ENFORCEMENT OF INTERNATIONAL ARBITRATION
AWARDS IN THE UNITED STATES ©
September
2013
Larry W. Thomas[i]
Introduction
As global business has increased dramatically so has
the use of arbitration in lieu of national courts to resolve international
commercial disputes. Although the prevailing party in an arbitration may expect
the losing party to comply with an award by an arbitrator or an arbitral panel,
the prevailing party may have to initiate a judicial action to enforce the
award in a jurisdiction where the defendant has assets.
Some commentators have suggested that foreign arbitral
awards are enforced more frequently in the United States than foreign
judgments. In fact, the United States has a strong policy in favor of
arbitration, a policy that extends to the recognition and enforcement (also
referred to hereafter as confirmation) of arbitral awards. Although there are
other bases for confirming an arbitral award, such as the 1975 Inter-American
Convention on International Commercial Arbitration (Inter-American Convention),
this article discusses confirmation in the United States based on its
ratification in 1970 of the 1958 United Nations Convention on the Recognition
and Enforcement of Foreign Arbitral Awards (New York Convention). The United
States implemented the New York Convention in Chapter 2 of the Federal
Arbitration Act (FAA). According to the New York Convention’s website, Brazil’s
ratification of the Convention took effect in 2002.
From the vantage point of the United States and the
FAA, there are three kinds of arbitral awards: foreign awards, non-domestic
awards, and domestic awards. In the United States, the New York Convention, as
well as the FAA, applies both to foreign and non-domestic arbitral awards.[ii]
However, the two types of awards differ in regard to the grounds and defenses
that may be asserted to their confirmation in the United States. Foreign awards
are confirmed in accordance with Chapter 2 of the FAA. Non-domestic awards are
confirmed in accordance with both Chapters 1 and 2 of the FAA.[iii]
I. THE NEW YORK CONVENTION AND THE FEDERAL ARBITRATION
ACT
In the overwhelming number of cases seeking
confirmation in the United States of an award made in an international
arbitration, the prevailing party, and thus the plaintiff in the confirmation
proceeding, has sought enforcement pursuant to the New York Convention. In the
United States the confirmation of arbitral awards is limited to awards
involving commercial disputes, a term that the courts have interpreted quite
broadly. United States courts will enforce awards made only in the territory of
another state that is a Contracting Party to the New York Convention.[iv]
Chapter 2 of the FAA incorporates the New York
Convention as part of the law of the United States. Section 203 of the FAA
provides that the federal courts of the United States have jurisdiction of
recognition and enforcement actions brought pursuant to the Convention. [v]
Although such recognition and
enforcement actions may be brought in a state court in the United States the
defendant has the option of “removing” (i.e., having the case
transferred) to the appropriate federal court in that state.[vi]
A party seeking to confirm an award in the United States must commence a
proceeding “[w]ithin three years after an arbitral award falling under the
Convention is made….”[vii]
An arbitral award need not have been confirmed first
in the foreign state where the award was made before an action for recognition
and enforcement is brought in the United States. If a party seeks to annual or
vacate a foreign award the action for annulment or vacatur must be
brought in the foreign state where the arbitration was held. Although an
application in the United States to annul or vacate a foreign award is not an
option under Chapter 2 of the FAA, an application in the United States to
vacate a non-domestic award is possible under Chapter 1 of the FAA. Under
Chapter 1 the statute of limitations is one year.
Even an arbitration that was entirely between citizens
of the United States may be subject to the New York Convention and be
enforceable under the FAA when the parties’ relationship “involves property located
abroad, envisages performance or enforcement abroad, or has some other
reasonable relation with one or more foreign states. For the purpose of this
section a corporation is a citizen of the United States if it is incorporated
or has its principal place of business in the United States.”[viii]
II. ENFORCEMENT OF A FOREIGN AWARD UNDER THE NEW YORK
CONVENTION AND CHAPTER 2 OF THE FAA
A. A Court Shall Confirm a Foreign Award Unless the
Court Finds a Specific Ground for Refusal
Article V of the New York Convention and section 207
of the FAA create a presumption of validity for foreign arbitral awards.
