In Zeevi Holdings Ltd v Bulgaria, (S.D.N.Y. Apr. 5, 2011), the court found that a forum selection clause requiring execution of the award in another country applied to confirmation proceedings; thus, the court was prohibited from confirming the award because the forum selection clause was a procedural bar to enforcement.

Zeevi Holdings, an Israeli Company, entered into an agreement with the Privatization Agency for the Republic of Bulgaria (Agency) that transferred 75% of the shares of Balkan Airlines to Zeevi. As part of the agreement, the Agency made guarantees to Zeevi about the financial health and legal status of Balkan Airlines. The agreement contained an arbitration clause and a forum selection clause stating that "execution of an award against the Seller may be conducted only in Bulgaria in accordance with the provisions of Bulgarian law."

After disputes over the representations made by the Agency, Zeevi initiated arbitral proceedings against the Agency and Bulgaria. The arbitrators issued an award against Bulgaria. Bulgaria did not pay the award because it believed the arbitral panel did not have jurisdiction to issue an award against it since it was not a party to the agreement.

Zeevi filed an application for authorisation of the award in an Israeli court, which found that Israeli law did not require that Zeevi enforce the award in Bulgaria. There was no evidence that Zeevi attempted to enforce the award in Israel. Zeevi then filed a petition for confirmation in New York, and Bulgaria requested removal to federal court. Bulgaria then moved to dismiss the petition because the forum selection clause in the agreement made New York courts an improper venue.

The New York Convention (NYC) lists the "exclusive" grounds for courts to refuse to enforce an arbitral award. Bulgaria conceded that none of these applied but argued that the forum selection clause of the agreement prohibited confirmation in New York. The court agreed, explaining that the grounds in the NYC are the exclusive substantive grounds for refusing to confirm an award, but that courts can refuse to enforce an award based on procedural grounds as the law of their territory allows.

The court further reasoned that enforcing the award would allow Zeevi to avoid its contractual obligations to seek execution of arbitral awards only in the agreed upon forum. This could create a potential chilling effect on the NYC's goal of encouraging international business.

The court then found that the forum selection clause applied to this case. "Execution of an award" includes confirmation or enforcement of an award based on the plain meaning of execution and its context. Finding otherwise would require a "hyper-technical and illogical reading" of the word execution. After finding that Zeevi failed to rebut the presumption of enforceability for valid forum selection clauses, the court granted Bulgaria's motion to dismiss the petition.

This case demonstrates the grounds on which parties can challenge enforcement of arbitral awards. While the New York Convention provides the exclusive substantive grounds, parties can also rely on procedural grounds, as allowed by the law of the jurisdiction, to challenge enforcement of awards.