Dear Readers:

Apologies to those of you who enjoy these posts, for a relatively long hiatus. It has been a busy time these past several months. Today’s post is lengthy, warranting its organization into numbered paragraphs.

1. A 2-1 divided panel decision of the US Court of Appeals for the District of Columbia Circuit on August 9, 2024, in an Investor-State award enforcement case implicating the New York Convention and the “arbitration exception” of the Foreign Sovereign Immunities Act (FSIA), deserves serious attention because of what did not happen. Two judges of the Court rejected the dissenting judge’s contention that the New York Convention does not govern investment arbitration awards against a State when the State’s liability-creating actions under a bilateral investment treaty (BIT) were taken “in a sovereign capacity.” The district court’s enforcement of a $55 million award in favor of a Chinese investor against Nigeria was affirmed, and the applicability of the New York Convention to arbitrations under BITs (but outside of the ICSID Convention framework) between private investors and States that host the investments, remained as it has long been understood. Zhongshan Fucheng Industrial Investment Co. v. Federal Republic of Nigeria, 2024 WL 3733341 (D.C. Cir. Aug. 9, 2024).
2. A political undercurrent to this Commentary is inevitable. First, the dissenting judge joined the DC Circuit in December 2017 directly from service as Deputy White House Counsel to the then-President of the United States, and came to the Court with a corresponding political profile including a publicized affiliation with the Federalist Society (as well as sterling professional credentials). Second, the case involves, directly, an award in favor of a Chinese investor under a China-Nigeria BIT, and, nearly as directly, the relevance of a distinction for purposes of FSIA immunity from suit between the sovereign acts of a sovereign and the private acts of a sovereign. Third, in the background — but how far back may be debated — is the issue of the aforementions ex-President’s official immunity from suit, which was not finally decided by the US Supreme Court in July 2024; it remains for the US District Judge to sort misconduct alleged in the indictments into official (“sovereign”) and non-official (“private”) categories, and for that refined version of presidential immunity to be reviewed in the DC Circuit (absent a Justice Department decision to terminate the prosecution, or a presidential pardon). The reasoning of the dissent in the Zhongshan case – in support of an apparently unprecedented interpretation of the New York Convention – and how the panel majority answered it, invite us to consider how ardent political conservatism in the federal judiciary may be transmitted through legal reasoning to potentially reshape international arbitration law – perhaps in service of laying a jurisprudential foundation for envisioned legal targets of a conservative political agenda.
3.  The underlying facts of the case, briefly, are these. A federated state of Nigeria called Ogun set up a free trade zone in a joint venture with one Chinese investor, and another Chinese investor set up a business there, also under contract with Ogun, investing millions to develop an industrial park with community facilities. Ogun terminated this investor’s contract unilaterally, and Nigerian federal police reinforced the ouster of the Chinese investor by arresting and abusing at least one of its executives. So there was no dispute that, for purposes of the New York Convention, the Investor had a commercial relationship with Ogun state. Nigeria did contend both that Nigeria had no “legal relationship” (in a New York Convention sense) with the Investor, and that even if there was such a relationship it was not “commercial” because the Investor contracted only with Ogun state. (Nigeria when it ratified the Convention in 1959 had adopted the reservation that it would only apply the Convention to commercial disputes). The DC Circuit rejected both arguments, and on these questions the dissent did not quarrel. But there remained one further element necessary to establish that the Convention governed the award: that Nigeria must be a “legal person” under Convention Art. I(1) (which states that the Convention applies to awards “arising out of differences between persons, whether physical or legal”).  Nigeria argued that the alleged violation of its BIT obligation of fair and equitable treatment (among other obligations) was not the action of a “legal person” under the Convention because Nigeria acted – including in the abusive federal police arrest and mistreatment of the Investor’s executive — in a sovereign capacity. On this issue the dissent sided with Nigeria, the majority with the Investor.
4. The dissent begins its “legal person” analysis with a “textualist” exploration into the legal meaning of “person” beginning in the 1950s – the gestation period of the Convention, starting with the ICC’s draft in 1953. The exercise – focused on American legal and general dictionaries, and domestic statutes and case law – seems strikingly misdirected in regard to a multilateral instrument with a multinational drafting history.  Answering the majority’s criticism on this very point, the dissent states that “ordinary English usage is particularly relevant because the Convention was drafted in English and finalized in New York City.” (In precise terms, the U.N. headquarters complex was from the outset an international territory, pursuant to a treaty with the United States. And while the travaux préparatoires of the Convention had English as their official language, the drafting committee members were from Australia, the UK, Belgium, Ecuador, India, Sweden and the USSR). This is unconvincing textualism is seemingly agenda-driven. All the more troubling is that Nigeria conceded its “legal person” status under the Convention for its actions in a private, not sovereign, capacity. The textual exercise did not, and could not, yield held evidence to support a unqualified capacity-of-action distinction.
5. A further problem with this textual approach, as the majority states, is stare decisis. In DC Circuit cases such as Tatneft v. Ukraine, and Olin v. Libya, and Stileks v Moldova, and Chevron v. Ecuador, and even in the U.S. Supreme Court in BG Group v. Argentina, it has been accepted that an Award involving a Host State’s breach of international law obligations toward an investor under a BIT falls under the Convention and forms a basis for subject matter jurisdiction under the FSIA’s arbitration exception. In Stileks, for example, the Respondent Republic of Moldova had lost an Energy Charter Treaty arbitration on the basis of acts that were unambiguously sovereign – the Claimant had failed to obtain relief in Moldovan courts in “decade-long proceedings [that] were unsuccessful, due in significant part to the Moldovan government’s actions.” But Moldova among its many arguments against FSIA jurisdiction under the arbitration exception did not contend that it was not a “legal person” under the Convention, and neither the district court nor the DC Circuit had raised this potential barrier to subject matter jurisdiction sua sponte. The dissent in Zhongshan makes a valiant effort to rebut the stare decisis point. But the dissent’s argument devolves, in essence, to a position that nothing less than an express holding on an expressly litigated issue qualifies as settled jurisprudence. The discussion of Tatneft is illustrative. The dissenter correctly observes that the DC Circuit in Tatneft found FSIA non-immunity of Ukraine based on the waiver exception, not the arbitration exception – a waiver based on Ukraine having become a Contracting State of the New York Convention. But if Ukraine was not a “legal person” under the New York Convention, in regard to its arbitration with Tatneft, its signature on the New York Convention could scarcely operate as a waiver of sovereign immunity for Tatneft’s US award- enforcement case. Not so fast, says the dissent (in substance), because Ukraine did not advance a Convention non-personhood argument, and the Court opted not to raise it sua sponte. This is a highly technical limitation on stare decisis, in regard to a potential defect in FSIA subject matter jurisdiction in the “home court” for FSIA case law. Although it is not stated directly by the majority, the underpinning for its established jurisprudence position seems to be that when the DC CIrcuit repeatedly declines to raise sua sponte a potential defect in FSIA subject matter jurisdiction, that pattern of inaction stands as solid evidence that the argument animating the potential defect has no traction.
6. The panel majority furnishes its answer to the “legal person” question in roughly five dimensions (text, precedent, drafting history, treaty practice, U.S. Executive Branch construction), and the dissent counters on each. That makes this sprawling tome of a decision not comprehensively treatable in a medium like this Blog. Having treated text and precedent above,  I now take drafting history as the last dimension on which to take the measure of the dissent’s mission. Comparison of the majority and dissent in the treatment of drafting history is a useful way to measure objectivity: drafting history rarely yields a definite and direct answer, so the jurist’s use of such evidence can be revealing of an underlying agenda.
7. In simplified terms, the majority and dissent were in a debate over portions of the travaux that declared that the Convention “does not deal with arbitration between States.” That was not conclusive however, because it is necessary to understand why the Convention does not expressly state whether it covers, or does not cover, State-to-State arbitrations.  If the reason is that States are categorically not “legal persons” under the Convention, then an Investor v State arbitration could be no more within the Convention than a State v. State case. Even the dissent is not prepared to go this far. But if the drafting group said the Convention “does not deal with” State v State mainly because the Convention is concerned with awards arising from commercial disputes, then the character of State’s actions as “sovereign” or “private” – the distinction at the core of the dissent’s “not a person” position – does not answer the question of whether the State’s acts impacted a commercial relationship.
8. Underlying this debate over the original Convention meaning of “legal person,” of course, is the fact that BITs as we know them today existed nearly not at all when the Convention was working its way through the United Nations in the 1950s. The prevailing norm for investment encouragement and protection was the “Friendship, Commerce & Navigation” (FCN) treaty – a centerpiece of U.S. post-war treaty-making from the late 1940s to the 1960s — which were purely public law instruments because they created no provisions for direct enforcement of duties owed — for the benefit of citizens of the States — between States under International law. (The 1954 FCN between the U.S. and Israel, for example, articulated many of the international law obligations now commonly adjudicated in Investor-State arbitration, but provided for dispute resolution before the International Court of Justice, i.e., State v. State). Before reaching its treatment of the travaux, the majority situates the China-Nigeria BIT (and BITs in the precedents cited) textually in the private law camp by virtue of (i) the declared objective to encourage foreign investment by private investors,  (ii) the BIT’s separate dispute resolution frameworks for State-State and Investor-State arbitration, and (iii) the standing offer of the State to arbitrate with Investor over alleged violations of the investment protection obligations undertaken in the BIT. The ensuing dialogue between the majority and the dissent over the meaning to be derived from the sidelining of State v State arbitration in the Convention’s drafting history really concerns whether (and if so when) the Host State as a violator of privately- arbitrable BIT obligations avoids the grasp of the New York Convention because the privity of treaty contract in the BIT is, as it was in FCNs, State to State.
9. Confronting the same relatively indefinite indications in the travaux, the majority and the dissent diverge initially, and perhaps most importantly, on the relationship of the drafting history to the text – “legal person” — which is shaped in turn by their divergent views of what the text implies on a standalone examination. For the majority, the starting point is that there is no textual indication that “legal person” requires a case-by-case inquiry in its application to State actors, and this, combined with Nigeria’s admission (and other contextual and historical evidence) that States are Convention “legal persons” at least sometimes, meant that drafting history would have to have clarity to overcome a presumption that no such distinctions were intended. Quoting the US Supreme Court: “[C]herry-picked generalizations from the negotiation and drafting history … cannot be used to create a rule that finds no support in the treaty’s text.” The dissent starts from a different premise: the “text and context strongly suggest … that the Convention does not extend to disputes arising from sovereign acts governed by public law.” From this starting point, the dissent seeks from the travaux not clarity but only corroboration. Indeed, the dissent’s point of departure is well-captured in the phrase deployed to sum up the Investor’s argument: “hid[ing] elephants in mouseholes.”  That is to say, the dissent starts from the position that “legal person” is a treaty “mousehole” too cramped to accommodate the “elephant” of Investor-State arbitration over sovereign acts affecting BIT obligations that the Investor enforces through arbitration as an intended beneficiary and arbitration offer recipient.
10. The main (but not only) piece of drafting history debated between the dissent and the majority was a section of a Committee report concerning a change in the name of the draft Convention. The drafters said they changed “International Arbitral Awards” to “Foreign Arbitral Awards” because the former connotes State-to-State arbitration, which the Convention “does not deal with,” whereas the Convention does concern awards made in the territory of a country other than the one where recognition is sought. For the dissent, this was proof positive that States are not Convention legal persons, because personhood could not conceivably depend on who is the adversary: effectively “once a non-person, always a non-person.” But that seems an argument that proves too much, especially since Nigeria and the dissent both accepted that Nigeria was a Convention Art. I(1) legal person at least in some circumstances. The majority on the other hand viewed this passage as “indeterminate” because the language could be seen either as an express exclusion of State v. State arbitration or only as an explanation for aligning the Convention’s title with its main focus. One might go further, and worry that the dissent’s take on this nugget of drafting history is a troubling example of confirmation bias in treaty interpretation.
11. It is telling – as a measure of agenda-driven legal reasoning – that the dissent holds tenaciously to the view that this Chinese investor’s claims against Nigeria were “public law” claims, and therefore just as excluded from Convention coverage as State v. State claims arguably were. But in doing so the dissent slides past, without comment, the majority’s fundamental distinction: the China-Nigeria BIT in its Art. 9 concerning Investor-State arbitration, called upon any arbitral tribunal to “adjudicate in accordance with the law of the Contracting Party to the dispute… as well as the generally recognized principles of international law.”  I note this not as the predominant element in the majority’s reasoning – it is one of many – but only because it is the one that most poignantly indicates that the dissent was unmoved even at a point where its “public law” reasoning had essentially run out of runway. Much if not all of the travaux evidence of Convention meaning, invoked by the dissent on the “legal person” issue, would appear to support the majority position that the Convention covers the Chinese investor’s BIT arbitration award against Nigeria, and the dissent appears to manage this contradiction by being unyielding in the position that the BIT claims were “public law” claims.
12. There are reasons here to be worried about the fragility of arbitration jurisprudence and the risk of its subservience in the hands of (sometimes) agenda-driven jurists to considerations that may have little to do with arbitration or the New York Convention. That the dissent took such pains to extract from available sources a distinction between sovereign acts and the private acts of a sovereign, on a question of immunity from suit, in service of excusing Nigeria from enforcement of an award in favor of a Chinese investor under a BIT in which it consented to arbitrate, and under the New York Convention of which it was one of the original ratifiers in 1959, suggests that a different agenda, more political and more domestic, may have been in play in the writing of the dissent.

