## Facts

- Trans Chemical Limited (TCL), a Pakistani corporation formed by two U.S. citizens, contracted with China National Machinery Import & Export Corporation (CNMC), a Chinese corporation, to sell and construct a hydrogen peroxide plant and provide related technical services.
- The parties executed a contract in December 1987 and amended it in December 1988.
- Both agreements required binding arbitration in Houston, Texas under American Arbitration Association (AAA) procedures.
- Disputes arose; TCL asserted CNMC failed to provide required goods and services and made material misrepresentations relating to the plant’s sale, construction, and operation.
- CNMC asserted counterclaims including breach of contract, fraud in the inducement, and trade libel.
- The parties arbitrated in Houston; the AAA tribunal issued a final award in TCL’s favor.
- TCL filed consolidated actions in federal district court seeking confirmation and enforcement of the award under the New York Convention; CNMC opposed confirmation, raising jurisdictional objections and seeking vacatur.

## Issues

1. Whether CNMC was an “agency or instrumentality of a foreign state” under the Foreign Sovereign Immunities Act (FSIA), supporting subject-matter jurisdiction and implicating sovereign immunity defenses.
2. Whether the award, though rendered in Houston, was “non-domestic” and enforceable under the New York Convention as implemented by the Federal Arbitration Act (FAA), Chapter 2.
3. Whether the underlying international plant contract involved “commerce” within FAA § 2.
4. Whether CNMC established grounds to vacate or refuse enforcement of the award based on fraud, corruption, or misconduct under FAA § 10(a)(1) and Convention defenses.

## Decision

- The court confirmed the arbitral award and entered judgment for TCL.
- The court held it had subject-matter jurisdiction; CNMC qualified as a foreign-state instrumentality for FSIA purposes and, in any event, FSIA exceptions applied in this award-enforcement proceeding.
- The court held the award was enforceable under the New York Convention as a non-domestic award arising from an international commercial relationship.
- The court found the contract involved “commerce” within the meaning of the FAA.
- The court rejected CNMC’s vacatur and non-enforcement arguments, finding no established statutory or Convention basis to disturb the award.

## Legal Principles

- A federal court may confirm an international commercial arbitration award under the New York Convention, including an award rendered in the United States that is “non-domestic” due to the parties’ and relationship’s international character.
- Under FSIA, federal jurisdiction and enforceability may proceed against a foreign state’s agency or instrumentality when statutory exceptions—such as those tied to arbitration and commercial activity—apply.
- The FAA’s “commerce” requirement is satisfied by international commercial contracts involving cross-border performance, parties, and related services.
- Judicial review of arbitral awards is limited; the party resisting confirmation bears the burden to prove a recognized ground for vacatur under FAA § 10 or a defense under Convention Article V.

## Conclusion

The court enforced the Houston-seated AAA award against CNMC, concluding that FSIA did not bar the action, the award qualified for enforcement under the New York Convention and the FAA, and CNMC failed to prove any narrow statutory or Convention ground warranting vacatur or refusal of recognition.


In re Arbitration Between Trans Chem. Ltd. & China Nat'l Mach. Imp. & Exp. Corp., 978 F. Supp. 266 (S.D. Tex. 1997)