## Facts

- Bridas, a foreign investor group, entered a 1993 joint venture agreement (JVA) with Turkmenneft, a state-owned Turkmen entity, to conduct hydrocarbon operations in the Keimir area of Turkmenistan.
- The JVA contained an ICC arbitration clause with English law as governing law and Houston, Texas as the arbitral seat.
- Bridas alleged that governmental actions in 1995 (including suspensions and trade restrictions) undermined the venture and commenced ICC arbitration in 1996 against both Turkmenneft and the Government of Turkmenistan.
- The Government objected to arbitral jurisdiction, asserting it was not a signatory to the JVA and never agreed to arbitrate.
- The ICC tribunal issued multiple awards culminating in a final award (2001) awarding Bridas approximately $495 million and treating the Government as properly subject to arbitration.
- Bridas sought confirmation of the awards in the U.S. District Court for the Southern District of Texas under the New York Convention and the FAA.
- The district court confirmed the awards, including as against the Government; the Government and Turkmenneft appealed.

## Issues

1. Whether a nonsignatory foreign sovereign may be bound to an arbitration clause in a contract executed by a state-owned enterprise under federal common-law doctrines (e.g., alter ego, agency, estoppel).
2. Who decides “arbitrability” when a nonsignatory disputes ever agreeing to arbitrate, and what standard of review applies to the tribunal’s jurisdictional determination.
3. Whether the awards should be refused enforcement or vacated based on “manifest disregard of the law” or the tribunal exceeding its authority in merits and damages determinations.

## Decision

- The Fifth Circuit vacated the district court’s confirmation to the extent it enforced the award against the Government of Turkmenistan.
- The court affirmed in part and remanded for further proceedings regarding whether the Government could be bound under appropriate nonsignatory doctrines (including alter-ego/agency analysis) on an adequate factual and legal showing.
- The court declined to set aside the arbitral merits and damages determinations under “manifest disregard” or excess-of-powers theories on the record presented.

## Legal Principles

- Arbitrability is ordinarily for courts to decide unless there is clear and unmistakable evidence that the parties agreed to arbitrate arbitrability; when a nonsignatory contests assent, judicial review of arbitrability is de novo (with related factual findings reviewed for clear error).
- A sovereign’s ownership or control of a state-owned enterprise, standing alone, is insufficient to bind the sovereign to the enterprise’s arbitration agreement; binding a nonsignatory requires satisfaction of recognized federal common-law doctrines (e.g., alter ego/veil piercing or agency) under a demanding evidentiary showing.
- Judicial review of an international arbitral tribunal’s merits and damages determinations under the New York Convention is highly constrained; “manifest disregard” requires proof that arbitrators recognized a clearly governing legal rule and deliberately ignored it.
- Challenges that an award is excessive or improperly calculated generally do not justify nonenforcement absent a showing that the tribunal exceeded its authority under the parties’ submission and the Convention’s limited defenses.

## Conclusion

The Fifth Circuit required rigorous, court-led review of arbitrability when a nonsignatory sovereign disputes assent, vacated confirmation of the award against Turkmenistan, and remanded for proper application of alter-ego/agency principles while otherwise maintaining a deferential posture toward the tribunal’s merits and damages rulings.


Bridas S.A.P.I.C. v. Gov’t of Turkmenistan, 345 F.3d 347 (5th Cir. 2003)