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The United States ratified the Inter-American Convention, and

Customer Question

The United States ratified the Inter-American Convention, and such ratification provides that “the United States of America will apply the Convention, on the basis of reciprocity, to the recognition and enforcement of only those awards made in the territory of another Contracting State”.

If a US entity arbitrates a case with a foreign entity in New York, then does the Convention apply for the the recognition and enforecement of the award or because it is in the New York, USA, then the Convention does not apply ?????

I would like to have a very clear explanation of the above ratification with a precedent or two from a US Federal Court, Federal Court of Appeals or even the Supreme Court.
Submitted: 5 years ago.
Category: Business Law
Expert:  LawHelpNow replied 5 years ago.

Hello and thanks for choosing Just Answer®. I am a licensed attorney, and I will be glad to try and assist you. To provide you with accurate information, could you please clarify these points:

 

  1. Could you provide the full name of the document in question? [There are numerous instruments bearing this name...from the context of your post I am assuming you mean the Inter-American Convention on International Commercial Arbitration, but I want to make sure my understanding is correct.]
  2. In your second paragraph, when you mention an "entity" (US and/or foreign), could you explain that a bit more fully? In other words, are you referring to an official governmental representative, a person or a business entity (i.e. a corporation).

 

Once I hear back from you, I will be glad to let you know my answer. There may be some delay as I am assisting other customers or am away from my computer. Please rest assured, however, that I will get back to you as soon as possible.

 

Thanks!

Customer: replied 5 years ago.
yes it is the inter-american convention on international arbitration.

The entities are:
a) A US corporation
b) A Venezuela corporation owned by the Government of Venezuela
Expert:  LawHelpNow replied 5 years ago.

Hello and thanks so much for choosing this forum to pose your important legal question. I will do my best to give you some honest and accurate guidance as I answer your question.

 

  1. I am a licensed attorney, and I will be glad to try and answer your question. I hope that the following information will be helpful to you, but please just write back if you have any follow-up questions or need clarification on anything after reviewing the following information. Thank you for taking the time to write back and supply the additional requested information, which was helpful to my analysis of your inquiry. I would be glad to interact with you further if needed after you click "Accept" to process my answer.
  2. You have posed an interesting inquiry and one that has been the subject of some debate. Today, however, the answer is rather clear. Here is how this all comes together. The Inter-American Convention on International Commercial Arbitration does indeed apply pursuant to some important language in the Federal Arbitration Act. More specifically, the Convention applies since both sides (actual language states "majority of the parties to the arbitration agreement" are citizens of States which have ratified or acceded to the Convention.
  3. Venezuela joined in 1975, and the United States signed on in 1978, so assuming the dispute is beyond those dates the Convention would apply. It is somewhat difficult to find compelling case law due to this principle being firmly settled. However, one that might be helpful is Florasynth Inc v. Pickholz, 750 F2d 171. If I can do anything else to help, please just say the word. I would be happy to point you in the right direction if I can do so.

 

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The information provided is general in nature only and should not be construed as legal advice. By using this forum, you acknowledge that no attorney-client relationship has been created between you and Benjamin M. Burt, Jr., Esq. You should always consult with a lawyer in your state.

Customer: replied 5 years ago.
Mr. Burt,
The question is:

The United States ratified the Inter-American Convention, and such ratification provides that “the United States of America will apply the Convention, on the basis of reciprocity, to the recognition and enforcement of only those awards made in the territory of another Contracting State”.

In other words, the US will not apply the convention if the award was made in the U.S., rather it will apply the Federal Arbitration Act

Am I correct in making the above statement ??
Expert:  LawHelpNow replied 5 years ago.

Hello again,

 

Thanks for writing back so promptly. My apologies if I missed the main thrust of your query.

 

I know this matter is important to you, so in the interest of best serving you I have opted out (without charge). My fellow legal experts can view your question and hopefully a colleague will be able to assist you.

 

Take care and thanks again for using JustAnswer®!

