Case of the Day: McDonnel Group v. Great Lakes Insurance

The case of the day is McDonnel Group, LLC v. Great Lakes Insurance SE, UK Branch (5th Cir. 2019). McDonnel purchased a builder’s risk policy from a group of insurers. When the insurers denied a claim, McDonnel sued. The insurers argued that the case had to be arbitrated, because the insurance policy contained an agreement to arbitrate. But the policy also had a provision stating: “In the event any terms of this Policy are in conflict with the statutes of the jurisdiction where the Insured Property is located, such terms are amended to conform to such statutes.” A Louisiana statute, § 22:868, forbade agreements to arbitrate in certain insurance contracts covering property in the state. Prior cases had already held that the New York Convention preempted the statute; but did it preempt the statute with such force that the “conformity clause” in the insurance agreement has no effect? (more…)

Continue ReadingCase of the Day: McDonnel Group v. Great Lakes Insurance

Case of the Day: Outokumpu Stainless USA v. Converteam

The case of the day is Outokumpu Stainless USA, LLC v. Converteam SAS (11th Cir. 2018). Outokumpu operated a steel plant in Alabama. It contracted with Fives for the purchase of three cold rolling mills for use in the plant. The contract had an agreement to arbitrate calling for arbitration in Germany under the ICC Rules. GE Energy Conversion France SAS was identified in the contract as a potential subcontractor; its job, in the event, was to provide the motors for the mills. Although the contract defined the buyer and the seller as the “Parties,” it also said that the word “seller” includes sub-contractors, unless expressly provided. GE and Fives were also party to an “Agreement for Consortial Cooperation,” unknown to Outokumpu at the time of the execution of the main contract, which provided that “any and all stipulations of the [main contract] shall apply mutatis mutandis to each party for its own scope of supply and services,” and which contained an agreement to arbitrate disputes in Paris under the ICC Rules.

When the motors failed, Outokumpu sued GE in the Alabama Circuit Court. GE removed the case to the Southern District of Alabama, asserting jurisdiction under FAA § 205. Outokumpu moved to remand, and GE moved to compel arbitration. The district court denied the motion to remand and granted the motion to compel arbitration. Outokumpu appealed.
(more…)

Continue ReadingCase of the Day: Outokumpu Stainless USA v. Converteam

Case of the Day: Outokumpu Stainless v. Converteam

The case of the day is Outokumpu Stainless USA, LLC v. Converteam SAS (11th Cir. 2018). Outokumpu had a steel factory in Alabama. Its predecessor in interest had a contract with a firm called Fives to buy three cold rolling mills for use in the factory. The contract had an agreement to arbitrate requiring arbitration in Düsseldorf under the ICC Rules. Fives subcontracted with GE Energy Conversion France SAS to provide motors for use in the mills. The motors failed, and Outokumpu sued GE in the Alabama state court. GE removed the case to the District Court and moved to dismiss and compel arbitration. The court denied Outokumpu’s motion to remand and granted GE’s motion to compel, and Outokumpu appealed.

(more…)

Continue ReadingCase of the Day: Outokumpu Stainless v. Converteam
Read more about the article Case of the Day: Fiorilla v. Citigroup Global Markets
We hold these truths to be self-evident … Letters Blogatory wishes readers a happy Independence Day!

Case of the Day: Fiorilla v. Citigroup Global Markets

The case of the day is Fiorilla v. Citigroup Global Markets, Inc. (S.D.N.Y. 2018). John Leopoldo Fiorilla brought an arbitration against Citigroup in 2010. Fiorilla, a self-described “unsophisticated” investor, opened an account with Citi in 2006 to manage his $19.5 million life savings. He alleged that through “mismanagement and malfeasance,” Citi “eviscerated” his savings, which in the end were worth just $20,000. In 2012, Fiorilla’s lawyer accepted Citi’s offer to settle for $800,000, subject to negotiation of a mutually agreeable settlement agreement. But the parties disputed whether a real settlement had been reached or whether there were still material terms to be worked out. The tribunal rejected Citi’s motion to enforce the settlement agreement and its motion to terminate the arbitration based on the settlement. It awarded $10.75 million to Fiorilla.
(more…)

Continue ReadingCase of the Day: Fiorilla v. Citigroup Global Markets

Case of the Day: Hardy Exploration v. India

The case of the day is Hardy Exploration & Production (India), Inc. v. Government of India (D.D.C. 2018). It’s a rare example of a US court refusing to confirm an international arbitral award on the grounds that it violates US public policy.

