DC District Court confirms award despite ongoing set-aside action | Practical Law

DC District Court confirms award despite ongoing set-aside action | Practical Law

Abby Cohen Smutny (Partner) and Lee A. Steven (Counsel), Lauren Mandell (Associate), White & Case LLP

DC District Court confirms award despite ongoing set-aside action

Practical Law Legal Update 9-501-8769 (Approx. 2 pages)

DC District Court confirms award despite ongoing set-aside action

Published on 30 Mar 2010USA
Abby Cohen Smutny (Partner) and Lee A. Steven (Counsel), Lauren Mandell (Associate), White & Case LLP
On 16 March 2010, the District Court for the District of Columbia entered a default judgment and confirmed an ICC arbitration award issued against Albania, despite there being ongoing proceedings in Italy in which Albania is seeking to set-aside the award.
In G.E. Transp. S.P.A. v. Republic of Albania, 693 F. Supp. 2d 132 (D.D.C. 2010), the District Court for the District of Columbia entered a default judgment and confirmed an ICC award issued against Albania, declining to defer confirmation pending the resolution of a set-aside action brought by Albania in the Court of Appeals in Rome. Article VI of the New York Convention grants courts discretion to defer confirmation of an arbitral award if there is an ongoing action in another jurisdiction to set aside the award. The scope of this discretion was an issue of first impression in the DC Circuit.
The court adopted the six-factor test enunciated by the Second Circuit in Europcar Italia, S.p.A. v. Maiellano Tours, Inc., 156 F.3d 310, 317 (2d Cir. 1998). The first factor considers whether imposing a stay of the proceedings would undermine the objectives of arbitration, that is, the prompt and inexpensive resolution of disputes. The court held that this factor favoured confirmation because the petitioners had received no relief four years after the commencement of the arbitration, which was a fair proceeding in which Albania fully participated. The second factor, which considers the status of the foreign proceedings and the estimated time for those proceedings to be resolved, also favored confirmation. The court cited the petitioners' unrebutted assertion that the Italian proceedings would likely last until 2014. For the remaining four factors (the level of scrutiny the award will receive in the foreign proceedings, the characteristics of the foreign proceedings, the balance of hardships, and other considerations) the Court stated that it lacked evidence to find that these factors favoured adjournment.
This case suggests that it is extremely unlikely that a court will exercise its discretion to defer confirmation proceedings pursuant to Article VI of the New York Convention where the foreign state declines to participate in the proceedings and fails to rebut the petitioners' arguments.