Expert:  N Cal Attorney replied 5 years ago.
I agree with your interpretation of the Convention, the US applies it only to "awards made in the territory of another Contracting State”. <br /><br />The Convention does <u>not</u> apply to your arbitration conducted in the State of NY with a foreign entity. It will apply if you have to enforce the award in Venezuela.<br /><br />I hope this information is helpful.<br />
N Cal Attorney, Attorney
Category: Business Law
Satisfied Customers: 8127
Experience: Since 1983
N Cal Attorney and 9 other Business Law Specialists are ready to help you
Customer: replied 5 years ago.
could you kindly give me a presedent by a fedral court, or appeals court or even the supreme court ???
Expert:  N Cal Attorney replied 5 years ago.
http://supreme.justia.com/us/552/06-989/opinion.html is the latest US SUpreme Court opinion on the Federal Arbitration Act. I have not found any US Supreme Court opinions on the Inter American Convention.

9 US Code 301 adopts it, see http://www.law.cornell.edu/uscode/uscode09/usc_sup_01_9_10_3.html

I found one case on this and now I'm confused:

1
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
SANLUIS DEVELOPMENTS, L.L.C., SANLUIS
INVESTMENTS, L.L.C., and SANLUIS
CORPORACION, S.A. DE C.V.,
Petitioners,
06 Civ. 11531 (RJH)
-against-
MEMORANDUM OPINION
AND ORDER
CCP SANLUIS, L.L.C. and AIP-SANLUIS,
L.L.C.,
Respondents.
Petitioners Sanluis Developments, L.L.C. (the “Company”), Sanluis Investments,
L.L.C. (“Sanluis Investments”), and Sanluis Corporación, S.A. de C.V. (“Sanluis
Corporación”), filed a petition in state court to vacate an interim arbitration award
rendered on July 16, 2006 and a final award dated September 21, 2006, which included
the addition of costs and attorneys’ fees. Respondents CCP Sanluis, L.L.C. (“CCP
Sanluis”), and AIP-Sanluis, L.L.C. (“AIP-Sanluis”), removed the action to federal court
pursuant to 9 U.S.C. § 205 and 28 U.S.C. § 1441(a). Respondents moved to dismiss the
petition to vacate the arbitration award. In an Opinion and Order dated August 2, 2007,
the Court granted respondents’ motion to dismiss the petition to vacate. On August 3,
2007, the Clerk of Court entered judgment accordingly. On August 17, 2007,
respondents moved the Court to modify the judgment and confirm the arbitration award,
or in the alternative, to issue a new order and judgment confirming the award. On August
31, 2007, petitioners filed a cross-motion styled as a “motion to dismiss respondents’
2
motion to confirm.” Petitioners argue that this Court should not grant respondents the
relief they seek for five reasons: (1) the respondents’ motion to modify the judgment does
not meet the standards of Federal Rule of Civil Procedure 59(e); (2) the respondents’
opposition to the motion to vacate an arbitration award should not be treated as a motion
to confirm; (3) treating respondents’ opposition as a motion to confirm is inconsistent
with the Inter-American Convention on International Arbitration; (4) the respondents’
motion to confirm is untimely; (5) and the respondents failed to effect proper service of
process. (See Pets.’ Mem. of Law in Opp’n to Resps.’ Mot. at 1 (“Pets.’ Mem.”); Pets.’
Reply Mem. of Law at 4–6 (“Pets.’ Reply”).)
For the reasons that follow, respondents’ motion [15] is granted and petitioner’s
cross-motion [17] is denied.
DISCUSSION
I. Motion to Alter or Amend the Judgment
“Rule 59(e) does not prescribe specific grounds for granting a motion to alter or
amend an otherwise final judgment . . . .” Munafo v. Metro. Transp. Auth., 381 F.3d 99,
105 (2d Cir. 2004). Courts in this Circuit have held that to prevail on such a motion, “the
movant must [either] present factual matters or controlling decisions the court overlooked
that might materially have influenced its earlier decision . . . [or] demonstrate the need to
correct a clear error or prevent manifest injustice.” Griffin Indus. v. Petrojam, Ltd., 72 F.
Supp. 2d 365, 368 (S.D.N.Y. 1999) (internal citations omitted); see also Munafo, 381
F.3d at 105 (holding that district courts “may alter or amend judgment to correct a clear
error of law or prevent manifest injustice”); Kingdom 5-KR-41 v. Star Cruises PLC, No.
3
01 Civ. 2946 (DLC), 2005 U.S. Dist. LEXIS 762, at *7 (S.D.N.Y. Jan. 20, 2005) (noting
