## Facts

- Frydman and Cosmair, Inc. (associated with L’Oréal) were involved in two proceedings before the same neutral, Mayoux.
- After the first proceeding, Frydman and L’Oréal entered into a share-purchase agreement in France in which the purchase price would be “determined” by Mayoux.
- The parties jointly communicated to Mayoux that his valuation would supply the contract’s price term.
- In the second proceeding, Mayoux issued a valuation fixing the price to be paid for Frydman’s shares.
- Frydman challenged that valuation in the Paris Tribunal de Grande Instance, which quashed the price determination.
- Frydman then sued Cosmair in New York state court, alleging fraud related to the transaction and valuation.
- Cosmair removed the case to federal court, asserting jurisdiction under the New York Convention and Chapter 2 of the Federal Arbitration Act.
- Frydman moved to remand, arguing Mayoux’s role was a contractual expert price determination (including under French Civil Code art. 1592), not “arbitration” under the Convention.

## Issues

1. Whether the Mayoux price-setting mechanism constituted “arbitration” (and/or produced an “arbitral award”) within the meaning of the New York Convention and 9 U.S.C. §§ 201–208.
2. If not, whether federal subject-matter jurisdiction existed under 9 U.S.C. § 203 to support removal, requiring remand to state court.

## Decision

- The court granted Frydman’s motion to remand.
- The court held that Mayoux’s valuation was an expert determination of a contractual price term, not arbitration governed by the New York Convention.
- Because the dispute did not “fall under the Convention,” removal jurisdiction under 9 U.S.C. § 203 was absent, and the case was returned to New York state court.

## Legal Principles

- “Arbitration” under the New York Convention generally contemplates an agreement to submit disputes to a neutral tribunal empowered to issue a binding adjudication of contested rights.
- A third-party mechanism that fixes a contractual parameter (such as a purchase price) functions as an expert determination when it is directed at setting a term rather than adjudicating a dispute.
- Labels are not controlling; courts examine the parties’ intent and the function of the neutral’s role to decide whether the process is arbitration or an expert determination.
- An expert valuation or price determination, without indicia of a dispute-submission and adjudicatory mandate, does not provide a basis for federal jurisdiction under 9 U.S.C. § 203.

## Conclusion

The court concluded that the parties’ use of Mayoux to set the share purchase price was a contractual expert determination rather than Convention arbitration, so the Convention did not supply federal jurisdiction and the removed fraud action had to be remanded to state court.


Frydman v. Cosmair, Inc., 1995 WL 404841 (S.D.N.Y. 1995)