The Award Was Enforceable. The Court Wasn’t the Right One.

A decision from the AIFC Court in Kazakhstan caught my attention this week. In Naftogaz of Ukraine v Gazprom, the Court was asked to recognise and enforce an ICC award rendered by a tribunal seated in Switzerland. An earlier order had said yes.

The Court has now said no — not because of the award itself, but because of the court’s own jurisdiction.

The reasoning is quite straightforward: the AIFC Court is a specialised court created by statute. Its jurisdiction is defined by the AIFC Constitutional Statute and is not a general jurisdiction over every civil or commercial matter. The claimant argued that the relevant provisions could nevertheless give the Court jurisdiction to enforce foreign arbitral awards.
The Court disagreed.

One distinction did much of the work: parties who agree to arbitration before the Astana International Arbitration Centre also accept the jurisdiction of the AIFC Court. Parties who agree to ICC arbitration, however, do not. So the Court could enforce IAC awards. That did not mean it could enforce an ICC award rendered in Switzerland.

There is a useful lesson here for enforcement strategy. We often ask whether an award is enforceable in a particular jurisdiction. Perhaps, sometimes the better starting point is: which court has jurisdiction to enforce it?

That question can become particularly important in jurisdictions with specialised courts, financial centres or statutory enforcement regimes. International arbitration is built around the idea that awards can cross borders relatively easily. But when the award reaches the enforcement stage, territory — and the jurisdiction of the local court — comes back into the picture.