From Promise to Patchwork: The Growing Gap Between New York Convention Theory and Enforcement Reality

Arbitration’s strongest selling point has never been neutrality, expertise, or even confidentiality. It is simpler: if you win, the award will travel. And if it travels, you will get paid. The New York Convention sits at the center of that story, treated as the quiet guarantee behind the entire system.

The Convention does deserve its reputation. It is one of the most effective coordination instruments in private international law, making arbitral awards easier to recognize and enforce internationally than most foreign court judgments. But the promise many users infer from that success is not the one the Convention made.

The Convention does not guarantee outcomes. It guarantees a pathway. It protects the circulation of awards through national courts, not the collection of debts in the real world. That distinction is not academic. It is the difference between arbitration as a reliable system and arbitration as a source of disappointment.

This is not an argument against the Convention. It is an argument for reading it accurately, because the gap between “portable award” and “collectible recovery” is where modern enforcement battles increasingly play out.

What the Convention Actually Guarantees

The Convention’s core achievement is procedural: it commits Contracting States to recognize arbitration agreements and to recognize and enforce foreign awards, subject to limited refusal grounds. It is not a global sheriff. It is a disciplined compromise between international enforceability and domestic judicial sovereignty.

That compromise explains why the Convention works so well—and why it cannot do everything parties sometimes assume it will do.

It cannot create assets. It cannot dissolve state immunity. It cannot force courts to ignore sanctions regimes or regional constitutional constraints. It cannot prevent parallel proceedings from multiplying the cost of “winning.” What it does is set a presumption in favor of recognition and enforcement and confine the exit routes to specific categories.

This is why enforcement practice is always a two-level story. On paper, the award circulates. In practice, the award’s bite depends on whether the enforcement forum can reach something that matters.

In practice, this gap is rarely experienced as a doctrinal nuance. It appears at the end of a case, when the winning party, often after years of proceedings and significant legal costs, realizes that the hardest phase has only just begun. The award exists and may even be recognized, yet it does not translate into immediate recovery. Instead, it triggers a second phase defined by asset tracing, jurisdictional manoeuvring, and enforcement attempts across multiple forums. What looked like a legal victory becomes an operational campaign. At that stage, the Convention is still doing its work, but no longer as a promise of closure, rather as the starting point of a more complex and fragmented process where law, economics, and strategy converge.

Recent English practice illustrates this dynamic clearly: while courts remain institutionally committed to arbitration, effective enforcement against Russian parties continues to turn on sanctions’ constraints, immunity doctrines, and above all, the presence of attachable assets in the jurisdiction.

When Enforcement Turns into Geometry

If arbitration is the judgment, enforcement is the geography. Awards do not land in a vacuum; they land in jurisdictions with different public policies, different appetites for judicial control, and different asset realities.

That is why “enforcement” is often less a doctrinal question than an exercise in mapping. Where are the assets? Who holds them? Are they protected by sovereign character? Are they frozen, sanctioned, or politically sensitive? These questions are not add-ons. They are the legal analysis.

The Russian sanctions-era landscape makes that visible. A claimant may have a strong award and a supportive enforcement forum, yet still face licensing requirements, frozen-asset complications, and countermeasures that raise the cost of pursuing recovery. Meanwhile, Russian procedural countermeasures under Articles 248.1 and 248.2 of the Arbitrazh Procedure Code create a parallel pressure system designed to make foreign arbitration economically irrational.

This shift has changed how enforcement risk is perceived at the outset of a dispute. It is no longer sufficient to assess the strength of the legal claim or the likelihood of obtaining a favourable award. Parties increasingly need to model enforcement scenarios in parallel: identifying jurisdictions of exposure, anticipating defensive restructuring strategies, and evaluating the interaction between private rights and public constraints. In that sense, enforcement is no longer the final stage of arbitration, but a strategic layer running alongside the merits from the very beginning. The arbitration itself may be global, but its effectiveness will ultimately be decided locally.

This is the deeper point: modern resistance to arbitration often does not attack the Convention. It reshapes incentives around it. Awards remain legally “enforceable,” yet become strategically hard to realize. That is not failure. It is the Convention operating inside a world where enforcement is territorial and resource dependent.

