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GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC (U.S. Sup. Ct.)

Published online by Cambridge University Press:  23 October 2020

Steven Skulnik
Steven Skulnik*
Affiliation:
Steven Skulnik is a Senior Legal Editor at Practical Law. He also regularly sits as arbitrator in international commercial disputes.
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Extract

On June 1, 2020, the U.S. Supreme Court decided GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC. The decision is significant for its holding that nothing in the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the Convention or the New York Convention) or the Federal Arbitration Act (the FAA) prohibits courts from deciding that non-signatories may be bound by or enforce international arbitration agreements based on contract, agency, equity, or related principles.

Type
International Legal Documents
Information
International Legal Materials , Volume 59 , Issue 6 , December 2020 , pp. 911 - 921
Copyright
Copyright © American Society of International Law 2020

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References

ENDNOTES

1 140 S. Ct. 1637 (2020).

2 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, opened for signature June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 38.

3 9 U.S.C. §§ 1–16; 201–208; 301–307.

4 GE Energy Docket, Pet. App. 4a (quoting contracts); J.A. 171.

5 GE Energy, 140 S. Ct. at 1642.

6 Outokumpu Stainless USA LLC v. Converteam SAS, No. CV 16-00378-KD-C, 2017 WL 480716 (S.D. Ala. Feb. 3, 2017).

7 Outokumpu Stainless USA, LLC v. Converteam SAS, 902 F.3d 1316 (11th Cir. 2018). The Eleventh Circuit's approach was countertextual. Article II(2) of the Convention requires contracting states to enforce signed arbitration agreements; it does not provide that contracting states may enforce only signed agreements. The holding was also contrary to the position taken by the Restatement of the U.S. Law of International Commercial and Investor-State Arbitration (2019). The Restatement confirms that under U.S. law, non-signatories may invoke and be subject to international arbitration agreements in appropriate circumstances. Section 2.3 (b) provides that a court, upon request, “enforces an international arbitration agreement against or in favor of a nonsignatory to the agreement to the extent that the nonsignatory: (1) is deemed to have consented to such agreement, or (2) is otherwise bound by or entitled to invoke the agreement under applicable law.”

8 To the author's knowledge, no appellate court in any other contracting state adopts the view taken by the Eleventh Circuit. To the contrary, foreign jurisdictions that recognize one or more doctrines applicable to joining a non-signatory to arbitration include England, France, Germany, Russia, and Switzerland. See Irina Tymczyszyn, et al., Joining non-signatories to an arbitration, Practical Law Arbitration Article 6-275-4952 (Aug. 6, 2014).

9 The Ninth Circuit case, Yang v. Majestic Blue Fisheries, LLC, 876 F.3d 996 (9th Cir. 2017), involved a claim by a transportation worker who could not be compelled to arbitrate under Chapter 1 of the FAA. See New Prime, Inc. v. Oliveira, 139 S. Ct. 532, 539 (2019); Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 112 (2001). The transportation worker exception was not present in GE Energy, but the Eleventh Circuit did not follow the FAA's command to apply domestic arbitration law where not in conflict U.S. law applicable to international arbitration. 9 U.S.C. § 208. The U.S. Supreme Court had already held in Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631 (2009) that non-signatories can join and be joined to an arbitration arising from a domestic arbitration agreement under estoppel and other theories. Thus, according the Eleventh Circuit, international arbitration agreements were, in this circumstance, less enforceable by U.S. courts than domestic arbitration agreements, despite the Supreme Court's admonition that the “emphatic federal policy in favor of arbitral dispute resolution, … applies with special force in the field of international commerce.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614, 631 (1985).

10 Sourcing Unlimited, Inc. v. Asimco Int'l, Inc., 526 F.3d 38 (1st Cir. 2008).

11 Aggarao v. MOL Ship Mgmt. Co., 675 F.3d 355 (4th Cir. 2012) and Int'l Paper Co. v. Schwabedissen Maschinen & Anlagen GMBH, 206 F.3d 411 (4th Cir. 2000).

12 GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC, 139 S. Ct. 2776 (2019).

13 140 S. Ct. at1643 (quoting Arthur Andersen LLP v. Carlisle, 556 U.S. at 630).

14 Id.

15 Id. at 1645.

16 Id.

17 Id. at 1646.

18 Id., citing 1 G. Born, International Commercial Arbitration § 10.02, pp. 1418–1484 (2d ed. 2014) (compiling cases).