## Facts

- Carte Blanche (Singapore) PTE., Ltd. (CBS) was a Singapore corporation that held a franchise to market and service Carte Blanche credit cards in parts of Southeast Asia under an agreement with Carte Blanche International, Ltd. (CBI), a Delaware corporation based in New York.
- The parties’ 1980 franchise agreement contained an arbitration clause calling for arbitration under the International Chamber of Commerce (ICC) rules.
- A business dispute arose, and CBS commenced ICC arbitration seeking nearly $7 million in damages.
- The arbitration proceeded under “terms of reference” identifying the dispute and defining the tribunal’s mission; the terms addressed damages owed to CBS and did not set an express cap on damages.
- A three-arbitrator tribunal was selected and confirmed by the ICC: William Piel (chair), Hans Smit, and Theodore Sorensen.
- The tribunal issued an interim award on liability finding CBI liable to CBS on all claims.
- During the damages phase, CBS sought leave to amend its pleadings and the terms of reference to add a claim for more than $3 million in consequential damages; CBI opposed, and CBS did not file amendments.
- At the damages hearing, CBS sought more than $16 million total, and the tribunal (Piel and Smit) issued a final award of nearly $10 million; Sorensen dissented on the amount, calling it unreasonably high.
- Under ICC practice, the ICC Court “scrutinized” the award before it became final and certified compliance with ICC requirements.
- CBS petitioned in the Southern District of New York to confirm the award under the Federal Arbitration Act (FAA). CBI cross-moved to vacate the award or, alternatively, to modify it (including challenges to consequential damages and the interest component). CBS also sought sanctions for CBI’s opposition.

## Issues

1. Whether the federal court should confirm the ICC arbitration award under the FAA absent a statutory basis to vacate or modify it.
2. Whether the arbitrators exceeded their powers (or violated ICC procedures in a way that matters under the FAA) by awarding consequential damages allegedly outside the arbitration’s terms of reference and ICC limits on “new claims.”
3. Whether the award should be vacated for “manifest disregard of the law” based on the tribunal’s contract and damages rulings.
4. Whether the award’s interest component required modification, including the proper effective date from which interest should run under ICC procedures.
5. Whether sanctions should be imposed against CBI for resisting confirmation.

## Decision

- The court granted CBS’s petition to confirm the arbitration award.
- The court denied CBI’s motion to vacate the award.
- The court denied CBI’s request to modify the award, except for a limited modification to the interest start date based on when the ICC Court delivered the award to the parties (February 8, 1988).
- The court denied CBS’s request for sanctions, finding CBI’s arguments were not frivolous.

## Legal Principles

- Under the FAA, a court must confirm an arbitration award unless the party opposing confirmation proves a statutory ground for vacatur or modification; judicial review of the merits is tightly limited.
- Arbitrators do not “exceed their powers” merely because a court would interpret the contract or damages differently; the question is whether the tribunal acted within the scope of the submission and had at least a colorable basis for what it did.
- When arbitration is conducted under institutional rules (here, ICC rules), a tribunal’s interpretation of its procedural authority and the scope of the submission receives substantial judicial deference, especially where the administering institution has reviewed the award for rules compliance.
- “Manifest disregard of the law” is an exceptional basis for vacatur: the challenger must show a clearly applicable legal rule that the arbitrators knew and deliberately ignored; an arguable legal error is not enough.
- A party’s failure to raise and pursue procedural objections within the arbitral framework can weigh against later attempts to overturn an award on those same procedural grounds.
- A court may modify an award on limited FAA grounds; where the interest calculation depends on the award’s effective date under the governing arbitral process, the court may adjust interest to match that effective date while confirming the award in all other respects.

## Conclusion

The Southern District of New York confirmed the ICC tribunal’s nearly $10 million award for CBS, rejecting CBI’s arguments that the tribunal exceeded its authority or acted in manifest disregard of the law, and it modified only the interest component to run from the date the ICC Court delivered the final award.


Carte Blanche (Singapore) PTE., Ltd. v. Carte Blanche International, Ltd., 683 F. Supp. 945 (1988)