LUXEMBOURG is party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the “New York Arbitration Convention” or the “New York Convention”.

It is one of the key instruments in international arbitration. It applies to the recognition and enforcement of foreign arbitral awards and the referral by a court to arbitration.

Luxembourg is also party to other bilateral or multilateral treaties regarding the recognition and enforcement of arbitral awards which include the European Convention on International Commercial Arbitration of 1961 and the Energy Charter Treaty of 1994.

By reason of the New York Convention alone, international arbitration awards can and are enforced in Luxembourg.

As a matter of fact, the courts there have adopted a liberal regime in favour of the recognition and enforcement of foreign or international arbitral awards.

It is said that the country “has been and remains a pro arbitration jurisdiction”.

The Luxembourg government even moved to modernise the country’s arbitration rules to highlight the advantages of flexibility, speed and confidentiality, making Luxembourg more attractive as a pro-arbitration jurisdiction with liberal and arbitration-friendly provisions in the New Code of Civil Procedure.

So all is not lost despite the shocking reports of authorities in Luxembourg seizing the assets of two Petronas subsidiaries valued at over US$2 billion (RM8.9 billion).

There are appropriate guarantees under Luxembourg law, particularly with regard to the right of the parties to arbitration and respect for the rights of third parties.

Petronas is the unfortunate third party. It must mount a rigorous challenge to the recognition and enforcement of the French arbitral award in Luxembourg. – July 14, 2022.

* Hafiz Hassan reads The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.