A Brazilian airline submitted a dispute of a purchase price from a

New York equity firm to arbitration. The tribunal held the equity firm

liable. The equity firm challenged the award in Brazilian courts while the

Brazilian airline filed for confirmation of the award in accordance with

the New York Convention. The district court held that the tribunal lacked

jurisdiction over the dispute.

 

The question of arbitrability should be decided under United States

arbitration law. The district court never asked whether the court or the

arbitrator was to decide arbitrability. Instead, the district court

determined that whether or not the equity firm agreed to arbitrate

disputes, the arbitration agreement did not extend to the conflict at hand.

 

The Second Circuit remanded this case to the district court to

determine if the equity firm agreed to the terms of the agreement. The

agreement contains a clause subjecting disputes to the rules and

procedures of the ICC International Court of Arbitration. If the equity

firm agreed to these terms, then the question of arbitrability is for the

arbitrators and the award should be confirmed.

 

 

a. Shaw Group Inc. v. Triplefine Int’l Corp., 322 F.3d 115 (2d Cir.

2003) (arbitration clause subjecting disputes to the rules and

procedures of the ICC International Court of Arbitration gives

the question of arbitrability to the arbitrator).

 

b. Encyclopaedia Universalis S.A. v. Encyclopaedia Britannica,

Inc., 403 F.3d 85 (2d Cir. 2005) (Article V of the New York

Convention gives seven exclusive defenses to refuse a

confirmation of an arbitration award).

 

 

 

Cubic Defense Systems, Inc. (“Cubic”), a US corporation, contracted

with the Ministry of War of the government of Iran (“Ministry”) for sale

and service of an air combat maneuvering range for use by Iran’s

military in 1977. The Iranian Revolution led to nonperformance of the

contract and the parties agreed in 1979 that the contract would be

discontinued and that Cubic would try to resell the equipment, with a

later settlement of the accounts. In 1991, the Ministry filed a request for

arbitration before the International Court of Arbitration of the

International Chamber of Commerce (ICC). The ICC made a final award

of $2.8 million plus pre-award interest in favor of the Ministry. In June

1998, after Cubic failed to pay, the Ministry filed a petition in federal

district court to confirm the ICC’s award under the New York

Convention. The district court granted the Ministry’s petition. The

Ministry then filed a motion for prejudgment interest covering the period

between the ICC’s final award and the district court’s confirmation and

attorney’s fees. The district court denied the motion in 1999, concluding

that prejudgment interest and attorney’s fees were unavailable in an
action to confirm a foreign arbitration award under the Convention.