Conditional Awards in International Arbitration: A Flexible Tool or an Enforcement Risk?

International arbitration is often chosen for both its flexibility and ability to accommodate business reality. Yet, the final product of this process – an arbitral award – is usually far more rigid. Most arbitral awards follow a simple formula: one party must pay a fixed sum to the other party.

While this approach provides legal certainty, it does not always reflect the realities of complex commercial relationships. Certain disputes may require more than a binary monetary solution, while a straightforward payment order may leave key issues unresolved or even create grounds for further disputes. In such situations, arbitral tribunals may need to go beyond standard wording and resort to conditional awards.

Despite this, conditional awards have traditionally been approached with caution. Concerns regarding enforceability, finality, and the risk of post-award complications have led many arbitral tribunals to avoid conditionality in the arbitral awards altogether. We would like to examine whether those concerns remain justified and explore when and under which conditions conditional awards can offer both enforceability and effectiveness.

Traditional (Doctrinal) Fear of Conditional Awards

A cautious approach to conditional language in arbitral awards is widely shared in practice. Arbitral tribunals are often reluctant to include wording such as “unless” or “on condition that” in the dispositive part of an award.

This reluctance stems primarily from concerns regarding the enforceability of arbitral awards. While the New York Convention does not contain express wording that an arbitral award shall be “final”, it permits refusal of recognition and enforcement where the award has not yet become binding on the parties. What constitutes a “binding” award, however, is not defined in the New York Convention and has been left to interpretation by national courts.[1] In practice, some national courts have equated binding force with the final and definite determination of the dispute or discrete claim on the merits.[2] As a result, if the dispositive part of an award depends on a future event, enforcement courts may question whether the tribunal has issued a final binding award at all.

[3]The language of a “final award” also appears in Article 32(1) of the UNCITRAL Model Law, which provides that arbitral proceedings are terminated by the “final award”. Although the provision primarily addresses the termination of the arbitral tribunal’s mandate, its wording reinforces the perception that arbitral awards must possess a certain degree of finality to produce legal effects.

From an enforcement perspective, national courts also expect the dispositive part of an award to be sufficiently clear and self-contained to permit direct enforcement. As the English High Court observed in Eurofric Power Limited v Federal Government of Nigeria case, an award must be capable of being “translated straight into the body of a judgment” without the need for further assessment as to whether and when an obligation arises.[4] Where the dispositive part of an award is ambiguous, inconsistent, or dependent on further evaluation, enforcement may be refused because the court cannot reconstruct the arbitral tribunal’s intended obligations.[5]

Therefore, at first sight, conditional awards seem to sit uneasily with the above understanding of finality. If an obligation only arises once a future condition is met, it may be unclear whether the arbitral tribunal has fully resolved the dispute or merely postponed its decision. In such cases, an enforcement court may find that the award is not a final and binding decision and, therefore, cannot be enforced.

Fears Often Unrealised

Resolving the fears of whether a conditional award is “final” requires, first and foremost, a clearer understanding of what finality actually demands.

As Gary Born explains, the term “final award” carries at least three distinct meanings in international arbitration.[6] First, all arbitral awards are “final” in the sense that they resolve a particular claim with preclusive effect (including partial awards issued before the arbitration concludes). Second, “finality” may refer to the degree of finality achieved at the seat, meaning the award is no longer subject to appeal or annulment proceedings. Third, and most narrowly, a “final award” denotes the last award in the arbitration; the one that disposes of all remaining claims, terminates the proceedings, and renders the tribunal functus officio (similarly to that provided in Article 32(1) of the Model Law).

A similar categorisation of finality has been articulated, for example, by the Singapore Court of Appeal in PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation case,[7] which distinguished between partial, interim, provisional, and final awards and explained that the term “final award” may refer either to the conclusive determination of a specific issue not subject to appeal or to the award that disposes of all claims in the arbitration.

None of these three meanings of finality is inherently incompatible with conditionality, provided the condition does not require the arbitral tribunal to revisit its decision on merits. The key lies in distinguishing between conditions that require further judicial or arbitral assessment and those that are purely factual in nature.

This distinction is not a modern invention. As early as 1813, the US Supreme Court in Thornton v. Carson case upheld an award that illustrates precisely this point.[8] The arbitrators ordered Thornton to convey a fractional interest in mineral lands to Carson by a specified date, failing which Thornton was to pay a specified monetary sum. The US Supreme Court rejected the challenge of Thornton that this contingency made the award “uncertain” or “not final”, holding that a clear choice between specific performance and a monetary fallback creates a valid and enforceable obligation as the obligation becomes determinate through the actual conduct of the parties, without requiring any further assessment by the tribunal.