Section 207 of the FAA states that courts “shall” confirm an award unless the
court finds that one of the seven grounds, discussed below, specified in the
New York Convention warrants refusing to recognize and enforce an award. The
party opposing confirmation has the burden of proving the invalidity of any
award.
Article V of the Convention sets forth seven grounds
for refusing to recognize and enforce an award. Five of the grounds may be
raised by the party against whom the award is sought to be enforced. The
remaining two grounds may be raised sua sponte by the court or by the
defendant or defendants opposing confirmation. The courts in the United States
have construed the seven grounds narrowly. Although a party opposing an award
may attempt to assert other grounds, most courts in the United States have held
that the grounds for refusal to recognize and enforce an arbitral award are
limited to the seven grounds enumerated in Article V of the Convention.[ix]
B. Grounds that may be Asserted by the Party Opposing
Confirmation
(1) Validity of the
Agreement
Article V(1)(a) of the Convention states that the
first ground for refusal to confirm an award is that the parties to the
arbitral agreement “were, under the law applicable to them, under some
incapacity, or the said agreement is not valid under the law to which the
parties have subjected it or, failing any indication thereon, under the law of
the country where the award was made….”
The view of many legal commentators is that the first
ground rarely has been used and if asserted rarely has been successful in the
United States. The courts in most of the cases reviewed for this article
rejected a defense of invalidity based on Article V(1)(a). Nevertheless, a few
cases were found in which the courts held that the arbitration agreement was
actually or at least potentially invalid.[x]
(2) Adequacy of Notice; Inability to Present One’s
Case
Article V(1)(b) of the Convention states that a second
ground for refusal to confirm an award is that “[t]he party against whom the
award is invoked was not given proper notice of the appointment of the
arbitrator or of the arbitration proceedings or was otherwise unable to present
his case….”
The due process defense is intended to ensure that
during the arbitration sufficient notice and opportunity to be heard were
provided to the parties. However, as with other bases for refusing to recognize
and enforce a foreign award under the Convention, not only has the due process
defense usually been unsuccessful, but also the courts have construed the
defense narrowly.[xi] The
courts have decided that “arbitrators are charged with the duty of determining
what evidence is relevant and what is irrelevant, and that barring a clear
showing of abuse of discretion, the court will not vacate an award based on
improper evidence or the lack of proper evidence.”[xii]
It appears that in only a few cases have the courts in the United States
refused to confirm an award based on alleged inadequate notice or the denial of
a defendant’s ability to present its case.[xiii]
(3) Scope of the Submission
Article V(1)(c) of the Convention states that
confirmation may be refused when:
The award deals with a difference not contemplated by
or not falling within the terms of the submission to arbitration, or it
contains decisions on matters beyond the scope of the submission to arbitration,
provided that, if the decisions on matters submitted to arbitration can be
separated from those not so submitted, that part of the award which contains
decisions on matters submitted to arbitration may be recognized and enforced….
One case in which the defense was successful is Fiat
S.p.A. v. Ministry of Finance & Planning of Suriname.[xiv]
The court ruled that the tribunal exceeded its authority when it purported to
bind a non-signatory to an arbitration agreement. It appears that a party’s
reliance on the third ground, however, to oppose confirmation rarely has been
successful.
(4) Composition of the Arbitral Tribunal; Rules of
Arbitral Procedure
The fourth ground for refusal to confirm an award is
in Article V(1)(d) of the Convention: “The composition of the arbitral
authority or the arbitral procedure was not in accordance with the agreement of
the parties, or, failing such agreement, was not in accordance with the law of
the country where the arbitration took place….”
