In 2017 the Court of Appeals confirmed a change in position regarding the enforcement of awards annulled in the seat of arbitration.(1) This decision broke with the court's earlier interpretation, which had favoured enforcement and been standing practice since 1999.(2)

While in 2015(3) the Court of Appeals demonstrated a more nuanced position in the context of stay of enforcement proceedings in Gold Reserve v Bolivarian Republic of Venezuela (rendered under the International Centre for Settlement of Investment Disputes (ICSID) Additional Facility Rules),(4) in respect of awards which are subject to pending annulment proceedings, the 2017 decision solidifies its new approach of denying enforcement when an award does not produce effects in its jurisdiction of origin.


In 1997 Commisa, a subsidiary of a Delaware-incorporated and Texas-based military contractor, entered into a contract with Pemex Exploración y Producción (PEP), a Pemex subsidiary (and thus a state-owned entity) to build oil platforms in the Gulf of Mexico. After a series of logistical and financial issues arose, the parties signed a subsequent agreement, which ultimately failed to resolve the strain on their contractual relationship.

Under both contracts, in case of a dispute, both arbitration (to be initiated by either party) and unilateral rescission by PEP were foreseen. After PEP informed Commisa of its intent to rescind the contract and a failed attempt at conciliation, Commisa filed a request for arbitration on 1 December 2004.

Following a preliminary award on jurisdiction and a series of domestic proceedings regarding amparo relief and a change of substantive law (notably reducing the time to appeal a unilateral rescission to 40 days, with appeals to be lodged with a specific organ of the executive), the final award was rendered in 2009.

After both enforcement proceedings in the United States and a challenge in the Mexican courts, the award was ultimately vacated in 2011 on various grounds, including the fact that, due to the unilateral rescission, the dispute should not have been submitted to arbitration in the first place.(5)

Given the complex nature of the facts and an in-depth analysis thereof, the US courts strayed from their usual position of not enforcing awards vacated in the seat of arbitration. However, the Luxembourg Court of Appeals diverged from its usual position and took the opposite approach.

Previous Luxembourg practice

Since 1999 it has been common practice in Luxembourg to apply Article 1251 of the New Code of Civil Procedure with respect to arbitral proceedings. Article 1251 states as follows:

Subject to the provisions of international conventions, the judge refuses exequatur: (1) if the award can still be appealed before arbitrators and if the arbitrators have not ordered the provisional execution of the award notwithstanding appeal; (2) If the award or its execution is against public order or if the dispute could not be settled by arbitration; (3) if it is established that there are grounds for annulment as provided for in Art. (1244(3) to (12).(6)

The grounds for annulment referenced in the listed articles include:

  • public order;
  • the dispute's arbitrability;
  • the absence of a valid arbitration agreement;
  • the tribunal's actions being ultra vires (ie, exceeding its competence or powers);
  • the tribunal's failure to treat matters which were inseparable from those ultimately decided on in the award;
  • the irregularity of the tribunal's constitution;
  • a violation of due process;
  • a lack of motivation of the award (in the absence of an express waiver thereof by the parties to the dispute),
  • contradictory dispositions of the award;
  • fraud in the obtention of the award;
  • the rendering of the award based on evidence discovered to be false; and
  • the discovery of evidence which would have had a material effect on the outcome of the procedure, where such evidence was withheld through the adverse party's actions.

As Luxembourg law does not list annulment per se, but only grounds for annulment as a reason to refuse exequatur to an award annulled in the seat, it was common practice to allow for the enforcement of such awards, siding with the often-cited pro-enforcement bias of the New York Convention.

Court of Appeals decision

However, the Luxembourg Court of Appeals' decision in Pemex v Commisa went in a different direction. In the court's reading of Article 1251, a direct application of the New York Convention should be favoured. The court held that because an international convention on the subject exists, the New Civil Code of Procedure does not apply and that if exequatur is refused, it is on the basis of the New York Convention and not the grounds listed in the New Code of Civil Procedure.

As the New York Convention roots arbitral awards in the country of issue or the country according to the laws of which it has been issued, an award challenged and annulled in such jurisdiction will not be enforceable in the seat.

While the Court of Appeals confirmed that the New York Convention does not preclude the states party thereto to grant more favourable treatment to an annulled award – and thus does not preclude them from allowing an award's enforcement irrespective of the fact that it has been annulled in the seat – it simultaneously found that Article 1251 of the New Code of Civil Procedure does not permit such practice in Luxembourg. The court found that in order for an award to be declared enforceable in Luxembourg, it must also be enforceable in the seat, which, if an annulment in the seat has occurred, is not the case.

The Court of Appeals did not share the US court's findings regarding the issue of public order. The Luxembourg court's findings in this respect were that the retroactive application of a legal provision outside criminal law is not necessarily a violation of public order, especially when it is not manifest that such retroactive application has taken place. The Court of Appeals finally ruled that a judge tasked with granting exequatur has no power of appreciation in respect of the grounds and legal reasoning that have led to the annulment of the award in question.


The Court of Appeals' finding that the mere existence of an international instrument (as opposed to granting prevalence only to stricter provisions of such international instrument) leads to the disapplication of the New Code of Civil Procedure. This, along with the stronger emphasis placed on the assessment of whether an award has effect in its jurisdiction of origin in the context of enforcement proceedings, marks a change in the court's previous practice.

For further information on this topic please contact Guy Harles at Arendt & Medernach by telephone (+352 40 78 78 1) or email ( The Arendt & Medernach website can be accessed at


(1) Court of Appeals, 27 April 2017, 40105 of the court's docket.

(2) Court of Appeals, 28 January 1999, Pasicrisie Luxembourgeoise, 31, p 95.

(3) Court of Appeals, 25 June 2015, 42067 of the court's docket.

(4) Gold Reserve Inc v Bolivarian Republic of Venezuela, ICSID Case ARB(AF)/09/1, award dated 22 September 2014.

(5) For an exhaustive description of the facts and procedural background of the case, please refer to the US confirmation proceedings (962 F Supp 2d 642 (2013) Corporación Mexicana de Mantenemiento Integral, S DE RL de CV v PEMEX – Exploración y Producción, US District Court for the Southern District of New York).

(6) Unofficial Arendt & Medernach translation.

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