6TH ASIA PACIFIC

ADR CONFERENCE
NOVEMBER 2017
NEW AREAS OF
INTERNATIONAL ARBITRATION

2017 U.S. DEVELOPMENTS

John Dellaportas
Four Topics
To Be Covered:

1. International Arbitration In Banking and Finance

2017 Developments

2. Kindred Nursing v. Clark,

US Supreme Courts New Anti-Discrimination Rule

3. Manifest Disregard for Law Exception

2017 Developments

4. Other Key Appellate Decisions In 2017

2017 Developments In
Banking and Finance:

Banking sector has historic reluctance to arbitrate, but lessening in

recent years

In 2013, ISDA, in reaction to Financial Crisis, issued arbitration guide

with optional arbitration clauses for the 1992 and 2002 Master
Agreements

By contrast, arbitration has always been prevalent in the investment

sector

Recent case law suggests limits to use of arbitration in international

context
Banking and Finance
(cont.):

Eisen v. Venulum, 244 F. Supp. 3d 324 (W.D.N.Y. 2017):

Investment contract requiring British Virgin Islands (BVI) ICC
arbitration clause held unconscionable and void as against public
policy
Defendants had repeatedly run afoul of
securities laws resulting in repeated admonishments by regulatory
authorities
Court held it would insulate [defendants] from the protections
provided by securities laws for their conduct in the U.S. with a U.S.
investor by compelling arbitration in the BVI applying [BVI] law
Decision is on appeal
Banking and Finance
(cont.):

In re MF Global, 569 B.R. 544 and 571 B.R. 80

(Bankr. S.D.N.Y. 2017):

MF Global was a global derivatives and commodities firm that went

bankrupt in 2011; contracts subject to international various
arbitration clauses

New York Convention held not to preempt foreign insurer statutory

bonding requirements

Dispute with Bermuda insurer held to be non-core and arbitrable

notwithstanding trustee was counter-party and proceeds were estate
assets
Kindred Nursing v. Clark,
New Anti-Discrimination Rule

Kindred Nursing v. Clark, 137 S. Ct. 1421 (2017):

Kentucky Sup. Ct. held general power of attorney could not bind party
to arbitrate because Kentucky Constitution guaranteed right of jury
trial
U.S. Supreme Court reversed:
Because that rule singles out arbitration agreements for disfavored
treatment [vis-a-vis litigation], we hold that it violates the FAA.
FAA preempts any state rule discriminating on its face against
arbitration and displaces any rule that covertly accomplishes the
same objective
2017 Developments In
Manifest Disregard for Law

Does Manifest Disregard for Law Apply

In International Arbitrations?
In U.S., arbitration awards historically subject to challenge for
manifest disregard for the law, based on Wilko v. Swan, 346 U.S.
427 (1953)

Rarely, If Ever, Applied

In 2008, U.S. Sup. Ct. suggested manifest disregard was just

shorthand for FAA vacatur when arbitrators "guilty of misconduct
or "exceeded their powers." Hall St. v. Mattel, 552 U.S. 576
(2008)
Manifest Disregard for Law (cont.)

Majority View:
Ukrnafta v. Carpatsky Petro. Corp., 2017 U.S. Dist. Lexis 163064 (S.D.
Tx. Oct. 2, 2017)

Arbitral dispute between joint venture partners, before Arbitration

Institute of Stockholm Chamber of Commerce, under UNCITRAL
Arbitration Rules, governed by Ukranian law.

Article V of the NY Convention lists the exclusive grounds justifying

refusal to recognize an arbitral award, and [it] does not include
miscalculations
of fact or manifest disregard of the law
Manifest Disregard for Law (cont.)

Minority View:
Daesang v Nutrasweet, 2017 N.Y. Misc. Lexis 1810
(Sup. Ct. N.Y. Cnty. May 15, 2017) (Ramos, J.)
Arbitral dispute before ICC, arising out of Daesang's sale of
aspartame business to NutraSweet
Tribunal awarded Daesang $101 million and rejected Nutrasweets
counterclaims
N.Y. state court vacated latter aspect of award based on manifest
disregard of law, remanding for tribunals redetermination of
Nutrasweets counterclaims
Decision is on appeal
Other Key 2017
Appellate Decisions:

CBF Industria v. AMCI, 850 F.3d 58 (2d Cir. 2017):

Appellants not required to confirm foreign (ICC Paris) arbitral award
before enforcing in U.S.

Thai-Lao Lignite v. Laos, 864 F.3d 172 (2d Cir. 2017):

U.S. judgment enforcing foreign arbitral award
vacated after Malaysian high court set it aside

Stemcor USA v. CIA Siderurgica,

2017 U.S. App. Lexis 16916 (5th Cir. Sept. 1, 2017):
U.S. courts held to have jurisdiction to issue
pre-arb. attachments in NY Convention cases
Thank you.

John Dellaportas
Co-Head, Securities Litigation & Enforcement
Kelley, Drye & Warren LLP
101 Park Avenue
New York, NY 10178
(212) 808-5000
jdellaportas@kelleydrye.com