Originally from AAA Yearbook on Arbitration and the Law - 26th Edition

8.01 Applicability of the New York Convention

VRG Linhas Aereas S.A. v. Matlinpatterson Global Opportunities Partners II L.P., 717 F.3d 322 (2d Cir. 2013)

The district court failed to ask whether the court or arbitrator was to decide the question of arbitrability. The district court must first determine if the parties agreed to the rules and procedures of the ICC International Court of Arbitration. If the parties agreed, then the question of arbitrability was for the arbitrator and the award should be confirmed.

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.