The fourth defense was rejected in Four Seasons
Hotels & Resorts B.V. v. Consorcio Barr, S.A.,[xv]
in which a foreign party challenged the propriety of specific performance as a
remedy that was granted in a final award. The court rejected the argument that
the award under the circumstances was contrary to Venezuelan law. One reason
that the fourth ground may have had limited success is the courts’ perception
that the defense often is made in bad faith, particularly if the ground was not
raised as an objection during the arbitration.[xvi]
Only a few cases were located in which the courts in the United States relied
on the fourth ground to deny recognition and enforcement to a foreign award.[xvii]
(5) Legal Status of the Award
As provided in Article V(1)(e) of the Convention, the
fifth ground is that “[t]he award has not yet become binding on the parties, or
has been set aside or suspended by a competent authority of the country in
which, or under the law of which, that award was made.”[xviii]
It there are foreign proceedings challenging an award
one might assume that a court in the United States would not hear an
application to confirm an award or would defer ruling on an application for
confirmation of an award. However, on the contrary, courts in the United States
have ruled that an award is considered to be binding under the Convention when
there are no arbitral appeals available, not when all judicial appeals
have been exhausted in the country in which the award was made.[xix]
Nevertheless, there are some cases in which a court in the United States has
ruled that an award was not presently enforceable because of foreign
proceedings challenging the award[xx]
or not enforceable because the courts in the foreign jurisdiction had nullified
the award.[xxi]
C. Grounds Asserted by Defendant or Raised Sua
Sponte by the Court
There are two other grounds on which an arbitral award
may be challenged. Article V(2) of the Convention provides that confirmation of
an award also may be refused “if the competent authority in the country where
recognition and enforcement is sought finds” that one of the following two
grounds is present. Either ground may be raised by the defendant or by the
court sua sponte.
(1) Whether the Subject Matter is Arbitrable
Under Article V(2)(a) of the Convention the
confirmation of an award may be refused if “[t]he subject matter of the
difference is not capable of settlement by arbitration under the law of that
country….” For the defense to succeed, a party must prove that the nation where
enforcement is sought has a special national interest in the subject matter
that makes the dispute incapable of being settled by arbitration.[xxii]
As the court explained in Parsons & Whittemore
Overseas Co. v. RAKTA, [xxiii]
Article V(2)(a) [of the New York Convention]
authorizes a court to deny enforcement, on a defendant’s or its own motion, of
a foreign arbitral award when “the subject matter of the difference is not
capable of settlement by arbitration under the law of that [the forum]
country.” Under this provision, a court sitting in the United States might, for
example, be expected to decline enforcement of an award involving arbitration
of an antitrust claim in view of domestic arbitration cases which have held
that antitrust matters are entrusted to the exclusive competence of the
judiciary. … On the other hand, it may well be that the special considerations
and policies underlying a “truly international agreement” … call for a narrower
view of non-arbitrability in the international than the domestic context….[xxiv]
In a 2011 case, Thai-Lao Lignite (Thailand) Co.,
Ltd. & Hongsa Lignite (Lao Pdr) Co., Ltd. v. Gov’t of the Lao People’s
Democratic Republic,[xxv]
involving an arbitral award issued in Kuala Lumpur, Malaysia, a federal court
in New York rejected the defense that the matter in dispute was not arbitrable.
The court held in part that objections to arbitrability were “ultimately
objections to how the Panel calculated damages and interpreted the [Project
Development Agreement], both of which are well outside the scope of what the
Court may review on a petition to confirm an award under the Convention.”[xxvi]
The defense of non-arbitrability was successfully
invoked in the United States to deny enforcement of an award against Libya in
Libyan American Oil Co. (“LIAMCO”) v. Socialist People’s Libyan Arab Jamahirya.
