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.
The question of federal court jurisdiction over arbitration proceedings has historically led to different conclusions. A few years ago, the United States Supreme Court clarified in Vaden v. Discover Bank that Section 4 of the Federal Arbitration Act (“FAA”) authorizes a federal court to “look through” to the underlying controversy to determine if there is federal court jurisdiction to adjudicate a motion compelling arbitration. Until recently, however, the “look through” approach had not been adopted by the Second Circuit for determining whether a federal court has jurisdiction to hear a motion to vacate an arbitration award.
A long-running dispute between Chevron and Ecuador appears to have reached its end after the Supreme Court declined to take up Ecuador’s question of whether United States courts had jurisdiction to confirm a $96 million arbitration award in favor of Chevron.
The case arose out of a decades-long contractual dispute between Ecuador and Texaco Petroleum. In the 1970s, the oil giant and the South American country entered into a contract for Texaco to develop Ecuadorian oil fields in exchange for selling oil to the Ecuadorian government at below-market rates. Texaco brought several lawsuits in the 1990s in Ecuador’s courts, alleging that Ecuador violated the terms of the agreement. Chevron acquired Texaco in 2000. Meanwhile, in 1993, Ecuador and the United States had entered into a Bilateral Investment Treaty (“BIT”) under which Ecuador offered to arbitrate disputes with American investors involving investments that existed on or after the treaty’s effective date.