Alter ego entities are a pervasive presence in complex international commercial arbitrations

If those entities are named as Respondents, and they are non-signatories of the arbitration agreement, two procedural courses are possible. The first, and perhaps the more common, is that the alter egos will raise an objection to arbitral jurisdiction, and participate in the arbitration subject to that objection. This participation may or may not entail an express submission of the alter ego issue to the arbitrators – and whether there has been such a submission of course affects the scope of judicial review of the Tribunal’s decision on the alleged alter ego’s jurisdiction objection. Much less often (so it seems based on experience and the dearth of reported decisions), the alleged alter ego will seek a judicial determination at the start of the arbitration to declare that they are not bound to participate, or the Claimant will move in a competent court to compel the reluctant alter ego to arbitrate.

But in many cases the Claimant may elect to leave the alleged alter egos off the roster of named Respondents, reserving the question of their responsibility to satisfy a favorable award for later determination in the courts. In that setting, US arbitration law has for 60 years remained under the influence (and here in New York, the control) of a US Second Circuit Court of Appeals decision, the Orion Shipping case (Orion Shipping & Trading Co. v. Eastern States Petroleum Corp., 312 F.2d 299 (2d Cir.), cert. denied, 373 U.S. 949 (1963)).

In Orion Shipping, the Court held that an arbitration award – a US-seated international award that was treated under FAA Chapter 1 because this was seven years before the US incorporated the New York Convention into domestic law through FAA Chapter 2 — could not be confirmed under the FAA, under an alter ego theory, against the parent company of one of Respondents named in the arbitration and in the award, and observed that an award confirmation action under FAA Chapter 1 was not the proper time to attempt to pierce the corporate veil, due to the potentially complex fact-finding this inquiry would involve.

While Orion Shipping has survived as the law in the Second Circuit, not even one other federal court of appeals has ruled on the same issue, and Orion Shipping has had a very mixed reception in federal district courts outside the Second Circuit where it is not a controlling precedent. Two dimensions of Orion Shipping raise questions about the wisdom of its holding: first, it was based on pragmatic concerns rather than an authoritative construction of the Federal Arbitration Act, and second, the pragmatic concern of saddling confirmation actions with the complex evidentiary issues that an alter ego adjudication might involve arguably call for a discretionary rule not per se rule requiring two consecutive post-award lawsuits.

Orion Shipping is back in arbitration world “headlines” again, courtesy of a recent award enforcement case in the Southern District of New York, Eletson Holdings, Inc. v. Levona Holdings Ltd., 2024 WL 1702397 (S.D.N.Y. Apr. 19, 2024). In the Eletson arbitration, Claimant did not name the alter egos as Respondents but only as the collaborating miscreants of the named Respondent.  Claimant did however seek to arbitrate the alter ego issues; this was done; and the final award made comprehensive factual and legal determinations of the existence of the alter ego relationships. The Eletson confirmation/vacatur case was complex and multi-faceted, and in this Post you will be mercifully spared discussion of everything other than the alter ego issue!

When the time came to seek confirmation of the award, Claimant’s counsel did not seek confirmation against the alter egos.  At that point (if not sooner), we may surmise that Claimant had come into contact with the Orion Shipping case law. So instead of asking the Court to confirm the award against the alter egos, Claimant asked the Court to confirm the award’s alter ego determinations – an understandable play for some potential issue preclusion against the alter egos, in an eventual separate litigation to enforce against the award confirmation judgment against them. But the Court  (correctly) rejected this out of hand – saying, in substance, “the FAA puts us in the business of confirming awards, not findings of fact in awards uncoupled from the party bound by the award.” And to quote rather than paraphrase the Court: “Eletson may yet have the opportunity to seek to hold the alter egos responsible for Levona’s obligations under the award. But not having sought to make the alter egos a party to the arbitration, they must do so through a separate action for veil piercing. They may not do so through findings and an award as to which the alter egos had no opportunity to be heard.”

Before I unleash my diatribe on why “a separate action for veil piercing” should be consigned to the dustbin of outdated arbitration law, let’s pause for a moment to ask what the arbitrator in Eletson might have done to make this situation better. This is a “what makes a good arbitrator?” question.

We might all (or almost) agree that it is not for the Tribunal to advise a Claimant to make a judicial motion to compel arbitration, or to advise a Claimant to join new parties as Respondents. But when the Claimant asks for an award against non-parties on an alter ego theory, or an award against the named Respondent determining that certain non-parties are its alter egos, and the Respondent counters by contesting veil-piercing on the facts, why should the arbitrator only resolve the disputes as the Parties have framed them? The Parties’ framing of the issue may leave gaps that would encumber effective award enforcement. Should the “good arbitrator” merely take the arguments as presented by the Parties and leave the Parties to worry about award confirmation and enforcement? Or would it be preferable for the “good arbitrator” to ask: “Claimant seeks an award against non-parties B and C on the basis that they are alter egos of Respondent A, or in the alternative at least an award binding Respondent A on this issue. The Parties are invited to address in the Pre-Hearing Memorials (i) the legal basis for the Tribunal’s power to make an award against entities that are neither parties to the arbitration nor signatories of the arbitration agreement, and (ii) if such power were found not to exist, the reasons justifying the Tribunal making alter ego determinations that bind only the named parties?”

A closely-related question: Should “the good arbitrator” know or find out the law bearing on judicial enforcement of awards against alleged alter egos of the named party that the award would bind? If the arbitrator knows about the Orion Shipping line of cases but the Parties – as indicated by their briefs – do not, shall the arbitrator remain silent and only “call balls and strikes” among Parties’ pitches? Suppose the Tribunal adds to its request for briefing “Please give consideration, to the extent relevant, to the Orion Shipping line of cases.”  Is that out-of-bounds proactivity? Or precisely the kind of reservoir of arbitration-specific legal knowledge that the effective Tribunal should bring to bear if the Parties do not do so and it matters?

