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UNITED STATES 1085
United States Court of Appeals, Second Circuit, 2 July 2025, Docket No. 24-2209-cv
(Molecular Dynamics, Ltd., SDBM Limited, and Chauncey Capital Corp. v. Spectrum Dynamics Medical Limited, and Biosensors International Group Ltd.)
UNITED STATES 1085
The Court of Appeals affirmed the holding of the district court that US courts lack subject matter jurisdiction to vacate a New York Convention award rendered abroad. The district court had held that the parties’ agreement that New York courts would have exclusive jurisdiction over all matters concerning the arbitration did not displace the Convention’s principle that only the courts of the country where an arbitral award is made (here, Switzerland) have primary jurisdiction to vacate it. The Court of Appeals reached the same conclusion, though on different grounds. It held that there was no subject matter jurisdiction under Sect. 203 of the Federal Arbitration Act, because that Section endows a district court with subject-matter jurisdiction over “[a]n action or proceeding falling under” the Convention. The Convention, however, in “what little it says about vacatur proceedings”, does not contemplate an action such as the one at issue in the present case, that is, a petition to vacate an award made abroad. Accordingly, the Court could not conclude that the petition fell “under the Convention”.
The court discusses which awards are considered non-domestic even if rendered in the State of enforcement (international element, lex mercatoria).
The court discusses whether the Convention applies to domestic arbitration and to proceedings for the setting aside of domestic awards.
The court discusses the relevance and determination of the commercial nature of the relationship underlying the award, including in the context of contractual and non-contractual relations.
The court discusses the principle that the procedure for the enforcement of awards under the Convention is governed by the lex fori, as well as procedural issues (such as the competent enforcement court) not falling under the specific cases of ¶¶ 302-307.
The court discusses the overall scheme and/or pro-enforcement bias of the Convention.
The court discusses questions relating to the general approach taken by the Convention to the grounds for refusal of recognition and enforcement, including its pro-enforcement bias, as well as the system of the Convention, under which recognition and enforcement may only be denied on seven listed grounds and the petitioner has only the obligations set out in Art. IV.
Award not binding, suspended or set aside: The court discusses the difference between the exclusive jurisdiction to set aside an award (primary jurisdiction), which belongs to the courts of the country of origin of the award, and the jurisdiction of all other courts to recognize and enforce the award (secondary jurisdiction); issues relating to the determination of the “competent authority”; and whether an award that has been set aside in the country of origin can be enforced in another State under the Convention.