The court found that the case was not subject to arbitration because the main
issue concerned Libya’s nationalization of an oil company’s rights under
certain petroleum concessions. Because the nationalization was an act of state,
the case was not one that could be determined by arbitration.[xxvii]
(2) Public Policy
Under Article V(2)(b) a court may refuse to confirm an
award because “[t]he recognition or enforcement of the award would be contrary
to the public policy of that country.” American courts have interpreted the
public policy defense narrowly. For the defense to be successful, it would have
to be shown, for example, that the recognition and enforcement of an award
would violate the United States’ most basic notions of morality and justice.[xxviii]
In Four Seasons Hotels & Resorts B.V., supra,[xxix]
a federal court in Florida confirmed an arbitral award to which Consorcio Barr,
SA objected on the ground of public policy. The court stated that “the
possibility that confirmation of the Final Award may result in conflict with a
foreign court’s valid ruling is insufficient to raise comity or other public
policy concerns sufficient to give rise to a defense under Article V(2)(b).”[xxx]
Parties opposing confirmation may attempt to
characterize a ground for opposing confirmation as one based on public policy
that is not really a public policy defense as occurred in a case decided by a
federal court in Arizona.[xxxi]
In rejecting a public policy argument, the court stated that the award at issue
merely “recognizes the breach by PTG and the non-material breach by [the moving
parties] but then finds inadequate proof of damages. … This does not constitute
a violation of public policy.”[xxxii]
Although most attempts to rely on the public policy
defense have failed, the defense was was argued successfully to avoid
enforcement of an award in Laminoirs-Trefileries-Cableries de Lens, S.A. v.
Southwire Co. A federal court in Georgia found that the interest rate being
applied in the award was excessive, thus making the rate penal in nature and,
therefore, a violation of public policy in Georgia.[xxxiii]
III. ENFORCEMENT OF A NON-DOMESTIC AWARD UNDER THE NEW
YORK CONVENTION AND CHAPTERS 1 AND 2 OF THE FAA
As noted, a non-domestic award is one that was made in
the United States but that is subject to the New York Convention. Only Chapter
2 of the FAA applies to a foreign award; however, Chapters 1 and 2 of the FAA
apply to a non-domestic award. On first reading the FAA it may not be readily
apparent that there are two types of Convention awards or that there are
additional grounds on which to oppose a Convention award when the award is a
non-domestic award.[xxxiv]
The reason is that “when an action for enforcement is brought in a foreign
state, the state may refuse to enforce the award only on the grounds explicitly
set forth in Article V of the Convention.”[xxxv]
However, the Convention mandates very different regimes for the review of
arbitral awards (1) in the state in which, or under the law of which, the award
was made, and (2) in other states where recognition and enforcement are sought.
The Convention specifically contemplates that the state in which, or under
the law of which, the award is made, will be free to set aside or modify an
award in accordance with its domestic arbitral law and its full panoply of
express and implied grounds for relief.[xxxvi]
An important difference between foreign and
non-domestic awards is that there is no provision in Chapter 2 of the FAA
allowing a party to seek a vacatur of a foreign award. Chapter 1 of the
FAA, on the other hand, permits a losing party to request a court in the United
States to vacate an award subject to Chapter 1, including a non-domestic
Convention award.
In Chapter 1 of the FAA, Section 10 provides four
grounds on which a party may seek to vacate an award:
1. When the award was procured by corruption, fraud,
or undue means;
2. When there was evident partiality or corruption in
the arbitrators;
3. When the arbitrators were guilty of misconduct in
refusing to postpone the hearing, upon sufficient cause shown, or in refusing
to hear evidence pertinent and material to the controversy, or of any other
misbehavior by which the rights of any party have been prejudiced; or
4. When the arbitrators exceeded their powers or so
imperfectly executed them that a mutual, final, and definite award upon the
subject matter submitted was not made.[xxxvii]
Not all courts in the United States agree that a
non-domestic award is subject both to the standards of review in Chapter 1 and
Chapter 2. A California court observed in LaPine v. Kyocera Corp.[xxxviii]
that some courts in the United States have determined that an arbitral award
falling under the Convention but made in the United States should be reviewed
only under Chapter V of the Convention without any regard to the standards in
Chapter I of the FAA, or for that matter any other grounds not specified in
Chapter V of the Convention.