Recent case law confirms and refines the principle that the decisive question is not whether an arbitral award contains a condition, but whether the tribunal has already finally resolved the underlying dispute.

For instance, in Voltas Ltd v York International Pte Ltd case, the arbitrator ordered York to pay a fixed sum, subject to Voltas proving that it had paid the same amount to a third party.[9] When the parties later disagreed on whether the sum was payable, Voltas sought a further award from the arbitrator, and York challenged arbitrator’s jurisdiction to issue it, arguing that his mandate was over. The Singapore Court of Appeal upheld that challenge. It held that so long as there is sufficient clarity in both the award and any conditions stipulated therein, a conditional award may be a final award, and the central question is whether the condition requires the tribunal to reopen or reconsider the merits. If the award disposes of all claims and leaves nothing for the tribunal to decide, the tribunal is functus officio. The assessment of whether the condition has been met is a factual matter for the enforcement court, not a legal issue requiring further action by the tribunal. On that basis, the original (conditional) award was final, and the arbitrator had no jurisdiction to proceed further.

Another important question related to post-award complications, namely what happens when the tribunal’s mandate has already ended and a dispute arises as to whether the conditions of the award have been satisfied.

This question was addressed in A v B case.[10] In that case, the parties had settled an LCIA arbitration by a consent award providing for payment of the principal sum in instalments, with acceleration clauses triggered upon default or upon the occurrence of specified external events. The tribunal was expressly declared functus officio upon making the consent award. Then a dispute arose as to whether the acceleration conditions had been triggered. The court reasoned that once a tribunal is functus officio, enforcement is essentially a matter for national courts, and it is the court that assumes jurisdiction to verify factual compliance with the conditions of the award, ensuring no gap exists between the award and its execution.

Finally, some of the reliefs widely accepted in arbitration are also conditional. One common example is conditional post-award interest, where tribunals provide that interest will accrue at a specified rate if the awarded sum is not paid by a certain date.[11] These are clearly conditional reliefs, yet arbitral awards containing such reliefs are rarely questioned on grounds of finality. If this form of conditionality is accepted, it is difficult to argue that conditional relief is problematic as a matter of principle.

Why Conditional Awards Matter in Practice

Once it is accepted that courts are prepared to enforce properly drafted conditional awards, the debate shifts from abstract risk to practical necessity. In many disputes, avoiding conditional relief does not enhance certainty. Instead, it can produce outcomes that are legally neat but commercially ineffective. Flexibility and efficiency are core reasons why parties choose arbitration, and in appropriate cases, those values justify the use of conditional awards.

A clear example comes from a Ukrainian arbitration practice in cases involving the enforcement of security. In ICAC Case АС No. 373б/2014, the arbitral tribunal dealt with enforcement of collateral and granted a conditional relief to reflect the nuances of the Ukrainian secured transactions law.[12] Under the Law of Ukraine On Securing Creditors’ Claims and Registration of Encumbrances, enforcement is generally carried out through a sale at public auction, but the court may also provide for alternative enforcement methods, including private sale of the collateral by a creditor to any third party. In the arbitral award, the ICAC tribunal authorised the creditor to enforce its security interest through private sale of the collateral to a third party, while providing that, if that method of enforcement proved impossible within two years of the arbitral award, the claimant would be entitled to proceed with a sale at public auction instead. Thus, the ICAC tribunal ensured that the arbitral award remained final and actually enforceable regardless of how enforcement unfolded in practice, without forcing the parties into new proceedings. The arbitral award was later successfully recognised and enforced by a Ukrainian court.[13]

Conditional awards can increase efficiency by providing alternative remedies within a single decision. In J & J Global Investments v Zip-Flyer case, the tribunal structured its relief through two parallel conditional mechanisms: (і) it ordered the respondent to repay over USD 2.6 million within 60 days, failing which the claimant would be entitled to enforce the award as a court judgment in any competent jurisdiction, and separately (іі) it ordered the respondent to retrieve, at its own expense, steel located on the claimant’s property within the same period, failing which the steel would be deemed forfeited to the claimant.[14] In Rishima SA Investments LLC v Shristi Infrastructure Development Corporation Ltd case, the arbitral tribunal ordered payment of a quantified sum against delivery of share transfer documents and included an alternative monetary award in the event that the primary monetary relief was declared unenforceable by a court.[15] These “if-then” structures are most effective precisely because they anticipate enforcement difficulties in advance, reducing the need to go back to the arbitral tribunal and ensuring that the prevailing party is not left without a remedy.