In the not-to-be-forgotten de Gusa case in the Second Circuit in 2017 (CBF Industria de Gusa S/A v. AMCI Holdings, Inc., 850 F.3d 58 (2d Cir. 2017), the Court somewhat re-shaped the Orion Shipping doctrine by allowing — at least — a narrow exception in the context of New York Convention recognition and enforcement of an award made outside the United States:  such recognition and enforcement may be pursued under the Convention and FAA Chapter Two directly against alleged alter egos of the award debtor where the award debtor itself is a defunct entity not capable of being a Respondent in the recognition and enforcement case. I refer to  “at least … a narrow exception” not because this is what the Second Circuit said, but because alter ego entities seeking to avoid having awards enforced against them under the New York Convention and FAA Chapter Two, and seeking to retain the procedural advantages of playing out a more labored two-litigation process under Orion Shipping, may argue that this is the actual “holding” of de Gusa. And by “holding” I mean to say the narrowest discernible legal principle required to resolve the case. Arguably that narrow principle is that there is no reason to require (i) first, a successful Convention/FAA enforcement case (somewhere) against the award debtor, resulting in a Judgment, and then (ii) an action to enforce the Judgment against the alter egos under applicable state law, where the legal extinction of the award debtor as an entity capable of being sued makes enforcement against the award debtor impossible.

Deciphering the holding of de Gusa – “holding” in the broader sense of what the Court was telling us about the law — is a tall order for a mortal lawyer. I confirmed my mortality in an earlier long-form effort, titled (in short-form) “Deciphering De Gusa,” and published at Volume 29 No. 4 of the American Review of International Arbitration at p. 475 (2018).

But here is my 2024 interpretation: Whether to apply the rule of Orion Shipping to the recognition and enforcement under the Convention of a foreign award — that is to say, whether a US Court sitting as a “secondary jurisdiction” should apply Orion Shipping, is not mandated by the Convention or the Orion Shipping case itself, and therefore is a matter of discretion in the District Court. (On remand in de Gusa, the District Court exercised that discretion to permit Convention recognition and enforcement of the award against the alter egos of the defunct award debtor, even though that award debtor was a party to the enforcement case and the award had not been recognized and enforced anywhere else (316 F.Supp.3d 635 (S.D.N.Y 2018)). By implication, rather than by affirmative statement by the Second Circuit panel, that panel’s decision leaves Orion Shipping as “good” Second Circuit law, binding on the US district courts in the Second Circuit (i) in a domestic arbitration where award confirmation is governed entirely by FAA Chapter 1, and (ii) as the Eletson case indicates, probably also in US-seated international arbitrations.

But there is more.  Per the Second Circuit in de Gusa, the rule in Orion Shipping fits into the enforcement regime of the New York Convention (and in turn FAA Chapter 2) because it is a ” rule[] of procedure of the territory where the award is relied upon.” (Art. III of the Convention).  But the “rule of procedure” when a district court in the Second Circuit sits as a “secondary jurisdiction” to recognize and enforce a foreign award is no longer the rule of Orion Shipping, but instead the newer rule of de Gusa: that Orion Shipping is not a mandatory rule but a rule of discretion. That is to say, the district court may decide to permit, or to disallow, direct enforcement of the award under the Convention against alter egos of the award debtor.  On the Second Circuit’s remand of the de Gusa case to the US District Court for the Southern District of New York, that Court declined to apply Orion Shipping and gave recognition and enforcement to the Award against alter egos of the award debtor (316 F.Supp.3d 635 (S.D.N.Y 2018) and, at a later stage, 650 F.Supp.3d 228 (S.D.N.Y. 2023).  What is mandatory when a foreign award is brought to the US for recognition and enforcement under the Convention, said the Second Circuit, is that refusal of recognition and enforcement may only be based on one of the defenses stated in the New York Convention. Consider just how sensibly this might play out: the alter ego Respondents invoke Convention Art. V(1)(b) and say they were unable to present their case; the Petitioner (award creditor) argues that they are alter egos and their case was therefore effectively presented by the award debtor; and the alter ego issue thus becomes a Convention defense issue and is fully resolved in the enforcement case.

And while the de Gusa Second Circuit panel did not elaborate on this point, that would appear to imply that an alter ego respondent might succeed in resisting enforcement — but only if the implications of its alter ego status can be situated in a New York Convention Article V defense. And indeed that was the framework for further litigation on enforcement of the award in de Gusa, the most recent chapter of which was in January 2023, when the alter egos failed on their motion for summary judgment, seeking determinations without trial that (i) they lacked “capacity” under Convention Article V(1)(a) and that they had been “unable to present their case” to the Arbitral Tribunal, under Convention Article V(1)(b). (650 F.Supp.3d 228 (S.D.N.Y. 2023)).

If one is a judicial tea leaf reader, one might well conclude that the Second Circuit panel that decided de Gusa was prepared to dispose of Orion Shipping as a mandatory rule in all US-seated arbitrations, domestic and international. One might well conclude that the only reason it did not do so was judicial restraint: the Court elected to decide only the case that was before it . And perhaps that explains why, six years later, we still have Orion Shipping as a mandatory rule for US-seated arbitrations, and why that rule was enforced — without discussion of its virtues or vices — by the US district court judge in the Eletson case. Eventually some aggrieved award creditor pursuing alter egos will take the issue to the Second Circuit and — if you believe the indications in my crystal ball — the Second Circuit will convert the Orion Shipping rule into a rule of discretion in all award confirmation cases under FAA Chapters 1 and 2.

If the alter ego defendant, in an enforcement case brought on a US-made Convention award, also must fit its defenses into the framework of Convention Article V, little or nothing remains of the Orion Shipping rule. The Second Circuit did not say this with clarity in de Gusa. But a distinction for US-made Convention awards, where the US district court sits in “primary jurisdiction,” is not meaningful. The Convention’s Article V defenses become the focus of the enforcement case, unless there is a separate “rule of procedure” recognized by Article III of the Convention that makes the alter egos an improper party to the enforcement case until an unless there has been an award enforcement — whether in the same case or elsewhere – against the award debtor. But in de Gusa the Second Circuit stated that such a “Texas Two-Step” looks too much like the “double exequatur” that the New York Convention was adopted to abolish. I see no reason why that principle has less force in regard to a US-made Convention award than a foreign-made Convention award.  Judicial restraint can be problematic when an appellate court with great influence in international arbitration solves a problem for only a portion of the cases wherein the problem arises. The Eletson case appears to be the first post-de Gusa case in a federal district court in the Second Circuit, but the frequency of published decisions is only one measure of the scope of the problem. Those of you who arbitrate regularly as counsel or arbitrators know that alter egos of the contract-signatory respondent are a regular feature of international arbitrations.

What is the prescription for the law in the Second Circuit?  Probably to abrogate Orion Shipping, entirely and conclusively. One of the main reasons alter egos exist is to create legal separation between the potential obligor (whether of an arbitration award or otherwise), and the nominal owner of the obligor’s assets. Orion Shipping sought to promote prompt and efficient confirmation of awards, by shutting out the fact-intensive and potentially time-consuming process of litigating the existence, or not, of an alter ego relationship.  The point of prompt and efficient confirmation is to move the award creditor swiftly to eligibility to use the enforcing state’s methods for execution on judgments. But if the award-debtor has arranged to be judgment-proof, and the main hope for execution is against the alter egos, the “Texas Two-Step” mostly serves to delay the award-creditor’s ability to move on from enforcement to execution. If only the named award debtors may be respondents in the enforcement case, while the alter egos remain on the sidelines pending entry of an award enforcement judgment, the award debtor who is keen on a shell game to move assets from one alter ego entity to another to stay at least one step ahead of execution against assets, gains undue advantages — the systemic advantages of crowded federal court dockets where Convention award enforcement is rarely a top priority, and award enforcement judgments may be challenged on appeal to buy more time, and the additional opportunities to buy time by raising Convention defense issues under Article V that may ultimately lack merit but do require careful briefing and study by the Courts.  From a public policy perspective — viewing satisfaction of enforced awards as an element of public policy — bringing the alter ego shell game under early judicial control in the award-enforcing court makes a great deal of sense.  This solution also takes into account the limited ability of Tribunals to solve the alter ego issue within the arbitral procedure. The Claimants either will or will not seek to join the alter egos as Parties (Thoughtful counsel in many arbitrations will name the alter egos as Respondents and seek to have those issues resolved by the Tribunal. If the alter egos object to jurisdiction, but do not immediately go to court, the issue gets arbitrated, and if the alter egos are unhappy with the Tribunal’s determination that they were indeed alter egos and therefore bound to arbitrate the merits, that displeasure can become part of the confirmation/vacatur process.  The competent court then decides the alter ego issue, whether under a deferential standard because the issue was submitted to arbitration, or under a de novo standard if the issue was arbitrated over the alter ego parties’ objection that it should not have been arbitrated. In either case, the alter ego issue is resolved in the confirmation/vacatur case, not deferred to a later separate lawsuit.)

Let’s look hopefully toward an early opportunity for the Orion Shipping rule to to meet its final demise.

There are many good reasons for the Supreme Court of the United States to grant the petitions for writ of certiorari now before the Court in two cases involving the question of whether international arbitrators’ undisclosed professional relationships justify vacatur on the basis of evident partiality.  The main theme of each of those cert. petitions – that there is a “split” among the federal judicial circuits concerning the relevant test derived from the Court’s 1968 decision in the Commonwealth Coatings case – is sensibly crafted to attract the enthusiasm of the Court. But for those of us who, perhaps more acutely than the Justices of the Supreme Court, have an anxious preoccupation with the subject of arbitrator disclosure, a compelling reason for the Court to take the cases is because the US arbitration community would benefit from authoritative guidance on how the “evident partiality” standard of the Federal Arbitration Act (“FAA”) Section 10(a)(2) applies to the active arbitrator’s multi-layered web of professional and personal relationships in a highly­-networked global community. That type of community did not exist in 1968 – two years before the US acceded to the New York Convention – and its eventual existence was neither considered nor anticipated in the quaint domestic setting of Commonwealth Coatings.

