The Court of Appeals for the Eleventh Circuit will be the next body to weigh in on a dispute between Del Monte International GmbH (“Del Monte”) and Inversions y Procesadora Tropical INPROTSA, S.A. (“INPROTSA”) over an exclusive sales agreement for pineapples. The case has been appealed to the Eleventh Circuit, and the appeal raises issues of the finality of international arbitration awards.
The underlying arbitration concerned an exclusive sales agreement between Del Monte and INPROTSA. See INPROTSA v. Del Monte, 2017 WL 1737648, *1 (S.D. Fla. 2017). The subject matter of the contract, which was entered into in 2001, was pineapples. See id. A dispute arose over whether INPROTSA had sold pineapples from Del Monte’s seeds to competitors, and, on June 10, 2016, an arbitrator awarded Del Monte more than $25 million in damages (“Arbitration Award”). See id. The arbitration was conducted before the International Court of Arbitration of the International Chamber of Commerce. See id.
On December 6, 2016, the U.S. District Court for the Southern District of Florida (“District Court”) dismissed INPROTSA’s petition to vacate the Arbitration Award, which Del Monte had removed to federal court on the basis of 9 U.S.C. § 203. See id. Section 203 states, “An action or proceeding falling under the New York Convention shall be deemed to arise under the laws and treaties of the United States. The district courts of the United States…shall have original jurisdiction over such an action or proceeding, regardless of the amount in controversy.” INPROTSA appealed from the District Court’s dismissal of its vacatur petition, and the Eleventh Circuit issued a limited remand order so that the District Court could decide Del Monte’s cross-petition to confirm the Arbitration Award. See id.
On May 2, 2017, the District Court confirmed the Arbitration Award and rejected INPROTSA’s claim that the U.S. District Court did not have subject matter jurisdiction to hear vacatur proceedings filed pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”). See id., at *2. Though the limited remand was confined to the question of Del Monte’s cross-petition to confirm the award, INPROTSA took the opportunity to challenge the District Court’s jurisdiction to dismiss its original vacatur petition. See id.
The foundation of INPROTSA’s jurisdictional argument was its contention that the New York Convention “regulates only two types of proceedings — (1) for an order confirming an arbitration award (9 U.S.C. § 207) and (2) for orders compelling arbitration pursuant to an agreement (9 U.S.C. § 206).” Id. Another case decided by the District Court — Ingaseosas Int’l Co. v. Aconcagua Investing, Ltd., 2011 WL 500042, *3 (S.D. Fla. 2011) — seemed to support the argument that petitions to vacate an international arbitration award may fall outside the ambit of the Section 203. See id. Citing cases from several other jurisdictions (as well as one from its own), however, the District Court found that its assertion of jurisdiction in the vacatur proceedings had been proper. See id., at *3.
The next question before the District Court was whether there was any defense to confirmation. INPROTSA raised an argument that the arbitrator’s decision had been based on fraud. See id., at *4. Here, the District Court made an important distinction in ruling that fraud was not a defense to confirmation: “There is no argument that the two-year arbitration process was fraudulent, that the arbitration tribunal acted fraudulently, or that the final award was procured by fraud. Rather, the parties dispute whether the arbitration tribunal addressed the question of whether the parties’ underlying agreement was procured by fraud. A review of the arbitration tribunal’s decision shows that it addressed the issue.” Id., at *5. The fraud must be within the arbitral process — not a part of the underlying claims. Parties seeking vacatur may not “rehash a losing argument” in vacatur proceedings. Id.
Next, INPROTSA claimed that its due process rights were violated when the arbitrator elected not to give probative value to a letter INPROTSA offered into evidence. See id. The District Court ruled that “[e]videntiary decisions are not grounds to refuse confirmation of an arbitral award under the New York Convention’s public policy defense.”
After disposing of a few additional, minor arguments, the District Court confirmed the Arbitration Award, teeing up the Eleventh Circuit’s consideration of the case. Fitch Law Partners LLP will monitor developments in this ongoing dispute. For more information about our firm’s international arbitration practice, please visit our website: /blog/international-litigation-arbitration/