Where to Vacate and How to Resist Enforcement of Foreign Arbitral Awards: International Standard Electric Corporation v. Bridas Sociedad Anónima Petrolera, Industrial y Comercial – Vol. 2 No. 1

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AuthorSergio Le Pera*

Published: March 1991

Arbitral Awards
Appeal to Arbitral Tribunal and Annulment
Enforcement of Arbitral Awards
New York Convention

Description: After five years of intensely fought International Chamber of Commerce (“ICC”) arbitration, in which we represented Bridas Sociedad Anonima Petrola, Industrial y Comercial (“Bridas”), the Argentine claimant, it could be anticipated that the respondent, International Standard Electric Corporation (“ISEC”), a wholly-owned subsidiary of International Telephone and Telegraph Co., would challenge an adverse award. When the award was finally released, the question was how and where the challenge would be made. Mexico City was the place of arbitration, and the parties had agreed that the arbitral proceedings would be conducted subject to the mandatory rules of Mexican procedural law. ISEC and ITT are multinational corporations based in New York, and the substantive law of New York was applied to resolve the dispute. Mexico, the United States, and Argentina (among about eight other countries) have ratified the New York Convention, and ISEC and ITT had assets in many of those countries.

In my view, the award presented ISEC with the following dilemma: it could either move in Mexico to “annul” or “vacate” the award on whatever grounds might have been available under Mexican procedural law; or it could resist enforcement of the award in every jurisdiction in which Bridas sought to enforce it. ISEC did neither. Instead, it petitioned the U.S. district court in New York to vacate the Mexican award. This might have been a mistake, but it also might have been a tactical move: While Bridas could still seek enforcement of the award in any jurisdiction other than the United States, ISEC was providing itself with a prima facie admissible defense under article VI of the New York Convention — a pending action to vacate the award. The resulting scenario, an entangled international litigation in which more money would have to be spent than was commensurate with the amounts to be recovered, was not appealing.
I decided to move that the U.S. district court dismiss the petition to vacate the award for lack of subject matter jurisdiction and order enforcement of the award. If the challenge to jurisdiction was successful, ISEC’s attack on the award would be limited to the specific grounds permitted by the New York Convention to resist enforcement of foreign arbitral awards. Judge Conboy’s opinion in International Standard Electric Corporation v. Bridas Sociedad Anonima Petrolera, Industrial y Comercial4 fully addressed the jurisdictional issues and other matters of interest regarding enforcement of foreign arbitral awards. ISEC did not appeal the ruling, choosing instead to settle the case.

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*Partner, Le Pera & Lessa, Buenos Aires.