## Facts

- Company A obtained an arbitral award rendered in former Yugoslavia (later within Slovenia) ordering Company B, a Slovenian company, to pay approximately four million Austrian schillings.
- Company B sought to set aside the award in the courts at the seat; a lower court declined to annul the award.
- The Supreme Court of Slovenia partially set aside the award, concluding that part of it violated Yugoslav public policy at the time the award was made.
- Company A sought recognition and enforcement of the award in Austria.
- In Austrian enforcement proceedings, Company B argued that the Slovenian partial annulment (and its public-policy basis) barred enforcement under the New York Convention.
- The Austrian trial court refused enforcement, treating the foreign partial annulment as precluding enforcement.
- The Austrian appellate court reversed and allowed enforcement at least as to the portion not annulled.
- Company B appealed to the Austrian Supreme Court.

## Issues

1. Whether, under New York Convention article V(1)(e), Austrian courts must refuse enforcement of an arbitral award to the extent it has been set aside at the seat, or whether refusal is discretionary.
2. Whether Austria may enforce the non-annulled, severable portion of an award when the seat court partially annulled the award on public-policy grounds.
3. Whether public-policy analysis at the enforcement stage is governed by Austrian ordre public rather than the seat’s public-policy assessment.

## Decision

- The Austrian Supreme Court upheld the appellate decision permitting enforcement in Austria of the non-annulled portion of the award, subject to Austrian public policy.
- The court treated New York Convention article V(1)(e) as permissive: annulment at the seat authorizes, but does not compel, refusal of enforcement.
- The court recognized that the Slovenian judgment set aside part of the award and accepted that this could justify refusing enforcement of the annulled portion.
- The court allowed partial enforcement of the remaining portion because it remained formally intact and could be assessed independently under Austrian law.
- The court did not treat the seat court’s public-policy determination as automatically controlling for Austrian ordre public.

## Legal Principles

- Under New York Convention article V(1)(e), an enforcement court has discretion to refuse enforcement when an award has been set aside at the seat; refusal is not mandatory in all cases.
- A foreign annulment affects enforcement only to the extent of the annulment; an enforcement court may enforce separable, non-annulled portions of an award.
- Public policy under New York Convention article V(2)(b) is determined by the enforcing forum’s ordre public; a seat court’s public-policy rationale does not automatically establish a violation of the enforcing state’s public policy.
- Public-policy refusal is exceptional and narrowly confined to conflicts with fundamental principles of the enforcing state.

## Conclusion

The Austrian Supreme Court held that a foreign court’s partial annulment of an arbitral award on local public-policy grounds does not automatically preclude enforcement in Austria; article V(1)(e) is discretionary, and Austria may enforce the award’s severable, non-annulled portion if it does not violate Austrian ordre public.


Company A v. Company B (Radenska v. Kajo), 20 Y.B. Com. Arb. 1051 (Austl. 1995)