Attachment Prior to the Enforcement of International Arbitral Awards Under the New York Convention
FORDHAM INTERNATIONAL LAW JOURNAL
Fordham International Law Journal
Copyright c 1982 by the authors. Fordham International Law Journal is produced by The
Berkeley Electronic Press (bepress). http://ir.lawnet.fordham.edu/ilj
Peter J. Fitzpatrick
This Note will analyze the court of appeals decision in Cooper v. Ateliers de la Motobecane,
S.A.,and examine the usefulness and suitability of permitting attachments pending arbitration
ATTACHMENT PRIOR TO THE ENFORCEMENT OF
INTERNATIONAL ARBITRAL AWARDS UNDER THE
NEW YORK CONVENTION
The New York Court of Appeals has held' that attachment is
impermissible pending arbitral procedures in commercial disputes
under the United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards2 (New York Convention). It
is the first state appellate court to address the issue of whether
attachment should be permitted prior to the completion of
arbitration.3 The court of appeals' conclusion is contrary to the approach
taken by legislative 4 and judicial bodies5 of other signatory
countries to the New York Convention 6 and contrary to the approach
taken by the major arbitration rule-setting bodies.7 This Note will
analyze the court of appeals decision in Cooper v. Ateliers de la
Motobecane, S.A., 8 and examine the usefulness and suitability of
permitting attachments pending arbitration proceedings.9
I. THE NEW
A. The Convention
Businessmen often prefer to settle disputes through arbitration
rather than judicial proceedings. The reasons cited are speed of
number of businesses in New York that conduct transactions with overseas parties and that
have the option of inserting arbitration agreements into their contracts. See Bennett, New
York: The World FinancialMarket, N.Y. Times, Mar. 22, 1983, at B1, col. 1 (discussion of
New York as the world center for finance and trade).
determination, informality, monetary savings, expertise of the
arbitrators as compared to judges, and protection of confidential
business transactions. 10 Perhaps more important, arbitration allows
dispute settlement to occur in a neutral forum.'
One historical problem with international arbitration has been
to ensure that one country will recognize and enforce an arbitral
award granted in another country.' 2 The New York Convention
has provided more certainty in this area.' 4 The Convention's two
most important provisions are article 11(
), which reads,
The court of the Contracting State, when seized of an action in a
matter in respect of which the parties have made an agreement
within the meaning of this article, shall, at the request of one of
the parties, refer the parties to arbitration, unless it finds that
the said agreement is null and void, inoperative or incapable of
being performed,1 5
and article III, which states in part, "[e]ach Contracting State shall
recognize arbitral awards as binding and enforce them in
accordance with the rules of procedure of the territory where the award is
The United States originally declined to sign but subsequently acceded to the
Convention effective February 1, 1971. See ContractingStates and Reservations, 2 INT'L COMM.
AaB.: NEW YORK CONVENTION (Oceana) pt. VI.3 (Sept. 1980). The Convention was codified
under title 9 of the United States Code. 9 U.S.C. §§ 201-208 (1976).
Prior to signing the Convention, the United States primarily relied upon the doctrine of
comity and upon bilateral treaties of friendship, commerce, and navigation to recognize and
enforce arbitration agreements. Asken, supranote 10, at 37. This led to an inconsistent result.
Before codifying the Convention, the common law in approximately 22 states did not
necessarily allow enforcement of arbitration agreements. Id. at 38 n.5. Enforcement of
arbitral agreements was often left to the discretion of individual state legislatures, and many
states retained the common law doctrine of the revocability of arbitration clauses. Quigley,
supra note 10, at 1056. The bilateral treaties failed to establish a uniform approach to
transnational arbitration. Id. at 1054.
Preceding the New York Convention, there had been other attempts to create
multilateral agreements to achieve uniformity. See id. The most significant of these efforts were the
Geneva Treaties: the 1923 Protocol on Arbitration Clauses, 27 L.N.T.S. 158 (1924), and the
1927 Convention on the Execution of Foreign Arbitral Awards, 92 L.N.T.S. 302 (1929).
Quigley, supra note 10, at 1054. By allowing the burden of proof to be placed on the
successful party, these treaties made it easy for an unsuccessful defendant to default and for a
tribunal to thwart enforcement of an award. Id. at 1054-55. See Contini, International
Commercial Arbitration-TheUnited Nations Convention on the Recognition and Enforce
ment of ForeignArbitralAwards, 8 AM. J. COMP. L. 283, 289-90 (1959), for a discussion of
the Geneva Treaties. A primary benefit of the New York Convention is that it shifts the
burden of proof to the party seeking to vacate an award. Domke, The United Nations
Conference on InternationalCommercialArbitration, 53 Am. J. INT'L L. 414, 416 (1959).
Efforts to foster arbitration had also been exerted by professional organizations and
associations. Contini, supra, at 284; Quigley, supra note 10, at 1051. Traditionally,
arbitration did not receive overwhelming support in the legislatures and judicial bodies of nations.
Id. at 1049, 1051; see supra note 12. Thus, private organizations and regional centers were
substantially responsible for bringing credibility to the arbitral process. See Contini, supra, at
284; De Vries, supra, at 44. Two important bodies in this respect, particularly in the United
States, are the International Chamber of Commerce (ICC) and the American Arbitration
Association (AAA). See Contini, supra, at 284; De Vries, supra, at 45.
Other well known bodies in addition to the ICC and AAA were the Inter-American
Commercial Arbitration Commission, the London Court of Arbitration, the Netherlands
Arbitration Institute, the Zurich Chamber of Commerce, and the Foreign Trade Arbitration
Commission of the U.S.S.R. Chamber of Commerce. Asken, supra note 10, at 39; Contini,
supra, at 284.
