The Last Circuit Standing: Will The 11th Circuit Realign With The Supreme Court Or Maintain Its Pro-Arbitration Award Enforcement Posture?

• Published date: 03 November 2022
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Law Firm: Steptoe & Johnson
• Author: Mr Steven Davidson, Michael Baratz, Molly Bruder Fox and Cannon Jurrens

First Tuesday Update is our monthly take on current issues in commercial disputes, international arbitration, and judgment enforcement. This month we cover the Eleventh Circuit's recent grant of en banc review of its May 2022 decision in Corporacion AIC, SA v. Hidroelectrica Santa Rita S.A., to reconsider its precedent barring courts from vacating international arbitral awards rendered in the United States under broader domestic standards.

This en banc review was granted because of the court's concern that the Eleventh Circuit precedent is out of step with the Supreme Court's decision in BG Group Plc v. Republic of Argentina, 134 S. Ct. 1198 (2014). While federal courts generally agree that grounds for the refusal to recognize an arbitration award made outside of the United States, as specified in international arbitration conventions, are exclusive; most circuits have held that non-domestic awards'awards made in the United States under local law but subject to an international arbitration convention'could also be vacated under Chapter 1 of the Federal Arbitration Act (FAA), which applies to domestic arbitration. The Eleventh Circuit is the only federal court that has refused to consider Chapter 1 grounds and specifically requires a party to raise one of the seven grounds enumerated in Article V of the New York Convention, as incorporated by Chapter 2 of the FAA, to vacate a non-domestic award made in the United States. Deference to the New York Convention currently makes the Eleventh Circuit's pro-arbitration approach an attractive forum for international arbitration. But this deferential position may soon change.

Background

The underlying case arises from a contract dispute between two Guatemalan companies, Corporaci‎on AIC (AIC) and Hidroelectrica Santa Rita SA (Hidroelectrica), and the associated arbitration proceedings between them. In 2012, AIC contracted with Hidroelectrica to provide engineering, procurement, and construction for a hydroelectric dam project in Guatemala. However, Hidroelectrica discontinued the project the following year when it issued a force majeure notice in response to opposition by the local community'excusing performance and canceling the contract.

Pursuant to the contract, Hidroelectrica initiated arbitration proceedings against AIC seeking reimbursement of the advance payments it had already made. In October 2018, the International Chamber of Commerce tribunal found in favor of Hidroelectrica and ordered AIC to return more...