What the Supreme Court actually held in Commonwealth Coatings has been debated now for 55 years in US federal courts and in the arbitration community. That debate has swirled because the Supreme Court has declined to shed light on how the “evident partiality” test for vacatur applies in different contexts. The consequence has been that advocates and courts have on various occasions taken out of context phrases from the opinion of the Court authored by Justice Black (often said to have been only a “plurality opinion” although it was not denominated as such), and the concurring opinion authored by Justice White, and have struggled to extend them to a variety of situations that scarcely resemble Commonwealth Coatings.

Commonwealth Coatings involved a local construction arbitration in Puerto Rico, over sums unpaid to a paint-job subcontractor. The tribunal was composed of two party appointees who were non-neutral by agreement and a presiding arbitrator whom the parties expected to be a neutral. The presiding arbitrator’s “day job”  was as an engineering consultant, and he had provided such services, off-and-on over a five-year period before the arbitration, to the Respondent in the arbitration. This was not disclosed by the presiding arbitrator or by the Respondent, and Claimant only learned of it after losing the case. The Court described this undisclosed business relationship in the following terms: “[T]he [Respondent’s] patronage was repeated and significant, involving fees of about $12,000 over a period of four of five years, and the relationship even went so far as to include the rendering of services on the very projects involved in this lawsuit.”

These facts were essential to the Court’s holding. The Court’s objection to the non-disclosure, in FAA “evident partiality” terms — and here I quote from Justice Black’s “opinion of the Court”  — was that “neither this arbitrator nor the [Respondent] gave to petitioner [Claimant in the arbitration] even an intimation of the close financial relations that had existed between them for a period of years.” Justice Black then entered upon a discussion of a 1927 Supreme Court case in which it had been decided that a criminal defendant was denied the constitutional right to a fair trial because, under the Ohio local criminal court’s rules and practices, the judge derived income from court fees taxed against convicted defendants.  The Opinion of the Court in Commonwealth Coatings  then interpolated this principle into FAA Section 10: “Since in the case of courts this is a constitutional principle, we can see no basis for refusing to find the same concept in the broad statutory language that governs arbitration proceedings and provides that an award can be set aside on the basis of ‘evident partiality’ or the use of ‘undue means’.”

The paragraph containing this quotation concludes with the sentence hosting the catch-phrase that has made Justice Black’s Opinion famous. The catch-phrase is “might create an impression of possible bias.” The full sentence reads: “We can perceive no way in which the effectiveness of the arbitration process will be hampered by the simple requirement that arbitrators disclose to the parties any dealings that might create an impression of possible bias” (emphasis supplied, purposefully). In this 2024 retrospective, taking into account five decades of concern with potential overreach of the phrase “might create an impression of possible bias,” perhaps it is useful to ask, by way of limitation: what did the Supreme Court mean by “dealings”? It seems to be a question worth considering. One can only imagine how many briefs in how many courts over the span of 55 years have argued that Commonwealth Coatings requires all arbitrators in FAA cases, on pain of potential award vacatur, to disclose “any matter”  or “any information” or “any relationship” or “any facts” that “might create an impression of possible bias.”  But it seems entirely possible that Justice Black and his colleagues — including the concurring Justices White and Marshall — used “dealings” more narrowly, in alignment with the facts of the case to refer to the business activities that are regularly engaged in by the arbitrator for profit, and the potential influence of the profit motive on the arbitrator’s objectivity. Such an interpretation seems to harmonize Justice Black’s opinion with Justice White’s concurrence, cutting against a tendency in some of the lower federal court case law to view those opinions as pronouncing different standards.

There is evidence of this in Justice White’s concurrence. Clearly Justice White was focused on  arbitrators’ “business relationship with the parties before them” and “any financial transactions which he has had or is negotiating with either of the parties.” He then described the holding of the Court to be that “where the arbitrator has a substantial interest in a firm which has done more than trivial business with a party, that fact must be disclosed.”  And it is worthwhile to observe that there is no hint in Justice Black’s Opinion that Justice White misstated the holding of the Court.

I see quite a bit of unity in the White and Black opinions in Commonwealth Coatings, and it may well be that the divergence that has been ascribed to those opinions by some lower federal courts has resulted from efforts to apply Commonwealth Coatings to disclosure scenarios at a considerable remove from the one that case presented.

These remarks surely apply to the non-disclosure facts presented by the certiorari petitions in the Andes and Grupo Unido cases. Each involves non-disclosures by arbitrators who, at the times of their appointments, were lawyers in private practice, serving both as arbitration advocates and as arbitrators. Neither case has to do with a business relationship between the arbitrators (or their law firms) and any of the parties. Andes concerns nondisclosure of an arbitrator’s concurrent service on a different tribunal with a party’s counsel. Grupo Unido concerns (inter alia) nondisclosure of a presiding arbitrator’s concurrent service on a second tribunal with one of the co-arbitrators. (Related to this, but not dealing with Grupo Unido itself, is the Post on this Site entitled “On Overlapping Appointments” dated November 2, 2022. It is easily located using the Search by Keyword feature in the right-hand margin).  These are arbitrators in an arbitration world that bears no resemblance to the local construction industry of San Juan, Puerto Rico in the 1960s.  A compelling reason for the Supreme Court to grant certiorari, from the perspective of our community, has much to do with giving guidance to participants in the contemporary world of complex high-value arbitrations, international and domestic, where busy arbitrators constantly encounter other busy arbitrators in contexts, well known to all of you, ranging from other tribunals to workshop faculties to Bar Association task forces.

The cert. petitions in Grupo Unido and Andes cast a spotlight on the unstable relationship between arbitrator disclosure and arbitrator bias.  That relationship is unstable, in the US market, because rules about arbitrator disclosure mainly come from the rules and standards of arbitration-sponsoring institutions (with the overlay of soft law, notably the IBA Conflict of Interest Rules), while rules about arbitrator bias mainly come from jurisprudence under the FAA in cases where a losing party seeks to have an award vacated, or refused confirmation, because an arbitrator was “evident[ly] partial[]” or “corrupt.” Which set of rules should guide an arbitrator in deciding what disclosures to make?  Does the answer vary from case to case? From one federal judicial circuit to another? From one institution to another?

The Grupo Unido and Andes decisions in the federal courts of appeals reflect a view that the FAA is only concerned with undisclosed professional relationships that are prima facie indicative of bias. That Prominent Arbitrator A in Case 1 promotes the candidacy of Prominent Arbitrator B in Case 1 to chair the Tribunal in Case 2 in which Prominent Arbitrator A serves as a party appointee – one of the nondisclosure scenarios in Grupo Unido —  doesn’t meet the prima facie test according to the Eleventh Circuit in Grupo Unido.  To be sure, chair appointments in big cases are lucrative, and in some sense marketable to get more of them. But the concern of a losing party that Prominent Arbitrator A had purchased Arbitrator B’s adoption of the position of the party that appointed Prominent Arbitrator A, or at least purchased a more sympathetic audience for the position of that party, is speculative not reasonable unless other unfavorable and undisclosed relationship facts indicate that Arbitrator B withheld disclosure to conceal the fact that her or his vote and/or sympathy was in some sense for sale.  This seems to be a sensible view, and the problem that justifies the granting of cert. in both cases is that it is not consistently shared across all federal courts actively and regularly concerned with international arbitrations.

Consider, for example, a case that is to be argued in the US Ninth Circuit Court of Appeals in April 2024, called Equicare Health Inc. v. Varian Medical Systems, Inc. (No. 23-15698 in the 9^th Circuit, for those of you with PACER accounts who may wish to track down the briefs).  This is an appeal from a US District Court judgment in the Northern District of California that vacated an ICDR arbitration award on grounds of evident partiality due (mainly) to a wing-arbitrator’s non-disclosure. What did the wing arbitrator fail to disclose – evidently unwittingly?: That years earlier, in a long-since-settled legal malpractice case, he and his law firm as local counsel for an out-of-California law firm, had been represented by a legal team that included (in the final stages before settlement) a lawyer now appearing before the Tribunal as a partner of a different law firm. And (assuming the accuracy of the appellant’s version of the facts) that lawyer had taken only a back-office brief-writing role in the malpractice case; and her presence on the malpractice defense team had been entirely unknown to the arbitrator/former client, such that her appearance in the arbitration triggered no connection that would have caused him to make a disclosure.

Those of you who are intrepid enough to read the District Court’s opinion granting the motion to vacate in the Equicare case (2023 WL 3089093 (N.D. Cal. April 19, 2023)) may share my consternation that the Court appears to hold that FAA Section 10 “evident partiality” is present when an arbitrator, innocently or through inadvertence, fails to discover his or her own transitory and attenuated prior status as a client of a law firm whose legal team on the matter included an attorney now appearing before him. Even more disconcerting,  the District Court supports this conclusion with the observation that the non-disclosure violated the terms of the ICDR’s arbitrator questionnaire that requires that all such relationships be disclosed, and the consequence was to deprive the losing party (the vacatur movant) of the ability, in the initial striking and ranking of the ICDR’s candidate list, to strike from the list the arbitrator that it instead ranked without taking into account the undisclosed facts.

