Exclusive Trim, Inc. v. Kastamonu Romania, S.A.

Background

Exclusive Trim, Inc. petitioned under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, known as the New York Convention, and the Federal Arbitration Act. It asked the court to confirm and enforce an arbitration award issued against Kastamonu Romania, S.A. in proceedings administered by the International Centre for Dispute Resolution.

The parties had a Supply Agreement requiring the purchase of a minimum number of door skins during the first year and providing for arbitration of disputes. A dispute arose after Exclusive Trim purchased fewer door skins than the agreement required, told Kastamonu it was leaving the door-making business, and declined to purchase additional door skins. The arbitrator found for Exclusive Trim, determined that the agreement contained an impermissible penalty, and concluded that Kastamonu could not keep Exclusive Trim’s $610,000 deposit. The award also granted Exclusive Trim $256,292 in attorneys’ fees, $78,659.28 in arbitration costs and expenses, and $38,550 in administrative fees, expenses, and arbitrator compensation and expenses. The stated total award was $982,501.28. The arbitrator rejected Kastamonu’s counterclaim.

Kastamonu did not respond to Exclusive Trim’s petition or to the court’s order to show cause why the petition should not be treated as unopposed. The court therefore deemed the petition unopposed, while still reviewing whether confirmation was proper under the law.

Court’s Analysis

The court determined that it had jurisdiction under the New York Convention. It found that the arbitration agreement was written, concerned a commercial subject, provided for arbitration in a country that is a party to the Convention, and was not entirely domestic because Kastamonu was a Romanian corporation with its principal place of business in Romania.

Under the New York Convention, a court must confirm an award unless the opposing party proves one of the limited defenses listed in the Convention. Those defenses include an invalid arbitration agreement, inadequate notice or inability to present a case, an award exceeding the arbitrator’s authority, an improper arbitration procedure, an award that is not binding or has been set aside, a subject matter that cannot be arbitrated, or enforcement that would violate public policy.

The court found that Exclusive Trim had shown there was no genuine dispute of material fact preventing judgment in its favor. It concluded that the arbitrator acted within the authority granted by the Supply Agreement and that the arbitration included prehearing proceedings, discovery, an evidentiary hearing, witness testimony, and post-hearing submissions. Kastamonu did not appear in the federal case or assert any Convention defense, and the record provided no basis for refusing enforcement. The court also found no basis to question the award of arbitration costs or Exclusive Trim’s attorneys’ fees.

Disposition

The court granted the petition to confirm the arbitration award. It directed Exclusive Trim to file a proposed judgment consistent with the award by October 16, 2023, and directed the clerk to terminate the identified letter-motion docket entry.