US 1004 The Supreme Court reversed and remanded a decision of the Eleventh Circuit (US no. 961), which had in turn reversed the decision of a district court (US no. 908) compelling arbitration of a dispute between the parties. The Court of Appeals had found that the defendant (the present petitioner) could not compel arbitration under the 1958 New York Convention as it had not signed the arbitration agreement; it could also not rely on the theory of equitable estoppel or third-party beneficiary, because these theories were available under Chapter 1 of the Federal Arbitration Act (FAA), which regulated domestic arbitration and only applied to New York Convention cases when not in conflict with Chapter 2 of the Act codifying the Convention. In this case, the Court of Appeals had found that the two Chapters were in conflict, since Chapter 1 did not expressly restrict arbitration to the specific parties to an agreement, while Chapter 2 and the Convention imposed precisely such a restriction. The Supreme Court reached the contrary conclusion that the New York Convention did not conflict with the equitable estoppel doctrines permitting the enforcement of arbitration agreements by nonsignatories. The Supreme Court held the following: (1) Chapter 1 of the FAA did not alter the traditional principles of state contract law regarding the scope of agreements, including the question of who was bound by them; these principles included doctrines, like equitable estoppel, authorizing contract enforcement by a nonsignatory. (2) Treaty interpretation established that the state-law equitable estoppel doctrines permitted under Chapter 1 did not conflict with the Convention and were therefore applicable: (i) the text of the New York Convention was silent on the issue of enforcement by a nonsignatory; hence, nothing in the Convention could be read to conflict with the application of domestic equitable estoppel doctrines; and (ii) this interpretation was confirmed by the Convention’s negotiation and drafting history as well as the post-ratification understanding of the signatory nations, as evidenced by the decisions of the courts of other Convention signatories. (3) The Supreme Court concluded that the Court of Appeals could address on remand whether the present petitioner could enforce the arbitration clauses under equitable estoppel principles.
Supreme Court of the United States, 1 June 2020
GE Energy Power Conversion France SAS, Corp., fka Converteam SAS v.
Outokumpu Stainless USA, LLC et al.