A Double-Edged Sword: The Unification of Grounds for Setting Aside and Non-Enforcement

Abstract

This article analyzes the unification of legal grounds for setting aside and resisting enforcement of arbitral awards in new arbitration laws. It explores the intended benefits of consistency and predictability within international arbitration. However, it also critically questions whether this unification removes a valuable second layer of judicial scrutiny and potentially weakens award finality, presenting a double-edged sword for the future of international commercial arbitration.

Introduction

International commercial arbitration is crucial for resolving cross-border disputes, with award enforceability and finality being paramount. Traditionally, distinct legal grounds existed for setting aside (annulling) an arbitral award at its seat and for resisting its enforcement elsewhere. This dual-layered scrutiny has been a cornerstone of the international arbitration framework, particularly under the New York Convention [2].

Recent legislative reforms, such as the amendment to the Chinese Arbitration Act (effective March 1, 2026), indicate a growing trend towards unifying these grounds [4]. This development aims to streamline processes, enhance predictability, and align national laws with international best practices. While pursuing greater consistency and efficiency is commendable, this article argues that such unification, while beneficial, also presents a critical dilemma. It risks diminishing the valuable dual safeguard of separate judicial reviews, potentially weakening the overall finality and integrity of arbitral awards. This analysis will delve into the intended advantages of this unification while critically examining its potential drawbacks, particularly concerning judicial oversight and the ultimate robustness of arbitral decisions.

The Rationale for Unification: Benefits and Intended Outcomes

The movement towards unifying the grounds for setting aside and non-enforcement of arbitral awards is driven by compelling rationales, primarily focused on enhancing the efficiency, consistency, and predictability of international arbitration.

Enhancing Consistency and Predictability

One primary benefit is the reduction of divergent interpretations arising from different legal standards applied at the annulment and enforcement stages. By harmonizing these grounds, legal systems aim to establish a more predictable and consistent global standard for challenging awards based on fundamental procedural fairness [1]. This convergence minimizes the likelihood of an award being upheld at the seat but subsequently refused enforcement elsewhere on similar, yet distinct, grounds. Such consistency fosters confidence in the international arbitration system, providing parties with a clearer understanding of the limited circumstances under which an award can be challenged, regardless of the forum.

Improving Efficiency and Reducing Costs

The traditional bifurcation of challenge mechanisms often leads to parallel proceedings, where parties might simultaneously seek to set aside an award at the seat and resist its enforcement in another jurisdiction. This results in significant delays, increased legal costs, and potential for conflicting judicial outcomes. Unifying the grounds is expected to streamline legal processes by reducing opportunities for procedural maneuvering and forum shopping. By clarifying and consolidating permissible avenues for challenge, the system can accelerate dispute resolution, contributing to the overall efficiency that arbitration is designed to provide.

Strengthening the Pro-Enforcement Bias of International Arbitration

International arbitration, particularly as embodied by the New York Convention, operates with a strong pro-enforcement bias [2]. This principle dictates that arbitral awards should be enforced unless compelling reasons exist to the contrary, ensuring a final and binding resolution. The unification of challenge grounds reinforces this bias. By aligning national laws more closely with the limited grounds for non-enforcement outlined in the New York Convention, jurisdictions can ensure awards are not easily undermined by technical or procedural arguments permissible under broader domestic annulment standards. This alignment strengthens the global utility of arbitral awards, making them a more robust and reliable tool for international commerce.

The Critical Counter-Argument: A Double-Edged Sword

Despite the clear benefits of streamlining and harmonization, the unification of grounds for setting aside and non-enforcement of arbitral awards is not without its critics. The primary concern is that this consolidation could inadvertently weaken the system of checks and balances that has long underpinned the integrity of international arbitration.

Removal of a Valuable Second Layer of Judicial Scrutiny

The traditional system, with its distinct grounds for annulment and non-enforcement, provides a dual safeguard against flawed or unjust awards. Courts at the seat of arbitration offer the first layer of review, applying their own procedural laws. Subsequently, enforcement courts provide a second, albeit limited, opportunity to scrutinize the award, typically based on New York Convention grounds. This two-tiered approach, while sometimes complex, ensures an award is subject to judicial oversight at both its legal “home” and the place of enforcement.

By unifying these grounds, there is a risk of collapsing this dual review into a single, potentially less comprehensive, assessment. If the grounds are identical, a court at the seat of arbitration might be seen as having the final say on all matters of challenge. This could lead to a situation where an enforcement court feels constrained from conducting its own independent review, even if legitimate public policy concerns are specific to the enforcement jurisdiction. The removal of this second layer of scrutiny could, in some cases, allow procedurally or substantively flawed awards to be enforced, undermining the very fairness arbitration seeks to achieve.

