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Recognition and enforcement of foreign arbitral awards in Macau

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The courts of Macau courts have limited experience as regards the recognition and enforcement of foreign arbitral awards. By conducting a search on the website of the Courts of Macau, we retrieved only four cases involving the recognition of foreign arbitral awards:

 

– Decision of the Court of Second Instance of 12 November 2009 (case 163/2008)

– Decision of the Court of Second Instance of 10 February 2011 (case 135/2010)

– Decision of the Court of Second Instance of 28 February 2013 (case 645/2011)

– Decision of the Court of Second Instance of 13 March 2014 (case 66/2013)

 

The courts of Macau also have limited (or should we say inexistent?) experience in the application of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), even though Macau is a member of the Convention since 2005, when the Chinese Government decided that the Convention shall apply to the Macau SAR. The decision of 10 February 2011 reviewed an arbitral award rendered in the United States according to article 1199 and 1200 of the Civil Procedure Code. However, these provisions are only applicable where there is no international convention applicable in Macau, a judicial cooperation agreement or special law. The decision does not even mention the New York Convention, even though the United States and Macau are members of the Convention. Likewise, the decision of 13 March 2014 recognized an arbitral award rendered in Singapore according to article 1200 of the Civil Procedure Code, not making any reference to the New York Convention, even though Singapore is a member since 1986.

 

This situation does not have a significant practical effect since the domestic rules on arbitration – the Civil Procedure Code (enacted by Decree-Law no. 55/99/M, of 8 October) and Decree-Law no. 55/98/M (Law on International Commercial Arbitration) are in line (thanks to the influence of the UNCITRAL Model Law) with the principles and rules of the New York convention. However, it is important to underline that foreign arbitral awards are to be recognised and enforced according to the provisions of the convention (provided that all its requirements are met) and not of the Civil Procedure Code or Decree-Law no. 55/98/M. Pursuant to article 1199(1) of the Civil Procedure Code, unless otherwise is provided for in international convention applicable in Macau, according to judicial cooperation agreement or special law, decisions on private rights made ​​by courts or arbitrators from outside Macau, are only effective in Macau after being reviewed and confirmed. On the other hand, according to the first paragraph of art. 1 of Decree-Law no. 55/98/M (scope of application), this Decree-Law applies to international commercial arbitration, without prejudice to the Basic Law of Macau, to any international convention applicable in Macau or any agreement regarding judiciary cooperation. That is: when there in an applicable international convention (in this case, the New York Convention), it prevails. Although most of the relevant legal provisions are very similar to those contained in the New York Convention, there can be sometimes little differences, additions, or omissions. In case of conflict we should not forget that Decree-Law no. 55/98/M only applies if there is not any international convention or agreement regarding judiciary cooperation applicable to the case. Furthermore, it is important to notice that the New York Convention is applicable to the Macau SAR subject to the same statements originally made by the PRC upon accession to the convention in 1987: the reciprocity reservation and the commercial reservation.

As far as we know, Macanese courts have not, until the moment, applied the New York Convention even once. Judges and other practitioners have no experience in its practical application. The Case Law is inexistent and the doctrine is silent. The Court of Second Instance, on its decisions of February 2011 and March 2014 missed good opportunities to apply the convention, deciding instead to apply articles 1199 and 1200 of the Civil Procedure Code. This can only be explained by distraction or by the fact that Macanese courts are still too attached to the traditional rules laid down on the domestic laws.

Given the rise of arbitration generally in Asia over the past decade, it is expected that arbitration will become more popular in Macau. Further, as economic development in Macau continues to boom, disputes involving Macau and Macanese parties are expected to rise. In this environment arbitration will, we believe, come to play an increasingly important role. Furthermore, the increase in commercial relations between Macau and the Asia-Pacific region, the European Union, and Portuguese-speaking countries, may prove to be important factors contributing to an increase in arbitrations taking place in Macau and requests for recognition and enforcement of foreign awards being filed in the courts of Macau. If the caseload increases in the future, probably judges will be faced with more cases, more questions, and more doubts.

The effectiveness of international commercial arbitration depends on efficient adjudicative skills. National courts are indispensable to the effectiveness of the arbitral process. Court involvement in arbitration proceedings may occur in any of its three stages: before arbitration commences, during the proceedings, and once the arbitral award has been rendered. As a result, it is necessary to raise the knowledge amongst Macanese judges about the technical specificities of international commercial arbitration. Judicial skills are especially important regarding the last stage of arbitration: the recognition and enforcement of the arbitral award. National judges need to know, for instance, that art. V of the New York Convention provides very limited and narrow grounds for refusal of recognition and enforcement of the award.

How international arbitration actually functions depends a great deal on the knowledge and quality of judges. As a result, there is a need for a widening of the awareness amongst Macanese judges about the specific nature and requirements of this method of dispute resolution. Only with proper and persistent training can all the professionals intervening in arbitration proceedings (arbitrators, lawyers, and judges) perform their duties with a high level of quality and thus satisfy the needs and interests of the users of arbitration. The quality of the services delivered by the legal community can only be improved by means of training and hands-on experience. So as to raise the knowledge among judges about international arbitration, the promotion of an ‘arbitration culture’ is essential. This requires the active engagement of several different stakeholders such as arbitral institutions, arbitration associations, universities, chambers of commerce, etc. Arbitral institutions perform an especially important role in providing information and advice on the use of arbitration. They are important forums for the discussion and dissemination of policy on various aspects of commercial arbitration. They can actively promote the exchange of know-how with experts in international arbitration and in international business law. Only a common effort by all legal professionals will allow for a change of paradigm and the dissemination of an arbitration culture within the Macanese legal community.

 

Image: website of the Courts of Macau


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