Eolica Tres Mesas, S. de R.L. de C.V. v. Abengoa Mexico S.A. de C.V., No. 1:18-cv-07505 (S.D.N.Y. Feb. 28, 2019) [click for opinion]
In June 2014, Eolica Tres Mesas, S. de R.L. de C.V. and Eolica Tres Mesas 2, S. de R.L. de C.V. (“Eolica”) entered into a subcontractor relationship with general contractor Abengoa Mexico S.A. de C.V. (“Abengoa”) under a Balance of Plant Agreement (“BOP Agreement”) relating to the development of a 45-turbine wind farm in Mexico. In September 2016, Eolica terminated the BOP Agreement based on various contractual defaults by Abengoa. The following month, Abengoa filed a demand for arbitration with the International Center for Dispute Resolution (“ICDR”).
In August 2018, the tribunal issued an award requiring Abengoa to pay Eolica $11.4 million in liquidated damages based on Eolica’s counterclaims, and $3.2 million for the “reasonable costs” of arbitration, both sums to bear compound interest from the date of the award until payment. A few weeks later, Eolica filed a petition to confirm the award in the Southern District of New York.
In considering Eolica’s petition, the district court explained that confirmation of foreign arbitral awards is governed by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention“), as implemented by the Federal Arbitration Act (the “FAA”), 9 U.S.C. §§ 201-208. The court found that it had subject matter jurisdiction over the petition because the application was made within the three-year limitation period provided for in the FAA.
The court also found that it had personal jurisdiction over Abengoa, despite Abengoa’s failure to appear in the confirmation proceedings, based on Abengoa’s agreement to arbitrate in the jurisdiction. Eolica had also properly served Abengoa by courier, allowing the exercise of such personal jurisdiction. The court explained that, although the Hague Service Convention ordinarily governs service of process on a foreign party, parties may agree to use a particular method service. The parties did so here by providing for service by courier in the BOP Agreement.
Turning to the merits, the court found present none of the grounds for refusal or deferral of recognition or enforcement of the award specified in the Convention. The court also noted that the party opposing enforcement bears the burden of showing that one of the listed grounds for refusing to recognize an award is met and that, here, Abengoa had not opposed the petition.
Finally, the court awarded Eolica its attorneys’ fees. The court explained that an exception to the general rule that each party pays its own attorneys’ fees arises when an enforceable contract provides for their award. Here, the underlying contract included a provision that “[i]n any arbitration or litigation to enforce the provisions of this Agreement, the prevailing Party in such action shall be entitled to the recovery of its reasonable legal fees and expenses (including reasonable attorneys’ fees and legal costs) ….” The court held that this was a sufficient basis for also awarding Eolica its attorneys’ fees and costs for the confirmation action.
A version of this post originally appeared in the May 2019 edition of Baker McKenzie’s International Litigation & Arbitration Newsletter, which is edited by David Zaslowsky.
