[Congressional Record Volume 143, Number 101 (Wednesday, July 16, 1997)]
[Extensions of Remarks]
[Page E1438]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         THE INTERNATIONAL ARBITRATION ENFORCEMENT ACT OF 1997

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                           HON. BILL McCOLLUM

                               of florida

                    in the house of representatives

                        Wednesday, July 16, 1997

  Mr. McCOLLUM. Mr. Speaker, last week I introduced the International 
Arbitration Enforcement Act of 1997, H.R. 2141, a bill designed to 
protect the investments of U.S. citizens overseas. It will provide a 
civil remedy in U.S. courts for damages suffered from a violation of 
the New York Convention on the Recognition and Enforcement of Foreign 
Arbitral Awards by a foreign state.
  The New York Convention is a multilateral international treaty 
drafted in New York in 1958. The United States joined the convention in 
1970. Binding arbitration clauses are frequently used in international 
business contracts, providing a prompt and relatively inexpensive 
dispute resolution mechanism. Signatories to the convention commit 
themselves to enforcing awards of foreign arbitration panels in their 
domestic courts. Failure to enforce an award, unless based on one of 
the limited defenses specified in the convention, in my opinion, raises 
an obligation on the part of the offending signatory to satisfy the 
debt at issue.
  Arbitration clauses such as those governed by the convention are 
especially important in countries that do not have a tradition of 
adhering to the rule of law as we know it. There, if a conflict arises 
triggering arbitration, a neutral third-country forum enables 
resolution of the dispute free from the biases of local courts and the 
vagaries of an unresponsive judiciary. The usefulness of this mechanism 
depends, however, on the commitment of signatories to the convention to 
provide a process through their courts when the prevailing party 
returns to enforce and collect. When a signatory fails to provide such 
a process or otherwise impairs the ability of parties to collect on 
foreign awards, U.S. citizens often find themselves without any remedy 
notwithstanding an award in hand obtained through process measure of 
protection to U.S. citizens against economic injury resulting from 
violations of the New York Convention by foreign states by creating a 
civil remedy against the foreign state in U.S. courts and providing for 
enforcement of any resulting judgments against certain assets of the 
foreign state in the United States.
  The case of the Ross Manufacturing Corp. of Florida illustrates the 
need for the remedy provided for in this bill. In July 1993, Revpower 
Limited, owned by Ross Manufacturing Corp.--f/k/a Ross Engineering 
Corp.--obtained a unanimous arbitral award in the amount of US$4.49 
million against its Chinese State-owned trading partner, the Shanghai 
Far East Aero-Technology Import and Export Corp.--SFAIC. With interest 
the award now totals almost $9 million. Since that time, Revpower has 
been trying to enforce its award through the Chinese court system with 
essentially no success. Indeed it was only after enlisting the interest 
and support of the United States State and Commerce Departments and 
numerous Members in both Houses of Congress that the Chinese court even 
accepted Revpower's enforcement action for filing. A review of 
Revpower's 4-year effort to enforce its award makes it abundantly clear 
that the Chinese Government has, by failing to provide a viable 
enforcement mechanism in accord with its obligations under the New York 
Convention, effectively blocked and delayed Revpower's enforcement 
efforts and rendered its arbitral award worthless for all practical 
purposes.

  By its actions in this dispute, China has signaled that it is no 
longer bound by the terms of the New York Convention and, consequently, 
Revpower and Ross Manufacturing are without any remedy to redress their 
economic injuries. This bill would provide that remedy to Ross 
Manufacturing and all citizens and corporations of the United States 
who encounter foreign nations unwilling to live up to their obligations 
under the New York Convention.
  Mr. Speaker, I invite my colleagues to join me in supporting this 
bill and, in so doing, underscore the importance of the rule of law and 
respect for international treaty obligations.

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