Awards by consent are a common feature of international arbitration. Yet there are no commonly accepted rules defining precisely the elaboration, the effect and the recognition of awards by consent. One of the reasons for this situation is that an award by consent has a dual nature: it is an award but has a contractual origin.
The purpose of this article is to look at some of the practical consequences flowing from this dual nature. First, it compares the relative merits, in relation to enforcement, of awards by consent and of the underlying settlement agreements and concludes that although awards by consent are on the whole easier to enforce there are situations where that is not necessarily the case. In particular, awards by consent can pose serious problems if as a result of unclear or incomplete drafting they raise questions of interpretation. A key concept proposed by this article is that an award by consent serves no purpose as an award if it does not have a jurisdictional effect (‘effet juridictionnel’) and thus that there is no point in issuing an award by consent if the underlying settlement agreement has been fully complied with by the parties when the issuance of the award is requested from the arbitral tribunal.
Secondly, this article explores the extent to which the annulment of the underlying settlement agreement must cause the award by consent embodying this agreement, or the exequatur judgments declaring that award enforceable, to lapse. The article finds that there are possibly two approaches to this issue, depending on whether the award by consent is seen as a mere instrument created in order to facilitate the settlement agreement or whether it stands as an award on its own. This article considers several factual situations in which the question could arise and concludes that there can be no clear and predictable solution, irrespective of which approach is taken by the various courts or tribunals which may have to rule on the issue.
In its conclusion, the article suggests that the problems which occur in relation to the enforcement of awards by consent are best avoided if both the agreement and the award are valid and functional. The arbitrator must therefore take a proactive role in ensuring that the underlying settlement agreement is as free as possible from defects and that it is reflected in the award in a manner which leaves no room for further disputes. The article pleads for the right of the arbitrator to refuse to issue an award by consent if the parties are unable or unwilling to correct perceived deficiencies in the settlement agreement which could later cause the agreement or the award to fall apart.ASA Bulletin