15. New York Convention, supra note 2, art. 11(
relied upon, under the conditions laid down in the following
) provides for the recognition of arbitral
agreements. It prevents courts from adjudicating disputes that the parties
have agreed to arbitrate when one party asserts a valid arbitration
agreement. 7 Article III provides that signatories will enforce
legitimate arbitral awards.18
The New York Convention brought to the arbitral process a
greater degree of uniformity and credibility than previous treaties '9
and private efforts 20 had achieved. One area of contention is the
issue presented in Cooper: whether attachments should be allowed
pending arbitral proceedings under the purview of the
B. United States Law Priorto Cooper
Federal law governs the permissibility of attachment pending
arbitration under the New York Convention.2 2 Although federal
law controls the application of the New York Convention,
attachment is a local matter and must always satisfy the prerequisites of
state law. 23
Two cases highlight the issue of attachment under the New
York Convention. In McCreary Tire & Rubber Co. v. CEAT,
S.p.A.,24 a Pennsylvania corporation, McCreary Tire and Rubber,
sued CEAT, an Italian corporation. Despite a prior agreement
between the two companies to submit commercial disputes to
arbitration, 25 McCreary brought a judicial action, claiming that CEAT
had violated an agreement not to supply other companies in the
United States with tires it produced in Italy and India. 21 McCreary
obtained an attachment over the defendant's assets in
Pennsylvania.2 7 The Court of Appeals for the Third Circuit reversed the
decision and held that no judicial action could be brought against
CEAT prior to the agreed upon arbitration.28 The court cited the
New York Convention, specifically article 11(
), noting: "There is
nothing discretionary about article 11(
) of the Convention. It states
that district courts shall at the request of a party to an arbitration
agreement refer the parties to arbitration. '29
but in accordance with § 6211(b) must be confirmed within five days after an attachment is
Sections 7502 and 7503 provide the relevant arbitration provisions in New York. N.Y.
Cxv. PRAc. LAW §§ 7502-7503 (McKinney 1980). Section 7502(b) sets out the necessary time
requirements for asserting an arbitration agreement. Section 7503(a) mandates that where
there is a valid arbitration agreement, parties will be referred to arbitration if judicial
proceedings are sought. It specifies, however, that only those matters that are the subject of
the arbitration will be referred away. The court retains jurisdiction over that which is
nonreferable. Arbitral boards cannot legally impose attachments. It can be presumed, therefore,
that this type of provisional remedy is non-referable, thereby allowing the involvement of the
courts. See Burrows & Newman, Attachment in Aid of Arbitration, N.Y.L.J., Dec. 30, 1982,
at 2,col. 2.
New York law does not preclude a party, acting pursuant to an arbitration proceeding,
from obtaining a warrant of attachment. See American Reserve Ins. Co. v. China Ins. Co.,
297 N.Y. 322, 327, 79 N.E.2d 425, 427 (1948); Lease Plan Fleet Corp. v. Johnson Transp.,
Inc., 67 Misc. 2d 822, 823, 324 N.Y.S.2d 928, 929 (Sup. Ct. 1971); Auerbach v. Grand Nat'l
Pictures, Ltd., 176 Misc. 1031, 1033, 29 N.Y.S.2d 747, 750 (Sup. Ct.), aJf'd, 263 A.D. 712,
31 N.Y.S.2d 670 (1941).
24. 501 F.2d 1032 (3d Cir. 1974).
25. Id.at 1035.
26. McCreary alleged that CEAT was selling its tires to a Massachusetts corporation
under a different brand name, but with the same tread, in violation of its agreement. Id. It
was also alleged that CEAT's Indian subsidiary was selling CEAT tires to corporations in
California and Arizona, in violation of an agreement to use good faith efforts to prevent the
subsidiary from selling to companies other than the plaintiffs in the United States. Id. at
27. Id.at 1033.
28. Id. at 1038. The decision overturned the opinion of the District Court of Western
Pennsylvania, which had denied CEAT's motion to dissolve the foreign attachment, dismiss
the complaint, transfer the venue, and stay the action pending arbitration. Id.at 1033.
29. Id.at 1037.
The court recognized that attachment might be used to enforce
an arbitral award but held that it could not be imposed prior to the
rendering of an award.3 0 According to the court, state provisional
remedies accompanying trials, including attachment, are not free
from the article 11(
) mandate "to refer" parties to the arbitral
procedure . 1
In Carolina Power & Light Co. v. URANEX, 32 the Northern
District Court of California reached a contrary conclusion. A
public utility had contracted with a French company (URANEX) for
the delivery of uranium concentrates. 33 When URANEX defaulted,
Carolina Power and Light filed an action and proceeded to attach
an U.S.$85 million debt owed to URANEX by a California
corporation. 34 The contract had called for arbitration in New York in the
event of commercial disputes.3 5 URANEX sought dissolution of the
attachment on the grounds that it was contrary to the New York
Convention. 36 The district court found no basis for the decision in
McCreary, stating that the Convention was silent on the issue of
attachment and therefore did not necessarily preclude it. 37 The
court noted: "[I]t would seem there is nothing to prevent the
plaintiff from commencing the action by attachment if such procedure is
available under the applicable law." 38 Judge Peckham also cited 31
the United States Supreme Court decision in Boys Market, Inc. v.
Retail Clerks Union,40 which concluded that provisional remedies
encourage rather than obstruct the use of arbitration agreements. 4'
Carolina Power is the only reported case that clearly permits
attachment pending an arbitration proceeding in a non-maritime
matter. 42 The cases that permit attachment all involve maritime
disputes. 43 They have a specific statutory basis upon which to rely. 44
II. THE COOPER.CASE
In November 1974, the parties, Robert R. Cooper and Ateliers
de la Motobecane, S.A., entered into a shareholder's agreement. 45
The agreement governed their rights and obligations concerning
their joint ownership of Motobecane America, Ltd. (the
Corporation), a newly formed American subsidiary of Ateliers de la
Motobecane, S.A.46 Included in the shareholder's agreement was a
provi42. 451 F. Supp. at 1044. The only other non-maritime federal case addressing the
attachment issue is I.T.A.D. Assoc. v. Podar Bros., 636 F.2d 75 (4th Cir. 1981), which adopts
the McCreary approach. Id. at 77. Podar was an Indian-based foreign partnership. Id. at 76.
It had contracted with I.T.A.D. Associates, a New York company, to deliver textiles. Id.
Podar alleged that government imposed quotas prevented it from conforming to the contract.
