Last year, in Corporación AIC, SA v. Hidroélectrica Santa Rita S.A., 66 F.4th 876 (11th Cir. 2023) (en banc), the court overruled two prior decisions to hold that the grounds for vacatur of an international arbitration award are those set forth in Chapter 1 of the Federal Arbitration Act (“FAA”), not the grounds enumerated in Article V of the New York Convention as defenses to recognition or enforcement of an international award. (See our post on Corporación AIC here.) In Commodities & Minerals Ent., Ltd. v. CVG Ferrominera Orinoco C.A., 2024 WL 3709074 (11th Cir. Aug. 8, 2024), the court applied Corporación and confirmed a $187.9 million arbitration award.
Commodities & Minerals Enterprise, Ltd. (“CME”), an entity incorporated under the laws of the British Virgin Islands, contracted with Ferrominera Orinoco, C.A. (“FMO”), a state-owned mining entity of the Bolivarian Republic of Venezuela, to provide various goods, services, and financing in exchange for iron ore. After FMO failed to provide iron ore in the quantities required under the contract, CME instituted arbitration proceedings in accordance with the contract’s arbitration provision. The arbitration was seated in the United States and resulted in a $187.9 million award in CME’s favor. The arbitrators issued the award in February 2019, so the three-month period during which FMO could seek vacatur of the award, as provided by 9 U.S.C. § 12, expired in May 2019.
In December of 2019—within the one-year period provided by 9 U.S.C. § 9—CME moved in federal court in Florida to confirm the arbitration award. FMO opposed the application, alleging that CME had procured the underlying contract for iron ore by bribing a foreign public official and that enforcement of the arbitration award would therefore be “repugnant to fundamental notions of decency and justice in the United States.” The district court, in a decision rendered before the Eleventh Circuit issued its decision in Coporación AIC, confirmed the award based on its conclusion that FMO waived its public policy argument when it failed to file a timely motion to vacate. FMO appealed.
In an opinion written by Judge Jordan—who also authored the court’s opinion in Corporación AIC—the Eleventh Circuit affirmed, finding no waiver by FMO but also no ground to refuse confirmation. The district court’s determination that FMO waived its argument that confirmation of the award would violate public policy was incorrect under Corporación, because Chapter 1 of the FAA does not provide for vacatur based on alleged violation of public policy. Accordingly, the failure to file a motion for vacatur did not waive the public policy argument. And Chapter V of the New York Convention, which governs enforcement and recognition of international arbitration awards, provides that a court may refuse enforcement if “recognition or enforcement of the award would be contrary to the public policy” of the country in which recognition is sought.
FMO’s public policy argument, however, failed as a matter of law. “It is well settled that judicial review of an arbitration award is narrowly limited,” and efforts to resist confirmation and enforcement “rarely succeed.” FMO’s argument, which focused on alleged errors in the arbitration panel’s analysis of the formation of the underlying agreement, did not meet the “demanding standard” for non-enforcement. “[A] court is bound by the arbitrator’s findings and conclusions even when it is ‘convinced [that the arbitrator] committed serious error,’” the court noted. In the case before it, the arbitration panel had permitted broad discovery—more than was required given the parties’ agreement to arbitrate—and concluded after due consideration that FMO’s allegations were not supported by the evidence. Importantly, there was no allegation that the award itself—as opposed to the underlying contract between the parties—was procured by fraud or dishonesty. The public policy argument amounted to a “collateral attack” on the arbitrators’ decision, and the court found no basis on which to refuse confirmation of the award.