Glass-Inspiration GMBH Design + Engineering v. McGrath

Background

McGrath contracted with Glass-Inspiration, a company based in Austria, to manufacture and supply glass and stone for a construction project at St. Nicholas Greek Orthodox Church in New York City. Their contract required disputes to be finally resolved under the arbitration rules of the International Chamber of Commerce.

A dispute arose concerning the quality of Glass-Inspiration’s materials, and both parties claimed the other had breached the contract. Glass-Inspiration began arbitration on April 25, 2022. After a hearing and post-hearing briefing, the arbitrators issued a final award on May 29, 2024. The award dismissed McGrath’s counterclaims and awarded Glass-Inspiration €936,220.79 and $189,774.50, plus interest. McGrath did not pay the award.

Confirmation of the Arbitration Award

Glass-Inspiration moved to confirm the award under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the Federal Arbitration Act. McGrath accepted that the court’s four-part inquiry for confirming a foreign commercial arbitration award was satisfied. It nevertheless argued that enforcement would violate United States public policy because Glass-Inspiration had not pursued its claim within the deadline applicable to creditors of a dissolving corporation.

The court held that McGrath had forfeited this argument by failing to present it to the arbitrators during the 25-month arbitration. The court explained that forfeiture means failing to preserve an argument, while waiver means knowingly and intelligently giving up an argument. The record did not show that McGrath raised its dissolution-based deadline argument to the arbitrators, and the written award did not mention it. The court therefore would not consider the argument for the first time during the confirmation proceeding.

The court also addressed the argument’s merits. Under Minnesota law, a dissolving corporation may shorten the period for bringing claims by giving proper notice. For known creditors and claimants, that notice must be given in writing directly to them. The court found that Glass-Inspiration was a known creditor because McGrath could reasonably foresee that Glass-Inspiration had a potential claim by July 1, 2021. There was no evidence that McGrath gave Glass-Inspiration the required written notice. As a result, Glass-Inspiration had two years from McGrath’s July 1, 2021 filing of its intent to dissolve to bring its claim. Because Glass-Inspiration began arbitration on April 25, 2022, the claim was timely.

Attorneys’ Fees and Costs

Glass-Inspiration also requested attorneys’ fees and costs incurred in seeking confirmation. The court stated that fees may be awarded when a party acts in bad faith, vexatiously, wantonly, or for oppressive reasons, and that an unjustified refusal to honor an arbitration award can constitute bad faith.

The court found that Glass-Inspiration met this high standard. McGrath had participated in the arbitration, did not move to vacate or set aside the award, did not respond to Glass-Inspiration’s payment letters, and presented a new argument during the confirmation proceeding that had not been raised in arbitration. The court found the argument clearly losing and granted Glass-Inspiration’s request for its reasonable attorneys’ fees and costs incurred in bringing its petition and motion.

Disposition

The court ordered that:

- Glass-Inspiration’s motion to confirm the arbitration award was GRANTED. - The May 29, 2024 award in International Court of Arbitration Case No. 26994/FS/GL was CONFIRMED. - Glass-Inspiration received judgment for €936,220.79 and $189,774.50. - The judgment included the specified simple and compound interest amounts and rates: 8% simple interest on the stated euro and dollar amounts for the periods listed in the order, €77,582.94 for interest accrued through April 25, 2022, and 4% compound interest on that €77,582.94 until the judgment is satisfied. - Glass-Inspiration was awarded its attorneys’ fees and costs incurred in bringing the petition and motion. The court invited Glass-Inspiration to submit a motion under Federal Rule of Civil Procedure 54 detailing the reasonable fees and costs, and allowed McGrath 14 days to respond after service.