## Facts

- A Colombian power generator (Termorio) and a Colombian state-owned utility (Electranta) entered a power purchase agreement requiring Termorio to generate electricity and Electranta to buy it.
- The agreement required arbitration in Colombia under Colombian law.
- After a dispute, the parties arbitrated in Colombia, and the arbitral tribunal issued an award exceeding $60 million in Termorio’s favor.
- Electranta pursued set-aside relief in Colombian administrative courts.
- Colombia’s highest administrative court (Consejo de Estado) annulled the award, finding the arbitration clause violated Colombian law.
- Termorio and a U.S. investor affiliated with Termorio (LeaseCo) filed an action in the U.S. District Court for the District of Columbia seeking recognition and enforcement of the award under the Federal Arbitration Act and the New York Convention.
- The district court dismissed LeaseCo for lack of standing and dismissed the enforcement action for failure to state a claim (and, alternatively, on forum non conveniens grounds).
- Termorio and LeaseCo appealed to the D.C. Circuit.

## Issues

1. Whether a U.S. court may recognize and enforce a foreign arbitral award that has been annulled by a competent court in the country where the award was made under the New York Convention and the FAA.
2. Whether alleged defects or public-policy objections relating to the foreign annulment justify enforcing the award notwithstanding the annulment.

## Decision

- The D.C. Circuit affirmed dismissal of the enforcement action for failure to state a claim.
- The court held that U.S. courts, acting as a “secondary” jurisdiction under the New York Convention, should refuse enforcement when the award has been set aside by a competent authority in the arbitral seat.
- The court treated the Colombian annulment as effective and controlling absent extraordinary circumstances.
- The court rejected reliance on U.S. pro-arbitration policy to justify enforcing an award that the primary-jurisdiction court had annulled.
- The court found no evidence that the Colombian set-aside proceeding or judgment was tainted, illegitimate, or inauthentic.

## Legal Principles

- Under the New York Convention, courts at the arbitral seat exercise “primary” jurisdiction to annul awards; other Contracting States typically act in “secondary” jurisdiction when asked to recognize and enforce.
- Article V(1)(e) permits refusal of recognition and enforcement when the award has been set aside or suspended by a competent authority of the country in which, or under the law of which, the award was made.
- A secondary-jurisdiction court generally should not enforce an award that has been lawfully annulled in the primary jurisdiction, absent extraordinary circumstances such as fundamental unfairness, corruption, or lack of authenticity in the annulment.
- Article V(2)(b) (forum public policy) does not supply a general basis to enforce an award that has been annulled in the primary jurisdiction.

## Conclusion

The D.C. Circuit held that an arbitral award annulled by a competent court at the seat of arbitration is ordinarily not enforceable in U.S. courts under the New York Convention, and that generalized public-policy objections do not justify disregarding a foreign annulment without evidence of serious impropriety.


Termorio S.A. E.S.P. v. Electrificadora del Atlántico S.A. E.S.P., 487 F.3d 928 (D.C. Cir. 2007)