GE Energy secures unanimous Supreme Court victory in significant international arbitration case
Clients General Electric Company
Jones Day represented GE Energy Power Conversion France SAS, Corp. ("GE Energy") in its unanimous win in the U.S. Supreme Court. The case involved the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (commonly known as the "New York Convention"), a multilateral treaty that governs the enforcement of international arbitral awards and international arbitration agreements. GE Energy had sought to compel arbitration under the Convention based on the doctrine of equitable estoppel, one of several common-law doctrines that allow non-signatories to arbitration agreements to enforce those agreements in appropriate, well-defined circumstances. The Eleventh Circuit held, however, that non-signatories can never compel arbitration under the Convention, finding that non-signatory enforcement doctrines like equitable estoppel are inconsistent with the Convention's requirement that an arbitration agreement be made in writing.At Jones Day's behest, the Supreme Court granted certiorari to decide whether equitable estoppel is available under the Convention. All nine justices agreed that it is. In an opinion by Justice Thomas, the Court explained that "[t]he Convention is simply silent on the issue of nonsignatory enforcement." Slip Op. 6. Because "nothing in the text of the Convention 'conflict[s] with' the application of domestic equitable estoppel doctrines," it cannot be read "to displace domestic doctrines" that, like equitable estoppel, allow non-signatories to arbitrate in appropriate circumstances. Id. at 7. The Court found further support for its ruling in the treaty's drafting history and the practice of other signatory nations, neither of which "suggests that the Convention sought to prevent [signatory nations] from applying domestic law that permits nonsignatories to enforce arbitration agreements." Id. at 9. The Supreme Court's decision is an important victory for commercial international arbitration—and, indeed, for all businesses engaged in international commerce. It is part of a growing line of Supreme Court decisions recognizing the enforceability of arbitration agreements across many different contexts. It eliminates a pre-existing split of authority about whether international arbitration agreements in this respect stand on equal footing with domestic arbitration agreements. And it confirms that the New York Convention sets a floor, not a ceiling for the enforcement of arbitration agreements.
The upshot of the Court's ruling is that domestic principles that allow non-signatories to arbitrate now apply to international arbitration agreements, just as they do to domestic ones. Those principles include not only equitable estoppel, but also many other doctrines—like agency, assignment, and corporate succession—on which parties routinely rely to conduct business. The availability of these non-signatory enforcement doctrines may prove particularly important in cases involving subcontracting, distribution chains, and employment relationships—all contexts in which the entity performing the work or subject to suit may not be the same as the individual who signed the arbitration agreement. In those cases as in others, the Supreme Court's ruling will ensure that domestic doctrines regarding non-signatory enforcement extend to international arbitration agreements.
GE Energy in GE Energy Power Conversion France SAS v. Outokumpu Stainless USA, LLC, No. 18-1048 (U.S.)