U.S. Supreme Court Allows Non-Signatories to Enforce Arbitration Agreements

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In GE Energy Power Conversion France SAS v. Outokumpu Stainless USA, the United States Supreme Court was presented with the question whether domestic equitable estoppel doctrines that allow a non-signatory to an arbitration agreement to compel arbitration in disputes arising under such agreement conflict with the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958, more commonly known as the New York Convention. The Supreme Court unanimously found no conflict, paving the way for non-signatories to agreements containing international arbitration clauses to compel arbitration using domestic doctrines of equitable estoppel.

The factual background of the case is as follows: In 2007, ThyssenKrupp Stainless USA, LLC entered into contracts with F.L. Industries, Inc. for the construction of certain mills at a plant in Alabama. Each contract contained an international arbitration clause. F.L. Industries then entered into a subcontract with GE Energy Power Conversion France SAS (GE Energy) for GE Energy to provide motors for the mills. During the course of performance on the contracts, Outokumpu Stainless USA, LLC, acquired ownership of the Alabama plant from ThyssenKrupp.

In 2016, Outokumpu filed suit against GE Energy, claiming the motors failed. GE Energy moved to compel arbitration and the District Court granted GE Energy's motion. Outokumpu appealed and the Eleventh Circuit reversed the District Court's ruling, holding that since GE Energy was not a signatory to the agreements containing the international arbitration clauses, GE Energy could not compel arbitration under those agreements. The Eleventh Circuit further held that state-law equitable estoppel doctrines could not apply to enforce the arbitration clauses because, according to the Eleventh Circuit, such equitable doctrines conflict with the New York Convention's signatory requirements.

GE Energy appealed to the Supreme Court, which reversed the Eleventh Circuit's ruling, holding that domestic equitable estoppel doctrines do not conflict with the New York Convention. In its holding, the Supreme Court relied primarily on the New York Convention's silence regarding equitable estoppel doctrines, finding that such "silence is dispositive here because nothing in the text of the Convention could be read to otherwise prohibit the application of domestic equitable estoppel doctrines." The Court further noted that "the weight of authority from contracting states indicates that the New York Convention does not prohibit the application of domestic law addressing the enforcement of arbitration agreements."

The Supreme Court's holding makes clear that a non-signatory to an international arbitration agreement can compel a signatory to arbitrate disputes arising under that agreement if the non-signatory can satisfy equitable estoppel requirements.

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