judicial reasoning, threatening the perceived neutrality and predictability of the arbitral process.

The Balance Between Sovereignty and Certainty

The enforcement of arbitral awards sits at the intersection of state sovereignty and international commercial certainty. States must retain the ability to safeguard their core values and interests, yet excessive reliance on public policy risks eroding confidence in arbitration as a reliable dispute resolution mechanism.

For businesses and investors, the lesson is clear: enforcement risks should be considered at the contract-drafting stage. Parties must carefully select arbitration-friendly jurisdictions, choose clear governing law clauses, and, where possible, adopt institutional rules that offer established enforcement precedents.

Conclusion

As the public policy defence continues to evolve, it remains a double-edged sword—necessary to preserve state integrity, yet capable of undermining the very predictability that arbitration promises. Navigating this uncertainty requires both judicial restraint and strategic foresight by parties and counsel alike.

The conversation must continue on how to reconcile national values with the global consistency needed to sustain arbitration’s credibility as a final and enforceable means of resolving disputes.

Reference:
Chimezie Onuzulike, “Enforcement of Arbitral Awards: Navigating the Uncertainties of Public Policy Defence” (January 20, 2025).
Available at SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5194665