Meaning
Judicial intervention to invalidate an arbitral award occurs within the jurisdiction of the seat of arbitration. When a party secures a domestic court set aside, the arbitral award loses its legal force in that jurisdiction and becomes highly vulnerable to rejection elsewhere. This procedure represents the primary local mechanism to challenge the legitimacy of an arbitration proceeding.
Jurisdictional Ground
Grounds for invalidating an award are usually restricted to procedural flaws or the lack of a valid arbitration agreement. Parties cannot seek a merits-based review of the decision of the tribunal because courts defer to the factual findings of the arbitrators. Successful petitions rely on proving that the tribunal lacked jurisdiction or violated the right to be heard.
Standard Review
Review standards applied by domestic judges are heavily influenced by the local adoption of the model law on international commercial arbitration. Courts apply a high threshold of proof to petitions because they favor the finality of arbitral decisions.
Enforcement Risk
Attempts by a losing party to enforce a vacated award in another country encounter severe resistance under international treaties. Judges in secondary jurisdictions will generally refuse to execute an award that has been set aside at the seat of arbitration.
