Fifth Circuit Highlights The Jurisdictional Challenges Of Enforcing A Foreign Arbitral Award Against A Non-Resident Award Debtor: Conti 11. Container Schiffarts-GmbH & Co. V. MSC Mediterranean Shipping Company S.A.

• Published date: 12 March 2024
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Transport, Corporate and Company Law, Marine/ Shipping, Arbitration & Dispute Resolution
• Law Firm: Jenner & Block
• Author: Kenneth Beale, Ronan O'reilly, James Rogers and Elizabeth A. Edmondson

In a decision of potential importance to arbitral award creditors and debtors, the US Court of Appeals for the Fifth Circuit recently reversed a federal district court decision confirming an English arbitral award on the basis that the district court lacked personal jurisdiction over the award debtor.¹ The award debtor had sought to enforce its foreign award in federal court in Louisiana under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), as implemented by Chapter 2 of the Federal Arbitration Act. The New York Convention significantly limits the grounds for challenging a request for confirmation and enforcement, but it does not dispense with the requirement to establish that the court where confirmation is sought has jurisdiction.² This judgment reconfirms that jurisdiction is a fundamental requirement that should not be overlooked when seeking to enforce a foreign arbitral award.

Background

The underlying dispute arose out of a charterparty - a contract pursuant to which a shipowner agrees to hire or lease a ship or yacht to a charterer - between Conti 11. Container Schiffahrts-GmbH & Co. (Conti), a German company, and MSC Mediterranean Shipping Company S.A. (MSC), a Swiss company, pursuant to which Conti chartered its cargo vessel, the M/V Flaminia, to MSC. In July 2012, the M/V Flaminia was in the middle of the Atlantic Ocean in transit from Charleston, Louisiana to Antwerp, Belgium, when an explosion occurred causing a fire onboard that resulted in the death of three crew members and the destruction of the onboard cargo. The explosion was caused by auto-polymerization of the contents of tank containers laden with 80% divinylbenzene (DVB). Those containers had been at a terminal in New Orleans and stored outdoors for a period of nine days before being shipped. The carriage of the tanks had been booked by an employee in the Houston office of MSC (US), a wholly owned New York subsidiary of MSC.

Following the incident, Conti commenced arbitration proceedings in London against MSC. The tribunal found that MSC had breached the charterparty by failing to comply with the International Maritime Dangerous Goods Code. In its award, the tribunal awarded Conti approximately $200 million in total damages (theAward). Conti then brought an action to confirm its Award pursuant to the New York Convention in federal court in the Eastern District of Louisiana. MSC moved to dismiss for lack of personal...