Albtelecom SH.A v. Unifi Communications, Inc., No. 16 Civ. 9001 (S.D.N.Y. May 30, 2017)
Petitioner initiated arbitration proceedings against Respondent for breach of a telecommunications contract. After the arbitration proceedings began, the parties entered into a settlement agreement and requested the arbitrator issue a consent award that would incorporate the settlement agreement. The arbitrator agreed. The award required Respondent to make certain payments to Petitioner in monthly installments. However, after the award issued, Respondent allegedly stopped making its monthly payments.
As a result, Petitioner filed a petition in the District Court for the Southern District of New York, seeking confirmation of the award pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention“) and entry of judgment on the remaining settlement amount, plus interest and costs and fees. Respondent opposed the petition and contended, inter alia, that the New York Convention does not apply to the award because it took the form of a consent award.
The court found that there was no material issue of fact for trial as to confirmation. Because the award reflected the consent of the parties to its terms, none of the grounds for refusal of recognition or enforcement existed. The court also rejected Respondent’s argument that the award should not be confirmed because it was entered into by consent of the parties, as opposed to being based on an arbitrator’s resolution of the factual and legal disputes.
The court explained that there is no rule that an “[a]ward entered into by an ICC arbitrator, mid-arbitration, with the parties’ consent and based on terms agreed to by the parties, is any less binding under the New York Convention than an ICC award entered into after more contentious litigation.” The court found no reason for such an exception, as the opposite rule would discourage resolution of disputes in mid-arbitration. Rather, “the limited available precedents reflect recognition and enforcement of Awards entered into based on stipulations by the parties.”
The court declined to rule on whether Respondent breached the award because disputed factual issues existed that precluded entry of such relief. The order was thus limited to confirming the arbitral award. To the extent Petitioner pursued a claim of breach of the award, the court would require briefing by the parties to address the related issues.
A version of this post originally appeared in the September 2017 edition of Baker McKenzie’s International Litigation & Arbitration Newsletter, which is edited by David Zaslowsky and Grant Hanessian.
