Trividia Health, Inc. v. Nipro Corporation

Background

Trividia Health, Inc. and Nipro Corporation entered into an International Distribution Agreement on October 27, 2015. The agreement required Nipro to purchase minimum quantities of Trividia’s blood-glucose meters, test strips, and related products for five years. The agreement also contained an arbitration clause.

The parties disputed whether Nipro had to make minimum purchases during the third year of the agreement or could terminate the agreement without owing damages. Trividia requested arbitration in February 2018. The three-member arbitration tribunal first issued a partial final award concluding that the agreement did not limit Trividia’s remedies to terminating the agreement. After additional proceedings, the tribunal issued a final award on September 18, 2020. It found that Trividia was the prevailing party, that Nipro had breached the agreement by failing to make the required third-year purchase, and that Nipro owed Trividia $21,668,302.30 in damages, interest, legal costs, and arbitration costs.

Trividia petitioned the court to confirm the non-domestic arbitration award. Nipro opposed confirmation and argued that the award should not be enforced.

Legal standard

The court applied the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly called the New York Convention. Under that convention, a court must confirm a non-domestic arbitration award unless one of the specified grounds for refusing enforcement is established. Those grounds include an invalid arbitration agreement, inadequate notice, an award outside the scope of the arbitration agreement, improper composition of the tribunal or procedure, or an award that is not yet binding or has been set aside.

Because the arbitration proceedings took place in New York City, the court also discussed the Federal Arbitration Act. That statute permits vacating an award in circumstances such as fraud, arbitrator corruption or evident partiality, serious procedural misconduct, or arbitrators exceeding their authority. The court explained that the party seeking to vacate an award bears the burden of proof and must make a very strong showing. Courts also give substantial deference to arbitration awards.

Nipro’s due-process objections

Nipro argued that it was denied a fair opportunity to present its case during the arbitration. The court addressed three main objections.

First, Nipro challenged the tribunal’s decision to proceed initially on a purely legal interpretation of the distribution agreement rather than treating the dispute as involving both law and fact. Trividia had submitted materials that the tribunal found did not comply with an earlier procedural order requiring the parties to provide relevant factual and legal information. The tribunal nevertheless chose the legal-interpretation approach and deferred deciding whether Trividia’s noncompliance warranted consequences.

The court found no due-process violation. It reasoned that the tribunal’s decision was based on its view that the agreement was unambiguous and that the initial issue was contract interpretation. Nipro did not identify evidence that the tribunal improperly excluded to Nipro’s disadvantage. The court also noted that Nipro’s argument focused mainly on not receiving a particular email until after the partial award and did not explain how that email would have changed the contract interpretation.

Second, Nipro challenged the tribunal’s decision to allow Trividia to add a trademark-infringement claim and another breach-of-contract claim after the partial final award. The court found that the International Chamber of Commerce rules gave the tribunal discretion to allow new claims after the terms of the arbitration had been established. The court acknowledged that Nipro had only five months to prepare for the hearing after the claims were added, but concluded that this difficulty did not amount to a due-process violation. The tribunal had considered Nipro’s objections, explained its decision, and determined that the new claims were related to the existing dispute.

Third, Nipro argued that the tribunal ignored Article 2.9 of the agreement, which addressed damages and other payments following expiration or termination. The court rejected this argument. It observed that Nipro had presented its interpretation to the tribunal and that the tribunal’s rejection of that interpretation did not deprive Nipro of due process. The court also stated that its role was not to vacate an award merely because a different result might have been preferable to the losing party.

Disposition

Judge Caproni held that the arbitration award should not be vacated because the case did not present the exceptional circumstances required to avoid confirmation. The court granted Trividia’s petition to confirm the non-domestic arbitration award and confirmed the award. The Clerk of Court was directed to close the case.