This is troublesome for at least a few reasons. First, a party may strike an arbitrator from an institution-provided candidate list for any reason, and so at the selection stage party autonomy includes the right to speculate about a candidate’s predisposition. A party striking and ranking an institution’s list, when the list is composed after pre-screening candidates by asking them to make conflicts disclosures, is perfectly entitled to prefer candidates whose disclosures do not invite speculative suspicion of bias. But it does not follow that a candidate’s innocent nondisclosure at that stage of information that entails at most a speculative concern about bias, rises to the status of award-vacating evident partiality when the same information surfaces after the case has concluded.  To do so wrongly conflates party autonomy in arbitrator selection with the impression of arbitrator bias that compromises an award. Further, disclosure standards such as the broad disclosure instructions given by the AAA/ICDR in its disclosure questionnaire are not sensibly understood as a guide to the meaning and application of “evident partiality” in FAA Section 10. Those instructions would seem to have a two-fold purpose: (1) to better ensure full disclosure of material information by calling on arbitrators to disclose all information about relationships without making threshold judgments about materiality, and (2) fostering a perception among arbitration users, who make choices among institutions, that the AAA/ICDR’s broad disclosure philosophy provides a certain level of assurance that its Tribunals will observe high ethical standards of independence and impartiality. The FAA’s “evident partiality” standard is applied, however, when the arbitration has ended (or partially ended in a Partial Final Award or an Interim Measures Award), and so it is concerned with the striking of an appropriate balance between overturning conflict-clouded results and defeating the very purpose of arbitration by requiring completed cases to be repeated before new tribunals.

One of the most useful contributions the Supreme Court of the United States could make, by accepting certiorari in the Grupo Unido and Andes cases, would be to deliver guidance clarifying when an undisclosed professional relationship of an arbitrator is insufficient to justify setting aside an award, even though the non-disclosure may well have violated the reasonable disclosure expectations of the losing party derived from institutional rules and practices, state procedural law and soft law like the IBA Conflicts Rules.  A logical consequence of such a ruling from the Supreme Court might well be that arbitral institutions and state arbitration laws would more explicitly adopt disciplinary remedies for disclosure omissions by their arbitrators  — and/or more transparency about the criteria guiding their challenge decisions on nondisclosure issues — so that jeopardy to the arbitrator’s standing and eligibility to serve, rather than jeopardy to the award, would more often govern the disclosure decisions of arbitrators in situations akin to Grupo Unido and Andes.

Looking at US Case Law on the Public Policy Exception With the Foreign Case Law in Mind

From a sampling of the recent US case law, two general observations seem possible. One is that the arguments raised against award enforcement generally do not remotely implicate a truly international public policy or even explicit US domestic public policy norms of high importance that find expression in specific US laws. The consequence is that the public policy exception is often raised as the last item in a laundry list of the award-loser’s objections to enforcement, and thus receives perfunctory judicial examination. The second observation relates to the first: that there is reason to think that in a case that did seriously implicate international (or high-level domestic) public policy embedded in US law, US courts could find reasons to adopt the kind of carefully calibrated approach that we see in the foreign case law. Accordingly we should be careful not to quickly leap to the conclusion that the US is a more “pro-arbitration” jurisdiction where judicial re-consideration of the arbitral record in a public policy exception case is simply off the table.

1.In a Los Angeles-seated international arbitration, a Hong Kong-domiciled owner of downtown LA real estate, as payment guarantor for its US affiliate, had refused to make payments to a construction contractor, and defended on the ground that the construction contract was illegal because the contractor did not maintain licenses required by California law. The arbitrator decided that the guarantee contract was not a construction contract, and that licensure issues were therefore outside the arbitrator’s jurisdiction under the terms of the guarantee. In the US District Court, the motion to vacate on grounds of a violation of public policy was denied, and the Court stated: “Respondent’s public policy argument would require a finding that the Guarantee was a construction contract under which licensure was necessary, which would be an inappropriate reinterpretation by the Court.” (Lendlease (US) Construction Inc. v. China Oceanwide Holdings Ltd., 2021 WL 8443761 at *7 (C.D. Cal. June 15, 2021)).

2.In a Malaysia-seated international arbitration between a US hydrocarbons exploration firm and the Government of India, the Tribunal in its award found that India had wrongfully evicted the firm from the coastal waters exploration area and, as a specific performance remedy, ordered India to permit the firm to return and resume exploration. In the US District Court in Washington DC where the award was brought for enforcement, India successfully invoked the New York Convention’s public policy exception, persuading the Court that respect for the territorial sovereignty of a foreign nation was for the US “a most basic notion of morality and justice” and that the intrusion upon such sovereignty from recognition and enforcement of the specific performance award was a US public policy violation that outweighed the policy in favor of the finality of foreign arbitral awards. (Hardy Exploration & Prod. (India), Inc. v. Government of India, 314 F. Supp.2d 95 (D.D.C. 2018)). That decision furrowed more than a few brows in the arbitration community; the disgruntled award-holder took an appeal to the DC Circuit; and the Parties evidently reached a settlement before the appeal was decided (as indicated by the voluntary dismissal of the appeal on the docket of the DC Circuit). Why was there much brow-furrowing? Mainly because India could be seen as having submitted the question of remedy for breach to private commercial arbitration without excluding specific performance as a potential remedy, and thus arguably had made a sovereign decision to forgo defenses to award enforcement based on sovereign ownership and control of the coastal waters of the Claimant’s exploration concession.

3.In a Paris-seated investment treaty arbitration between Russian investors and the Government of Ukraine, a final award was entered in favor of the Russian investors even though the award gave effect to corporate share purchases that were allegedly unlawful under Ukraine law. Here however Ukraine only first raised the illegality issue as an objection to recognition and enforcement of the final award, and its efforts were rejected by the US courts. (Tatneft v. Ukraine, 21 F.4th 829 (D.C. Cir. 2021), affirming judgment in the District Court, 301 F.Supp.3d 175 (D.D.C. 2018)). And while the DC Circuit cited US domestic arbitration case law for the proposition that there is no general public policy principle against enforcement of a contract that involves illegality, the decision provides no particular guidance on what types of illegality – or what degree of infection of the contract arising from the illegality— might indeed rise to the level of a US public policy objection to foreign award enforcement.

Tatneft is a prime example of a case that is not even close to “our most basic notions of morality and justice,” with the result that the US courts can make easy work of rejecting the public policy objection with little depth of analysis. In Tatneft, Ukraine, having lost an investment arbitration to Russian State-related parties conducted at a Paris seat under UNCITRAL Rules based on the Ukraine-Russia BIT, and having been found liable for $173 million in damages, first failed to obtain annulment in a Paris court, then sought to fend off enforcement in Washington. Ukraine sought to avoid enforcement based on the alleged illegality under Ukrainian law of the procedure by which the Russian entities had acquired their shares in a jointly-owned oil refinery. Ukraine’s main “illegality” argument against Award enforcement, which it had failed to raise before the Tribunal and had also failed to timely raise in the US District Court, was that the alleged illegal share acquisition vitiated Ukraine’s consent to arbitrate. The District Court declined to address this contention because it was not timely raised, and the DC Circuit followed suit.  So Ukraine’s alternative argument that the alleged share-acquisition illegality under Ukraine law violated US “public policy against illegality” was more or less a throwaway – an insubstantial argument offered up with no serious prospect that it would succeed. Said the DC Circuit: “[T]he U.S. does not have a policy against enforcing arbitral awards predicated on underlying violations of foreign law.”  So the more interesting question of what kinds of illegalities under foreign law would or could genuinely raise US “morality and justice” hackles was never even close to being in play.

4.In a New York-seated international arbitration in which the Tribunal afforded extensive opportunity for the losing party to prove its claim that the contract was procured by corruption, and the Tribunal specifically examined and rejected that claim, the Second Circuit affirmed the District Court’s rejection of the public policy defense to enforcement. (Commodities & Minerals Enterprise Ltd. v CVG Ferrominera Orinoco CA, 49 F.4th 802, 818-19 (2d Cir. 2022)). The Court declared that “[i]n reviewing an arbitral award for violations of public policy, a court may not ‘revisit or question the fact-finding or the reasoning which produced the award.’”

The Orinoco case calls to mind another reason we don’t get much “morality and justice” nourishment from the jurisprudence:  that raising a public policy defense to enforcement is not – at least not systematically — a side-door entry to judicial review of an arbitral determination that there was in fact no corruption or other illegality or public policy obstacle to enforcement of the Claimant’s claim. When the party resisting enforcement argues that “the law governing the contract, interpreted correctly as the Tribunal failed to do, makes enforcement of the claim unlawful” that party can be expected to lose. Call it a finality exception to the public policy exception. The public policy infraction must arise from the award as is, not the award as the loser argues that it ought to have been. Orinoco is an example.  In this case, the arbitration Respondent, a Venezuelan State-owned exporter of iron ore, defended before the Tribunal on the ground that the Claimant’s contract to haul ore down river from the mine to an ocean transfer station had been procured by corruption. The Tribunal heard the evidence on that issue, and found no such corrupt procurement. Venezuela then failed on a public policy defense to enforcement in the US District Court and the Second Circuit, and the latter court cited Supreme Court precedent in a domestic context for the proposition that: “[A] court’s task in reviewing … possible violations of public policy is limited to determining whether the award itself, as contrasted with the reasoning that underlies the award, creates an explicit conflict with other laws and legal precedents and thus clearly violates an identifiable public policy…. [Venezuela’s] public policy argument attacks the [contract] itself, not the Award or its enforcement. The Panel carefully considered [Venezuela’s] corruption allegations and gave [Venezuela] ample opportunity to substantiate its claim.”

