ENFORCEMENT OF INTERNATIONAL ARBITRATION
AWARDS IN THE UNITED STATES ©
Larry W. Thomas[i]
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]
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.).
[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).
[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).