Annulled at the Seat, Enforced Elsewhere

Few episodes illustrate the Convention’s real promise more clearly than the “annulled here, enforced there” phenomenon. Article V(1)(e) allows an enforcing court to refuse recognition if an award has been set aside at the seat, but it does not compel refusal. The Convention leaves room for judgment, and that room is where legal orders can diverge.

COMMISA is the modern case study. The award was annulled in Mexico, but US courts ultimately enforced it. This commentary on the case highlights the controversy this creates: whether the enforcing court effectively evaluated the legitimacy of the Mexican annulment process, and whether enforcement risks turning into indirect appellate review of foreign judgments.

Whatever one thinks of that result, it demonstrates something crucial. The Convention does not guarantee uniform outcomes. It guarantees that awards can be presented for enforcement, and that courts will evaluate them under their own legal constraints—including how they treat annulment at the seat. A system built on state courts cannot promise a single enforcement truth. It can only promise a structured way to manage disagreement.

Collisions with Other Legal Orders: Micula as a Mirror

The enforcement story becomes sharper when arbitration collides with a legal order that treats payment as unlawful. This is where users most clearly feel that something “broke,” even when the Convention is behaving as drafted.

The Micula saga shows how an award can be valid within its arbitral framework and yet become practically blocked by EU State aid rules. As Francesco Sorace has argued in this post, the EU General Court’s October 2024 decision reaffirmed the EU approach: treating payment under the award as State aid and framing the enforcement conflict through EU competence, EU law primacy, and the relationship with the ICSID Convention.

The lesson is broader than intra-EU arbitration. The Convention makes awards portable; it does not immunize them from being filtered through public-law regimes that enforcement courts consider binding. The Convention supplies procedure; other legal orders may still supply constraints.

The Quiet Ceiling: State Immunity and the Limits of Conversion

Even when a court is supportive and the award is formally recognized, immunity can block the conversion of “award” into “asset recovery.” This is a structural ceiling.

The European Convention on State Immunity makes the architecture explicit. It limits state immunity in proceedings relating to arbitration agreements and arbitration procedure, including validity and interpretation questions. But that does not automatically translate into unfettered execution against sovereign property. Recognition is not attachment.

NML Capital, Ltd. v. Republic of Argentina underlines the same point from a different angle: even where claimants have strong legal entitlements, remedies can remain inadequate if execution tools are constrained by immunity and enforcement limits. Arbitration awards live in that ecosystem. The Convention is powerful, but it is not a solvent that dissolves sovereign protections.

The most sophisticated users have adapted. They do not ask only whether a jurisdiction will recognize an award. They ask whether it can realistically be turned into leverage.

Recalibrating the Promise Without Losing Faith

None of this requires cynicism. If anything, it requires respecting the Convention enough to stop over-selling it.

The Convention’s real promise is extraordinary: it globalized the legal opportunity to enforce awards and built a presumption in favor of recognition that many courts take seriously. But it does not guarantee payment, because payment is an economic event mediated by territorial jurisdiction, assets, immunity, sanctions, and the willingness of courts to act.

When parties treat the Convention as an outcomes guarantee, they misunderstand where modern arbitration battles are happening. Today, sophisticated resistance strategies often preserve the appearance of enforceability while making recovery practically unreachable: parallel proceedings, anti-arbitration injunction ecosystems, asset re-structuring, sovereign shields, and regulatory friction.

That is not a reason to love the Convention less. It is a reason to read it accurately. The Convention was never meant to be a global debt collector. It was meant to ensure that awards could circulate through courts with minimal re-litigation and defined refusal grounds.

If we recalibrate the promise, two things happen. First, parties draft and litigate with enforceability geometry in mind—where assets are, what shields exist, and what jurisdictions are likely to treat enforcement as a serious judicial function. Second, the arbitration community protects the Convention’s legitimacy by aligning expectations with reality: celebrating what it does, instead of blaming it for what it never promised.

The Convention’s achievement is not that it guarantees outcomes. It is what makes outcomes possible to pursue across borders, within a structure compatible with the state system in which it must operate. That is the promise worth defending—because it is real.