Id. Consequently, I.T.A.D. was unable to fulfill contracts it had entered into with its
customers. Id. I.T.A.D. alleged breach of contract and attached a Podar shipment of textiles
to another customer. Id. The contract had mandated that disputes be submitted to
arbitration. Id. The court held attachment was precluded by the Convention requirement that the
parties be referred to arbitration. Id. at 77 (citing McCreary and article 11(
) of the New York
Convention, supra note 2). The court stated that an attachment or other judicial proceedings
would be permissible only if a judge found the agreement to arbitrate "null and void,
inoperative or incapable of being performed." Id. (quoting article 11(
) of the New York
Convention, supra note 2).
43. Drys Shipping Corp. v. Freights, Sub-Freights, Charter Hire, 558 F.2d 1050, 1051
(2d Cir. 1977); Paramount Carriers Corp. v. Cook Indus., 465 F. Supp. 599, 601 (S.D.N.Y.
1979); Compania de Navegacion y Fin. Bosnia v. National Unity Marine Salvage Corp., 457
F. Supp. 1013, 1014 (S.D.N.Y. 1978); Atlas Chartering Servs. v. World Trade Group, Inc.,
453 F. Supp. 861, 863 (S.D.N.Y. 1978); Andros Compania Maritima v. Andre & Cie., 430 F.
Supp. 88, 91 (S.D.N.Y. 1977).
44. The Federal Arbitration Act states in pertinent part:
If the basis of jurisdiction be a cause of action otherwise justiciable in admiralty,
then, notwithstanding anything herein to the contrary, the party claiming to be
aggrieved may begin his proceeding hereunder by libel and seizure of the vessel or
other property of the other party according to the usual course of admiralty
9 U.S.C. § 8 (1976).
It should be noted that this section gives authority to seize vessels in order to establish in
rem jurisdiction and begin judicial proceedings. This judicial action is distinguishable from
attachment to provide security for a final arbitral award. Both, however, require judicial
involvement pending arbitrations.
45. Brief for Defendant-Appellant at 1, Cooper v. Ateliers de la Motobecane, S.A., 57
N.Y.2d 408, 442 N.E.2d 1239, 457 N.Y.S.2d 728 (1982) [hereinafter cited as
46. Id. Robert R. Cooper, one of the American investors, and Motobecane, a French
corporation headquartered in Pantin, France, had formed the venture to import and
distribsion that Cooper and others could tender their shares to
Motobecane or the Corporation. 47 Both were jointly and severally
obligated to buy them according to a price-setting formula. 48 The
agreement referred the parties to arbitration in Switzerland if
either seller or purchaser believed the formula did not properly weigh
"known adverse or favorable factors" that "substantially and
materially" affected the corporation's future profits. 49 In April 1978,
Cooper tendered his shares requesting repurchase.50 Unsuccessful
negotiations to set a value followed.51 Motobecane eventually
B. The JudicialProceeding
Cooper asserted that Motobecane failed to demand arbitration
within the time period established in their agreement.5 3 He sought
money damages in a court action for the value of the shares and
successfully attached a debt owed by the American subsidiary to its
parent. 54 The attachment, which was intended to preserve any
subsequent judgment, was upheld by the appellate division. 55 The
ute mopeds. Shareholder's Agreement Dated Nov. 20, 1974, § 5(v) at 7, Record on Appeal at
42, Cooper v. Ateliers de la Motobecane, S.A., 57 N.Y.2d 408, 442 N.E.2d 1239, 457
N.Y.S.2d 728 (1982) [hereinafter cited as Record on Appeal].
47. Record on Appeal, supra note 46, at 58, exhibit F.
48. Id. The formula set the purchase of the shares at eight times the net profit after tax
for the last two fiscal years preceding the notice to repurchase. Id.
50. Cooper v. Ateliers de la Motobecane, S.A., 68 A.D.2d 819, 819, 414 N.Y.S.2d 147,
51. Id. at 820, 414 N.Y.S.2d at 149.
53. The agreement called for the party to assert its right to arbitration within 10 days
after it received notice that the other party wished to purchase the shares at the agreed upon
formula. Record on Appeal, supra note 46, at 58, exhibit F. Cooper gave notice of his
intention to buy on April 13, 1978, but Motobecane did not unequivocally demand
arbitration until September 1, 1978, considerably after the 10-day limit. 68 A.D.2d at 819-20, 414
N.Y.S.2d at 149.
54. Cooper v. Ateliers de la Motobecane, S.A., 86 A.D.2d at 568-69, 446 N.Y.S.2d at
55. Id. at 570, 446 N.Y.S.2d at 299-300. The case history was complicated. In
September 1978, Cooper brought a special proceeding to stay arbitration in the supreme court. Id. at
568, 446 N.Y.S.2d at 298. The special term denied the request. The appellate division
reversed and issued the stay. 68 A.D.2d at 819, 414 N.Y.S.2d at 148. However, the court of
appeals overturned it. Cooper v. Ateliers de la Motobecane, S.A., 49 N.Y.2d 819-20, 404
N.E.2d 741, 427 N.Y.S.2d 619 (1980).
While the initial appeal was pending in this prior action, Cooper commenced and won
an ex parte money judgment action in the supreme court for the value of the shares owed to
court of appeals reversed the appellate division,5 holding that the
New York Convention does not allow attachment pending
arbitration proceedings. 57 The court applied the McCreary interpretation
of article 11(
) of the Convention, rejecting the Carolina Power
approach as "not compelling." 58 The decision stated that the
language "refer the parties to arbitration" 59 prevents courts from
adjudicating "in any capacity except to order arbitration." 60
The court also posited that attachment is unnecessary because
the Convention's list of signatory countries assures a contracting
party that it will be able to "enforce an arbitral award anywhere in
the world," '6 presumably without resorting to attachment. It
expressed concern that attachment would inject "uncertainty" into
arbitral proceedings, "the antithesis of the UN Convention's
purpose. ' 62 The court concluded that permitting attachment against
foreigners in the United States would lead to retaliatory attachment
of American assets located in other signatory countries.6 3
him according to the price-setting formula in the shareholder's agreement. 86 A.D.2d at
56869, 446 N.Y.S.2d at 298. When Cooper moved to confirm the attachment he was opposed by
Motobecane. Id. at 569, 446 N.Y.S.2d at 298. The supreme court, after the appellate division
had stayed the arbitration, confirmed the attachment. Id. Upon Motobecane's request, it
reversed its decision in special term, dismissing the complaint and vacating the attachment,
after the court of appeals had allowed arbitration to continue. Id.
