You may not like the Arbitral Tribunal’s decision, but generally speaking, you’re stuck with it!

The New York Arbitration Convention is pretty strong medicine! And trying to wriggle out of an Arbitral award is well nigh impossible, other than for the reasons specifically listed within the convention text itself.

A case of regional interest, Yusuf Ahmed Al Ghanim & Sons (Kuwait) v Toys R Us (1997), is a case in point, and provides an interesting insight into the strict enforceability of Arbitral awards under the Convention.

Al Ghanim had an award in their favour in the sum of USD 46M in the face of some astonishing facts, as Toys R Us considered. Those facts included:

1.     The License Agreement (the ‘Agreement’) granted by Toys R Us granted Al Ghanim the rights to open stores in Kuwait, plus thirteen other countries. They only opened four stores in Kuwait.

2.     Of the four stores opened, only one carried proper storefront signage and merchandise.

3.     In the ten years that the Agreement was in force, Al Ghanim lost over USD 6M, a fact they did not dispute.

4.     The termination of the License Agreement by Toys R Us missed the six-month termination notice period by only four days.

5.     The USD 46M award to Al Ghanim was based on future potential profits, which was lost to Al Ghanim – in theory – due to the non-contractual termination of the Agreement by Toys R Us.

Toys R Us argued that the award should be set aside as it was manifestly unfair and further argued that they had such a right under the US Federal Arbitration Act, as a separate and distinct right from the grounds listed in the Convention. The District Court of the Southern District of New York and the NY Court of Appeals both sided with Al Ghanim and the award was therefore fully enforceable.

So, if your lawyers are advising a challenge to an award against you, which is made in any contracting state of the Convention (161 states in total), Khiebra suggests that you think long and hard before doing so.