## Facts

- Chromalloy Aeroservices (CAS), a U.S. company, contracted with the Arab Republic of Egypt (through its Air Force) in 1988 to supply parts, maintenance, and repairs for military helicopters.
- Egypt terminated the contract in December 1991; CAS rejected the termination and commenced arbitration under the contract’s arbitration clause.
- An ad hoc tribunal seated in Cairo issued an award in August 1994 largely for CAS, ordering Egypt to pay about $17.2 million plus interest, while ordering CAS to pay Egypt a smaller amount in pounds sterling plus interest.
- Egypt sought to nullify the award in the Cairo Court of Appeal; the court suspended and later set aside (annulled) the award under Egyptian arbitration law.
- CAS petitioned in the U.S. District Court for the District of Columbia to confirm and enforce the award under the New York Convention and the Federal Arbitration Act (FAA).
- Egypt moved to dismiss, arguing lack of jurisdiction and that enforcement was barred because the award had been annulled at the arbitral seat.

## Issues

1. Whether the court had subject-matter and personal jurisdiction under the Foreign Sovereign Immunities Act (FSIA) to confirm an arbitral award against Egypt.
2. Whether Article V(1)(e) of the New York Convention required or justified refusal of enforcement because the award had been set aside by a court at the seat of arbitration.
3. Whether Article VII(1) of the Convention permitted the court to apply more favorable U.S. enforcement law (FAA) notwithstanding Article V(1)(e).
4. Whether the Egyptian annulment judgment should be given effect under res judicata, international comity, or the act of state doctrine.
5. Whether U.S. public policy favoring final and binding arbitration supported enforcement despite the foreign annulment.

## Decision

- The court denied Egypt’s motion to dismiss and granted CAS’s petition to recognize and enforce the arbitral award.
- The court held it had jurisdiction under the FSIA, including the arbitration-related and commercial activity bases for jurisdiction.
- The court treated Article V(1)(e) as permitting, but not compelling, refusal when an award has been set aside at the seat, leaving enforcement to the court’s discretion.
- Relying on Article VII(1), the court considered CAS’s entitlement to enforcement under U.S. law and concluded the award was enforceable under the FAA.
- The court declined to give preclusive or dispositive effect to the Egyptian nullification, viewing it as inconsistent with the parties’ agreement for final and binding arbitration and contrary to U.S. arbitration policy.
- The court enforced the award notwithstanding the annulment in Egypt.

## Legal Principles

- Under the FSIA, a foreign state may be subject to U.S. jurisdiction in an action to confirm an arbitral award where the dispute fits the statute’s arbitration-related and commercial activity grounds.
- Under the New York Convention, Article IV sets formal prerequisites for enforcement; once satisfied, refusal under Article V is available only on specified grounds.
- Article V(1)(e) authorizes a court to refuse enforcement when an award has been set aside by a competent authority at the seat, but the refusal is discretionary rather than mandatory.
- Article VII(1) preserves a party’s ability to rely on more favorable domestic law in the enforcing forum; a court may apply U.S. enforcement standards where they are more favorable than Convention defenses.
- U.S. public policy strongly favors enforcement of final and binding international arbitration awards; that policy may support enforcing an award even when the seat’s courts have annulled it, particularly where the annulment conflicts with the parties’ agreed arbitral finality.
- Foreign annulment judgments are not automatically controlling in U.S. enforcement proceedings; comity and related doctrines do not require deference where doing so would contradict the parties’ arbitration agreement and U.S. enforcement policy.

## Conclusion

The court confirmed a Cairo-seated arbitral award against Egypt despite its annulment by Egyptian courts, holding that FSIA jurisdiction applied and that the New York Convention—through Article VII(1)—allowed application of favorable U.S. enforcement law and U.S. public policy supporting final and binding arbitration.


Chromalloy Aeroservices v. Arab Republic of Egypt, 939 F. Supp. 907 (D.D.C. 1996)