The Case Against Arbitral Awards of Specific Performance in Transnational Commercial Disputes
Troy E. Elder
Florida International University (FIU) College of Law
The Journal of the London Court of International Arbitration, Vol. 13, No. 1, 1997
Florida International University Legal Studies Research Paper No. 11-10
Despite its common law origins as an exceptional form of relief, specific performance of contractual obligations in lieu of monetary damages has become a commonplace remedy in contract law in the U.S., and in civil and public international law. Moreover, U.S. courts have given arbitrators broad discretion to order specific relief. Routine use of this remedy in international commercial arbitrations, where privately chosen adjudicators resolve contract disputes between parties of different nationalities, would thwart the provisions of the New York Convention. The very structure of this treaty, which sets forth the terms for the recognition and enforcement of international arbitral awards by multiple commercial powers, contemplates awards for monetary damages.
Proponents of specific performance as an international arbitral remedy elevate the promisee’s interest in obtaining the benefit of its bargain over a systemic interest in the predictable enforcement of arbitral awards in foreign jurisdictions. While the New York Convention assigns to foreign courts the ministerial role of entering a judgment consistent with an international arbitral award, an award of specific performance would require one or more foreign courts to supervise its enforcement, a result not contemplated by the treaty that may also invite enforcing courts to revisit the merits of the award. This undermines the finality of arbitral awards that was secured by the treaty and frustrates the expectations of parties to international arbitration agreements. In the context of modern transnational commerce, an award of monetary damages for breach of contract is the only practicable form of final relief in international arbitrations.
Keywords: arbitral award, specific performance, money damages, remedies, contract law, transnational commerce, international arbitration, treaty, New York Convention, Article III
Date posted: May 10, 2011