Ocean World Lines, Inc. v. Transocean Shipping Transportagentur GesmbH

Background

Ocean World Lines, Inc. (OWL) and Transocean Shipping Transportagentur GesmbH (TOS) entered into a commercial agency agreement in 2009. The agreement required TOS to pay money owed to OWL within 60 days and required disputes to be resolved in New York by a panel of arbitrators from the Society of Maritime Arbitrators under New York law and the panel’s rules.

After the parties’ relationship deteriorated, OWL sought to enforce the payment provision and later terminated the agreement. An arbitration panel found that the agreement and its arbitration provision were binding. In January 2016, the panel ruled for OWL, finding that OWL validly terminated the agreement because of TOS’s breach and awarding OWL $192,304.39, including attorney’s fees, interest, and costs.

Separately, TOS sued OWL in the Vienna Commercial Court under Austria’s Commercial Agency Act. The Austrian Supreme Court held that the arbitration agreement could not prevent TOS from bringing claims under that statute in Austrian courts. After a trial, the Vienna Commercial Court awarded TOS €250,000. TOS later sought to enforce that Austrian judgment.

Confirmation of the arbitration award

OWL asked the court to confirm the arbitration award under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly called the New York Convention, as implemented by the Federal Arbitration Act. Under that law, a court generally must confirm an award unless the opposing party proves one of the treaty’s limited defenses.

Judge Torres held that the New York Convention applied because the award arose from a commercial contract and TOS was a foreign entity. TOS did not dispute that the award was covered by the Convention or that it was valid and enforceable. The court also found that TOS had not shown any treaty defense, such as lack of notice, an invalid arbitration agreement, an arbitration procedure that violated the parties’ agreement, or a violation of public policy. The court found no reason to conclude that the arbitrators had plainly disregarded the law.

The petition to confirm the arbitration award was GRANTED. The court noted that TOS’s apparent payment of the award did not prevent confirmation because compliance with an award and formal confirmation are separate issues.

Request to block enforcement of the Austrian judgment

OWL also sought a declaration that the Austrian judgment was invalid and an injunction preventing TOS from enforcing it. The court explained that an injunction stopping an ongoing foreign lawsuit is different from an injunction stopping enforcement of a judgment that a foreign court has already issued.

The court relied on Second Circuit precedent stating that concerns about international respect between countries’ courts weigh strongly against using a U.S. injunction to invalidate or block enforcement of a foreign judgment. The Austrian courts had considered the arbitration award and concluded that it did not prevent TOS from pursuing its Austrian-law claims. Judge Torres held that neither the New York Convention nor the Federal Arbitration Act empowered the court to review and invalidate decisions of courts in another country.

OWL’s request for a declaration that the Austrian judgment was inconsistent with the arbitration award and for an injunction barring enforcement of that judgment was DENIED.

Attorney’s fees

OWL sought attorney’s fees under the court’s inherent authority to control its proceedings. The court explained that fees may be available when a losing party acts in bad faith, vexatiously, wantonly, or oppressively, including in some arbitration-enforcement cases.

The court denied fees for two reasons. First, OWL was not the prevailing party concerning the Austrian litigation because the court had denied OWL’s request to invalidate or block enforcement of the Austrian judgment. Second, TOS had not improperly disregarded the arbitration panel’s decision by bringing the Austrian case: the panel had not yet issued its final decision when TOS filed that case, and the Austrian Supreme Court ultimately determined that the two proceedings involved different claims.

OWL’s request for attorney’s fees was DENIED.

Disposition

The petition to confirm the arbitration award was GRANTED. OWL’s request for an anti-suit injunction and its motion for attorney’s fees were DENIED. The Clerk of Court was directed to close the case.