Laura v. Pristec AG

Background

Joseph Laura and Anthony Sichenzio jointly owned Innovative Crude Technologies, Inc. (ICT), described in the opinion as a New Jersey corporation. Pristec AG was described as a joint stock company organized under the laws of Austria. Through ICT, the petitioners and Pristec AG each appeared to own a 50% stake in Pristec America, Inc. (New Jersey) and Pristec America, Inc. (Nevada).

In February 2017, Laura, Sichenzio, and Pristec AG’s chief executive officer entered into a Share Acquisition Agreement. The agreement proposed that the petitioners transfer all of ICT’s issued and outstanding shares to Pristec AG if specified conditions were met. It also required disputes concerning the agreement to be resolved through arbitration in New York, New York.

Arbitration Award

In May 2018, the petitioners filed an arbitration demand individually and on behalf of ICT and the two Pristec America companies. They sought to rescind the agreement, alleging that Pristec AG had fraudulently induced them to sign it through misrepresentations and concealments intended to take control of petroleum-refining technology and improperly obtain assets of the U.S. Pristec companies.

After pre-hearing proceedings and a six-day evidentiary hearing, the arbitrator issued an award on June 10, 2019. The arbitrator found that the petitioners had proved fraudulent inducement and that they would not have entered the agreement if Pristec AG had disclosed its private dealings with a third party. The arbitrator found the agreement void and unenforceable, declared it rescinded, and returned the parties to the positions they held before the agreement was executed.

The arbitrator also ordered Pristec AG to pay $26,586 for costs the petitioners incurred defending a New Jersey state-court suit; $154,835.98 in arbitration administrative expenses and arbitrator fees; and $331,614.99 in legal fees and expenses incurred during the arbitration. The award imposed 9% interest on those amounts from the dates specified in the award until payment.

Petition to Confirm

On February 18, 2020, the petitioners asked the court to confirm the award under Sections 9 and 13 of the Federal Arbitration Act. Pristec AG was served and acknowledged receipt of the petition but filed no opposition. The opinion states that the award had not been vacated, modified, or corrected under Sections 10 or 11 of that Act.

The court explained that an unanswered petition to confirm an arbitration award is treated as an unopposed motion for summary judgment, meaning a request for judgment when no genuine dispute over an important fact requires a trial. Even without an opposition, the court had to determine whether the petitioners showed that no material factual dispute existed and that they were entitled to enforcement as a matter of law.

Court’s Analysis

The court found that the arbitration clause covered the dispute because the petitioners’ allegations concerned misrepresentations allegedly used to induce the transfer contemplated by the agreement. The court also found that the arbitrator acted within the scope of the arbitrator’s authority. Pristec AG had participated in the arbitration, submitted an answering statement, and had opportunities to present arguments and defenses through pre-hearing motions.

The court further found that the relief awarded was within the arbitrator’s authority. Under the cited arbitration rules, the arbitrator could allocate reasonable costs among the parties and award appropriate pre-award and post-award interest. The court found no evidence that the allocation of costs or the interest was improper.

Disposition

The court confirmed the arbitration award and granted the petition to confirm it. The Clerk of Court was directed to close the case. The opinion does not state that the court separately entered a judgment beyond confirming the award.