In a four-to-one decision, the appellate division reversed the special term, ruling that
pre-arbitration attachment was permissible. Id. at 570, 446 N.Y.S.2d at 300.
56. 57 N.Y.2d at 416, 442 N.E.2d at 1243, 456 N.Y.S.2d at 732.
57. Id. at 410, 442 N.E.2d at 1240, 456 N.Y.S.2d at 729.
58. Id. at 415, 442 N.E.2d at 1242-43, 456 N.Y.S.2d at 731-32.
The appellate division had adopted the approach utilized in CarolinaPower. See 86 A.D.2d
at 570, 446 N.Y.S.2d at 299-300.
The court of appeals apparently felt Cooperhad met the prerequisites of New York state
law governing attachment, thus creating the further need to address the federal law on the
issue. See supra note 23 and accompanying text. The court interpreted American Reserve Ins.
Co. v. China Ins. Co., 297 N.Y. 322, 79 N.E.2d 425 (1948), to allow attachments pursuant to
arbitration agreements if notice is given or if the attachment is confirmed prior to the other
party moving to stay the action pending arbitration. 57 N.Y.2d at 413, 442 N.E.2d at
124142, 456 N.Y.S.2d at 730-31. The Cooper case met this limited test. Because arbitration had
been stayed, 68 A.D.2d at 819, 414 N.Y.S.2d at 148, the attachment was confirmed before
the defendant was able to assert that his right to arbitrate existed, 86 A.D.2d at 568-69, 446
N.Y.S.2d at 298. See Burrows & Newman, supra note 23, at 2, col. 3. In satisfaction of N.Y.
Civ. PAc. LAW § 6201 (McKinney 1980), money damages were at stake in the dispute. See
57 N.Y.2d at 410, 442 N.E.2d at 1240, 456 N.Y.S.2d at 729.
59. New York Convention, supra note 2, art. 11(
60. 57 N.Y.2d. at 414, 442 N.E.2d at 1242, 456 N.Y.S.2d at 731.
63. 57 N.Y.2d at 415-16, 442 N.E.2d at 1243, 456 N.Y.S.2d at 732.
III. CRITICISM OF THE McCREARY
ADOPTION IN COOPER
VIEW AND ITS
A. Analysis of the Cooper Decision
The narrow four-to-three margin in the Cooper decision
suggests that the majority's interpretation of the New York Convention
is not definitive. The McCreary court's broad interpretation of the
phrase "refer the parties to arbitration,"'6 4 cited by the Cooper
majority,6 5 automatically precludes the possibility of attachment. 66
This conclusion is unwarranted in view of the Convention's silence
on the topic of attachment.
The majority admits that foreign arbitration awards, by the
terms of the Convention, are to be enforced in the same manner
and on the same terms as domestic awards.68 Article III of the
Convention states: "There shall not be imposed substantially more
onerous conditions or higher fees or charges on the recognition or
enforcement of arbitral awards to which this Convention applies
than are imposed on the recognition or enforcement of domestic
arbitral awards. '6 9 The Convention's silence on attachment,
therefore, should not be construed necessarily to mean that it would alter
a traditional approach which permitted attachment pending
domestic arbitral disputes. 70
64. New York Convention, supra note 2, art. 11(
65. 57 N.Y.2d at 414, 442 N.E.2d at 1242, 456 N.Y.S.2d at 731.
66. A narrower interpretation of these words would be less drastic and would allow
United States practice to conform with the approach of other signatory countries, which
allows for attachment pending arbitration. See infra note 92 and accompanying text. A more
reasonable approach would refer parties to arbitration when either party sought judicial
action concerning the actual dispute issues mentioned in the agreement, and would not
automatically turn away tangential efforts to protect ultimate awards, such as the seeking of
'an attachment by a concerned party. The McCreary and Coopercourts seem to put excessive
emphasis on "refer to" within article 11(
), particularly since the actual drafting of article
) was hastily completed. See Sanders, Commentary-CourtDecisions on the New York
Convention 1958, 2 Y.B. COMM. Ai. 231, 237 (1979).
67. See CarolinaPower, 451 F. Supp. at 1051-52. There is one exception to the silence.
The Convention specifically allows for provisional remedies when a party attempts to thwart
the enforcement of an award. New York Convention, supra note 2, art. VI.
68. 57 N.Y.2d at 413, 442 N.Y.S.2d at 1241, 456 N.Y.S.2d at 730.
69. New York Convention, supra note 2, art. III.
The majority distinguishes Cooper from the maritime cases
upholding attachments. 71 Those cases relied on the Federal
Arbitration Act. 72 However, this distinction is illusory. The implementing
legislation for the Convention mandates that the Convention
override the previously exisiting Federal Arbitration Law. 73 Thus, if the
Convention is interpreted as prohibiting attachment pending
arbitration, the Federal Arbitration Act can no longer allow for libel
and seizure of vessels in maritime cases, because the Convention
makes no distinction between maritime and non-maritime
disputes. 74 It is contradictory to infer that the Convention would
permit judicial action in one instance and proscribe it in another. 75
Among the strongest arguments favoring the Cooperposition is
the Convention's policy of encouraging dispute resolution without
delay and expense. 76 Attachment, according to the Cooper
majority, may cause the defendant inconvenience and unnecessary
expense, including legal fees, sheriff's fees, and bond premiums. 77 It
does not necessarily follow, however, that an attachment will cause
delays. Attachment is a procedural device not related to the
material dispute. 78 The arbitration proceeding may commence or
continue, regardless of a party's decision to seek an attachment of its
opponent's assets. 78 The attachment is ancillary to the dispute and
only provides that, in the event of an award, a party will have the
ability to receive its just compensation.8 ° Moreover, the security
that attachment affords a concerned party outweighs the legal
expenses and premiums that may be involved. 8'
The majority in Cooper suggests that parties can entirely avoid
the court's prohibition of attachment pending arbitration by
providing for such provisional relief in their agreement. 82 However,
the complexity of contractual undertakings makes it unrealistic to
assume that parties will seriously consider every detail of a future
dispute including the need for provisional remedies if and when an
arbitration occurs.8 3 For example, the financial position of the
parties may change over time or the level of trust between the
parties may erode, necessitating recourse to provisional remedies.
