Facts
- A Louisiana marketing company and an Italian manufacturer entered a written licensing/sales arrangement granting the Louisiana company exclusive U.S. sales rights for mammography equipment.
- The contract was governed by the United Nations Convention on Contracts for the International Sale of Goods (CISG).
- U.S. regulators seized the equipment for noncompliance with U.S. medical-device regulatory requirements, including FDA Good Manufacturing Practices requirements.
- The parties disputed which party bore responsibility under the agreement for ensuring U.S. regulatory compliance.
- The agreement required mediation and, if unsuccessful, arbitration; mediation failed and the dispute proceeded to arbitration before a three-member tribunal.
- The arbitration occurred in New Orleans over several hearing dates in 1998; the tribunal issued an award for the Louisiana company for $357,009 plus interest from October 28, 1996, and allocated arbitration costs.
- The Italian company sought reconsideration from the tribunal, which was denied; the Louisiana company then sought judicial confirmation and entry of judgment under the Federal Arbitration Act (FAA), 9 U.S.C. § 9.
Issues
- Whether the district court was the proper court to confirm the award under 9 U.S.C. § 9.
- Whether confirmation should be denied (or the award vacated) because the arbitrators exceeded their powers or acted in manifest disregard of the CISG.
- Whether enforcement should be refused on public-policy grounds based on the tribunal’s alleged failure to follow foreign CISG precedent.
Decision
- The court granted the application to confirm the arbitral award and ordered entry of judgment consistent with the award.
- The court held it had authority under 9 U.S.C. § 9 because the award was made in the district where the arbitration occurred.
- The court held the grounds for refusing confirmation or vacating an award were extremely limited and were not satisfied.
- The court rejected the claim that the tribunal acted in manifest disregard of the CISG, characterizing the challenge as an impermissible request to re-litigate the merits.
- The court rejected the public-policy objection, finding no fundamental U.S. or international public policy barring enforcement.
Legal Principles
- Under 9 U.S.C. § 9, a court must confirm an arbitral award made within the district unless the award is vacated, modified, or corrected on the limited grounds recognized by the FAA.
- Judicial review of arbitral awards is highly deferential; alleged legal or factual error does not justify vacatur.
- “Manifest disregard of the law” requires more than misinterpretation; it concerns a situation where arbitrators recognize the governing law and intentionally refuse to apply it.
- Foreign decisions interpreting the CISG may be considered for uniformity and guidance, but they are persuasive rather than binding on a U.S.-seated arbitral tribunal or a U.S. court reviewing the award.
- The public-policy exception to enforcement of arbitral awards is construed narrowly and does not extend to disagreements about substantive legal interpretation.
Conclusion
The court confirmed an international arbitral award arising from a CISG-governed commercial dispute, holding that alleged misapplication of the CISG and failure to follow foreign CISG precedent did not meet the narrow FAA standards for refusing confirmation, vacatur, or non-enforcement on public-policy grounds.