## Facts

- An American company contracted with an Egyptian paper company to construct, start up, and manage a paperboard mill in Alexandria, Egypt.
- The contract included (1) ICC arbitration for disputes arising during performance and (2) a force majeure clause excusing delay from causes beyond the contractor’s reasonable control.
- During the 1967 Six-Day War period, growing hostility toward Americans culminated in Egypt severing diplomatic relations with the United States and expelling most American nationals.
- The American company halted performance, asserting force majeure; the Egyptian company continued work and sought damages for breach.
- In ICC arbitration, a tribunal issued a preliminary award finding force majeure excused only about the first month of nonperformance, citing the contractor’s minimal efforts to obtain visas and resume work.
- A final arbitral award held the contractor liable for $312,507.45 in damages plus $30,000 in costs and a substantial share of arbitral fees.
- In federal court, the contractor sought to block recovery via a letter of credit; the Egyptian company counterclaimed to confirm the foreign arbitral award under the New York Convention and the Federal Arbitration Act.
- The district court confirmed the award; the contractor appealed, and the Egyptian company cross-appealed on letter-of-credit issues.

## Issues

1. Whether enforcement of the award should be refused under the New York Convention’s public policy exception.
2. Whether the dispute was non-arbitrable as “not capable of settlement by arbitration” under U.S. law.
3. Whether the contractor was “unable to present its case” due to arbitral procedure.
4. Whether the arbitrators exceeded the scope of the parties’ submission to arbitration.
5. Whether alleged legal error (including force majeure interpretation) justified non-enforcement.

## Decision

- The Second Circuit affirmed confirmation of the foreign arbitral award.
- The court held the Convention’s public policy defense is construed very narrowly and did not apply to the contractor’s foreign-policy-based objections.
- The court rejected the non-arbitrability argument because the dispute arose from a private commercial contract.
- The court found no denial of a meaningful opportunity to present the case; complaints about evidentiary/procedural rulings sought impermissible merits review.
- The court held the issues decided fell within the broad arbitration clause and did not exceed arbitral authority.
- The court declined to review alleged legal error on the merits because the Convention’s defenses are limited and do not include de novo review for contract-interpretation mistakes.
- The court deemed it unnecessary to resolve the letter-of-credit dispute because the award could be satisfied from a supersedeas bond.

## Legal Principles

- The New York Convention embodies a strong pro-enforcement policy; defenses to recognition and enforcement are interpreted restrictively.
- The public policy exception permits refusal only where enforcement would violate the forum’s most fundamental notions of morality and justice.
- A dispute arising from a private commercial contract remains arbitrable even if it occurs against a backdrop of governmental acts or international relations.
- Article V(1)(b) does not authorize a court to revisit arbitral evidentiary choices or factual findings where the party had notice, representation, and an opportunity to be heard.
- Arbitrators do not exceed their authority when deciding matters closely tied to contract performance, including force majeure and damages, under a broad arbitration clause.
- Alleged errors of law or contract interpretation, without more, are not grounds for refusing enforcement under the Convention’s enumerated defenses.

## Conclusion

The Second Circuit enforced the ICC award and treated the Convention’s defenses—especially public policy, non-arbitrability, procedural unfairness, and excess of authority—as narrow limits that do not permit a U.S. court to re-litigate the merits of a foreign arbitral decision.


Parsons & Whittemore Overseas Co. v. Societe Generale de l'Industrie du Papier (RAKTA), 508 F.2d 969 (2d Cir. 1974)