that the Supreme Court has held that Rule 59(e) was meant to allow courts to “rectify
their own mistakes in the period immediately following entry of judgment” and vacating
judgment on the grounds that the court had overlooked certain claims by the movant); see
also Weiss v. Union Cent. Life Ins. Co., 65 Fed. Appx. 347, 350 (2d Cir. May 9, 2003)
(“A motion to amend a final judgment pursuant to Fed. R. Civ. P. 59(e) must be filed
within ten days of entry and will generally not be granted unless the moving party can
point to facts or controlling decisions overlooked by the court.”). “New facts, issues or
arguments not previously presented to the court may not be presented” on a motion under
Rule 59(e). Harrison v. Harlem Hosp., No. 05 Civ. 8271 (WHP), 2008 U.S. Dist. LEXIS
25139 (S.D.N.Y. Feb. 28, 2008). Likewise, a motion to amend the judgment “may not
treat the court's initial decision as the opening of a dialogue in which that party may then
use such a motion to advance new theories or adduce new evidence in response to the
court's rulings.” Seinfeld v. Worldcom, Inc., No. 06 Civ. 13274 (DLC), 2007 U.S. Dist.
LEXIS 39164, at *3–*4 (S.D.N.Y. May 31, 2007). The decision to grant or deny a
motion under Rule 59(e) is entrusted to the sound discretion of the district court. See
Devlin v. Transp. Communs. Int’l Union, 175 F.3d 121, 132 (2d Cir. 1999).
In this case, respondents timely filed a motion to alter the judgment on the basis
that the Court overlooked the question of the effect of a dismissal of the petition to
vacate. The issue was raised by the parties in their respective reply papers. Petitioners
noted that the action was styled a petition to vacate because it was originally filed in state
court. (Pets.’ Reply 1, n.1, Dec. 15, 2006.) As a result, they requested that the Court
construe their petition as a motion to vacate under 9 U.S.C. § 10. (Id.) Respondents
4
replied that they accepted this treatment of the petition on the understanding that a
dismissal of the petition to vacate would be treated as a decision on a motion to confirm.
(Resps.’ Reply 1, n.1, Dec. 22, 2006.) However, the Court’s August 2, 2007 Opinion and
Order did not address the question raised by the parties’ papers regarding the effect of a
dismissal of the petitioner. Indeed, the Court simply overlooked respondents’
unexceptional request. Accordingly the Court exercises its discretion to reconsider its
Opinion and Order, and for the reasons that follow, grants respondents’ motion to alter
the judgment to reflect the confirmation of the September 21, 2006 Arbitration Award.
II. Respondents’ Motion to Dismiss Petitioners’ Motion to Vacate the
Arbitration Award was a Motion to Confirm the Arbitration Award
When a party moves to dismiss a motion to vacate an arbitration award, the court
may, sua sponte, treat the motion to dismiss as a motion to confirm the award. Thyssen,
Inc. v. M/V Markos N, 97 Civ. 6181 (MBM), 2001 U.S. Dist. LEXIS 11560, at *2
(S.D.N.Y. 2001) (“Although defendants frame their motion as one to dismiss, I will treat
it as a motion to confirm the arbitration award.”); Maidman v. O’Brien, 473 F. Supp. 25,
27 (S.D.N.Y. 1979)1 (“[A]lthough Evans has not sought to have the arbitration decision
confirmed pursuant to 9 U.S.C. § 9, there is authority for treating such motions to dismiss
1 Petitioners argue that Maidman is factually distinguishable. They assert that Maidman is inapposite
because that case concerned a movant “seek[ing] to dismiss claims pending in litigation that have been
determined in arbitration.” (Pets.’ Mem. at 7.) Here, on the other hand, respondents’ motion sought to
dismiss petitioners’ petition to vacate the arbitration award. (Id. at 8–9.) Petitioners’ argument is meritless.
The court in Maidman reasoned that when a party moves for the court to consider the merits of an
arbitration award, the court may treat that motion as a motion to confirm. See Maidman, 473 F. Supp. at 27
n.2 (“The Court of Appeals for this Circuit uniformly has construed Rule 54(c) to require the granting of
relief to which a party is entitled irrespective of the form of action or the prayer for relief.” (citing Brown v.
Bridgeport Rolling Mills Co., 245 F. Supp. 41, 46 n.8 (D. Conn. 1965))). Accordingly, one district court
