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“THE INTERNATIONAL ARBITRATION ENFORCEMENT ACT OF 1997” mentioning the U.S. Dept. of Commerce was published in the Extensions of Remarks section on pages E1438 on July 16, 1997.
The publication is reproduced in full below:
THE INTERNATIONAL ARBITRATION ENFORCEMENT ACT OF 1997
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HON. BILL McCOLLUM
of florida
in the house of representatives
Wednesday, July 16, 1997
Mr. McCOLLUM. Mr. Speaker, last week I introduced the International Arbitration Enforcement Act of 1997, H.R. 2141, a bill designed to protect the investments of U.S. citizens overseas. It will provide a civil remedy in U.S. courts for damages suffered from a violation of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards by a foreign state.
The New York Convention is a multilateral international treaty drafted in New York in 1958. The United States joined the convention in 1970. Binding arbitration clauses are frequently used in international business contracts, providing a prompt and relatively inexpensive dispute resolution mechanism. Signatories to the convention commit themselves to enforcing awards of foreign arbitration panels in their domestic courts. Failure to enforce an award, unless based on one of the limited defenses specified in the convention, in my opinion, raises an obligation on the part of the offending signatory to satisfy the debt at issue.
Arbitration clauses such as those governed by the convention are especially important in countries that do not have a tradition of adhering to the rule of law as we know it. There, if a conflict arises triggering arbitration, a neutral third-country forum enables resolution of the dispute free from the biases of local courts and the vagaries of an unresponsive judiciary. The usefulness of this mechanism depends, however, on the commitment of signatories to the convention to provide a process through their courts when the prevailing party returns to enforce and collect. When a signatory fails to provide such a process or otherwise impairs the ability of parties to collect on foreign awards, U.S. citizens often find themselves without any remedy notwithstanding an award in hand obtained through process measure of protection to U.S. citizens against economic injury resulting from violations of the New York Convention by foreign states by creating a civil remedy against the foreign state in U.S. courts and providing for enforcement of any resulting judgments against certain assets of the foreign state in the United States.
The case of the Ross Manufacturing Corp. of Florida illustrates the need for the remedy provided for in this bill. In July 1993, Revpower Limited, owned by Ross Manufacturing Corp.--f/k/a Ross Engineering Corp.--obtained a unanimous arbitral award in the amount of US$4.49 million against its Chinese State-owned trading partner, the Shanghai Far East Aero-Technology Import and Export Corp.--SFAIC. With interest the award now totals almost $9 million. Since that time, Revpower has been trying to enforce its award through the Chinese court system with essentially no success. Indeed it was only after enlisting the interest and support of the United States State and Commerce Departments and numerous Members in both Houses of Congress that the Chinese court even accepted Revpower's enforcement action for filing. A review of Revpower's 4-year effort to enforce its award makes it abundantly clear that the Chinese Government has, by failing to provide a viable enforcement mechanism in accord with its obligations under the New York Convention, effectively blocked and delayed Revpower's enforcement efforts and rendered its arbitral award worthless for all practical purposes.
By its actions in this dispute, China has signaled that it is no longer bound by the terms of the New York Convention and, consequently, Revpower and Ross Manufacturing are without any remedy to redress their economic injuries. This bill would provide that remedy to Ross Manufacturing and all citizens and corporations of the United States who encounter foreign nations unwilling to live up to their obligations under the New York Convention.
Mr. Speaker, I invite my colleagues to join me in supporting this bill and, in so doing, underscore the importance of the rule of law and respect for international treaty obligations.
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