B. Justificationfor Attachment
1. Policy Considerations
In most cases, the party seeking attachment fears that an
arbitral award will be unenforceable and rendered meaningless
should the other party transfer or hide its assets. 84 Attachment
prevents a party from removing assets from a jurisdiction, thus
ensuring that the assets will be available to satisfy the arbitration.
As trade with Third World countries continues to develop,
attachment can take on even greater significance. Some of these
countries may have limited enforcement procedures in the event an
award goes against a company within their jurisdiction. 85 The
majority failed to recognize this problem when it stated that the list of
signatory countries to the Convention guarantees that awards will
be enforced in other areas of the world. 86 While these countries may
80. Attachment does not relate to the original purpose of arbitration agreements, which
in most cases is to provide for non-judicial settlements of specified disputes in the future.
81. Without the possibility of attachment a party might attempt to avoid the arbitral
82. 57 N.Y.2d at 414, 442 N.E.2d at 1242, 456 N.Y.2d at 731.
83. When parties enter into a contract, most of their attention is directed to the business
matter of the agreement. The minute details of providing for a provisional remedy in the
event of an arbitration is too easily glossed over at this stage. Optimistic parties might
presuppose that disputes will never arise and, therefore, not adequately prepare for them.
84. Left unrestricted, a party which fears an award will be rendered against it has the
option of removing its assets to a location where the award will not be enforced.
85. Burrows G. Newman, supra note 23, at 2, col. 4; Krishnamurthi, Thoughts on a
New Convention, in THE ART OF ARBITRATION 208, 210 (1982).
86. 57 N.Y.2d at 414, 442 N.E.2d at 1241, 456 N.Y.S.2d at 731.
recognize the Convention, in reality their legal systems sometimes
make awards difficult to enforce.8 7 By permitting attachment in a
country that has fair and sound procedures security could be
sought. This would add greater credibility and reliability to the
arbitral process in international transactions.
In contrast to Cooper's assertion that attachment hinders
arbitration,8 8 attachment encourages parties to enter into and adhere to
arbitration agreements. Parties are more likely to enter into arbitral
proceedings if they know that an ultimate award will be enforced.
2. Comparative Law Analysis
Available information concerning other signatories indicates
that provisional remedies89 are allowed in aid of arbitration. 0 This
is particularly interesting in view of the court's reasoning in
Cooper. The court of appeals expressed fear that if attachments
were sustained, American businessmen would find their assets
subject to attachments in foreign jurisdictions."' This concern is,
however, superfluous: at least twenty-three countries, all signatories to
the Convention, already permit attachments when parties have
agreed to arbitrate.
87. Parlin, Negotiating the InternationalArbitrationAgreement, in DOING BUSINESS IN
HIGH RISK COUNTRIES 83, 93 (1979).
88. 57 N.Y.2d at 414, 442 N.E.2d at 1241, 456 N.Y.S.2d at 731.
89. Provisional or interim measures other than attachment include court orders to
provide testimony, produce documents, or grant injunctive relief. See De Vries, supra note
14, at 62.
90. See infra note 92.
91. 57 N.Y.2d at 415-16, 442 N.E.2d at 1243, 456 N.Y.S.2d at 732.
92. Available information does not allow an examination of all current 65 signatories to
the Convention. See supra note 14 (list of signatories). The countries that allow for
attachments are: Algeria, 4 Y.B. COMM. AraB. 13 (1979); Austria, id. at 33, INTERNATIONAL
CHAMBER OF COMMERcE, Arbitration Law in Europe 21 (1981) [hereinafter cited as Arb.
Law]; Belgium, 5 Y.B. COMM. ARa. 14 (1980); Denmark, id. at 34; Egypt, 4 Y.B. COMM.
Arn. 51 (1979); England and Wales, Arb. Law, supra, at 168; Finland, 5 Y.B. COMM. ARn.
47 (1980), Arb. Law, supra, at 135; France, 6 Y.B. COMM. Ann. 14-15 (1981), Arb. Law,
supra, at 151; Germany, Arb. Law, supra, at 89; Greece, 5 Y.B. COMM. AsB. 70 (1980), Arb.
Law, supra, at 210; Indonesia, 5 Y.B. COMM. Asi. 90 (1980); Iraq, 4 Y.B. COMM. Asi. 109
(1979); Italy, 6 Y.B. COMM. ARB. 43 (1981); Japan, 4 Y.B. COMM. ARB. 129 (1979); Kuwait,
id. at 143; Libya, id. at 153; Netherlands, 6 Y.B. COMM. ArB. 71 (1981), Arb. Law, supra, at
287; Norway, 5 Y.B. COMM. Ann. 105 (1980); Pakistan, id. at 127; Sweden, 7 Y.B. COMM.
ARn. 69 (1982); Switzerland, Arb. Law, supra, at 61; Syria, 7 Y.B. COMM. Asi. 43 (1982).
As an example of the statutory support in other countries, the Israeli Knesset passed an
arbitration law on July 30, 1968. It states that courts have the same powers in arbitration
matters as in other court actions when it concerns "the attachment of property, the
prevention of departure from Israel, security for the production of property, the appointment of a
receiver, a mandatory injunction and a prohibitive injunction." Act of July 30, 1968, § 16(a),
Two cases in foreign courts have considered the New York
Convention and have provided for attachment in aid of arbitration.
One case, Scherk Enterprises Aktiengesellschaft v. Socidtg des
Grandes Marques9, 3 was decided by the Italian Supreme Court. In
Scherk, the plaintiff had leased trademarks to the Italian defendant
(SGM) in exchange for royalty payments.9 4 A two-year contract had
been renewed several times and the original version contained an
arbitration clause. 5 Eventually Scherk alleged that SGM was using
its trademarks without paying royalties.9" It sought arbitration at
the designated location, Zurich, and obtained attachment of SGM's
assets in Italy from the Court of First Instance of Rome.9 7 When
Scherk requested invalidation of the attachment award and a
declaration that the Italian court lacked jurisdiction with respect to the
merits of the dispute, it was opposed by SGM.98 The Italian
Supreme Court held that the Italian court had jurisdiction to validate
the attachment.99 The Court, however, denied jurisdiction running
to the merits of the dispute because of Italy's participation in the
New York Convention.10 0 The Italian Supreme Court, therefore,
upheld the right of Italian courts to impose attachment pending an
arbitral proceeding after it gave full consideration to the New York
The Scherk decision is notable because the Court permitted the
attachment even though it had strong justification for vacating it.