relied on Maidman to treat a motion for summary judgment as a motion to confirm an arbitration award.
See Andrea Doreen Ltd v. Building Material Local Union 282, 250 F. Supp. 2d 107, 111 (E.D.N.Y. 2003)
(“Although the court in Maidman inferred a request for confirmation from a motion to dismiss, the court’s
reasoning also applies to the summary judgment motion in this case.”) The reasoning of Maidman applies
with equal force to respondents’ motion to dismiss petitioners’ motion to vacate the arbitration award.
5
as implicitly seeking that confirmation . . . .”); GE v. Anson Stamping Co., 426 F. Supp.
2d 579, 591 (W.D. Ky. 2006) (“Anson’s motion to dismiss GE’s motion to vacate is in all
respects the practical equivalent of a motion to confirm . . . .”). See also Brown v.
Bridgeport Rolling Mills Co., 245 F. Supp. 41, 45 (D. Conn. 1965) (“[T]his Court’s
judgment in the prior proceeding denying the Company’s motion to vacate the award and
granting the motion by Brown and the Union for judgment on the record and pleadings
was in effect a judgment confirming the award . . . .” ). Cf. Andrea Doreen, Ltd. v. Bldg.
Material Local Union 282, 250 F. Supp. 2d 107, 111 (E.D.N.Y. 2003) (holding that a
“summary judgment motion can be viewed as an implicit request for confirmation of that
award”); Markowski v. Atzmon, 92 Civ. 2865 (LFO), 1994 U.S. Dist. LEXIS 4998, at *2
(D.D.C. 1994) (granting untimely motion to confirm because the court previously granted
a motion to dismiss a petition to vacate the award).
This is logical. The motion to confirm an arbitration award under § 9 of the FAA
and the motion to vacate under § 12 of the FAA are related. The two motions submit
identical issues for judicial determination. See e.g., Markowski, 1994 U.S. Dist. LEXIS
4998, at *2 (“A motion for confirmation involves the same substantive consideration as a
motion to vacate.”). Accordingly, when a court denies a motion to vacate an arbitration
award, the court’s judgment has the effect of collateral estoppel; the parties cannot
relitigate the validity of the award. See Brown, 245 F. Supp. at 45 (in a proceeding to
vacate an arbitration award, the “opposing parties [are] required to object upon all
grounds which might be urged in support of a proceeding to confirm the award”). It is
therefore sensible for the court to treat a party’s opposition to a motion to vacate as a
request to confirm the award.
6
Of course, in this case, respondents specifically requested that the Court treat their
motion to dismiss the petition as having the effect of a motion to confirm. Because it
would have been appropriate for the Court sua sponte to treat the motion to dismiss as a
motion to confirm, the Court finds that respondents’ request for such treatment should be
granted. Thus, respondents’ November 22, 2006 motion to dismiss the petition to vacate
should be treated as a motion to confirm the arbitration award.
III. Inter-American Convention on International Arbitration (“the Inter-
American Convention”)
Nevertheless, petitioners claim that a court should not treat the denial of a motion
to vacate as a motion to confirm if the arbitration was conducted pursuant to the Inter-
American Convention. Petitioners offer two reasons why distinctions between a motion
to vacate and a motion to confirm “have particular force in an international arbitration
like this one conducted pursuant to the [Inter-American Convention].” (Pets.’ Reply at 5.)
First, plaintiffs claim that while international criteria govern a motion to confirm an
award subject to the Inter-American Convention, domestic law governs a motion to
vacate such an award. Second, while the Inter-American Convention provides federal
courts with jurisdiction to hear motion to confirm, a federal court must have an
independent basis for subject matter jurisdiction to hear motion to vacate.
1. International and Domestic Criteria
The first argument is without merit. As noted above, the Inter-American
Convention incorporates the Convention on the Recognition and Enforcement of Foreign
Arbitral Awards, 9 U.S.C. § 201 et seq. See 9 U.S.C. § 302 (2000) (“Sections 202, 203,
204, 205, and 207 of this title [9 U.S.C. §§ 202, 203, 204, 205, and 207] shall apply to
7
this chapter [9 U.S.C. §§ 301 et seq.] . . . .). Thus, under the Inter-American Convention,