Hardy had a contract with the Indian government to search for and extract hydrocarbons in the waters off India’s southeastern coast. If it found oil, it would have two years under the contract to determine if the find was commercially viable; but if it found gas, it would have five years. Hardy found hydrocarbons and claimed it had five years to make its determination, but the Indian government disagreed, claiming that Hardy only had two years. When two years had passed, the government declared that Hardy’s rights had expired. Hardy was never allowed back into the area. It demanded arbitration. The tribunal, seated in Kuala Lumpur, issued an award in Hardy’s favor requiring specific performance of the contract (i.e., requiring India to allow Hardy back into the site to continue its activities) and awarding interest.
(more…)

Continue ReadingCase of the Day: Hardy Exploration v. India

Case of the Day: Ingenieria, Maquinaria Y Equipos v. ATTS

The case of the day is Ingenieria, Maquinaria Y Equipos de Colombia S.A. v. ATTS Inc. (D.N.J. 2017). ATTS was the agent of ISGEC John Thompson Ltd., which sold commercial boilers. IMECOL and ATTS entered into a three-year agreement under which IMECOL would act as sub-agent and would sell IJT boilers in Colombia. The agreement had an agreement to arbitrate that provided for arbitration in Cali, Colombia. ATTS learned that IMECOL had contacted IJT and had tried to negotiate to become IJT’s agent in Latin America. ATTS then terminated the agreement with IMECOL, arguing that IMECOL had breached the agreement’s provision forbidding direct contact with IJT and had entered the agreement under false pretenses, and IMECOL initiated an arbitration.

ATTS declined to participate in the arbitration “because the Agreement was terminated and no longer in effect.” The tribunal awarded almost $300,000 to IMECOL. IMECOL sought confirmation.
(more…)

Continue ReadingCase of the Day: Ingenieria, Maquinaria Y Equipos v. ATTS

Case of the Day: Kozma Investmentos v. Duda

The case of the day is Kozma Investmentos, Ltda. v. Duda (M.D. Fla. 2017). Kozma had a $14 million Brazilian arbitral award against Edson and Natalina Duda. It brought an action in the Florida state court against the Dudas and Geby Investments, LLC alleging that the Dudas had made fraudulent transfers to Geby to the detriment of Kozma, the creditor. The defendants removed the case to the District Court, and Kozma moved to remand. The defendants’ argument was that the award hadn’t been confirmed, and that Kozma was “essentially seeking to enforce an unconfirmed arbitration award that was entered in Brazil by setting aside as fraudulent the Dudases’ conveyance to Geby of certain real property located in Collier County, Florida in order to avoid its creditors.” Kozma’s argument was that under Brazilian law (specifically, Article 31 of the Brazilian Arbitration Act), the award had the status of a court judgment, and that it was therefore entitled to enforcement in Florida as a foreign judgment. Thus, it argued, the case did not arise under the New York Convention.
(more…)

Continue ReadingCase of the Day: Kozma Investmentos v. Duda

Case of the Day: Brittania-U Nigeria v. Chevron

The case of the day is Brittania-U Nigeria, Ltd. v. Chevron USA, Inc. (5th Cir. 2017). Brittania-U (the double-T is how it spells its name) sued Chevron USA, Ali Moshiri, and Moncef Attia in the Texas state courts. The claim was that Chevron Nigeria, a division of Chevron USA, had invited bids for the sale of its interest in Nigerian oil mining leases. Attia, who worked for BNP Paribas (Chevron’s advisor in the bidding process), invited Brittania-U to participate, and Moshri, a Chevron employee, was involved in the negotiations. Brittania-U and Chevron had signed a confidentiality agreement that contained an agreement to arbitrate disputes in London under the UNCITRAL Rules. Brittania-U alleged that it had submitted the high bid but had not won the auction. It sued for fraud in the inducement. The defendants removed the case to the district court and moved to dismiss. Brittania-U moved to remand the case to the Texas courts. The district court denied the motion to remand and granted the motion to dismiss on the grounds that questions of arbitrability were for the arbitrator to decide, and Brittania-U appealed.
(more…)

Continue ReadingCase of the Day: Brittania-U Nigeria v. Chevron