IV. OTHER POSSIBLE GROUNDS FOR REFUSING TO CONFIRM AN
ARBITRAL AWARD
There is judicial authority in the United States that
parties are not permitted to expand the grounds enumerated in the FAA by
including additional grounds in their arbitration agreement for opposing the
confirmation of an award.[xxxix]
However, some courts have supplemented section 10 of Chapter 1 of the FAA with
some non-statutory grounds for refusing to recognize and enforce or for
vacating a non-domestic award. One of these non-statutory grounds is when the
tribunal has made an award in “manifest disregard of the law.”[xl]
In Yusuf Ahmed Alghanim & Sons, W.L.L. v. Toys
“R” Us, Inc. the United States Court of Appeals for the Second Circuit
recognized the availability of the manifest disregard doctrine but held that
there had been no manifest disregard of New York law as applied by the
arbitrator in that case.[xli]
Although there is still judicial support for the manifest disregard ground,
there is also judicial authority in the United States holding that the manifest
disregard doctrine is not a basis for a court in the United States to vacate an
arbitration award.[xlii]
In Hall Street Associates, L.L.C. v. Mattel, Inc.[xliii]
the United States Supreme Court held that “§§ 10 and 11 respectively provide
the FAA’s exclusive grounds for expedited vacatur and
modification.” Nevertheless, in some courts it is unclear whether the manifest
disregard doctrine is a separate or additional ground for the vacatur of
an arbitral award.[xliv]
Even in courts recognizing the doctrine, it is
difficult for a party seeking to vacate an award to show that there has been a
manifest disregard of the law because judicial review on that basis is
“severely limited.”[xlv]
Even if the defense is available, the defense does not entitle the courts to
review the record of the arbitration proceedings for errors of fact or law.
Moreover, if the arbitrators do not state a reason for their decision, the
courts usually will affirm the award if any proper basis for the arbitral award
may be inferred.
Finally, there is no defense under the FAA to the
enforcement of an international arbitral award on the ground that an award is
“arbitrary and capricious.”[xlvi]
Conclusion
Enforcement of international arbitration awards in the
United States is primarily governed by the legal framework established by the
New York Convention that is implemented by Chapter 2 of the FAA. Although some
awards are enforced pursuant to the Inter-American Convention, which is
implemented by Chapter 3 of the FAA, the grounds in the Inter-American
Convention are a mirror image of Article V of the New York Convention.
There is a pro-arbitration, pro-enforcement policy on
the part of United States courts, which have construed the grounds narrowly
upon which the recognition and enforcement of an international arbitration
award may be avoided. Notwithstanding the grounds for opposing confirmation
under the New York Convention, it appears that most Convention awards are
confirmed by United States courts. On occasion, of course, a party opposing an
award does establish a ground for refusing to recognize and enforce an award to
a court’s satisfaction.
[i] J.D., Ph.D. The
Thomas Law Firm - www.lwthomas.com
[ii] The FAA applies, of course, to domestic awards that
are not discussed herein because they do not come within the ambit of the New
York Convention.
[iii] The reader may be interested in knowing that the
American Law Institute has a project underway to write the Restatement of
the Law (Third), The U.S. Law of International Commercial Arbitration.
Although the project is incomplete, tentative drafts are available in print and
on line. See American Law Institute, Restatement of the Law Third,
The U.S. Law of International Commercial Arbitration. Drafts numbered 1 and
2 available at:
<http://www.ali.org/index.cfm?fuseaction=publications.ppage&node_id=130>.
[iv] In Iran Aircraft Industries, v. Avco Corp., 980
F.2d 141 (2d Cir. 1992) (affirming the district court’s refusal to enforce an
international arbitration award in favor of the appellant Iranian corporations
and against the appellee, a United States corporation, because the appellee was
improperly denied the opportunity to present its case to the tribunal).
[v] 9 U.S.C. § 203 (in re: the New York Convention). See
also 9 U.S.C. § 302 (in re: the Inter-American Convention).
[vi] 9 U.S.C. §
205.
[vii] 9 U.S.C. § 207.
[viii] When seeking enforcement of an award under the New
York Convention in a United States court, the original arbitration agreement
must have been in writing and an original or certified copy of the agreement
and the original or certified copy of the arbitral award must be submitted to
the court.