“[t]he [reviewing] court shall confirm the award unless it finds one of the grounds for
refusal or deferral of recognition or enforcement of the award in the said Convention.” 9
U.S.C. § 207 (2000). Under Article V(1)(e) of the Convention, one ground for refusing
to recognize an arbitral award is that “[t]he award has not 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.” In, Yusuf Ahmed Alghanim & Sons,
W.L.L. v. Toys “R” Us, Inc., 126 F.3d 15 (2d Cir. 1997), the Second Circuit held that
Article V(1)(e) allows “a court in the country under whose law the arbitration was
conducted to apply domestic arbitral law, in this case the FAA, to a motion to set aside or
vacate that arbitral award.” Yusuf Ahmed, 126 F.3d at 21.
Therefore, under Yusuf, when the Inter-American Convention applies to an
arbitration award rendered under United States law, a court engages in the same inquiry
when addressing a motion to confirm and a motion to vacate.
For example, in Caja Nacional De Ahorro Y Seguros in Liquidation v. Deutsche
Ruckversicherung AG, 06 Civ. 5826 (PKL), 2007 U.S. Dist. LEXIS 56197, at *6
(S.D.N.Y. 2007), the petitioners moved pursuant to the New York Convention to vacate
an arbitration award rendered under United States law. The respondents cross-moved to
confirm the award. Quoting Yusuf, the district court held that the FAA was the applicable
law. Id. at *6 (“[When] ‘a party [seeks] to vacate or set aside an award in the state of
which, or under the law of which the award is rendered . . . such a motion is to be
governed by domestic law of the rendering state, despite the fact that the award is
nondomestic within the meaning of the Convention.’” (quoting Yusuf Ahmed, 126 F.3d at
8
23)). The court denied all of the petitioners’ claims to vacate or modify the award under
the FAA. Addressing the motion to confirm, the court noted “the [New York]
Convention gives jurisdiction to the courts of the United States to confirm an arbitration
award. Under the Convention, a court ‘shall confirm the award unless it finds one of the
grounds for refusal or deferral . . . specified in the Convention.’” Id. at *19. Stating that
“no such grounds have been brought to the Court's attention” and that “the grounds
brought forward by [the petition to vacate] do not meet the high burden that [the
petitioner] must bear in order for the Award to be vacated or modified,” court granted the
motion to confirm the award. Id. Thus, Caja Nacional demonstrates that, when the
Convention laws apply and the arbitration award was rendered under United States law, a
court engages in the same inquiry with respect to a motion to confirm as with a motion to
vacate.
2. Basis of Jurisdiction
The second argument—that, while a federal court needs an independent basis of
subject matter jurisdiction to hear a motion to vacate, the Inter-American Convention
provides federal courts with jurisdiction to hear motion to confirm—is also irrelevant
here. Here, it is uncontested that the Court has jurisdiction over either motion. Thus,
petitioners’ argument misses the mark.
It may be true that, in some instances, a court reviewing an arbitration award
under the Inter-American Convention must treat a motion to confirm differently from a
motion to vacate. Here, however, it is uncontested that the Inter-American Convention
applies and that the arbitration award was rendered under United States law. Moreover,
the Court has subject matter jurisdiction to hear both motions. Thus, under these
9
circumstances, the judicial inquiry in addressing motion to confirm is the same as that
with respect to a motion to vacate.
IV. Timeliness of the Motion to Confirm
Petitioners assert that the respondents’ motion to confirm is untimely. (See Pets.’
Mem. at 9.) The Court holds that the motion to confirm is timely under the Inter-
American Convention on International Commercial Arbitration (“the Inter-American
Convention”), or alternatively, the motion is timely under Section 9 of the FAA.
1. Inter-American Convention on Arbitration
The respondents’ motion is timely under Section 302 the Inter-American
Convention, 9 U.S.C. § 302 (2000), which applies in this case. The Inter-American
Convention expressly incorporates the Convention on the Recognition and Enforcement
of Foreign Arbitral Awards (“the New York Convention”), 9 U.S.C. § 201 et seq. (2000),
