United States / 15 December 2010 / United States, U.S. Court of Appeals, Fourth Circuit / AO Techsnabexport v. Globe Nuclear Services and Supply GNSS Lmt. / 09-2064
| Country | United States |
| Court | United States, U.S. Court of Appeals, Fourth Circuit |
| Date | 15 December 2010 |
| Parties | AO Techsnabexport v. Globe Nuclear Services and Supply GNSS Lmt. |
| Case number | 09-2064 |
| Applicable NYC Provisions | V | V(1)(b) | V(1)(c) | V(2)(b) |
| Source |
online: PACER |
| Languages | English |
| Summary | The Defendant-Appellant, Globe Nuclear Services and Supply GNSS Ltd. (“Globe”), and the Plaintiff- Appellee, AO Techsnabexport (“Tenex”), entered into a sale purchase agreement governed by Swedish law, which contained an arbitration clause requiring the parties to arbitrate all disputes “arising out of or relating to [the contract] or the breach, termination or invalidity thereof”. When a dispute arose, the parties agreed to arbitration before a panel of three arbitrators seated in Sweden. The arbitral proceedings were separated into three phases, the last of which was reserved for determining the validity of the contract pending the outcome of a related criminal investigation in Russia. The tribunal issued a partial award in favour of Globe, finding that Tenex had breached the contract. However, after considering the findings from the Russian criminal proceedings, the tribunal issued a final award in favour of Tenex, concluding that the contract was invalid under Swedish law. Tenex then sought to confirm the final award in the United States District Court for the District of Maryland. The District Court granted enforcement to the final award, while denying Globe’s request to confirm the partial award. Globe appealed, arguing that the final award should be vacated because it violated several provisions of the NYC. Specifically, Globe argued that by permitting Tenex to submit transcripts from the Russian proceedings without providing Globe an opportunity to cross-examine the same individuals, the tribunal prevented Globe from presenting its case under Article V(1)(b) NYC and violated the arbitral procedure agreed to by the parties under Article (V)(1)(d) NYC. Globe also argued that the tribunal had exceeded the scope of its authority, as per Article V(1)(c) NYC, by assessing Russian criminal law, considering the rights and interests of individuals who were not parties to the contract and reaching an outcome in its final award which was contradictory to its partial award. Finally, Globe argued that the tribunal had violated public policy under Article V(2)(b) NYC by applying Russian criminal law in international commercial arbitral proceedings. The United States Court of Appeals for the Fourth Circuit affirmed the District Court’s judgment confirming the final award and denied all of Globe’s arguments. The Court dismissed Globe’s defenses under Articles V(1)(b) and V(1)(d) NYC on the grounds that Globe had waived those arguments by not raising them during the arbitral proceedings. The Court pointed out that while Globe had generally objected to the admission of the transcripts, it had not argued that this violated the procedural rules agreed upon by the parties or that it was prevented from presenting its case by not being able to cross-examine the individuals mentioned in the transcripts. The Court dismissed Globe’s arguments based on excess of authority under Article V(1)(c) NYC and public policy under Article V(2)(b) NYC. It stated that the tribunal was acting within its authority to the extent that its consideration of alleged criminal activity by certain individuals related to its findings regarding the validity of the contract under Swedish law. Lastly, the Court held that the tribunal had not exceeded the scope of its authority within the meaning of Article V(1)(c) NYC by considering the validity of the contract after it had issued the partial award, noting that the tribunal had expressly reserved the right to determine the validity of the contract in the third phase of the proceedings. Accordingly, on the question of the contract’s validity the partial award was not final or definitive. Thus, the Court held that the tribunal had acted within its authority by addressing the issue in the final award. |
Attachment (1)
 Original Language Adobe Acrobat PDF |
