Magazine article Dispute Resolution Journal

International: Jurisdiction under the NY Convention

Magazine article Dispute Resolution Journal

International: Jurisdiction under the NY Convention

Article excerpt

The 2d Circuit held that the district court had jurisdiction to hear a motion to compel arbitration of a dispute between parties who were not citizens of signatories to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, since their arbitration agreement provided for arbitration in a signatory nation.

The case arose out of a series of agreements regarding an electrical power plant in the Dominican Republic. In 1993, Smith Cogeneration International (SCI), a British Virgin Islands company, entered into (1) a "power purchase agreement" with Compania Dominicana de Electricidad to build the plant, and (2) a Project Agreement with Enron International. The same year an SCI affiliate entered into the "1993 Agreement" with an Enron affiliate. This agreement created the SECLP limited partnership under the laws of the Turks and Caicos Islands, which was to build and operate the plant. The next year, the parties entered into the "1994 agreement," which amended the 1993 Agreement to reflect a series of assignments.

In July 1998, SCI filed the Dominican lawsuit, alleging that SCI was coerced into the SECLP partnership, that all of SCI's agreements with Enron were fraudulently induced, and that Enron tortiously interfered with its business relations. SCI sought rescission of the agreements and damages.

In August, SECLP and Enron petitioned a federal court in New York to compel arbitration and enjoin the Dominican lawsuit. The petition was based on a broad arbitration clause in the parties' agreements, which provided for arbitration in New York, governed by the FAA and Texas law. The district court granted Enron's motion to compel arbitration.

The 2d Circuit affirmed. On appeal SCI claimed that federal jurisdiction was lacking under the New York Convention and the implementing U.S. legislation, because the parties' agreement was not "centered" in a country that adhered to the New York Convention. …

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