[ix] See, e.g., Seung Woo Lee v. Imaging3, Inc., 283 Fed. Appx. 490, 492 (9th Cir. 2008) in which the court stated
that “[t]he grounds for the court’s refusal or deferral of recognition or
enforcement of an arbitration award are limited to the seven grounds listed in
Article V of the New York Convention.”
[x] See, e.g., Sarhank Group v. Oracle Corp, 404 F.3d 657 (2d Cir. 2005) (court remanding the case with
instructions that the district court should determine whether the Delaware
corporation had agreed to arbitrate the dispute); Czarina, L.L.C. v. W.F.
Poe Syndicate, LLC, 254 F. Supp.2d 1229 (M.D. Fla. 2002) (holding in part
that the documents did not meet the Convention’s jurisdictional requirement of
an “agreement in writing”), aff’d, 358 F.3d 1286 (11th Cir. 2004); China
Minmetals Materials Imp. & Exp. Co., Ltd. v. Chi Mei Corp., 334 F.3d
274 (3d Cir. 2003) (holding in part that the appellant was entitled to present
evidence of the agreement’s invalidity to the district court for an independent
determination).
[xi] See, e.g., Biotronik Mess-und Therapiegeraete GmbH
& Co. v. Medford Medical Instrument Co., 415 F.
Supp. 133, 140 (D.N.J. 1976) (granting motion to confirm award made in
Switzerland).
[xii] In Laminoirs-Trefileries-Cableries de Lens, S.A. v.
Southwire Co., 484 F. Supp. 1063, 1067 (N.D. Ga. 1980), the court granted a
motion for confirmation of the arbitration awards with the exception of that
portion regarding the applicable interest rates.
[xiii] In Sesostris, S.A.E. v. Transportes Navales, S.A.,
727 F. Supp 737 (D. Mass. 1989), the court’s rulings included one declining to
enforce the foreign arbitration award made in Spain because the bank was
entitled to notice of the proceedings and did not receive notice. See also,
Iran Aircraft Industries v. Avco Corp., 980 F.2d 141 (2d Cir. 1992), supra
note 3. A tribunal was created as a result of the Algiers Accords, the
agreement between the United States and Iran through the mediation of Algeria
that provided for the release of the 52 hostages seized at the American Embassy
in Tehran on November 4, 1979. The United States Court of Appeals for the
Second Circuit affirmed the district court’s refusal to enforce an arbitration
award in favor of the Iranian corporations and against the United States
corporation because the American company was improperly denied the opportunity
to present its case to the tribunal.
[xiv] 1989 U.S. Dist. LEXIS 11995 at *14 (S.D.N.Y. Oct. 12,
1989).
[xv] 613 F. Supp.2d 1362 (S.D. Fla. 2009).
[xvi] See Diana G. Richard, Enforcement
of Foreign Arbitral Awards under the United Nations Convention of 1958: A
Survey of Recent Federal Case Law, 11 Md. J. Int’l. L. & Trade 13,
32 (1987).
[xvii] See, e.g., Encyclopaedia Universalis S.A. v.
Encyclopaedia Britannica, Inc., 403 F.3d 85, 91-92
(2d Cir. 2005) (holding “that the District Court properly refused to confirm
Plaintiff’s arbitral award on the grounds that the appointment of a third
arbitrator was premature, and, therefore, the composition of the arbitral
authority was not in accordance with the parties’ agreement”); Cargill Rice,
Inc. v. Empresa Nicaraguense Dealimentos Basicos, 25 F.3d 223 (4th Cir.
1994) (vacating an arbitration award because the award was made by arbitrators
who were not chosen by the mutual agreement of the parties as required by the
parties’ contract); Dworkin-Cosell Interair Courier Services, Inc. v.
Avraham, 728 F. Supp.156 (S.D.N.Y. 1989) (holding in a case involving an
arbitration award made in New York that the matter had to be remanded to the
arbitrators because the award was ambiguous and required clarification).