Potential Weakening of Award Finality

Paradoxically, while unification aims to enhance finality, it could also have the opposite effect. The concept of delocalization, which posits that arbitration should be detached from national legal systems, has largely been dismissed as an “outdated myth” [3]. The reality is that the seat of arbitration remains a critical anchor, providing the legal framework and judicial support necessary for the arbitral process. The choice of seat is a strategic decision that determines the national laws governing potential annulment proceedings.

Unifying the challenge grounds could create a scenario where a single judicial decision—either to set aside or to uphold an award—has a more definitive and far-reaching impact. For instance, if a court at the seat refuses to set aside an award, an enforcement court might be less inclined to consider non-enforcement arguments, even if those arguments are based on local public policy considerations not relevant at the seat. Conversely, if an award is set aside at the seat, it may be more difficult to argue for its enforcement elsewhere, even though some jurisdictions have, in the past, enforced awards annulled at their origin.

This consolidation of challenge grounds could inadvertently make the initial challenge at the seat a “make or break” moment, intensifying litigation at that stage and potentially prolonging the dispute. Rather than promoting finality, this could lead to more protracted and high-stakes battles at the seat of arbitration, as parties recognize this may be their only meaningful opportunity to challenge the award.

Case Study: The Chinese Arbitration Act Amendment

The recent amendment to the Chinese Arbitration Act exemplifies this trend towards unification [4]. The revised law explicitly states that the grounds for setting aside a domestic arbitral award are the same as those for resisting its enforcement. This move intends to align China’s arbitration framework more closely with international standards and address inconsistencies that have previously arisen between its domestic and foreign-related arbitration regimes.

While the long-term effects of this amendment remain to be seen, it serves as a valuable case study for observing the practical implications of unification. Proponents argue it will enhance the predictability and efficiency of arbitration in China, making it a more attractive seat for international disputes. Critics, however, will be watching closely to see whether this change leads to a reduction in judicial oversight or creates unintended consequences for the finality of awards rendered in China.

Conclusion

The unification of grounds for setting aside and non-enforcement of arbitral awards represents a significant development in international arbitration. The intended benefits—greater consistency, predictability, and efficiency—are laudable goals that align with the pro-enforcement ethos of the global arbitration system. By streamlining the challenge process, this reform has the potential to reduce legal complexities and costs, strengthening arbitration’s appeal as a dispute resolution method.

However, this development is a double-edged sword. The consolidation of challenge grounds raises legitimate concerns about the potential erosion of judicial scrutiny and the weakening of the dual-safeguard mechanism that has long protected the integrity of arbitral awards. The risk of diminishing the role of enforcement courts and creating an over-reliance on the judiciary at the seat of arbitration cannot be ignored.

Ultimately, the success of this reform will depend on its implementation. Legislatures and courts must strike a delicate balance between the pursuit of efficiency and the preservation of fundamental fairness. Careful drafting of legislative provisions and nuanced judicial interpretation will be essential to ensure that the unification of challenge grounds does not inadvertently undermine the very finality and justice it seeks to promote. The international arbitration community must remain vigilant in monitoring these developments to ensure that the quest for a more streamlined system does not come at the cost of robust and equitable dispute resolution.

References

[1] Timken Dispute Resolution. (2025, August 14). Navigating the Landscape of International Arbitration Awards: Vacatur, Enforcement, and the Critical Role of the Seat. Retrieved from https://www.timkendisputeresolution.com/navigating-the-landscape-of-international-arbitration-awards-vacatur-enforcement-and-the-critical-role-of-the-seat/

[2] Norton Rose Fulbright. (n.d.). Issues relating to Challenging and Enforcing Arbitration Awards: Grounds to refuse enforcement. Retrieved from https://www.nortonrosefulbright.com/en-us/knowledge/publications/ee45f3c2/issues-relating-to-challenging-and-enforcing-arbitration-awards-grounds-to-refuse-enforcement/

[3] Timken Dispute Resolution. (2025, August 14). Navigating the Landscape of International Arbitration Awards: Vacatur, Enforcement, and the Critical Role of the Seat. Retrieved from https://www.timkendisputeresolution.com/navigating-the-landscape-of-international-arbitration-awards-vacatur-enforcement-and-the-critical-role-of-the-seat/

[4] Khanderia, S. (2025, September 18). Major amendment to Chinese Arbitration Act after three decades. Conflict of Laws. Retrieved from https://conflictoflaws.net/2025/major-amendment-to-chinese-arbitration-act-after-three-decades/