Green Renewable Organic and Water Holdings, LLC v. Bloomfield Investments, LLC

Background

Bloomfield Investments, LLC moved in two related federal proceedings to recognize and enforce two arbitration awards issued in London. One proceeding involved Green Renewable Organic and Water Holdings, LLC, doing business as Grow Holdings LLC, and W. Quay Hays; the other involved Grow Land and Water LLC and Kings County Ventures LLC. The arbitration concerned funding agreements under which Bloomfield provided $15 million and later an additional $3 million to help finance litigation and expected repayment from litigation proceeds.

The arbitrators found that the respondents breached the agreements by settling related litigation for a substantially undervalued amount and by failing to use all commercially reasonable efforts to pursue the claims. The awards granted Bloomfield $6 million in damages and interest. The 2020 award also found Mr. Hays personally liable under New York law based on alter-ego and corporate-veil-piercing doctrines.

Parallel proceedings were pending in England. According to the opinion, an English court had granted Bloomfield’s request to enforce the awards as English judgments, subject to the respondents’ challenges. The respondents challenged the awards based on alleged lack of jurisdiction over non-signatories and a serious procedural irregularity involving the interest rate. The Commercial Court of England and Wales stated that the tribunal’s approach to the interest rate was probably incorrect, produced an extreme result, and gave Mr. Hays and his entities’ substantive challenge good prospects of success.

Parties’ Positions

Bloomfield asked the federal court to confirm the 2018 and 2020 awards under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly called the New York Convention. The respondents argued that the awards were unenforceable under Article V. Alternatively, they asked the court to delay ruling under Article VI until the English challenge proceedings were resolved.

Bloomfield also argued that the federal court could confirm the $6 million base award while postponing consideration of the interest. The court rejected that piecemeal approach as inefficient. The respondents said their California declaratory-judgment case should continue even if enforcement was stayed, but Bloomfield argued that doing so could produce inconsistent decisions about issues such as jurisdiction and alter ego.

Court’s Analysis

The court relied on Article VI of the New York Convention, which permits a court to postpone an enforcement decision when a competent authority in the country where the award was made is considering an application to set aside or suspend the award. The court also recognized its general authority to stay proceedings to manage its docket and promote judicial efficiency.

Following the persuasive framework from a Second Circuit decision, the court considered factors including the objectives of arbitration, the status and expected duration of the English proceedings, the level of review available there, the nature of those proceedings, and the possible hardships to the parties. The court found that delaying enforcement would prolong the dispute, weighing against a stay. But it found that the other considerations generally favored a stay, especially because the English proceedings would apply a less deferential standard of review and could provide a more thorough examination of the awards’ validity.

The court also concluded that international comity supported allowing the English Commercial Court to address the substantive issues at the core of the dispute. It found that premature enforcement could materially prejudice the respondents if the English court later overturned the awards. The court therefore declined to require the respondents to post security at that time.

Disposition

The court stayed its decision on Bloomfield’s two motions to confirm the awards until the parallel English proceedings concluded. It also stayed both case number 21-cv-07181 and case number 21-mc-80306 pending resolution of those proceedings. The court directed the parties to file a two-page joint status report about the progress of the English proceedings by October 31, 2022.