Cert. Watch: Servotronics v. Rolls-Royce

Readers, I am keeping my eye on the cert. petition in Servotronics, Inc. v. Rolls-Royce plc, a case I’ve written about before, which raises the question whether § 1782 reaches private international arbitrations, or more specifically, whether such arbitrations are proceedings in a foreign or International tribunal, as the statute requires. The petition was filed in December. I’ve said before that given the existing circuit split, a well-drafted petition could be compelling. But I also have expressed some doubt about whether the parties could get the case teed up for the Supreme Court in time to avoid mootness, since under ordinary rules the arbitration still has to be pending for the Court to have jurisdiction to hear the case. (more…)

Continue ReadingCert. Watch: Servotronics v. Rolls-Royce

Case of the Day: In re Hanwei Guo

Longtime readers know that one of the big open questions in Section 1782 practice is whether the statute reaches private international arbitrations. Is an arbitration of a typical business dispute a proceeding before a “foreign or international tribunal,” such that an interested person can seek discovery in the United States? The circuits are split, with the pre-Intel decisions (from the Second and Fifth Circuits) holding that the statute does not reach private arbitration, and the post-Intel decisions (from the Fourth and Sixth Circuits) holding that it does. In today’s case, In re Hanwei Guo (2d Cir. 2020), the Second Circuit adhered to its own precedent, setting the stage for a pretty compelling cert. petition in the coming year. (more…)

Continue ReadingCase of the Day: In re Hanwei Guo

Case of the Day: GE Energy v. Outokumpu

The case of the day is GE Energy Power Conversion France SAS Corp. v. Outokumpu Stainless USA LLC (S. Ct. 2020). ThyssenKrupp had a contract with FL Industries for the construction of cold rolling mills at ThyssenKrupp’s steel plant in Alabama. The contract provided: “All disputes arising between both parties in connection with or in the performances of the Contract … shall be submitted to arbitration for settlement.” FL had a subcontract with GE for the design and construction of motors for the mills. Outokumpu later acquired the mills from ThyssenKrupp. It alleged that the motors had failed, and it brought an action against GE in the Alabama state court. GE removed the case to the district court and moved to compel arbitration. The Eleventh Circuit rejected GE’s argument, holding that under the New York Convention, only a signatory could be compelled to arbitrate. The question for the Supreme Court was whether the Convention displaced ordinary principles of equitable estoppel, under which a nonsignatory can compel arbitration where the signatory has to rely on the rely on the terms of the contract containing the agreement to arbitrate in order to prevail against the nonsignatory. (more…)

Continue ReadingCase of the Day: GE Energy v. Outokumpu

Case of the Day: Corporación AIC v. Hidroelectrica Santa Rita

The case of the day is Corporación AIC SA v. Hidroelectrica Santa Rita SA (S.D. Fla 2020). The parties had a contract for turnkey design and construction of a hydroelectric plant in Guatemala. HSR paid about $11 million to the contractor, AIC, and issued a notice to proceed. But the local community opposed the construction, and in the end, the opposition proved so fierce, including a blockade of the project and threats directed against workers, that HSR issued a force majeure notice requiring AIC to suspend work, and it eventually terminated the contract under a termination for convenience clause. The decision says very little about some key things. It says that “the Tribunal applied Guatemalan law,” which seems to mean that Guatemalan law governed the substance of the dispute, and it says that “the Tribunal conducted an evidentiary hearing in Miami.” But it does not specifically identify the seat of the arbitration, though I assume the seat was in Miami. (more…)