5.We may however question whether this categorical statement of non-reviewability is uniformly the position in US law. In the passage quoted above, the Court drew upon a precedent in the domestic context of labor arbitration under a collective bargaining agreement. We should compare this to the phrasing from a recent US District Court decision from Texas: “Erroneous legal reasoning or misapplication of law is generally not a violation of public policy within the meaning of the [New York Convention].” (Kora Pack Private Ltd.  v. Motivating Graphics LLC, 2023 WL 4826222 at *9 (N.D. Tex. July 27, 2023) (emphasis supplied)). That statement was taken from a rather prominent decision in the US international arbitration jurisprudence, Karaha Bodas Co. v. Perusahaan Pertambangan, 364 F.3d 274 (5th Cir. 2004), and in Karaha Bodas this statement about what should “generally” be deference to the Tribunal on all decided issues of fact and law was qualified a few sentences later by this: “An arbitration tribunal’s contract interpretation does not violate public policy unless it ‘violates the most basic notions of morality and justice’”. 364 F.3d at 306. As that appears to define the exception to the “general” rule of deference – in the Fifth Circuit at least, but also potentially elsewhere because it is an influential decision in the US canon — the door is in fact rather more open to judicial review of the substance of a Tribunal’s analysis in cases that the reviewing court perceives as (i) implicating a compelling issue of US public policy that is explicitly reflected in US law, and (ii) an instance where the depth of the Tribunal’s examination of the issues was not on par with their public policy significance.

There is important guidance for arbitral tribunals, especially those seated in the US, in this potentially unstable US legal terrain cohabited by tribunals and courts. Some judges, while in most respects considering themselves to be “pro-arbitration” may be more covetous of their own power when the question entails violation of public policy that is reflected in specific statutes, treaties and rules that, but for the agreement to arbitrate, the courts would enforce even if enforcement meant invalidating a contract as an unlawful bargain. If arbitrators apply their energies to issues of illegality as they believe judges would, and produce awards on those issues that are models of precision and clarity, judges will be less disposed to craft new exceptions for substantive judicial review on illegality and other public policy issues under the malleable rubric of “basic notions of morality and justice.”

If you insist that international arbitrators sitting in an environmentally common law case cannot properly look at or consider any legal authorities other than those submitted by the parties, stop reading here. I am here to preach to the convertible.

Let’s begin this discussion with a nod toward a legal doctrine that has essentially no shelf space in US arbitration law or US practice of domestic or international commercial arbitration: Jura Novit Curia (“JNC”), or in its arbitral variant, Jura Novit Arbiter (“JNA”).  We start there because among those who arbitrate in a procedural culture called the adversary system, which accounts for probably the vast majority of international arbitration whether contract-based or treaty-based, we are well-advised to have in our grasp the historical and theoretical foundation for the arbitrator to take any initiative to figure out the content of the law she is charged with applying. And by “initiative” we do not mean opening and reading the authorities submitted by the Parties. We mean anything other than that, including what you simply remember.

One contemporary commentator purports to credit Aristotle as a pioneering advocate for  JNC, and quotes the Great Greek from Stagira as having said at least once:

[A] litigant has clearly nothing to do but to show that the alleged fact is so or is not so, that it has or has not happened. As to whether a thing is important or unimportant, just or unjust, the judge must surely refuse to take his instructions from the litigants: he must decide for himself all such points as the law-giver has not already defined for him.

[as quoted in Fried Rosenfeld, “Iura Novit Curia in International Law,” European Int’l Arb. Rev.  Vol. 6, Issue 1 (2017)].

Granted this view of the judge as oracle predates by well over a millennium the emergence of an adversary system based on advocacy, never mind the refinement of the adversary system into the party-created body we now know as the arbitral tribunal. But even if it there is only negligible support for an arbitrator-as-oracle model in contemporary international arbitration, does that imply that there is no space for oracular behavior within the adversarial framework of arbitration? Do we, as avowed non-oracles, simply keep our fingers off the keyboard and our noses out of the legal databases where authorities the parties did not furnish to us might be found? Do we, moreover, purge our minds of whatever legal knowledge of arbitration law and applicable substantive law that (presumably) qualified us in the eyes of the parties to be selected as arbitrators, and approach each case as voracious neophytes craving legal education from the parties?

To answer this question, it is probably helpful to have a working knowledge of what JNA is, and what it isn’t. You can spend a good portion of your remaining lifetime reading volumes that have been written on the subject. Or trust your Commentator’s reductionist version: It is the principle that an arbitral tribunal may — consistent of course with due process — decide a case on the merits by furnishing legal reasoning for the outcome that has been fashioned by the Tribunal rather than by any of the parties.  And the due process right, in reductionist terms, is the right of the parties to learn of the proposed Tribunal reasoning from the Tribunal, and to endorse or deplore it, and to endorse or deplore the very fashioning of it (that is to say, the adoption of JNA methodology) before the Final Award is issued.

My source for these reductive nuggets on JNA? — The writing of a respected comparative law scholar in her chapter of a recent major academic compilation on JNA. To quote Professor Guiditta Cordero-Moss:

It is widely recognized that the will of the parties plays a determinant role in international commercial arbitration. The aim of this book is to investigate to what extent the arbitral tribunal may nevertheless develop its own legal reasoning. An independent legal reasoning will not necessarily be based on the will of the parties as manifested in the terms of the contract, in the law chosen in the contract or in the legal arguments presented by the parties.

[G. Cordero-Moss, General Report on Jura Novit Arbiter, in F. Ferrari and G. Cordero-Moss eds., Iura Novit Curia in International Arbitration (Juris 2018), Ch. 17 at p. 463].

Another contemporary commentator, possibly channeling his inner Aristotle, also suggests that the quest for the right legal reasoning to resolve the merits is at the core of JNA:

“Knowledge of law” must be understood in a manner related to the specific case. The arbitrator is not obliged to know all the laws, but his mission is to use the legal tools (within the rules of the game) to settle the dispute in accordance with justice. Is it not precisely for this reason that they were appointed by the parties? It would be absurd to say that a tribunal exercises its powers to settle the dispute only on the basis of what has been said by the parties.

If within their analysis of the laws the arbitrators identify some rule or principle that has been ignored by the parties (involuntarily or intentionally) and that could be crucial for the decision of the case, should the tribunal simply ignore said rule or principle because the parties did not mention it? The task of the tribunal to submit an award strictly according to law is not bound by what has been said by the parties.

[C. Collantes, Give Me The Facts and I’ll Give You the Law: What Are the Limits of the Iura Novit Arbiter Principle in International Arbitration?, Kluwer Arbitration Blog, Jan. 10, 2019].

If the core content of JNA is the power of the arbitrator to fashion the legal reasoning that resolves the merits, then the Americanized version of the JNA question — roughly, “can we as arbitrators ever do our own legal research?” — asks a question that is not the same as the JNA question, and while that question may intersect with JNA it is very far from a concentric overlap with JNA  [See, e.g., P.B. Marrow, Can an Arbitrator Conduct Independent Legal Research? If Not, Why Not? (May 6, 2013). Available at SSRN: https://ssrn.com/abstract=2261305 or http://dx.doi.org/10.2139/ssrn.2261305]

The troubling implication of the JNA doctrine’s core principle is that it is possible, not likely but certainly possible, that an arbitral tribunal could see its way to reject a legal outcome based on the submissions of either party, determine the outcome based on entirely on legal theories and authorities identified by the Tribunal, and salvage its award from annulment by sharing those theories and authorities with the parties for them to provide comments in advance of the award. In that case, so much for party autonomy beyond picking the panel. That JNA core principle, however rare might be its implementation by an arbitral tribunal in actual practice, is rejected by legal cultures based on the adversary system, which is to say most common law legal cultures.

The difficulty JNA presents for arbitrators sitting in US seated international cases or foreign seated cases governed by US substantive law is what guidance for our conduct do we take from our rudimentary understanding that the adversarial system rejects JNA (or, stated differently, that we are presiding in an adversarial, not an inquisitorial process)? In the perennial unresolved debate in our community about the proper role if any for arbitrators in identifying legal authorities other than those presented by the parties, the understanding that we reject JNA divides us into more or less two camps: the absolute rejectionists, who see no role for any legal inquiry by the Tribunal beyond the submitted authorities of the parties, and the moderate rejectionists who permit that such legal inquiry may be made but in narrow windows whose opening does not fundamentally alter the party-driven character of the overall process.

Consider this Commentator to be a moderate rejectionist, and let’s look at the content of moderate rejectionism.  Several practical examples can lead the way.

EXAMPLE NO. 1. In a New York-seated arbitration, the contract provides that New York law governs and that mediation shall be completed before arbitration is commenced. The Federal Arbitration Act is clearly applicable. Even before the Tribunal is fully constituted, Claimant files (with the provider organization) a motion to dismiss Respondents’ counterclaim, arguing that there is no arbitral jurisdiction over the counterclaim until a mediation of the counterclaim is completed. The Claimant cites only New York state court non-FAA cases concerning when mediation is treated by a state court a condition precedent to its subject matter jurisdiction. Respondent responds, also citing only New York State non-FAA cases, and argues that mediation is not a condition precedent to jurisdiction under that case law as properly understood and as applied to the present facts.

It would be apparent to many arbitrators that case law under the FAA treats an agreement for pre-arbitration mediation as a procedural condition whose fulfillment is a procedural aspect of the arbitration and  not  a condition precedent to the parties’ consent to arbitration. (BG Group, anyone? Maybe Howsam?) The presiding arbitrator taps into her preferred legal research tool, retrieves and reads the leading cases, shares the cases with counsel, and invites written comments on how they bear (if at all) on the jurisdiction motion.

Fair or foul?