The attachment favored a foreigner, the arbitral clause had not
been written into the renewed agreement, 10 1 and the original
arbitral clause had been written prior to Italy's becoming a signatory to
the New York Convention. 0 2 Thus, the Court had motive to strictly
interpret the New York Convention but still concluded that an
attachment was not inconsistent with Convention-governed
The second case arose in England. In The "Rena K," 0 3 the
defendant shipper negligently damaged goods. 0 4 The plaintiff
applied for and obtained an attachment of the defendant's ship in
London. 05 The shipowner asked for the unconditional release of his
ship pending arbitration, but the Queen's Bench Division
(Admiralty Court) held that the attachment was permissible. 06 Justice
I see no good reason in principle why it should not be available
to provide a plaintiff, whose action is being stayed on the
application of a defendant in order that the claim may be decided by
arbitration in accordance with an arbitration agreement
between them, with security for the payment of any award which
the plaintiff may obtain in the arbitration. I have further been
informed by counsel that the Commercial Court has granted
injunctions on this extended basis in a number of unreported
The New York Convention was fully considered by the court.
The court wrote: "There is nothing in s.1(
) of the 1975 Act which
obliges the Court, whenever it grants a stay of an action in rem in
which security has been obtained, to make an order for the
unconditional release of such security." 108 The passage refers to the
Arbitration Act of 1975109 which codified the Convention. The court
explicitly stated that while it would refer the parties to arbitration
it would continue to retain authority to attach assets as security." 0
The general language of The "Rena K" opinion implies that
attachment pending arbitration is not limited to maritime cases, but may
be permitted in any commercial matter."'
3. Treatment of the Issue by Rule Setting Bodies
International regulatory groups and arbitral associations,
whose rules determine the mechanics of international arbitration
proceedings, allow for attachment.11 2 The United Nations
Commission of International Trade Law (UNCITRAL) arbitration rules113
specifically provide for provisional remedies in aid of arbitration. 114
The rules state: "A request for interim measures addressed by any
party to a judicial authority shall not be deemed incompatible with
the agreement to arbitrate, or as a waiver of that agreement.""15
The UNCITRAL rules were intended "to be compatible with
all legal, social and economic systems throughout the world."" 6
They were recommended without a dissenting vote by the United
Nations General Assembly. 117 Prior to their adoption, signatories to
108.  1 Lloyd's L.R. at 559.
109. Arbitration Act, 1975, ch. 3.
110.  1 Lloyd's L.R. at 561.
111. Id. at 559, 561.
Justice Kerr describes several instances in which disputes submitted to arbitration under
English law may still involve judicial proceedings. Attachment as security is one mentioned.
Kerr, The English Courtsand Arbitration, 3 INT'L COMM. AraB. (Oceana) pt. III, at 34 (Dec.
1980). Although the account was written prior to England's adoption of the New York
Convention, it indicates the traditional acceptance of attachment in aid of arbitration, which
is still applied.
112. See infra notes 113-27 and accompanying text.
113. Arbitration Rules of the United Nations Commission on International Trade Law,
31 U.N. GAOR Supp. (No. 17), U.N. Doe. A/31/17 (1976), reprintedin 2 Y.B. COMM. Aia
161 (1977) [hereinafter cited as UNCITRAL rules].
114. Id. art. 26(
116. Holtzmann, Introduction-recentcontributions of Pieter Sanders to the art of
international commercial arbitration,in THE ART OF ARBITRATION at xi-xii (1982). The
UNCITRAL rules play a significant role in international dispute settlement. See De Vries, supra
note 14, at 53.
117. 31 U.N. GAOR (99th plen. mtg.) para. 49, U.N. Doe. A/C.6/L.17/Rev.1 (1976).
the New York Convention generally abided by regionally based
Professor Sanders, who helped draft the rules,"l 9 stated with
reference to article 26(
The taking of interim
measures is without prejudice to the
outcome of the case. They are well known in court proceedings,
which are not excluded in this instance. A party may even prefer
to approach the court instead of addressing himself to the
arbitral tribunal. Paragraph3 safeguards this approach by stating
proach a judicial authority ....
that it is not incompatible with the arbitral agreement to
He also pointed out that the New York Convention was "taken into
account" when the rules were approved.12 '
The first draft of the rules was circulated to the regional
economic commissions of the United Nations and to approximately
seventy-five centers of international commercial arbitration. 2 2 The
rules have been adopted by the Asian-African Legal Consultative
Committee and the Inter-American Commercial Arbitration
Commission. 2 3 They played a vital role in resolving the hostage crisis
between the United States and the Islamic Republic of Iran.124
The International Chamber of Commerce arbitration rules,
under which Cooper and Motobecane agreed to carry out their
arbitrations, 2 5 also provide for interim or conservatory measures. 2 6
118. Holtzmann, supra note 116, at xii.
120. Sanders, Commentary on UNCITRAL ArbitrationRules, 2 Y.B. COMM. ARB. 172,
121. Id. at 173. Professor Sanders is a firm advocate of interim measures such as
attachment in aid of New York Convention governed arbitration. He played an instrumental role in
the drafting of the Convention, thus his opinion on interim measures has some weight in
interpreting the New York Convention on this issue. See Van den Berg, Should an
International ArbitratorApply the New York Convention of 1958?, in T-E ART OF ARBITRATION 39,
122. Sanders, supra note 120, at 172.
123. Holtzmann, supra note 116, at xii.
124. Id. The United States and Iran agreed on the use of UNCITRAL rules in settling the
claims of not only commercial transactions, but disputes of public law as well. Id.
125. Record on Appeal, supra note 46, at 56, § 14.
126. Article 8(
) provides in pertinent part:
Before the file is transmitted to the arbitrator, and in exceptional circumstances
even thereafter, the parties shall be at liberty to apply to any competent judicial
authority for interim or conservatory measures, and they shall not by so doing be
held to infringe the agreement to arbitrate or to affect the relevant powers reserved
to the arbitrator.
