Question: Iran Aircraft: Do courts always enforce the decisions of arbitral bodies? Why or why not?

Expert answer

Arbitration is a process of dispute resolution in which two parties agree to submit their differences to an independent third party for a binding decision. Arbitral awards are legally binding on the parties and can be enforced through the courts.

However, there are some circumstances in which courts may refuse to enforce an arbitral award. For example, if the award is contrary to public policy or if it was obtained by fraud or duress.

In the case of Iran Aircraft v. Islamic Republic of Iran, the U.S. District Court for the Southern District of New York refused to enforce an arbitral award against Iran because it found that doing so would be contrary to public policy.

The court reasoned that enforcing the award would require the United States to violate its own sanctions laws, which prohibit transactions with Iran.

The court also found that enforcing the award would undermine the policy objectives of the sanctions regime, which is to pressure Iran to change its behavior.

This case illustrates that courts will not always enforce arbitral awards, even if they are legally binding. Factors such as public policy and the impact of the enforcement on other legal regimes can play a role in the court's decision.