Telecom Business Solution, LLC v. Terra Towers Corp.

Background

Telecom Business Solution, LLC, LATAM Towers, LLC, and AMLQ Holdings (Cay), Ltd. were the petitioners. Terra Towers Corp. and TBS Management, S.A., together with DT Holdings, Inc., were the respondents. Jorge Hernandez was also involved in the arbitration. The dispute arose from a shareholders agreement concerning a company that developed and operated telecommunications towers in Central and South America.

After the agreement’s five-year lock-up period ended, the petitioners attempted to begin a sale of the company. Terra rejected the proposed sale and sought instead to buy out the petitioners’ shares. The petitioners began arbitration, alleging that Terra had breached the shareholders agreement by obstructing the sale. In earlier stages, the arbitration panel ordered a sale, imposed sanctions, and issued other relief. This court confirmed those earlier awards, and the Court of Appeals later affirmed the confirmations.

The arbitration panel held a merits hearing in 2024 and issued its Fifth Partial Final Award on March 24, 2025. The award found, among other things, that the respondents continued to breach the shareholders agreement, wrongfully prevented the company from honoring certain obligations, and improperly used company resources. It also found that Hernandez had caused breaches to benefit himself and DT Holdings and was liable with DT Holdings for tortious interference. The award imposed monetary, injunctive, and declaratory relief and awarded the petitioners $300,749,761, including $25,166,643 in punitive damages. Terra, DT Holdings, and Hernandez were jointly and severally responsible for the award.

Legal standard

The court explained that judicial review of an arbitration award is very limited. Under the Federal Arbitration Act, a court may set aside an award on specified grounds, including corruption, arbitrator misconduct, or an arbitrator’s exceeding of its authority. The court also considered defenses under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which generally requires confirmation unless one of the treaty’s specified defenses is proven. The party resisting enforcement bears a heavy burden.

Respondents’ objections

The respondents argued that the panel exceeded its authority by awarding relief that the petitioners had not specifically requested. The court rejected that argument. The arbitration rules allowed the panel to grant any remedy or relief that was just, equitable, and within the parties’ agreement, and the relief was connected to the company-sale claims.

The respondents also argued that the award was not final because it did not account for possible future deductions or setoffs and because some equitable relief involved a future company sale. The court held that the panel had accounted for relevant deductions, that possible future counterclaims did not prevent finality, and that the injunctive relief—including placing sale proceeds in escrow—was permanent in nature. The court concluded that the Fifth Partial Final Award was mutual, final, and definite.

The court rejected the argument that the panel had acted in manifest disregard of New York law. The panel had applied New York law, analyzed the contract’s language, and rejected the respondents’ preferred interpretation. Disagreement with that interpretation was not enough to justify vacatur.

The respondents also invoked three treaty defenses: public policy, incapacity, and lack of notice or opportunity to be heard. The court rejected the public-policy argument because the award’s escrow provisions prevented double recovery and because the respondents’ other public-policy argument concerned technical requirements under British Virgin Islands law rather than the fundamental morality and justice concerns required for this defense. The incapacity defense did not apply because it concerns whether a party had capacity to enter the arbitration agreement, not whether it could bring a particular type of claim. The notice defense also failed because the respondents had notice of the proceedings, participated in extensive hearings, and had opportunities to submit evidence and briefing.

Hernandez’s objections

Hernandez argued that the arbitration panel lacked authority over him. The court held that his conduct showed that he had agreed to let the panel decide whether it could hear the claims against him. He had objected to the panel’s jurisdiction but did not timely challenge the panel’s authority to decide arbitrability, participated in the arbitration, and waited until 2024 to seek judicial relief. The court therefore reviewed the panel’s decision under the deferential standard applicable to the award as a whole.

The panel had relied on direct-benefits estoppel, a doctrine that can bind a nonsignatory who invokes or receives benefits under an agreement. Hernandez disputed the panel’s factual findings and interpretation of that doctrine, but he did not show that the panel had manifestly disregarded the law. The court therefore rejected his jurisdictional objection.

The court also rejected Hernandez’s arguments that the panel exceeded its authority, that the award was not final, and that earlier awards could not be applied to him. Hernandez had notice and an opportunity to be heard, the arbitration rules authorized the relief, and the relief was connected to the claims against him. The court held that the earlier awards remained unchanged and that the Fifth Partial Final Award imposed new relief against Hernandez rather than modifying the earlier awards.

Disposition

Judge Lewis A. Kaplan granted the petition to confirm the Fifth Partial Final Award and denied the petitions by the respondents and Jorge Hernandez to vacate it.