Baker Hughes Servs. Int’l, LLC v. Joshi Technologies Int’l, Inc., Nos. 21-5072 and 21-5081 (10th Cir. July 13, 2023)
Plaintiff, Baker Hughes Services International LLC (“Baker Hughes”), after winning an Ecuadorian arbitration against the Ecuador-based Pesago Consortium, secured an arbitral award enforceable jointly and severally against the Consortium’s two members—Joshi Technological International, Inc. (“Joshi”) and third-party Campo Puma Oriente S.A. Baker Hughes then brought its award to Oklahoma and sued Joshi to confirm the award in the United States. The district court confirmed the award and awarded attorney’s fees with prejudgment interest.
On appeal, Joshi sought to reverse the award on three bases: (1) the district court lacked subject matter jurisdiction; (2) there was not an enforceable arbitration agreement; and (3) the court erred in awarding attorney’s fees and prejudgment interest. The Tenth Circuit Court of Appeals affirmed the award but vacated the award of prejudgment interest and remanded to the district court to calculate an accurate prejudgment interest award.
Joshi first argued that Baker Hughes had failed to comply with Article IV of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention“), thereby depriving the court of jurisdiction. Under Article IV, a party applying for recognition and enforcement must, at the time of the application, supply: (a) the duly authenticated original award or a duly certified copy thereof; and (b) the original agreement containing the arbitration clause or a duly certified copy thereof. If the award or agreement is not made in an official language of the country in which the award is relied upon, the party applying for recognition and enforcement of the award shall also produce a certified translation of the documents into such language. Here, Baker Hughes only provided certified English translations, but not the original Spanish versions, of the award and agreement.
In addressing Joshi’s first point—that the alleged failure to comply with Article IV deprived the court of subject matter jurisdiction to enforce the award—the Tenth Circuit rejected the Eleventh Circuit’s reasoning in Czarina, LLC v. W.F. Poe Syndicate, and sided with the subsequent Second, Fourth and Ninth Circuits decisions on this subject, holding that failure to comply with the procedural requirements set out by Article IV raises a merits issue rather than a jurisdictional issue. Because Joshi did not raise Baker Hughes’s failure to comply with Article IV as a merits issue—and did not claim, in any event, that
the English versions of the agreement and award were inaccurate in any way—the issue was waived on appeal.
The Tenth Circuit also rejected Joshi’s second argument that there was no binding contract between the parties. Under black letter agency law and an agreement that the Pesago Consortium’s members would be obligated jointly and severally, Campo Puma Oriente S.A., which signed the agreement, could bind Joshi. Further, the fact that the agreement listed Baker Hughes Services International, Inc., yet the award was issued to Baker Hughes International, LLC, did not preclude enforcement of the award. The arbitral tribunal allowed Baker Hughes International, LLC to prosecute the action, and it appeared that Baker Hughes International, LLC was the entity providing the services for which the consortium refused to pay. And even if the wrong Baker Hughes entity had been allowed to prosecute the action, the Tenth Circuit held that was not a mistake that would permit a district court to refuse to enforce the award under Article V of the New York Convention, which is an exhaustive list of defenses to enforcement.
Finally, the Tenth Circuit rejected Joshi’s contention that the district court erred by awarding Baker Hughes attorney’s fees and prejudgment interest. The court found that attorney’s fees were appropriate both because there was an enforceable arbitration award, and because attorney’s fees were required under the cost-shifting provision of the underlying agreement. However, the court held that the rate of the prejudgment interest award departed from the statutory rate. While district courts have the discretion to do so, nothing in the record suggested the court intended to deviate here. The Tenth Circuit thus vacated the prejudgment interest award and remanded to calculate an appropriate prejudgment interest amount.
This Article was originally published in the North America Newsletter.