Has the Tribunal exceeded its powers, or otherwise overstepped a procedural norm of arbitration? The parties remain free to instruct the Tribunal that they are in agreement to have the obligation to mediate be enforced as it would be enforced in a non-arbitrable case in the New York courts. If they do not have such an agreement, they are free to comment upon and argue for or against the treatment of mediation indicated by the federal cases. Whether the Tribunal has impermissibly intervened in favor of the party opposing the jurisdiction objection is more complicated, but only slightly so. The Tribunal’s powers are defined by the contract, and the contract by necessary implication (because it involves interstate and international commerce and specifies a New York seat) calls for the Tribunal to apply federal and New York arbitral procedural law. The Tribunal would exceed its powers by applying New York judicial civil procedure law to a question of arbitral jurisdiction, unless the parties, modifying their written agreement, now agree that the Tribunal should do so.

Has the Tribunal committed a due process violation by saving one party from the outcome that might have resulted from proper application of the wrong body of law? I think not: The Tribunal was motivated to apply the right content of the agreed applicable law,  not to help one party win.  At least one commentator agrees, so I am not alone;

[A]n arbitrator should not be deterred from seeking the information he needs to correctly resolve a case just because that information may weigh in favour of one of the parties’ positions. In requesting such information, the arbitrator is not seeking to help one party over another. He’s trying to reach the right result. The right result will necessarily go in favour of one party and against the other, but that fact alone does not convert an arbitrator’s request for further information into a due process violation.

[J. Kirby, How Far Should an Arbitrator Go to Get it Right?, in The Powers and Duties of an Arbitrator, Liber Amicorum Pierre A. Karrer, Ch. 20 p. 193 at 197 (Kluwer 2017)].

I should add that I do not read the quoted commentator  as limiting “information” to evidence and excluding information about the content of the law. Nor do I read the position as limiting the request to a request to the parties and not to an online legal library at rue arbitrator’s disposal. The transparency-due process issue needs to be separated from the question of the legitimacy of the arbitrator’s quest for the content of the law.

EXAMPLE NO. 2. The Tribunal in a partial final award has decided that it will impose a sanction by entering a contemporaneous procedural order, and specifies in the PFA that relief from the sanction may be obtained only upon the fulfillment of certain conditions. The entire subject matter of this PFA is what if any sanction should be imposed and what should be the conditions for relief from the sanction.  No merits claims are resolved in this PFA. The affected party applies for relief from the sanction, admits that only some of  the PFA conditions for relief have been met, but advances no legal arguments about how the functus officio doctrine (or the limits in the agreed arbitration rules on modifying an award) impacts the Tribunal’s power to grant the requested relief. The presiding arbitrator taps into her preferred legal research tool, refreshes her recollection on the leading cases defining the contours of the functus officio doctrine and its exceptions, and with agreement of the co-arbitrators after sharing those cases, invites the applicant to submit written comments on how the making of an award bears on the Tribunal’s power to grant the requested relief under the functus officio doctrine or other limits on Tribunal powers to modify an award.

Has the Tribunal exceeded its powers or otherwise encroached on a procedural norm by “doing its own research”? I put the term in quotes here, because what the Tribunal has in fact done is not to embark on independent research for a Tribunal-motivated legal solution that the movant has not addressed, but has simply resorted to its recollection about a well-established universe of case law concerning a legal doctrine affecting the power of the Tribunal that obviously ought to bear on the decision. It seems unlikely that the functus officio doctrine is inapplicable just because the parties fail to mention it, although they might agree to dispense with it.

In this instance the Tribunal elects not to present specific cases for comment because relevant principles might be found in various cases and the applicant, having the burden of persuasion, does not deserve to have the Tribunal conduct legal research for (or against) her. Depending on what is received from both parties, there would be another opportunity if the briefing is inadequate to ask both sides to comment on specific cases that the Tribunal might be inclined to cite in a ruling. This is not to suggest, however, that a Tribunal must always revert to the Parties for comment on specific cases if it wants to cite a case that neither party has cited. One consideration is that if the decision involved is a procedural matter, an aggrieved party may seek to have the order vacated or modified by the Tribunal and may argue that the case law the Tribunal cites is inapposite.  Another consideration is that if the Tribunal’s question seeking comments is adequately phrased, the case law the Tribunal cites is unlikely to be obscure and reasonably ought to be found in competent research by the parties. (Unpublished decisions known to Tribunal members for unique reasons may be viewed differently).

EXAMPLE NO. 3. Suppose one party has sought issuance of an arbitral subpoena that would require a witness in California to testify via Zoom in a New York-seated arbitration. The other party objects to the subpoena in various respects but raises no issue about the Tribunal’s power to command Zoom testimony from a non-party. But one or more Tribunal members, tapping the databases of their own recollections in the first instance, know there is case law on both sides of the question of arbitral power to require non-party Zoom testimony under FAA Section 7. In an email to the Parties, the Tribunal mentions a few of those cases and directs the parties to comment on what they believe to be the right approach. This recourse to case law that has not been mentioned by either party has nothing to do with the merits directly — although the non-party’s evidence might well affect the outcome. Rejection of JNA in a common law environment should not mean that arbitrators must pretend to forget about an unsettled and controversial issue of arbitral power that is well known to them but possibly much less familiar to the parties.

EXAMPLE NO. 4. The fourth and final example for today’s Commentary relates to how common law court decisions are reported in certain online legal research tools: with hyper-linked citations to precedents cited (approvingly or otherwise) in the opinion. Do the arbitratorsimpermissibly “do their own research”, in violation of our Rejection-of-JNA,  by reading the court-cited precedents within the party-cited precedents to obtain a more complete understanding of the legal doctrine invoked by the party? This Moderate Rejectionist would say NO.  My first defense: this conduct does not seek a legal theory to resolve the case that neither party has mentioned. The arbitrator is seeking clarity about the contours of the legal theory invoked by a party, contours that might be clearer from reading the embedded precedents within the party-cited case. My second defense: If a legal theory is advanced by a party, the Tribunal should apply that legal theory (or principle) as it exists in the law, not only as it exists in the renditions of the law advanced by the Parties. The prescriptive norms of arbitration as an adversarial process will lead the Tribunal to give procedural primacy to the submissions of the Parties. But a quest for correctness in the content of the law, if the Parties’ renditions are not fully satisfactory, should not to be conflated with adoption of a Tribunal-conceived legal theory. This is not the importation of JNA into common law arbitration.

If I am an outlier in believing the arbitrator has a power of inquiry, and that the fairness issue is separate and is addressed by transparency to the parties about the results of the inquiry, then at least I have some good company. As the International Law Association stated in its 2008 Report on Ascertaining the Contents of the Applicable Law in International Commercial Arbitration:

[Arbitrators] should inquire about the applicable law within the general parameters of the arbitration defined by the parties and, considering costs, time and relevance issues, may conduct their own research, provided the parties are given an opportunity to be heard on material that goes meaningfully beyond the parties’ submissions.

We often debate the implications of what provider rules say or fail to say on a given issue. And on this issue we find mostly silence. The AAA Commercial Rules are and have long been silent. The CPR Non-Administered Rules are also silent save that “[s]ubject to these Rules, the Tribunal may conduct the arbitration in such manner as it shall deem appropriate.” (Rule 9.1). This leaves the door open. The JAMS Comprehensive Rules are also silent. This is a curious institutional silence, given that there is considerable sentiment in the domestic arbitrator ranks in the USA that when it comes to the law, the panel should take what the parties give them and seek no more.

When we look to the leading international rules, our attention goes first to the LCIA, whose Rule 22.1 (iii) (in the 2020 version)  has provides expressly — and has done since at least the 1998 version of the Rules that:

The Arbitral Tribunal shall have the power, upon the application of any party or … upon its own initiative, but in either case only after giving the parties a reasonable opportunity to state their views and upon such terms (as to costs and otherwise) as the Arbitral Tribunal may decide … (iii) to conduct such enquiries as may appear to the Arbitral Tribunal to be necessary or expedient, including whether and to what extent the Arbitral Tribunal should itself take the initiative in … ascertaining … the law(s) or rules of law applicable to the Arbitration Agreement, the arbitration and the merits of the parties’ dispute.

Let’s call the LCIA Rules approach — not widely adopted as far as I can find — Ambivalent Moderate Rejection of JNA. Ambivalent in the sense that it gestures in the direction of party autonomy by requiring input from the parties to be considered (but without requiring party acceptance) before the Tribunal starts foraging. That ILA Report formulation, which came ten years after the LCIA Rule, does not require this preliminary party-consultation step. And we find that most international rules leave the door wide-open for whatever position the Tribunal may wish to take. See for example ICC Rule 21(1): “In the absence of any [party] agreement, the arbitral tribunal shall apply the rules of law which it determines to be appropriate.” The Singapore Centre Rules list among the “Additional Powers of the Tribunal” absent agreement of the parties limiting such power : “to … conduct such enquiries as may appear to the Tribunal to be necessary or expedient” (SIAC Rule 27(c)) and also “to … decide, where appropriate, any issue not expressly or impliedly raised in the submissions of a party provided such issue has been clearly brought to the notice of the other party and that other party has been given adequate opportunity to respond” (SIAC Rule 27(m)). Broadly speaking, the landscape of international arbitration rules is marked by approaches more flexible than the LCIA model, leaving the Tribunal broad discretion to conduct inquiries into the content of the applicable law without previewing with the parties the prospect that such inquiries will or may be made. The ultimate criteria universally applicable are post-inquiry: was there equal treatment of the parties and were the parties given an opportunity to be heard on any outcomes of the Tribunal research into the content of the law that might affect the outcome in a material way?

Let’s address one more objection from the JNA literature before you leave.

