The Tenth Circuit confirmed a $36.1 million international arbitration award in a dispute between Bolivian company Compañia de Inversiones Mercantiles S.A. (“CIMSA”) and a group of Mexican companies known as Grupo Cementos de Chihuahua, S.A.B. de C.V. and GCC Latinoamerica, S.A. de C.V. (collectively “GCC”) relating to a right of first refusal for certain shares. In doing so, the Court reaffirmed Federal policy in favor of arbitral dispute resolution, particularly with respect to international disputes.
Subsequent to the arbitration, defendant GCC initiated actions in both Bolivia and Mexico challenging the arbitration award. While GCC’s challenge was being litigated in Bolivia, plaintiff CIMSA filed an action in the United States District Court for the District of Colorado seeking to confirm the arbitration award pursuant to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”). The District Court confirmed the award and GCC appealed.
On appeal, the Tenth Circuit considered, among other things, GCC’s arguments that (1) the District Court lacked personal jurisdiction to confirm the award; and (2) the arbitration award should not have been confirmed because it had been set aside by a court in Bolivia. The Tenth Circuit rejected both arguments.
In affirming the District Court’s finding of specific personal jurisdiction, the Tenth Circuit held that GCC had sufficient nationwide contacts in the United States to confer personal jurisdiction under Rule 4(k)(2). In order for a court to have specific personal jurisdiction over a defendant, the injury must “arise out of or relate to” the contacts in question. The Tenth Circuit rejected GCC’s argument that the only contacts that matter are ones that relate to the arbitration, rather than the underlying conduct that resulted in the arbitration award.
Though the contract at issue was executed outside the United States, the Court found that the parties’ multiple meetings in Miami and Houston concerning the negotiation and performance of the contract constituted sufficient contacts with the United States, noting a prior Supreme Court declaration that the “emphatic federal policy in favor of arbitral dispute resolution” applies “with special force in the field of international commerce.
Having affirmed the District Court’s finding of personal jurisdiction, the Tenth Circuit considered whether the District Court erred in confirming the arbitration award. Pursuant to Article V(1)(e) of the New York Convention, enforcement of an arbitration award can be refused if the award has been set aside or suspended by a competent authority in the country under whose law the arbitration award was made – in this case Bolivia. GCC argued that the award had been set aside by a Bolivian court and the District Court, therefore, should not have confirmed it.
The Tenth Circuit noted that “whether the arbitration tribunal’s award on the merits has been set aside or suspended is a knotty issue.” The Court considered the procedural history of the Bolivian litigation, took into account reports provided to the District Court from experts in Bolivian law, and found that, although GCC’s action to nullify the arbitration award in Bolivia was ongoing, and although the record in the Bolivian litigation was not clear to the Court, the arbitration award was not set aside or suspended for purposes of the New York Convention. The Court therefore affirmed the District Court’s confirmation of the award.