In addition, the American Arbitration Association (AAA) rules
indicate that judicial proceedings do not represent the waiver of a
party's right to arbitrate. 12 7
A Supreme Court decision allowing for provisional remedies
pending arbitral proceedings would bring the United States
practice into line with that of other countries and the UNCITRAL
rules. 12 8 Until the Supreme Court acts, it is suggested that state and
federal courts, when considering this matter, undertake a
comparative law analysis similar to the one set forth in this Note. 129
Legislative action may alternatively provide needed reform.
The Committee on Arbitration of the Association of the Bar of the
City of New York and the Subcommittee on Advisability and
Validity of Provisional Remedies in the Arbitration Process together have
suggested reform of section 7502 of the New York Civil Practice
Laws & Rules (CPLR) and of section 8 of the Federal Arbitration
Act. 130 The proposed changes would permit attachments pending
arbitral proceedings. 131
In 1982, New York's Advisory Committee on Civil Practice
also drafted a subdivision to be added to section 7502 of the CPLR,
permitting courts to grant an attachment or injunction in
connection with an arbitral proceeding. 132 The New York legislature did
not act on it, but it will be resubmitted with slight revisions in
ings, and for purposes of such provisional remedies, a Notice of Intention to
Arbitrate and Demand for Arbitration shall be deemed the equivalent of a summons and
complaint. Any application for such relief must be made prior to or within twenty
days after service by a party of a Notice of Intention to Arbitrate or Demand for
Report of the Committee on Arbitration of the Association of the Bar of the City of New York
and the Subcommittee on Advisability and Validity of Provisional Remedies in the
Arbitration Process 10-11 (1982) [hereinafter cited as New York City Bar Committee Report] (copy
on file at the Fordham InternationalLaw Journal).See supra note 23 for background on N.Y.
Civ. PrAc. LAW § 7502 (McKinney 1980).
The Committee also suggests that § 8(b) of the Federal Arbitration Act be amended to
Application of Interim Relief in Aid of Arbitration: A party to an agreement in
writing for arbitration enforceable under Section 2 hereunder may begin his
proceeding hereunder by attachment of property of another party in accordance with
the law applicable to attachment proceedings or by obtaining a preliminary
injunction against another party in accordance with the law applicable to obtaining such
relief, and the court shall then have jurisdiction to direct the parties to proceed with
the arbitration, to amend, supplement, vacate or otherwise alter any orders made
under this section and to enter its decree upon the award.
New York City Bar Committee Report, supra, at 11. See supra note 44 and accompanying
text for background on § 8 of the Federal Arbitration Act.
131. See supra note 130.
132. The provision would read as follows:
(c) Provisional remedies. The supreme court in the county in which an arbitration is
pending, or, if not yet commenced, in a county specified in subdivision (a), may
entertain an application for an order of attachment or for a preliminary injunction
in connection with an arbitrable controversy, but only upon the ground that the
award to which the applicant may be entitled may be rendered ineffectual without
such provisional relief. The provisions of articles 62 and 63 of this act shall apply to
the application, including those relating to undertakings and to the time for
commencement of an action (arbitration shall be deemed an action for this purpose) if
the application is made before commencement, except that the sole ground for the
granting of the remedy shall be as stated above. The form of the application shall be
as provided in subdivision (a).
1983 Report of the Advisory Committee on Civil Practice to the Chief Administrator of the
Courts of the State of New York 90-91 (1983) [hereinafter cited as Advisory Committee
Report] (copy on file at the Fordham InternationalLaw Journal). This proposal includes a
necessity test, distinguishing it from the New York City Bar Committee Report which does
not. The implicit danger of a necessity test is that it might impose additional time burdens on
the court and parties. Time would presumably have to be spent analyzing evidence
concerning the financial conditions of the parties. Inserting a necessity test, therefore, remains a
133. Id. at 12.
Reforming New York law on this issue is not enough absent a
Supreme Court decision in favor of attachment. The Cooper
decision cites a federal convention as preventing attachment; therefore
federal legislation, as suggested in the New York City Bar
Committee Report, 34 is needed to correct the court's misguided
interpretation of the Convention as codified. 35
Attachment in aid of arbitration is acceptable to many
countries that have signed the New York Convention. 36 Thus, the
McCreary court's broad interpretation of article 11(
) of the
Convention 137 and the Cooper court's reliance on McCreary138 are
The treatment of this issue by United States courts is
questionable in view of the Convention's silence on the issue, 39 the
overwhelming support of foreign countries for attachment, 40 and the
The New York City Bar Committee and Advisory Committee reports relax the
requirements for attachment pending arbitration under New York law in comparison to the standard
established by the Cooper decision in its interpretation of American Reserve Ins. Co., 297
N.Y. 322, 79 N.E.2d 425. See supra note 58.
This is a beneficial result if one accepts the proposition that attachment does not hinder
the arbitral process, but in fact grants security to parties concerned that awards in their favor
will never be enforceable. See supra notes 84-88 and accompanying text.
134. See supra note 130.
135. Clarifying the New York Convention's treatment of attachment as codified in the
United States Code would help eliminate the confusion experienced by all courts on this issue.
See supra notes 24-44 and accompanying text. Clarifying the Code would be particularly
helpful to New York's jurisdiction. See supra note 9.
It has been suggested that the United Nations could resolve the ambiguity by issuing an
interpretive ruling. Note, Pre-Award Attachment Under the U.N. Convention on the
Recognition and Enforcement of ForeignArbitral Awards, 21 VA. J. INT'L L. 785, 801-02 n.85
(1981). However, the drafters of the Convention specifically rejected a proposal to institute
uniform procedural rules for enforcement of arbitral agreements. Id. Promulgation of such
rules was considered premature in view of the differing national approaches to arbitration.
Id. Therefore, no real mechanism is in place to generate such United Nations interpretive
rulings. See id.
Since the interpretation of an international convention is at issue, it would seem that the
next best approach would be to examine how the other signatories interpret the Convention
on the issue of pre-award attachment and then clarify the United States Code accordingly.
