United States / 14 April 2005 / U.S. Court of Appeals, Second Circuit / Sarhank Group v. Oracle Corporation / 02-9383
| Country | United States |
| Court | United States, U.S. Court of Appeals, Second Circuit |
| Date | 14 April 2005 |
| Parties | Sarhank Group v. Oracle Corporation |
| Case number | 02-9383 |
| Applicable NYC Provisions | V |
| Source | 404 F.3d 657, online: http://www.ca2.uscourts.gov/ (U.S. Court of Appeals, Second Circuit website) |
| Languages | English |
| Summary | Sarhank Group (“Sarhank”), an Egyptian corporation, and Oracle Systems Inc., (“Systems”) entered into a bilateral executory contract to be performed in Egypt. This Agreement contained an arbitration clause providing for arbitration under Egyptian law. A dispute arose and Sarhank commenced arbitration proceedings against both System and its parent company Oracle Corporation (“Oracle”) before the Cairo Regional Center for International Commercial Arbitration. The Arbitral Tribunal issued an award in Sarhank’s favor, holding Oracle and Systems jointly and severally liable. Sarhank petitioned the United States District Court for the Southern District of New York to confirm and enforce the foreign arbitration award against Oracle, under the NYC. The District Court enforced the award. Oracle appealed, arguing, inter alia, that: (i) the Court had failed to independently determine whether Oracle had consented to arbitration; (ii) the arbitrators lacked jurisdiction to determine arbitrability, and (iii) enforcement of the award would be contrary to United States public policy. The United States Court of Appeals for the Second Circuit vacated the judgment of the District Court and denied enforcement of the award. The Court emphasized that pursuant to Article V(2) NYC, a United States court is not required to enforce an agreement if its subject matter is not capable of arbitration in the United States, or if enforcement of the arbitral award would be contrary to U.S. public policy. It further noted that under United States law, the issue of whether a party has consented to arbitrate is an issue to be decided by the court in which enforcement of an award is sought. The Court concluded that, because Oracle was not a signatory to the contract, there was no evidence of Oracle’s intent to arbitrate. Moreover, the Court stated that the arbitrators’ conclusion that Oracle was bound to arbitrate as a non-signatory was based on Egyptian law, but U.S. arbitration law controls in an enforcement action. The Court held that, under U.S. law, a non-signatory cannot be bound to arbitrate without persuasive evidence of the satisfaction of U.S. contract or agency law requirements. |
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