I briefly note here two recent cases in the federal district court in Washington, D.C., in which the judges refused to grant foreign governments stays of enforcement of awards against them, under Article VI of the New York Convention, based on proceedings pending in foreign courts to set aside the awards. (G.E. Transport S.P.A. v. Republic of Albania, 2010 U.S. Dist. LEXIS 24180 (D.D.C. Mar. 16, 2010); Continental Transfert Technique Ltd. v. Federal Government of Nigeria, 2010 U.S. Dist. LEXIS 27336 (D.D.C. Mar. 23, 2010).
Each decision relies upon the leading U.S. case elaborating standards governing the exercise of discretion to proceed with or suspend enforcement proceedings under the Convention: Europcar Italia, S.p.A. v. Maiellano Tours, 156 F.3d 310, 317 (2d Cir. 1998). The Second Circuit in Europcar provided a non-exhaustive list of six factors for consideration, with primary emphasis upon two of the six: the general objectives of arbitration (expeditious resolution of disputes), and the status and expected duration of the set-aside proceedings pending abroad.
In the Albania case, the government challenged the $20 million + award in favor of GE in a court at the arbitral seat — Rome, Italy — and lost its initial application in that court to enjoin GE from proceeding with enforcement. The Court relied on this preliminary negative assessment of Albania’s set-aside prospects, GE’s uncontested projection that the Rome court would not render a final judgment earlier than 2014, and the fact that Albania had been a full participant in three years of arbitral proceedings, in deciding to go forward with the enforcement action.
In the Nigeria case, the Court relied foremost upon negative inferences arising from Nigeria’s procedural conduct: having let pass the deadline for filing a motion to vacate in the Nigerian court, Nigeria then failed to appear in this enforcement case until the Claimant sought entry of a default judgment, then obtained a 45-day extension of time to respond to that motion, and filed its set aside case in Nigeria during the ensuing interval.
Further, the Court found that the set aside case in Nigeria was stalled, the presiding judge having retired and not been replaced, and was unpersuaded that the scope of review under Nigerian law would meaningfully less deferential that under the Convention as applied in US courts.

Dear Readers:
At my general website, I have introduced a new dimension entitled Counsel Culture Corner. There you will find current listings for the performing arts and artists’ exhibitions in leading arbitral venues — at this time New York, Paris, London, Hong Kong and Toronto. These pages also contain links to key arbitral resources of each jurisdiction –generally the governing arbitration statutes and the websites of the leading international arbitral institutions situated in those venues.
You are invited to visit Counsel Culture Corner…. and to submit your recommendations for updates to the listings!
Warm regards.
Marc Goldstein

Dear Readers:
At my general website, you will find commentaries on two recent federal court cases involving efforts by offshore hedge funds to use the arbitration mechanism of the Financial Institutions Regulatory Authority (FINRA) to recover losses sustained on credit default swaps. To reach the website, click on the link at the bottom of this window.
Warm wishes.
Marc Goldstein

Practitioners and arbitrators in both commercial and investment arbitrations may profit from studying the thorough and sensitive treatment of confidentiality found in a procedural order issued January 27, 2010 in an ICSID arbitration arising under the BIT between Italy and Argentina. (G Beccara et al v. Argentine Republic, ICSID Case No. ARB/07/5, Procedural Order of 1/27/10, published on ICSID website)

The order deals with confidentiality on several levels. The first and perhaps most generally applicable category concerns public discussion of the case during the course of the proceedings. Here the Tribunal’s approach implicitly recognizes a point to which experienced advocates on international arbitration will attest: clients seek to exploit the absence of clear legal rules imposing a confidentiality duty, to pursue extra-arbitral means of resolving the dispute through public exposure of embarrassing facts about the adverse party or its position.

Experience with this phenomenon surely is part of the motivation for approach taken by the Beccara Tribunal, concerning general public discussion of the ongoing proceedings. Thus the Tribunal orders that “[t]he Parties may engage in general discussion about the case in public, provided that any such public discussion is restricted to what is necessary, and is not used as an instrument to antagonize the Parties, exacerbate their differences, unduly pressure one of them, or render the resolution of the dispute potentially more difficult. . . .” This standard was adopted from substantially identical language used by another ICSID Tribunal, in the Biwater Gauff Ltd. v. Tanzania case (ARB/05/22, Proc. Order No. 3 of 9/22/06).

The balance struck between transparency and the integrity of the proceedings is constructive, and appears to reflect values widely shared among arbitrators acting in investment law cases as well as commercial cases.

For counsel in international arbitration, it is not unusual for a client, intent on using media or other public pressure to influence the adverse party to resolve the dispute, to ask counsel for assurance that no laws, rules, or agreements concerning the confidentiality of the arbitration will be violated by such activity. The answer often is that there are no such laws, rules, or agreements (and such was the case in the Beccara v Argentina case under discussion), but that the proposed actions risk antagonizing the Tribunal. It is sometimes difficult to articulate for a client why this may be so.

