Preble-Rish Haiti, S.A. v. Republic of Haiti

Background

Preble-Rish Haiti, S.A. (PRH) and the respondents—the Republic of Haiti and the Bureau de Monétisation des Programmes d’Aide au Développement (BMPAD)—entered into three contracts under which PRH agreed to source, ship, and deliver fuel. After BMPAD allegedly failed to pay for the fifth shipment, PRH stopped further shipments and claimed approximately $27.2 million in damages, including lost profits.

Each contract required disputes to be arbitrated in New York before three arbitrators. PRH demanded arbitration after BMPAD failed to pay. BMPAD did not appoint its arbitrator within the required 10-day period, so PRH appointed a second arbitrator, and the two PRH-appointed arbitrators selected the third. BMPAD challenged the arbitration in New York state court, but that court denied BMPAD’s request to stay the arbitration.

The arbitration panel scheduled a remote hearing. After BMPAD raised objections concerning jurisdiction, notice, remote proceedings, conditions in Haiti, and the illness of its director and principal witness, the panel adjourned the hearing once and later denied a request for another 60-day adjournment. The panel repeatedly invited BMPAD to participate while preserving its objections. BMPAD did not attend the July 28, 2021 hearing. On August 6, 2021, the panel issued a Partial Final Award ordering BMPAD to deposit $23,043,429.79 into an escrow account as pre-award security.

Jurisdiction and governing law

PRH petitioned under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly called the New York Convention, and Chapter Two of the Federal Arbitration Act. The court held that the Convention applied because PRH and BMPAD were organized and had their principal places of business in Haiti, Haiti was a Convention country, the arbitration occurred in New York, and the contracts created a commercial relationship. The court also held that it had subject-matter jurisdiction under Section 203 of the Federal Arbitration Act.

Enforcement standard

The court explained that a petition to confirm an arbitration award is treated similarly to a motion for summary judgment, meaning the court examines whether there is a genuine dispute over a material fact and whether the petitioner is entitled to judgment as a matter of law. Under the New York Convention, a court must confirm an award unless the opposing party proves one of the Convention’s grounds for refusing enforcement. The opposing party carries a heavy burden.

BMPAD’s defenses

Arbitrability. BMPAD argued that Haitian law made the arbitration provision illegal because the dispute involved a Haitian entity and a Haitian government agency. The court held that this issue had already been decided against BMPAD in the New York state-court proceeding. Applying claim preclusion—a rule barring a party from relitigating claims or issues that were or could have been decided in an earlier final case—the court held that BMPAD could not raise the validity of the arbitration agreement again.

Notice and opportunity to present a case. BMPAD argued that PRH’s notice was defective because it was not served through the procedure BMPAD believed was required for service in Haiti and because the arbitration notice was initially sent in English rather than French. The court found that PRH had also provided notice in French and that the contracts supplied an alternate method for serving an arbitration demand. The court further held that the earlier state-court ruling prevented BMPAD from relitigating the service issue.

BMPAD also argued that it was unable to present its case because of a COVID-19 surge in Haiti, political turmoil following the assassination of Haiti’s president, and the panel’s refusal to grant a further 60-day delay. The court concluded that BMPAD had an opportunity to participate in the arbitration hearing but declined to do so. The panel had adjourned the hearing after BMPAD’s director and principal witness contracted COVID-19, invited BMPAD to participate after his recovery, and allowed it to preserve its objections. The court therefore found no defense based on inadequate notice or inability to present a case.

Panel composition. BMPAD argued that the panel was improper because of alleged connections between some arbitrators and PRH’s counsel. The court held that the arbitrators were selected according to the contracts: PRH selected the first arbitrator, selected a second after BMPAD missed the appointment deadline, and the two selected the third. The court also found that BMPAD had not shown evident partiality or corruption. It noted that the contracts prohibited an arbitrator from being an employee, representative, or agent of a party, but did not contain a broader conflict-of-interest provision.

Public policy. BMPAD argued that enforcement against a longstanding United States ally would violate United States public policy. The court rejected the argument, explaining that the New York Convention’s public-policy exception is narrow and applies only when enforcement would violate basic notions of morality and justice. The court held that enforcing the award would not do so and would instead further the United States’ policy favoring international arbitration.

Disposition

The court granted PRH’s petition to recognize, confirm, and enforce the August 6, 2021 Partial Final Award against BMPAD. It directed the Clerk to amend the caption to reflect the agency’s name, enter final judgment for PRH against BMPAD, terminate the pending motion, and close the case.