Timor-Leste joins the Convention on the Recognition and Enforcement of Foreign Arbitral Awards

Sat. 21 of January of 2023, 01:04h

On January 17th, Timor-Leste became the 172nd State Party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (also known as the New York Convention). The Convention will enter into force for Timor-Leste on April 17th, 2023.

Playing a vital role in the development and consolidation of international commercial arbitration, the New York Convention obliges the courts of each one of the States' Parties, provided certain assumptions are met, to recognise arbitration agreements concluded and arbitral awards made in any other State Party and to ensure their enforcement. Accordingly, participating in this Convention means that the Timorese courts are bound to recognise and enforce foreign arbitral awards made by other State Parties and that the courts of different State Parties are bound to recognise arbitral awards made in East Timor.

Voluntary arbitration is an alternative dispute method of dispute resolution whereby litigants, instead of going before the State courts, entrust the dispute resolution to arbitrators chosen by them, who are empowered to issue a binding decision whose enforceability is equivalent to that of court decisions.

Besides allowing for more incredible speed in resolving disputes, arbitration also offers the parties the advantage of appointing as arbitrators the persons they consider most appropriate to the nature and complexity of the case to be resolved. In addition, recognising foreign arbitration agreements and arbitral awards fosters foreign partners' confidence and mitigates possible obstacles to their investment in the country.

The accession of Timor-Leste to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards is part of a legislative package prepared by the then Ministry of Legislative Reform and Parliamentary Affairs, led by Minister Fidelis Magalhães, intending to ensure the improvement and strengthening of the justice administration system and promote the existence of a diversified range of means of dispute resolution, creating a more favourable environment for business and private investment, namely foreign investment. The entry into force of the Voluntary Arbitration Legal Regime, approved by Law 6/2021 of March 31st, which was part of the same legislative package, also contributed to this goal. With the accession to the New York Convention and the approval of the Legal Framework for Voluntary Arbitration, the legal framework for voluntary arbitration has been completed in its essential aspects.

The draft National Parliament’s Resolution for Timor-Leste's Accession to the New York Convention was approved on October 23rd, 2019, by the Council of Ministers, following a proposal of the then Minister of Legislative Reform and Parliamentary Affairs, Fidelis Magalhães. The National Parliament approved it on February 2nd, 2021.