Eleventh Circuit Finds Moot A Post-Judgment Challenge To A Confirmed Arbitral Award, Even When The Challenge Is Made In A Primary Jurisdiction Under The New York Convention

Ingaseosas International Co. v. Aconcagua Investing Ltd., No. 11-10914 (11th Cir. 2012) (unpublished), involves an interesting application of the primary vs secondary jurisdiction doctrine under the New York Convention as well as the mootness doctrine.

IIC participated in an arbitration in Miami, Florida, under New York law. IIC lost, the award requiring it to pay $11 million to AIL. When IIC didn't pay, AIL brought an enforcement proceeding in the British Virgin Islands. As the Eleventh Circuit noted, under the New York Convention, AIL could have filed an enforcement action in any of the over 140 contracting states within the New York other than an state where the award was rendered or where the award is "considered as domestic". (For a fuller discussion of where arbitral awards can be enforced/opposed, see the discussion of international arbitrations and the New York Convention in our e-book, International Practice: Topics and Trends.) In response to the AIL proceeding in the BVI court, IIC filed a motion to vacate in the district court in Florida.

In the BVI court, the court was willing to stay the matter until the determination of the motion to vacate in federal district court if IIC provided security of $7 million. IIC declined to do so, the BVI court ultimately entered a judgment enforcing the award, and IIC in fact paid the judgment while still pursuing it's motion to vacate in the federal district court.

The Eleventh Circuit held that IIC could not "idly stand by and allow an arbitration award to be confirmed and then seek to vacate same". In support, the Court of Appeals relied on The Hartbridge, 57 F.2d 672 (2d Cir. 1932), a decision by three of the legal giants of that generation (Learned Hand, Augustus Hand, and Thomas Walter Swann), which held:

As we understand the statute a motion to confirm puts the other party to his objections. He cannot idly stand by, allow the award to be confirmed and...