## Facts

- ACME (a Cayman Islands corporation with a New York office) contracted with MCP (a Pakistan government-owned enterprise) on January 6, 1977 to supply goods and services for MCP’s Iraq construction project.
- The contract required disputes to be arbitrated through the ICC in Paris or Geneva if negotiations failed.
- A May 22, 1978 supplementary agreement stated that Pakistani law would govern.
- ACME commenced ICC arbitration on May 1, 1979; MCP responded and filed a $1 million counterclaim.
- Geneva was selected as the arbitral seat, and a sole arbitrator was appointed; the parties executed Terms of Reference on March 19, 1980 accepting the arbitrator’s jurisdiction, Geneva as the seat, and Geneva procedural rules.
- MCP later sought relief in a Lahore court, which declared the arbitration agreement invalid under Pakistani law on January 13, 1981.
- MCP received notice of a June 1981 Geneva hearing but chose not to appear; the arbitration proceeded.
- On May 24, 1982, the arbitrator issued a final award for ACME, rejected MCP’s counterclaim, found the supplementary agreement invalid under Pakistani and New York law, and applied New York law to the original contract.
- ACME petitioned the Southern District of New York on May 17, 1985 to confirm the award under the New York Convention; MCP opposed confirmation under Convention Article V.

## Issues

1. Whether enforcement should be refused under Article V(1)(a) because the arbitration agreement was allegedly invalid under Pakistani law and a Pakistani court had declared it invalid.
2. Whether the arbitrator exceeded the submission under Article V(1)(c) by addressing the supplementary agreement’s effect/validity and choice of law.
3. Whether the arbitration procedure violated Article V(1)(d) given MCP’s nonappearance and the Pakistani court proceedings.
4. Whether the Pakistani judgment constituted an annulment or setting aside by a “competent authority” under Article V(1)(e) requiring non-enforcement.

## Decision

- The court granted ACME’s petition and confirmed the Geneva ICC award.
- Article V defenses were construed narrowly, and MCP bore the burden to prove a ground for refusal.
- The arbitrator acted within the scope of the parties’ Terms of Reference in deciding the supplementary agreement’s effect/validity and the governing law.
- The arbitration proceeded consistently with the parties’ agreement and applicable procedural rules; MCP had notice and voluntarily defaulted.
- The Lahore court was not the competent authority of the arbitral seat (Switzerland) for purposes of Article V(1)(e), so its judgment did not bar enforcement.
- The award was not shown to have been set aside or suspended by a competent authority in Switzerland.
- The Second Circuit affirmed.

## Legal Principles

- The New York Convention reflects a strong policy favoring recognition and enforcement of foreign arbitral awards; Article V defenses are limited and narrowly applied, and the resisting party carries a heavy burden.
- Under Article V(1)(e), the authority with primary responsibility for setting aside an award is the court of the arbitral seat (or the country under whose law the award was made); a non-seat court’s declaration of invalidity does not automatically defeat enforcement.
- A party’s participation in arbitration and acceptance of jurisdiction through agreed procedural instruments (including ICC Terms of Reference) weighs strongly against later attempts to deny the tribunal’s authority in enforcement proceedings.
- Determinations about contract modification, the validity/effect of supplementary agreements, and choice of substantive law are within the tribunal’s authority when those questions are submitted for decision.

## Conclusion

The court confirmed a Geneva ICC award under the New York Convention, rejecting challenges based on alleged invalidity under Pakistani law, alleged excess of arbitral authority, and alleged procedural defects, and held that a Pakistani non-seat judgment did not constitute a competent annulment that required refusal of enforcement.


Am. Constr. Mach. & Equip. Corp. v. Mechanised Constr. of Pak., Ltd., 659 F. Supp. 426 (S.D.N.Y. 1987)