Commodities & Minerals Enterprise Ltd. v. CVG Ferrominera Orinoco, C. A.

Background

Commodities & Minerals Enterprise, Ltd. (CME) petitioned under the Federal Arbitration Act and the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly called the New York Convention, to confirm an international arbitration award against CVG Ferrominera Orinoco, C.A. (FMO). The dispute arose from contracts between the parties, including the General Piar Charter, under which CME time-chartered a vessel to FMO to transport iron ore.

The General Piar Charter required disputes to be arbitrated by three arbitrators in New York under the Society of Maritime Arbitrators’ rules. CME sought payment for unpaid invoices, lost profits, and attorneys’ fees. FMO opposed CME’s claims and asserted setoff rights and counterclaims. FMO also argued that the charter was void because it allegedly resulted from corruption and lacked approvals required by Venezuelan law.

The arbitration panel ruled for CME. Its Final Award, issued December 20, 2018, and Corrected Award, issued February 11, 2019, awarded CME $12,655,594.36 plus post-award interest at 5.50% per year. The panel concluded that the evidence did not show CME had engaged in corruption related to the charter.

FMO’s objections

FMO argued that the award should not be confirmed because:

- the panel lacked authority to decide whether the parties had agreed to arbitrate; - the award addressed matters beyond the scope of the arbitration agreement, including the allocation of FMO’s prior payments among contracts; and - enforcing the award would violate public policy because the underlying contract allegedly involved corruption.

FMO also asserted that service of the petition was deficient, but the court concluded that service complied with the parties’ agreement to use the Society of Maritime Arbitrators’ rules.

Court’s analysis

The court first held that it had subject-matter jurisdiction because the arbitration involved foreign corporations and took place in the United States, bringing the award within the New York Convention. It also held that the parties had consented to personal jurisdiction in New York by agreeing to arbitrate there and permitting judgment to be entered by a court with jurisdiction.

The court explained that review of an international arbitration award is highly deferential. The party opposing enforcement bears a heavy burden and must establish one of the defenses listed in Article V of the New York Convention.

On arbitrability, the court held that the General Piar Charter’s broad clause covering “any dispute arising out of or in connection with” the charter clearly gave the panel authority to decide arbitrability, meaning whether the dispute was subject to arbitration. The court therefore reviewed the panel’s decision deferentially. It found no basis to disturb the panel’s conclusions that U.S. maritime law governed the charter and that FMO had not proven the charter lacked approvals required by Venezuelan law.

On the claim that the panel exceeded the arbitration agreement, the court held that allocating prior payments among the parties’ contracts fell within the broad arbitration clause. The court found no reason to disturb the panel’s allocation and stated that an alleged error, even a serious one, is not enough to make an award unenforceable under the applicable standard.

On public policy, the court held that FMO had not shown that enforcing the award itself, as opposed to enforcing the underlying contract, would violate public policy. The court also observed that the panel had considered the corruption allegations and found the evidence insufficient. The court therefore rejected FMO’s public-policy defense.

Ruling and disposition

Judge Andrew L. Carter, Jr. granted CME’s petition to confirm the arbitration award. The court directed the Clerk of Court to enter judgment against FMO for $12,655,594.36, with interest at 5.50% per year from December 20, 2018, through the date of judgment, and at the statutory rate afterward.

The court also granted CME’s requests for costs and attorneys’ fees arising from the confirmation proceeding. CME was directed to file its attorneys’ fee motion by December 21, 2020, and FMO was given deadlines to oppose and respond to that motion.