Sour Chilean Grapes and Specific Performance of Contracts In International Arbitration

 

A winery investment dispute gives the Eleventh Circuit a chance to validate District Court powers in confirming arbitral awards.

 

In the second of two cases considering Latin American arbitration arising under the Panama Convention, the Eleventh Circuit reminds us that arbitrators have the same flexibility as courts to order a party to perform.

 

The arbitration involved an investor in a Chilean wine company — a financial relationship that had obviously soured — who wanted to offload its shares under a put provision in its agreement with the winery’s owners. When one of them balked, the investor, EGI, uncorked an arbitration to enforce the shareholder agreement and to force the recalcitrant owner to complete the buyback and pay the appropriate premium. The arbitration panel decided in EGI’s favor, entering a detailed order enforcing the put right, calculating share pricing, and ordering the completion of the share transaction.

When EGI went to confirm its award in the Southern District of Florida, the shareholder opposed it on service grounds, which were rejected based on proper use of the Inter-American Convention on Letters Rogatory. (A Brazilian, he had apparently been hiding out on a Paraguayan farm to avoid service.) He then tried unsuccessfully to argue to the District Court that it lacked the power to order specific performance:

 

Mr. Coderch offers no reason why an arbitration award ordering
specific performance, as opposed to money damages, is not confirmable under the
Panama Convention. The Panama Convention makes no exception for the
recognition of arbitration awards ordering specific performance. See generally
Panama Convention, art. 5. And, as explained above, a district court can refuse to
confirm an arbitration award only if one of the enumerated exceptions in the
Panama Convention applies. Accordingly, we find that the Award was
confirmable under the Panama Convention and the FAA.
The fact that the Award is an order of specific performance, as opposed to a
money judgment, might be irrelevant for purposes of determining whether the
Award is confirmable, but it is relevant to crafting the appropriate remedy.

 In remanding the case, the appellate panel instructed the District Court to include in its judgment a specific order that EGI transfer the shares. 

The opinion is a reminder that the judgment of confirmation can be as specific and flexible in its relief as necessary to effectuate the actual arbitration award. It also illustrates the need to spending time in the careful and thoughtful preparation of the judgment of confirmation, considering all of its details: another items that the Eleventh Circuit sent back for recalculation was the date used for converting the award from Chilean pesos to U.S. dollars.

All in all, though, with judgment in hand, EGI presumably toasted this result with a good glass of wine. 

The case is EGI-VSR, LLC v. Juan Carlos Celestino Coderch Mitjans, No. 18-12615 (11th Cir. June 25, 2020).

 

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