Originally from Dispute Resolution Journal

INTERNATIONAL—U.N. CONVENTION—ENFORCEABILITY OF AWARD—FOREIGN FORUM

The mandate of the U.N. Convention on the Recognition and Enforcement of Foreign Arbitral Awards that parties who have agreed to arbitrate must be referred to arbitration is not negated due to the unenforceability of the award in a foreign forum. A ship under time charter to a party insured by Rhone Mediterranee caught fire and was lost while docked in the Virgin Islands. Rhone sued, claiming that the vessel was unseaworthy, that the damage was due to negligence by the crew, and that the time charter had been breached. The defendants moved to dismiss the action, because the time charter provided for arbitration of disputes in Naples, Italy. Rhone resisted, however, contending that the agreement to arbitrate was null and void under Italian law. The court rejected this argument, however, noting that "the Convention's mandate to refer parties to arbitration is not necessarily negated because an arbitral award would be unenforceable under a foreign forum's law," and ordered the parties to proceed to arbitration in Naples.

Rhone Mediterranee Compagnia Francese v. Lauro, 555 F.Supp. 481 (D.V.I. 1982).