Some commentators object in principle to Tribunal initiatives to ascertain the law, saying that the JNC principle as applied in civil law courts, i.e. the version inherited from Aristotle, rests on the premise that judges in the courts of a state are protectors and purveyors of a law of their forum (lex fori), and that arbitrators, having no comparable position and instead serving the parties not the state, have “no forum .”  [See, e.g., P. Landolt, Arbitrators’ Initiatives to Obtain Factual and Legal Evidence, Vol. 20 No. 2 Arb. Int’l at pp. 184-85 (2012)]. Not to argue the issue exhaustively, I would only point out by way of examples: (1) if the Parties in a international case governed by New York substantive law constitute a Tribunal of two party-appointed retired New York judges and as Chair one lioness of the New York litigation bar who has also given long service as an international arbitrator, did they not intend to have a Tribunal function on New York substantive law as a New York court would?, and (2) if the Parties to an international case governed by the law of Ontario constitute a Tribunal composed of two lions of the Toronto litigation bar and one retired Justice of the Supreme Court of Canada, did they not intend to have the Tribunal function on Ontario law as an Ontario court would?

It is time for some takeaways, as you have other blogs to read and other work to do!

The commentator who writes in favor of flexible arbitral power in the search for the content of applicable law risks to be mis-branded as a zealot and a maverick, as a closeted autonome perpetually foraging for his own legal guidance in disrespect of the parties’ autonomy, not to mention the competence of their legal representatives. I hope to be acquitted of these charges. But it seems that we as a community can do better than the broad homilies that buttress polar positions: “arbitration is a party-driven process” at one extreme, and “due process is all that matters” at the other.  Perhaps we can draw some guiding principles from the examples and the discussion provided in this post.

1. Occasions for input on the applicable law from the Tribunal do not arise only when a merits award is being written. Applicable law may come into play at any number of mileposts, including threshold objections to jurisdiction, proposed issuance of arbitral subpoenas, etc. Parties may not even be aware of applicable law affecting the proposed procedural step, as in the case of a proposed arbitral subpoena. If the Tribunal asks the Parties “what about these cases concerning our power to command a Zoom appearance?” it is not taking sides between the parties, but is seeking in good faith to exercise its powers in regard to non-parties within applicable legal limits. If the Tribunal, in the mediation-as-condition-precedent example, asks “what about the FAA case law on this subject from the US Supreme Court?” it fairly raises the question of whether the Parties’ counsel truly wish to mutually exclude application of the FAA, or rather are skilled courtroom advocates who misconceived the application New York civil procedure law in an FAA-applicable arbitration.
2. The context for arbitrator research may be critical to how we view it. Suppose a Tribunal decides during deliberation that it is important to study the cases cited, discussed and quoted within the cases cited by the Parties, and the Tribunal proceeds to do so, then deliberates further about whether the older precedents are sufficiently material to warrant asking the parties for further comments. By doing this the Tribunal carries out, in a manner that is fair to both sides, a process that may generate a more precise rendition of the law the parties have agreed to have the Tribunal apply to decide the case, and legal theories under that law that they have specifically invoked. On the other hand, a party-appointed arbitrator who conducts research in pursuit of a legal analysis not articulated by either party, based on case law not cited by either party, but that would advantage the party that appointed her if embraced by the Tribunal, generally speaking is acting inappropriately. But the infraction is not of a rule or a proscriptive norm against arbitrator research. It is a violation of the broader obligation to behave impartially.
3. Timing is crucial. When arbitration is in a common law environment, the parties expect the development of claims and defenses, the legal theories and authorities supporting those theories, to be primarily their counsels’ handiwork. If an arbitrator in such a case suggested at a preliminary conference that case A v. B might well be controlling on the merits, the parties would naturally be dismayed. On other hand, parties arguably do have a reasonable expectation that the Tribunal might at the post-hearing stage of deliberations and award-drafting check to see if there have been new developments in a line of authorities relied upon by the parties, or appellate reversals of authorities cited by the parties. If this were not aligned with the expectations of the parties, we might expect to see party initiatives to stipulate that the Tribunal will not, or will not without the parties consent, conduct any legal research.

Arbitral tribunals are in the habit of thinking seriously about how their handling of the case affects the “enforceability” of their Awards. But we mainly think of “enforceability” as the potential for confirmation under the New York or Panama Convention, and/or applicable domestic arbitration law,  and potential vacatur in a court at the arbitral seat. We give less attention to true “enforcement” – the forced compliance of the losing party with a Judgment confirming an Award. When the Award simply orders payment of money, or declares ownership of property, the laws and mechanisms of execution come into play. But if the Award regulates the conduct of the losing party, as by specific performance or an injunction, the merger of an Award into a Judgment brings into play the court’s powers to coerce compliance with its Judgments by imposing contempt sanctions.

If a losing party in such a case is determined to fight on, not only after an adverse Award but beyond the judicial confirmation of the Award, the contempt scenario may arise. Arbitrators who sense they are in a “fight to the finish” type of case are well advised to understand how the applicable law of contempt may have an impact. What follows is a brief sketch and discussion of some relevant aspects of the contempt law landscape affecting arbitration Awards in US federal courts.

1. Before a contempt sanction may be imposed, it must be shown by the applicant that the conduct required by the judgment or order was clear and unambiguous, leaving no doubt of what the prospective contemnor was required to do. That means our Awards, especially those that entail a remedy of specific performance or an injunction (whether mandatory or prohibitory) should state with precision the conduct that is required or forbidden. This guidance is seemingly straightforward. But if the Tribunal anticipates that non-compliance, at any cost, may be the objective of the losing party, arguments that could be raised before the enforcing court that the Award (as converted to a Judgment by recognition) lacks a clear conduct mandate ought to be anticipated in the Award drafting. To take a recent example, a US federal court denied a contempt sanction where the alleged non-compliance with the Award/Judgment was the refusal to grant the applicant two appointees to a corporate board of directors. The stumbling block for the applicant was that the Award/Judgment, while it recognized the ongoing validity of the agreement that provided the right to have two seats on the board, did not direct specifically that the losing party should implement the applicant’s board nominations.
2. Tribunals may find it useful to know that non-compliance with a Judgment confirming an arbitral award may be addressed by contempt sanction in a US distric court even while an appeal of the Judgement is pending – absent a stay from the Judgment-rendering court or the appellate court. (This is the general rule as to any Judgment, not a special attribute of award-confirmations). So while it may be anticipated that the well-resourced and determined losing party may litigate over recognition of the Award all the way to a denial or grant of review in the US Supreme Court, a process that might consume several years, the coercive force of a contempt sanction may be sought (barring a stay) once the Judgment has been entered and after the passage of any deadline for compliance fixed by the Award/Judgment. It is regrettable, but a fact, that coercion is a factor Tribunals must sometimes take into account. It may bear on the Tribunal’s effective ability to regulate party and/or counsel conduct in an ongoing arbitration. It may well bear on the efficacy of the entire arbitral process, if a party determined to pay any price for victory decides to marginalize the arbitration into but one of many battlefronts in a multiple-forum war.
3. US federal law permits coercive incarceration as a civil contempt sanction, upon the theory that the contemnor goes behind bars while holding the keys to her release: compliance with the Judgment turns the latch. And the coercive effect of such a sanction may have international commercial dimensions that begin before any actual arrest and lockup. The prototype may be the non-US controlling person of a foreign business entity, who may travel to the United States regularly to carry on business and may also have one or more US places of residence for herself and her family. For that person, the coercive effect of incarceration as a civil contempt sanction may begin with the Court’s order to notify US Customs and Border Protection to detain the contemnor upon her attempt to enter the US for any purpose. Judges may naturally prefer to test the efficacy of monetary civil contempt sanctions before ordering incarceration, but upon a proper record concerning a contemnor’s conduct, business practices and obduracy, a confinement order as a contempt sanction for non-compliance with a judicially-confirmed Award may be obtainable.
4. Not to be overlooked in this survey is that the companion category of civil contempt sanctions, alongside the “coercive,” is the “compensatory.” The legal costs incurred by the successful civil contempt sanctions applicant, or other out-of-pocket costs resulting from the non-compliance, are comfortably within this category. But there could be more complicated scenarios. Suppose the judicially-confirmed Award directed specific performance of a contractual obligation. If coercive sanctions prove unfruitful, may the applicant obtain in a compensatory civil contempt judgment a sum of money to be substituted for the unattainable specific performance? Does the question of damages as an alternative remedy for the contract breach remain arbitrable? Or does the judicial confirmation of a conduct-regulating Award transform what would be, in other circumstances, a squarely arbitrable issue of breach of contract damages, into a matter of Judgment enforcement that is exclusively in the judicial realm? Or are both solutions possible, with the claimant/applicant having the option to pursue one or the other? I did not happen upon an answer in the reading that supported this post. But this is an issue that some court or Tribunal may well have faced, or may have to face, as more arbitral awards involving conduct-based rather than monetary relief are resisted by the losing side not only in confirmation/vacatur litigation but beyond that in contested contempt sanction proceedings.

[The cases informing this post include: Smagin v. Yegiazaryan, 2023 WL 4002730 (C.D. Cal May 22, 2023); Micula v. Gov’t of Romania, 2023 WL 2127741 (D.C. Cir. Feb. 21, 2023); Absolute Nevada, LLC v. Grand Majestic Riverboat Co., 2022 WL 17156624 (S.D.N.Y. Nov. 22, 2022); Inversiones Y Procesadora Tropical Inprotsa, S.A., 2021 WL 3508370 (S.D. Fla. Aug. 19, 2021); Telenor Mobile Communications AS v. Storm LLC, 587 F.Supp.2d 594 (S.D.N.Y. 2008), aff’d 351 Fed.Appx. 467 (2d Cir. 2009); CE Int’l Resources Holdings LLC v. S.A. Minerals Ltd. Partnership, 2013 WL 324061 (S.D.N.Y. Jan. 23, 2013).]