Conditional awards are also useful in disputes involving chains of contracts. Where a wholesaler is sued by a retailer for defective goods and seeks indemnification from the manufacturer, waiting until the retailer’s claim is fully resolved may put the wholesaler’s upstream claim at risk due to limitation periods. A conditional award enables the tribunal to determine the manufacturer’s liability to the wholesaler contingent on the wholesaler being found liable to the retailer. This “pre-emptive protection” secures the wholesaler’s rights without requiring separate lawsuits or speculative damages claims.

Conditional awards equally offer a practical solution in disputes with a sanctions or regulatory compliance dimension. As illustrated in YDU v SAB case, where the counterparty is subject to sanctions risk, an unconditional payment order may place the receiving party in a difficult position. By attaching conditions as to the source of funds and requiring documentary evidence of their origin, the arbitral tribunal enabled enforcement while protecting the claimant from sanctions exposure.[16] Conditional relief can, therefore, serve as a substantive tool for managing legal risk in a changing geopolitical environment.

Conditional awards also prove useful where one party defaults on participation. As shown in U&M Mining Zambia v Konkola Copper Mines case, rather than proceeding to an unconditional award against the absent party or adjourning the proceedings indefinitely, the arbitral tribunal adopted a “show cause” mechanism — ordering relief conditionally, with a fixed window for the absent party to respond, whereby specific relief would take effect unless the absent party produced contrary submissions and evidence within a set time limit.[17] This preserved procedural fairness without sacrificing efficiency.

Finally, conditional mechanisms have also appeared in arbitral awards dealing with future legal costs. In DBG Group Investments v Johnston case, the arbitrator conditionally awarded fixed sums for potential appeals to higher courts, payable only if the claimant prevailed.[18] In Tricon Energy Ltd v Vinmar International Ltd case, the arbitral tribunal conditionally awarded reasonable attorneys’ fees for future enforcement proceedings, specifying in the award itself the amount that would constitute such reasonable fees at each level of court.[19] While such practice is more prevalent in common-law jurisdictions, these examples show that arbitral tribunals may use conditional relief to allocate future costs in advance, thereby discouraging unmeritorious challenges and clarifying the financial consequences of post-award proceedings.

Conclusions

The hesitation surrounding conditional awards appears to rest on a misunderstanding of what finality requires. Finality demands that the arbitral tribunal resolve the dispute, not that the award be stripped of all conditional elements. Across jurisdictions, the case law converges on a consistent test: a conditional award remains final where the tribunal has conclusively determined the merits and any remaining step involves only the factual verification of a condition, rather than further legal assessment. Limited forms of supervisory jurisdiction over the implementation of such conditions may, in appropriate circumstances, remain with the arbitral tribunal (as illustrated in YDU v SAB case). As a general rule, however, the verification of whether a condition has been satisfied is a matter for enforcement courts, which helps ensure that conditional awards remain both final and workable in practice.

On balance, conditional awards should not be viewed as exceptional or inherently risky. Therefore, where the circumstances of the case require a more nuanced solution than a simple monetary award, a conditional award may better serve both parties.

Established arbitration practice already accepts various forms of conditional relief, most notably post-award interest mechanisms, which operate precisely on a contingency basis and yet rarely give rise to concerns as to their finality or enforceability. The limited judicial resistance to such mechanisms suggests that the perceived risks of conditional awards may, in many cases, be exaggerated. While legitimate concerns may arise where conditions are unclear or require further legal assessment, a more general reluctance toward conditional relief appears to reflect caution rather than necessity, and in some instances may be invoked more readily by dissatisfied parties seeking to resist enforcement than by courts applying principled limits on arbitral authority.

The key is careful drafting. Conditions in the dispositive part of an arbitral award must be objective, clearly defined, and limited to matters that an enforcement court can verify without revisiting the merits. When such standard is met, conditional awards do not undermine finality. They enhance the effectiveness of arbitration by delivering outcomes that work in practice.

[1] UNCITRAL Secretariat Guide on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958), page 209, paragraph 5, available at: https://newyorkconvention1958.org/pdf/guide/2016_Guide_on_the_NY_Convention.pdf#page=89

[2] UNCITRAL Secretariat Guide on the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958), page 216, paragraph 17, available at: https://newyorkconvention1958.org/pdf/guide/2016_Guide_on_the_NY_Convention.pdf#page=89

[3]

[4] Eurafric v. Nigeria, BPE and MoFI, Judgement of the High Court of Justice of England and Wales [2022] EWHC 3548, 15 November 2022, para. 42, available at: https://jusmundi.com/fr/document/decision/en-eurofric-power-limited-v-federal-government-of-nigeria-nigerian-bureau-of-public-enterprises-bpe-and-nigerian-ministry-of-finance-incorporated-mofi-judgment-of-the-high-court-of-justice-of-england-and-wales-2022-ewhc-3548-tuesday-15th-november-2022