See supra note 92 and accompanying text.
136. See supra note 92 and accompanying text.
137. See supra notes 29-31 and accompanying text.
138. See supra note 58 and accompanying text.
139. See supra notes 67, 70 and accompanying text.
140. See supra notes 89-111 and accompanying text.
uniform support for attachment by the associations and regulatory
bodies that have shaped and created the arbitral procedures that
exist today. 14'
The decision in Carolina Power,142 which allows for
attachments pending arbitration, is more consistent with the views of
judiciaries and legislatures of other signatory countries and serves to
promote rather than disrupt the arbitral process. Parties to a
contract will be more likely to enter into and adhere to arbitration
agreements when they know that an award in their favor will be
enforceable. Attachment can help provide this desired security. 143
Peter J. Fitzpatrick
1. Cooper v. Ateliers de la Motobecane, S.A. , 57 N.Y.2d 408 , 442 N.E.2d 1239 , 456 N.Y.S.2d 728 ( 1982 ) (four-to-three decision).
2. Openedfor signatureJune 1 , 1958 , 21 U.S.T. 2517, T.I.A.S. No . 6997 , 330 U.N.T.S. 38 , reprintedin 4 Y.B. COMM. ARm . 226 ( 1979 ) [hereinafter cited as New York Convention] .
Attachment or in rem arrest has traditionally been permitted pending maritime arbitrations . See infra notes 43-44 and accompanying text . The decision does not affect this traditional practice . See Cooper, 57 N.Y.2d at 415 , 442 N.E.2d at 1242, 45 N.Y.S.2d at 731.
3. See infra notes 24- 44 for attempts by federal courts to address the topic of attachment pending New York Convention-governed arbitrations .
4. See infra note 92 and accompanying text.
5. See injra notes 93-111 and accompanying text.
6. See infra note 14 for a list of signatory countries to the New York Convention .
7. See infra notes 112-27 and accompanying text.
8. 57 N.Y.2d 408 , 442 N.E.2d 1239 , 456 N.Y.S. 2d 728.
9. The issue is particularly relevant within New York's jurisdiction because of the
16. Id . art. III.
17. When a party seeks adjudication of an issue specified in an arbitration agreement , article 11 ( 3 ), by its terms, demands that the court "refer" the parties to arbitration after the other party asserts the existence of the arbitration agreement . See id art . 11 ( 3 ).
18. When an arbitral panel reaches its conclusion, article III mandates that the final award be enforced in the signatory country where it is sought to be enforced without readjudication of the matter . See id art . III. The only involvement of a court should be to enforce the award . See id.
19. Quigley , supra note 10, at 1054.
20. Springer, The United Nations Convention on the Recognition and Enforcement of ForeignArbitral Awards, in NEw STRATEGIES FOR PEACEFUL RESOLUTION OF INTERNATIONAL BUSINESS DISPUTES 25 , 25 ( 1971 ).
21. 57 N.Y.2d at 410, 442 N.E.2d at 1240, 456 N.Y.S.2d at 729.
22. 9 U.S.C. §§ 201 - 208 ( 1976 ).
23. U.S. CONST. amend. X.
Attachment is rationally related to a vital state interest in that a state must ensure that the rights of creditors are protected against debtors, who might thwart attempts to enforce legal obligations . Stoller Fisheries , Inc. v. American Title Ins. Co., 258 N.W.2d 336 , 346 (Iowa 1977 ).
In New York, the relevant attachment provisions are found at § 6201 and § 6211 of the New York Civil Practice Law & Rules. N.Y. Civ. PRAc . LAW §§ 6201 , 6211 (McKinney 1980 ). Section 6201 sets out when attachment can be imposed . Subsection ( 3) states that attachment will be available when a money judgment is at stake and includes a provision that attachment will be allowed when a defendant is attempting to abscond with funds that might satisfy a potential award . Section 6211 ( a) states that attachment is allowed without notice, 70. Arbitration and attachment have long coexisted in the United States . Atlas Chartering Servs., 453 F. Supp . at 863. New York permits attachment pending domestic arbitral disputes as long as certain criteria , see supranotes 23 , 58, are met. See Plaintiff-Respondent's Brief at 25-27 , Cooper v. Ateliers de la Motobecane, S.A. , 57 N.Y.2d 408 , 442 N.E.2d 1239 , 456 N.Y.S.2d 728 ( 1982 ) [hereinafter cited as Plaintiff-Respondent's Brief] .
Dr. Albert Jan Van den Berg states: 22 Laws of the State of Israel 210, 213, reprintedin 2 INT'L COMM . ARB. (Oceana) pt . VII, at 14 ( June 1979 ). Israel was one of the original signatories to the Convention . See Contracting States and Reservations , 2 INT'L COMM. Aaa .: NEW YORK CONVENTION ( Oceana) pt . VI. 3 ( Sept . 1980 ).
Japan's Code of Civil Procedure includes a provision permitting judicial involvement during arbitral proceedings . Minji sosh6 h6 (Code of Civil Procedure) , Law No. 29 of 1890 , art. 796 ( Japan), reprintedin 3 INT'L COMM . ARB. (Oceana) pt . III, at 156 (Dec. 1980 ). Japan was an early signatory to the Convention . See Contracting States and Reservations , 2 INT'L COMM. Aaa .: NEW YORK CONVENTION ( Oceana) pt . VI. 3 ( Sept . 1980 ). Upon the motion of a party, legal acts affecting the award "may be carried out by the court[s]" where arbitrators lack the power and where a "real necessity" is apparent . Id.
See generally A. VAN DEN BEac , supra note 10, at 43; Burrows & Newman, supra note 23, at 2, col. 5 (proposition that other signatories allow attachment in aid of arbitration).
93. Judgment of May 12, 1977 , Corte cass., Italy , 4 Y.B. COMM. ARB . 286 ( 1982 ).
94. Id . at 287.
95. Id .
96. Id .
97. Id .
98. Id .
99. Id .
100. Id . at 288.
141. See supra notes 112-27 and accompanying text.
142. 451 F. Supp . 1044 (N.D. Cal . 1977 ). See supra notes 32-41 and accompanying text for discussion of the opinion .
143. See supra notes 84-88 and accompanying text.