The Eleventh Circuit Court of Appeals recently joined the likes of the Second, Third, Fifth, Sixth, Seventh, Ninth, Tenth, and D.C. circuits with their latest en banc decision. Earlier this year, the bench presided over the case of Corporacion AIC, SA v. Hidroelectrica Santa Rita S.A.. At issue was whether the grounds for vacatur under Chapter 1 of the Federal Arbitration Act (FAA) could extend to nondomestic arbitration awards. After deliberations, the court held in the affirmative, officially overruling its own precedent.
Nondomestic arbitration awards are rendered in the U.S. but involve a non-U.S. party. The FAA, in its Chapter 1, includes limited criteria that could serve to vacate such awards. Until the recent Eleventh Circuit’s decision, the applicability of these grounds to nondomestic awards remained murky. With this ruling, the Circuit has promoted uniformity among its peers as most of them already endorsed this interpretation of the FAA.
This ruling has significant implications for corporations and law firms handling international arbitrations. Parties engaged in arbitrations that have a link to the U.S. can anticipate a more predictable legal regime. The potential to challenge nondomestic awards within the U.S. becomes distinctly viable which ultimately may provide a safeguard against unjust or improper arbitral decisions.
If a party believes their case was affected by evident partiality, corruption, arbitrators exceeding their powers, or by other forms of misconduct as detailed in the FAA, they now have a broader avenue to get the award reviewed. While this brings more predictability, it also may require the parties to approach their arbitrations more strategically, especially when they contemplate the possibility of seeking a vacatur in U.S. courts.
The decision can be seen to promote a more consistent and rational approach to this aspect of international arbitration. Nonetheless, the legal professionals need to stay alert to how this evolving jurisprudence might influence the landscape of international arbitration, particularly in the Eleventh Circuit.
For further details and a comprehensive reading, see the original discussion on this topic available at JDSupra.