Kenmar Securities, LLC v. Negocios Y Telefonia Nedetel S.A.

Background

Kenmar obtained a final arbitration award against Nedetel on August 1, 2024. The arbitration concerned an advisory agreement under which Kenmar provided advisory and investment-banking services related to a potential acquisition of Nedetel. The agreement required Nedetel to pay monthly retainers and success fees for qualifying transactions, including transactions completed within 24 months after termination of the agreement. The agreement selected New York law and required arbitration under the American Arbitration Association’s commercial rules.

Nedetel terminated the agreement in July 2021. It later entered into a stock purchase agreement transferring 70 percent of its equity to Ufinet Latam, S.L.U., and a put/call option agreement concerning the remaining 30 percent. Kenmar alleged that Nedetel owed success fees for those transactions. The arbitrator ruled for Kenmar on its breach-of-contract claim, granted declaratory relief requiring a future success fee if the put/call option was exercised, and denied the unjust-enrichment claim as moot.

The arbitration awards provided Kenmar $3,713,846 in damages, 9 percent annual interest on the damages, $535,539.25 in attorneys’ fees, costs, and expenses, and $149,125.50 in arbitration costs. Kenmar then moved in federal court to confirm and enforce the award and also requested fees and costs incurred in the federal proceeding. Nedetel did not contest the merits or damages and opposed enforcement only on the issue of post-judgment interest.

Court’s analysis

The court explained that review of an arbitration award is narrowly limited. A court generally must confirm an award if the arbitrator acted within the scope of the arbitrator’s authority and there is no basis to vacate, modify, or correct the award. The court concluded that the arbitrator acted within that authority and confirmed the award.

The court also confirmed the arbitration award’s fees and costs from the arbitration. Although the agreement did not expressly provide for fees and costs, the final award explained that the parties had authorized the arbitrator to award them. The court found a sufficient basis for the amounts awarded, including the reduction of Kenmar’s requested attorneys’ fees and costs.

The court confirmed 9 percent annual pre-award and post-award, pre-judgment interest on the damages. It treated interest on unpaid damages between July 10, 2024, and August 1, 2024, as pre-award interest, and interest from August 1, 2024, until entry of judgment as post-award, pre-judgment interest.

For the period after judgment, the court applied 28 U.S.C. § 1961, which generally requires the federal statutory rate for money judgments entered in federal civil cases. The court held that the parties had not clearly and unambiguously agreed that the 9 percent rate would apply after judgment. The agreement concerning the arbitrator’s authority covered pre-award and post-award interest through the date of the award, not post-judgment interest. The court therefore ordered post-judgment interest at the statutory federal rate from the date judgment was entered.

Finally, the court applied the general rule that parties ordinarily cannot recover attorneys’ fees incurred in federal litigation unless a statute or agreement authorizes them. The court found no applicable statute or agreement allowing Kenmar to recover fees and costs from the federal proceeding to confirm the arbitration award. It denied that request.

Disposition

The court ordered judgment against Nedetel for $3,170,210 with the specified 9 percent pre-award and post-award, pre-judgment interest; $543,636 with the specified interest; $535,539.25 in arbitration attorneys’ fees and costs; and $149,125.50 in arbitration fees and arbitrator compensation. It also ordered Nedetel to pay a success fee under the advisory agreement for any qualifying put/call option transaction that may be exercised in the future. The motion to confirm and enforce the arbitration award was granted in part and denied in part, and Kenmar’s request for fees and costs associated with the federal proceeding was denied. Judge Victor Marrero directed the Clerk of Court to close the case.