The U.S. Court of Appeals for the Tenth Circuit recently held for the first time that parties opposing confirmation of nondomestic arbitral awards (i.e., awards issued in disputes involving property located or conduct occurring outside the U.S.) issued in the U.S. or under U.S. arbitration law are not limited to the grounds set forth in the Inter-American Convention on International Commercial Arbitration (the Panama Convention). Instead, the court ruled that defenses to confirmation under the Federal Arbitration Act (FAA) apply.

In Goldgroup Resources, Inc. v. DynaResource De Mexico, S.A. de C.V., the Tenth Circuit considered an appeal from confirmation of an arbitral award in a protracted, multi-jurisdictional dispute over control of a Mexican gold mine. Following an initial spate of lawsuits in Texas and Mexico, Canadian company Goldgroup Resources, Inc. commenced contractual arbitration proceedings in Denver, Colorado, alleging that Texas-based DynaResource, Inc. and its Mexican subsidiary had improperly diluted Goldgroup’s interest in the mining project. DynaResource refused to participate, however, after obtaining from a Mexico City court a ruling that Goldgroup had waived its right to arbitration by submitting to the jurisdiction of Mexican courts in a previous action. In an August 2016 award, the arbitrator ruled that Goldgroup had not waived its right to arbitration, found the parties’ arbitration agreement valid and enforceable, and granted Goldgroup monetary and equitable relief.

Goldgroup then sought to confirm the award in the U.S. District Court for the District of Colorado. In response, DynaResource filed an application under the Panama Convention for non-recognition of the award and moved for vacatur under § 10(a)(4) of the FAA, arguing that the arbitrator had exceeded authority by deciding the waiver issue. Goldgroup countered that the Panama Convention provides the exclusive grounds to oppose confirmation of nondomestic arbitral awards.  In May 2019, the district court confirmed the award and entered judgment against DynaResource.  DynaResource appealed.

On appeal, the Tenth Circuit noted that, though it had previously recognized the exclusivity of grounds in the Panama Convention for vacating an arbitral award rendered in or under the arbitration law of a foreign jurisdiction, it had not yet considered the issue in the context of a nondomestic award subject to the Panama Convention and rendered in or under U.S. arbitration law.  The court observed that the majority of circuits to have addressed the issue—including at least the Second, Fifth, and Sixth Circuits—found FAA defenses available in such cases based on language in Article 5(1)(e) of the Panama Convention, which provides a defense to confirmation if an award “has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.” Only the Eleventh Circuit had reached a contrary result, holding that challenges to confirmation of nondomestic arbitral awards are limited to the grounds specified in the Panama Convention.

The Tenth Circuit sided with the majority, concluding that the Panama Convention “expressly contemplates” the application of U.S. arbitration law to arbitral awards rendered in or under U.S. law. Nevertheless, the court declined to vacate the award under FAA § 10(a)(4), reasoning that the parties had clearly manifested their intent to arbitrate issues of arbitrability—including waiver—by incorporating the rules of the American Arbitration Association into their agreement.  The court thus affirmed confirmation of the award.

The Tenth Circuit’s decision has obvious significance for litigants opposing confirmation of nondomestic arbitral awards by expanding the spectrum of defenses available to them. At the same time, the decision deepens a split of authority among the federal courts of appeals which may ultimately require the U.S. Supreme Court’s intervention. We will monitor developments and report further as warranted.

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Photo of Shiloh Rainwater Shiloh Rainwater

Shiloh Rainwater is an associate in the Litigation Department and a member of the Firm’s Appellate Practice Group, which was named to the National Law Journal’s 2020 Appellate Hot List.  He litigates appeals spanning a wide array of subject areas, including bankruptcy, constitutional…

Shiloh Rainwater is an associate in the Litigation Department and a member of the Firm’s Appellate Practice Group, which was named to the National Law Journal’s 2020 Appellate Hot List.  He litigates appeals spanning a wide array of subject areas, including bankruptcy, constitutional law, securities, employment, and contracts.  Shiloh has successfully represented clients in high-stakes appeals in state and federal appellate courts across the country, including the U.S. Supreme Court.  Among his notable representations, Shiloh has obtained victories at the First Circuit on behalf of the Financial Oversight and Management Board for Puerto Rico in numerous appeals stemming from Puerto Rico’s $135 billion bankruptcy—the largest in American history.

In addition, Shiloh litigates a range of commercial disputes at the trial level involving, among other things, products liability, real estate, contracts, securities regulation, shareholder actions, and restructurings.  His experience spans the entire litigation lifecycle, from commencing litigation through discovery, motion practice, and trial.  Most recently, Shiloh was a member of a trial team litigating a protracted contract dispute between former co-owners of nursing facilities in California.  Among other matters, Shiloh secured dismissal of claims for intentional interference with contract against a major French logistics company; obtained summary judgment on behalf of a debt fund seeking to enforce guarantees executed in connection with financing a condominium project in Brooklyn; and contributed to a favorable outcome in expedited arbitration proceedings concerning violations of a commercial non-compete.

Shiloh maintains a robust pro bono practice, representing clients in a variety of matters.  For several years, he has provided pro bono representation to a veteran seeking vocational rehabilitation & employment benefits from the Department of Veterans Affairs.  He has also represented a prisoner asserting claims against prison officials for violations of his Eighth Amendment rights.  And, he has represented a class of tenants in public housing seeking to compel New York to address persistent mold issues.

Before joining Proskauer, Shiloh served as a law clerk to the Honorable James O. Browning of the U.S. District Court for the District of New Mexico, one of the nation’s most prolific federal judges.  Shiloh also clerked for the Honorable Gregory A. Phillips of the U.S. Court of Appeals for the Tenth Circuit.