[xviii] New York Convention, article V(1)(e).
[xix] G.E. Transport S.P.A. v. Republic of Albania, 693 F. Supp.2d 132, 138 (D.D.C. 2010) (refusing to delay
enforcement because of foreign proceedings); Belize Social Development Ltd.
v. Gov’t of Belize, 668 F.3d 724 (D.C. Cir. 2012) (appeals court stating
that the possibility of “multiple judicial proceedings on the same legal
issues” did not justify the district court’s issuance of a stay), cert.
denied, Belize v. Belize Soc. Dev., 2012 U.S. LEXIS 6366 (2012).
[xx] In Cpconstruction Pioneers Baugesellschaft Anstalt
v. The Gov’t of the Republic of Ghana, 578 F. Supp.2d 50 (D.D.C., August
12, 2008) and 578 F. Supp.2d 48 (Sept. 23, 2008) the court stayed the petition
to confirm arbitration awards against the Republic of Ghana because the Ghana
High Court had determined that the agreement to arbitrate had no effect, proceedings
that were still pending. See also, Spier v. Calzaturificio Tecnica,
S.p.A, 663 F. Supp. 871 (S.D.N.Y. 1987) (“Spier I”) (district court
deferring enforcement proceedings while the Italian courts considered the
corporation’s challenge to the arbitration award under Italian law).
[xxi] Termorio S.A. E.S.P. v. Electranta S.P., 487 F.3d 928 (D.C. Cir. 2007) (holding that because the award was
lawfully nullified by the country in which the award was made, the producer had
no cause of action in the United States to seek enforcement of the award), cert.
denied, 552 U.S. 1038, 128 S. Ct. 650, 169 L. Ed.2d 508 (2007); Baker
Marine, Ltd. v. Chevron, Ltd., 191 F.3d 194 (2d Cir. 1999) (affirming the
district court’s decision declining to enforce foreign arbitration awards that
had been overturned by the Nigerian Federal High Court); Spier v.
Calzaturificio Tecnica, S.p.A., 71 F. Supp.2d 279, 288 (S.D.N.Y. 1999) (“Spier II”) (refusing to confirm
an arbitral award made in Italy because of the Italian courts’ nullification of
the Italian award).
[xxii] Parsons & Whittemore Overseas Co. v. RAKTA, 508 F.2d 969, 975 (2d Cir. 1974) (In a case involving an
arbitration in which an issue was whether a force majeure clause was
valid only during hostilities, the appeals court affirmed a federal district
court’s decision to confirm an arbitration award in favor of an Egyptian
corporation.).
[xxiii] Id.
[xxiv] Id. at
974-975.
[xxv] 2011 U.S. Dist. LEXIS 87844 (S.D.N.Y. 2011)
(Unreported).
[xxvi] Id. at
*45.
[xxvii] Libyan American Oil Co. (“LIAMCO”) v. Socialist
People’s Libyan Arab Jamahirya, 482 F. Supp. 1175
(D.D.C. 1980) (later case history unclear).
[xxviii] Parsons & Whittemore Overseas Co. v. RAKTA, 508 F.2d. at 974.
[xxix] 613 F. Supp.2d 1362 (S.D. Fla. 2009).
[xxx] Id. at
1371.
[xxxi] Kaliroy Produce Co. v. Pac. Tomato Growers, Inc., 730 F. Supp.2d 1036 (D. Ariz. 2010).
[xxxii] Id. at
1044.
[xxxiii] 484 F. Supp. 1063, 1069 (N.D. Ga. 1980) (Applying
Georgia law, the court stated that “[a] foreign law will not be enforced if it
is penal only and relates to the punishing of public wrongs as
contradistinguished from the redressing of private injuries. … Agreements to
pay fixed sums as damages plainly without reasonable relation to any probable
damage which may follow will not be enforced.”).
[xxxiv] Yusuf Ahmed Alghanim & Sons, W.L.L. v. Toys “R”
Us, Inc., 126 F.3d 15, 22-23 (2d Cir. 1997), cert.
denied, 522 U.S. 1111, 118 S. Ct. 1042, 140 L. Ed.2d 107 (1998).