including section 207, which sets a three-year statute of limitations:
Within three years after an arbitral award falling under the Convention is made,
any party to the arbitration may apply to any court having jurisdiction under this
chapter [9 USCS §§ 201 et seq.] for an order confirming the award as against any
other party to the arbitration. The court shall confirm the award unless it finds one
of the grounds for refusal or deferral of recognition or enforcement of the award
specified in the said Convention.
Id. at § 207.
Since the award was rendered on July 16, 2006, and a three-year statute of
limitations applies under the Inter-American Convention, the respondents’ motion to
confirm is timely.
2. Section 9 of the FAA
10
Alternatively, even if Section 9 of the FAA applies as petitioners contend, the
respondents’ motion to confirm is timely.
Section 9 of the FAA states that
If the parties in their agreement have agreed that a judgment of the court shall be
entered upon the award made pursuant to the arbitration . . . then at any time
within one year after the award is made any party to the arbitration may apply to
the court so specified for an order confirming the award, and thereupon the court
must grant such an order unless the award is vacated, modified, or corrected . . . .
9 U.S.C. § 9 (2000). The Second Circuit has interpreted the word “may” in § 9 “as
permissive, but only within the scope of the proceeding adverbial phrase: ‘at any time
within one year after the award is made.’” Photopaint Techs., LLC v. Smartlens Corp.,
335 F.3d 152, 158 (2d Cir. 2003). Thus, “[Section] 9 of the FAA imposes a one-year
statute of limitations on the filing of a motion to confirm an arbitration award under the
FAA.” Id. See also Kerr-McGee Refinery Corp. v. M/T Triumph, 924 F.2d 467, 471 (2d
Cir. 1991) (“nder the Arbitration Act a party has one year to avail itself of summary
proceedings for confirmation of an award.”)
Petitioners contend that the “award [was] made” on July 19, 2006; thus, they
argue that the one-year period expired on July 19, 2007. (Pets.’ Mem. at 9.) Therefore, if
the Court were to treat respondents’ August 17, 2007 motion to alter the judgment as a
motion to confirm, the motion indeed would be untimely (ignoring the Inter-American
Convention). As noted above, however, the court will treat the respondents’ November
22, 2006 motion to dismiss as a motion to confirm. Therefore, the respondents’ motion
would be timely when made even if respondents moved to confirm under 9 U.S.C. § 9
(2000). Several courts have adopted this sensible view. See Anson Stamping Co., 426 F.
Supp. 2d at 591 (“[O]ne fashion in which the one-year statute of limitations of § 9 has
11
been held to be satisfied is when the prevailing party at arbitration successfully opposes a
timely motion to vacate or modify the award filed by the non-prevailing party pursuant to
§ 12 of the FAA.”); Maidman, 473 F. Supp. at 27 (“[W]hen a party objects to an
arbitration decision on the merits, the possible untimeliness of the confirmation
application has been viewed as waived.”). Cf. Markowski, 1994 U.S. Dist. LEXIS 4998,
at *2 (“[A]n objection to the arbitration decision may be treated as a waiver of any
objection to the timeliness of confirmation.”).
V. Service of Process
Petitioners also argue that respondents failed to serve the motion to confirm. (See
Pets.’ Mem. at 9.) This argument is meritless. Petitioners initiated the action to vacate
the arbitration award. Thus, the respondents, in moving to confirm the award, did not
have to fulfill the service requirements of Rule 4 of the Federal Rules of Civil Procedure.
Cf. Jackson v. Hayakawa, 682 F.2d 1344, 1347 (9th Cir.1982) (voluntary appearance
waives a claim that failure to serve individuals resulted in lack of personal jurisdiction).
CONCLUSION
For the reasons stated above, respondents’ motion [15] is granted and petitioners’
cross motion to dismiss respondents’ motion [17] is denied. The Clerk of the Court is
directed to amend the August 3, 2007 judgment accordingly.
SO ORDERED.
Dated: New York, New York
June 3, 2008

What exactly is the subject of the arbitration? Was this a dispute over a contract? If so, where was the contract entered into.

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