The orders adopted in Beccara andBiwater Gauff are indicative of a widely shared norm among international arbitrators that efforts to coerce the other party through publication of embarrassing facts may destabilize the arbitration, making the Tribunal’s task of managing the case and achieving a transparently fair process more difficult. (This is reflected in other elements of the Beccara confidentiality order, barring publication without mutual consent of pleadings, motions, and transcripts of proceedings, on the basis that “their uneven publication or distribution carry the risk of giving a moisleading impression….”) Thus the advice to the client may well be that while no law, rule, or agreement is violated by a proposed publicity campaign, the sensibilities of the arbitrators (or some of them) may be influenced quite negatively, because the actions tend to undermine the tribunal efforts to maintain order and a desirable level of courtesy and respect in the written and oral discourse.

Yesterday a federal judge in New York granted an anti-suit injunction, in aid of arbitration, barring Indian corporate entities from continuing litigation in India over arbitrable disputes with a U.S. company — litigation in which the Indian parties have already obtained ex parte orders enjoining the U.S. party from continuing with pending ICDR arbitration in New York. (Amaprop Ltd. v. Indiabulls Financial Servs. Ltd., 2010 U.S. Dist. LEXIS 27117 (S.D.N.Y. Mar. 23, 2010)).

The arbitration community should be encouraged by the swift and decisive support for international arbitration from the U.S. District Court in Manhattan. But the Court’s anti-suit injunction, combined with the Indian court’s ex parte anti-arbitration injunction, creates an difficult procedural standoff: the U.S. party risks contempt in the Indian court if the arbitration proceeds, while the Indian parties risk contempt in the U.S. court if the India litigation continues.

The New York federal judge, only beginning his analysis from the premise that the India anti-arbitration injunction violates the U.S. federal policy in favor of arbitration that applies with particular for in international cases, proceeded to discuss a variety of case-specific factors that indicated the vexatiousness of the India litigation and the extreme burdens it threatened for the U.S. party:

— that the Indian parties had initially appeared in the ICDR case, indicated their intention to participate and appoint an arbitrator, and obtained an extension of time to answer, while concealing their intention to obtain injunctive relief in India;

— that the Indian parties deliberately omitted critical words, in quoting the arbitration clause to the U.S. court, to create the misleading impression that the type of injunctive relief they had sought in India was permitted under the clause;

— that the proceedings in India were conducted entirely ex parte; even after obtaining that relief the underlying papers were not provided to the U.S. party, and no explanation for proceeding ex parte was provided to the U.S. court;

— that according to competent expert witness testimony of a retired India High Court judge, the average civil case in India’s courts takes at least 15 years to reach initial resolution, with appeals consuming 5 to 10 more years;

— that the pendency of parallel proceedings on the same disputes creates burdensome redundant costs, risks of inconsistent judgments, and potential for tactics to manipulate the timing of outcomes in each forum.

Shipowners typically agree with their typically-offshore insurers to arbitrate disputes over coverage, and those arbitration agreements are governed by the New York Convention.

And the laws of some U.S. states, including Louisiana, allow injured ship workers to bring claims in court against those insurers directly when their employers are bankrupt.

Could this mean that the injured worker must arbitrate his direct action claim against the insurer, as a third-party beneficiary of the employer-insurer agreement to arbitrate? Could this mean that such direct action statutes violate the FAA to the extent they require the direct action to proceed in court?

The U.S. Fifth Circuit Court of Appeals has held that these outcomes are legally possible, and returned the case to the District Court to decide the issues. This holding, the Court stated, is required by the U.S. Supreme Court’s decision in 2009 that nonsignatories may be compelled to arbitrate and have their court actions stayed if applicable state contract law makes the agreement to arbitrate enforceable against them.
(Arthur Andersen LLP v. Carlisle, 129 S. Ct. 1896).

The Carlisle decision, according to the new Fifth Circuit case, overrules prior Fifth Circuit precedent permitting only lawsuits commenced by signatories to be stayed pending arbitration under FAA Section 3. A District Court must determine, the Court held, whether the arbitration agreement is binding upon the injured employees, under one of the various state law theories of enforceability against nonsignatories — notably third-party bebeficiary –such that they would be required to arbitrate their direct-action claims against the insurer. (Todd v. Steamship Mutual Underwriting Ass’n (Bermuda) Ltd., 2010 U.S. App. LEXIS 5637 (5th Cir. Mar. 18, 2010)).

In this case, the workers had already obtained a money judgment against their employer, and brought the direct action to collect the judgment from the insurer. The Court stated that “the district court may wish to consider whether the existence of [the] judgment has any bearing on whether [plaintiff] must arbitrate… to collect on this judgment.”. It seems possible the Court means to suggest, elliptically, that it may be sensible to view the worker as a third-party beneficiary of the employer-insurer contract on a claim to enforce a judgment against the employer, but not on an unliquidated direct claim.