[xxxv] Id.
[xxxvi] Id. (emphasis
supplied).
[xxxvii] 9 U.S.C §
10
[xxxviii] 2008 U.S. Dist. LEXIS 41172 at *15-16 (N.D. Calif. 2008).
[xxxix] In Hall Street Associates, LLC v. Mattel, Inc.,
552 U.S. 576, 584 (2008), the Supreme Court noted that the Ninth and Tenth
Circuits have held that parties may not contract for expanded judicial review,
whereas the First, Third, Fifth, and Sixth Circuits have held that parties may
provide in their contract for expanded judicial review.
[xl] In Hall Street Associates, 552 U.S. at 584-585,
the Supreme Court, although noting that based on the text of the FAA the
grounds in section 10 are exclusive, stated that some courts have recognized
the manifest disregard doctrine as an additional ground for challenging an
arbitral award. The Court cited McCarthy v. Citigroup Global Markets, Inc.,
463 F.3d 87, 91 (1st Cir. 2006); Hoeft v. MVL Group, Inc., 343 F.3d 57,
64 (2d Cir. 2003), Prestige Ford v. Ford Dealer Computer Servs., Inc.,
324 F.3d 391, 395-396 (5th Cir. 2003), and Scott v. Prudential Securities,
Inc., 141 F.3d 1007, 1017 (11th Cir. 1998).
[xli] In Yusuf Ahmed Alghanim & Sons, W.L.L. v. Toys
“R” Us, Inc., supra note 33, the court held that the arbitrator
correctly applied New York’s law on lost profits, that the arbitrator’s
calculation of lost profits was not in manifest disregard of the law, and,
moreover, that the award was not in manifest disregard of the terms of the
agreement.
[xlii] Ramos-Santiago v. United Parcel Serv., 524 F.3d 120, 1124 N 3 (1st Cir. 2008) (not deciding the issue
directly because the case was not an FAA case). In Citigroup Global Mkts.,
Inc., 562 F.3d at 355, the Fifth Circuit stated that in Hall Street
Associates, supra note 38, the United States Supreme Court
“unequivocally held that the statutory grounds are the exclusive means for vacatur
under the FAA. … Thus, to the extent that manifest disregard of the law
constitutes a nonstatutory ground for vacatur, it is no longer a basis
for vacating awards under the FAA.”
[xliii] 552 U.S. 576,
584 (2008) (emphasis supplied).
[xliv] In Mandell v. Reeve, 2011 U.S. Dist. LEXIS
114804, at *19 (S.D.N.Y. 2011), the district court stated that in the absence
of additional guidance from the Supreme Court or the Second Circuit, the court
presumed the continued survival of the manifest disregard doctrine as a
“judicial gloss” on the statutory bases
for vacatur. The district court’s decision was affirmed in Mandell v.
Reeve, 2013 U.S. App. LEXIS 2394 (2d Cir. 2013) (summary order).
[xlv] Greenberg v. Bear, Stearns & Co., 220 F.3d 22, 28, 29 (2d Cir. 2000) (holding that the arbitrators did
not ignore or refuse to apply well defined and clearly applicable law in
rejecting the appellant’s claims in such a way that would amount to a manifest
disregard of the law); Parsons & Whittemore Overseas Co. v. RAKTA,
508 F.2d. at 977 (stating that the court had “no difficulty” rejecting the
appellant’s contention that there was a manifest disregard of the law); and Spector
v. Torenberg, 852 F. Supp. 201, 209 (S.D.N.Y 1994) (finding no indication
of a manifest disregard of the law).
[xlvi] Industrial Risk Insurers v. M.A.N.
Gutehoffnungshutte GmbH, 141 F.3d 1434, 1443 (11th
Cir. 1998), cert. denied, 525 U.S. 1068, 119 S. Ct. 797, 142 L. Ed.2d
659 (1999) (a decision cited and followed by many courts in the United States).