[5] ibid

[6] Gary B. Born, International Commercial Arbitration (Third Edition), Chapter 23: Form and Contents of International Arbitral Awards (Updated April 2024), available: https://www-kluwerarbitration-com.peacepalace.idm.oclc.org/document/kli-ka-born-2021-ch23?q=%22final%20award%22

[7] PT Perusahaan Gas Negara (Persero) TBK v CRW Joint Operation [2015] SGCA 30, paras. 51-53, available at: https://www.elitigation.sg/gd/s/2015_SGCA_30

[8] Thornton v. Carson, 11 U.S. 596 (1813), available at: https://supreme.justia.com/cases/federal/us/11/596/

[9] Voltas Ltd v York International Pte Ltd [2024] SGCA 12, 2 May 2024, paras. 1-2, 39, 42, 44, 48-49, 63, available at: https://www.elitigation.sg/gd/s/2024_SGCA_12

[10] A v B [2020] EWHC 2790 (Comm), paras. 24-33, available at: https://jusmundi.com/fr/document/decision/en-a-v-b-judgment-of-the-high-court-of-justice-of-england-and-wales-2020-ewhc-2790-wednesday-21st-october-2020

[11] See, inter alia, Aconcagua Investment Co. v. Ingaseosas International Co., ICDR Case No. 50-181-T-00418-08, 20 August 2009, available at: https://jusmundi.com/en/document/decision/en-aconcagua-investment-co-v-ingaseosas-international-co-arbitral-award-thursday-20th-august-2009; CBJ Tonawanda Holdings v. Novair, AAA Case No. 01-23-0001-6652, 26 February 2025, para. 49, available at: https://jusmundi.com/fr/document/decision/en-cbj-tonawanda-holdings-inc-formerly-known-as-audubon-machinery-corporation-v-novair-sas-and-novair-usa-inc-final-award-wednesday-26th-february-2025

[12]  ICAC Case No. 106 (АС No. 373б/2014), Arbitral Award dated 28 January 2015, available at: https://icac.org.ua/wp-content/uploads/Case-No.-106.pdf

[13]  Ruling of the Dnipro District Court of Kyiv dated 8 September 2016 in case No. 755/7791/16-ц, available at: https://reyestr.court.gov.ua/Review/61244672

[14] J & J Global Investments, L.P. v. Zip-Flyer, LLC, AAA Case No. 01-23-0000-9271, 19 February 2025, paras. 37-39, 68, available at: https://jusmundi.com/en/document/decision/en-j-j-global-investments-l-p-v-zip-flyer-llc-partial-final-award-of-arbitrator-wednesday-19th-february-2025#decision_80192

[15] Rishima Sa Investments LLC v. Shristi Infrastructure Development Corporation Limited, ICC Case No. 21674/CYK/PTA in Judgment of the High Court of Delhi at New Delhi, 22 February 2021, available at: https://jusmundi.com/fr/document/decision/en-rishima-sa-investments-llc-v-shristi-infrastructure-development-corporation-limited-judgment-of-the-high-court-of-delhi-at-new-delhi-monday-22nd-february-2021

[16] YDU v SAB & Anor [2022] EWHC 3304 (Comm), paras. 34–36, 41, 44-45, available at: https://www.bailii.org/ew/cases/EWHC/Comm/2022/3304.html

[17] U&M Mining Zambia v. Konkola Copper Mines [2014] EWHC 2374, paras. 88, 97, available at: https://jusmundi.com/fr/document/decision/en-u-m-mining-zambia-ltd-v-konkola-copper-mines-plc-judgment-of-the-high-court-of-justice-of-england-and-wales-2014-ewhc-2374-tuesday-15th-july-2014#decision_43784

[18] DBG Group Investments, LLC, and DBG Group International, LLC v. Allen M. Johnston, Ellen Johnston, and Greentech Environmental, LLC, AAA Case No. 01-19-001-7169, 16 February 2022, para. 5, available at: https://jusmundi.com/en/document/decision/en-dbg-group-investments-llc-and-dbg-group-international-llc-v-allen-m-johnston-ellen-johnston-and-greentech-environmental-llc-final-award-modified-wednesday-16th-february-2022#decision_21169

[19] Tricon Energy Ltd. v. Vinmar International Ltd., AAA Case No. 70-198-00168-09, paras. 6.1.-6.2., available at: https://jusmundi.com/fr/document/decision/en-tricon-energy-ltd-v-vinmar-international-ltd-award-of-the-arbitrators-monday-29th-november-2010#decision_11286?su=%2Ffr%2Fsearch%3Flang%3Den%26query%3DTricon%2BEnergy%2BLtd.%2Bv.%2BVinmar%2BInternational%2BLtd