Continue ReadingCase of the Day: Corporación AIC v. Hidroelectrica Santa Rita

Case of the Day: Servotronics v. Boeing

The case of the day is Servotronics, Inc. v. The Boeing Co. (4th Cir. 2020). Servotronics was a supplier to Rolls Royce, which manufactured engines for use on Boeing’s 787 Dreamliner airplane. Following a 2016 testing accident, Rolls Royce settled Boeing’s claim for damages and then sought indemnification from Servotronics. The parties arbitrated their dispute in the UK. Servotronics brought an application in South Carolina under 28 U.S.C. § 1782 seeking issuance of subpoenas to two Boeing employees. The case thus set up one of the big open questions in § 1782 practice: is a private foreign arbitral tribunal a “tribunal” for purposes of the statute? (more…)

Continue ReadingCase of the Day: Servotronics v. Boeing

COVID-19 and Arbitration Hearings

Last week I held a prehearing conference with counsel in a small international arbitration being administered under AAA domestic rules by agreement of the parties. We set a date for the hearing. I proposed setting the hearing down as an audio-visual hearing, with an option to change it to an in-person hearing if conditions warrant. Counsel for both parties favored an in-person hearing, but of course they understood the concern. So what we ended up with was the following: “The hearing will be held in-person. However, in light of the COVID-19 pandemic, the parties have agreed that the arbitrator will have the discretion to direct that the hearing will be held by audio-visual means if in his judgment conditions warrant.” (more…)

Continue ReadingCOVID-19 and Arbitration Hearings

Case of the Day: A v. C

The case of the day is A v. C, [2020] EWHC 258 (Comm). The dispute was between joint venturers in a central Asian oil field. The details are unimportant. The claimants demanded arbitration in New York, and the arbitration proceeded to an evidentiary hearing. The tribunal gave permission to the claimants to seek an order from an English court for the taking of evidence from a third party in that country. The interesting jurisdictional question was whether § 44 of the Arbitration Act 1996 gives the court jurisdiction to compel a third party to give evidence. (more…)

Continue ReadingCase of the Day: A v. C

Case of the Day: Kazakhstan v. Lawler

The case of the day is Republic of Kazakhstan v. Lawler (D. Ariz. 2020). Big Sky Energy Corp. commenced an arbitration against Kazakhstan before ICSID, asserting a claim under the US/Kazakhstan bilateral investment treaty. The treaty does not provide protection to “any company that is controlled by non-U.S. nationals if that company does not conduct substantial business activities in the United States.” Kazakhstan sought and received leave under 28 U.S.C. § 1782 to serve a subpoena on William Lawler, Blue Sky’s principal, in order to obtain evidence to assert the jurisdictional defense. Shortly after the subpoena was served, Big Sky produced, in the context of discovery in the arbitration, the documents the subpoena had sought. Lawler then moved to quash the subpoena. (more…)

Continue ReadingCase of the Day: Kazakhstan v. Lawler

Note on Monster Energy v. City Beverages

Here is a note I wrote with my friend and former partner David Evans on the Ninth Circuit’s decision in the Monster Energy case. Please see the ABA copyright notice at the end.

Like judges, arbitrators are paid for their time. Judges, of course, draw a salary from the treasury, while arbitrators are paid by the parties. The freedom to choose an arbitrator best suited to the case is one of the great advantages of arbitration, but because some businesses are “repeat players,” appearing frequently before a particular arbitral body, commentators have long worried about the skewed incentives “repeat players” might create for ADR providers or arbitrators. Monster Energy Co. v. City Beverages, LLC was a dispute between Monster, maker of a popular brand of “energy drinks,” and City Beverages, a franchisee that did business as Olympic Eagle. When Monster sought to terminate the parties’ contract, Olympic Eagle invoked Washington’s Franchise Investment Protection Act, which requires good cause for a termination. Monster moved to compel arbitration with JAMS, the arbitration provider specified in the parties’ agreement. The arbitrator, a former state court judge, found in Monster’s favor, and also ordered Olympic Eagle to pay Monster $3 million in attorneys’ fees. But when Monster sought to confirm the award, Olympic Eagle moved for vacatur, arguing that the arbitrator had failed to disclose his ownership interest in JAMS. (more…)

Continue ReadingNote on Monster Energy v. City Beverages