Commodities & Minerals Enterprise Ltd. v. CVG Ferrominera Orinoco, C.A. ( 2022 )

20-4248
Commodities & Minerals Enterprise Ltd. v. CVG Ferrominera Orinoco, C.A.
In the
United States Court of Appeals
For the Second Circuit
August Term, 2021
No. 20-4248
COMMODITIES & MINERALS ENTERPRISE LTD.,
Petitioner-Appellee,
v.
CVG FERROMINERA ORINOCO, C.A.,
Respondent-Appellant.
Appeal from the United States District Court
for the Southern District of New York
ARGUED: FEBRUARY 1, 2022
DECIDED: OCTOBER 3, 2022
Before: CABRANES, LYNCH, and NARDINI, Circuit Judges.
Respondent-Appellant CVG Ferrominera Orinoco, C.A.
(“Ferrominera”), appeals from the judgment of the United States
District Court for the Southern District of New York (Andrew L.
Carter, Jr., Judge) confirming a foreign arbitral award and granting
attorney’s fees and costs in favor of Petitioner-Appellee Commodities
& Minerals Enterprise Ltd. (“CME”). Ferrominera challenges the
judgment on three grounds. First, it argues that the district court
lacked personal jurisdiction because CME never served a summons
on Ferrominera in connection with its motion to confirm the arbitral
award. Second, Ferrominera contends that the district court erred in
confirming the arbitral award based on purported lack of jurisdiction
by the arbitral panel, issues with the scope of the award, and conflicts
with United States public policy. Third, it argues that the district
court abused its discretion in awarding attorney’s fees and costs in
favor of CME.
As to the first point, we hold that a party is not required to serve
a summons in order to confirm a foreign arbitral award under the
New York Convention. We further conclude that the district court
properly enforced the arbitral award, but that it erred in awarding
attorney’s fees and costs. Accordingly, we AFFIRM in part and
VACATE in part.
BRUCE G. PAULSEN (Brian P. Maloney, on the
brief), Seward & Kissel LLP, New York, NY,
for Petitioner-Appellee.
GARTH S. WOLFSON, Mahoney & Keane,
LLP, New York, NY, for Respondent-
Appellant.
WILLIAM J. NARDINI, Circuit Judge:
Respondent-Appellant CVG Ferrominera Orinoco, C.A.
(“Ferrominera”), appeals from the judgment of the United States
2
District Court for the Southern District of New York (Andrew L.
Carter, Jr., Judge) confirming a foreign arbitral award and granting
attorney’s fees and costs in favor of Petitioner-Appellee Commodities
& Minerals Enterprise Ltd. (“CME”). Ferrominera challenges the
judgment on three grounds. First, it argues that the district court
lacked personal jurisdiction over Ferrominera because CME did not
serve a summons when it moved to confirm the arbitral award.
Second, Ferrominera contends that the district court erred in
confirming the award, pointing to purported defects in the arbitral
panel’s jurisdiction, issues with the scope of the panel’s award, and
conflicts with United States public policy. Third, it argues that the
district court abused its discretion in awarding attorney’s fees and
costs in favor of CME.
We hold that a party is not required to serve a summons in
order to confirm a foreign arbitral award under the New York
Convention, more formally known as the Convention on the
3
Recognition and Enforcement of Foreign Arbitral Awards, June 10,
1958, 21 U.S.T. 2517, T.I.A.S. No. 6997, 330 U.N.T.S. 38 (as applied
through the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 201-208).
We further hold that the district court properly enforced the arbitral
award, but that it erred in awarding attorney’s fees and costs.
Accordingly, we AFFIRM in part and VACATE in part.
I. Background
A. The commercial relationship
CME is incorporated under the laws of the British Virgin
Islands and is in the business of trading commodities and minerals,
including iron ore. Ferrominera is a Venezuelan company, owned by
the Venezuelan government, that produces and exports iron ore.
The dispute in this case stems from a contract involving a ship
named the General Piar. In 2010, Ferrominera chartered the General
Piar from CME to shuttle iron ore from Ferrominera’s Venezuelan
mines, down the Orinoco River, and to an offshore transfer station
4
where it would be shipped away by CME. 1 The seventeen-page
charter between CME and Ferrominera (the “General Piar Charter”)
contains a broad arbitration clause, which states, in part:
This charter shall be governed by and construed in
accordance with Title 9 of the United States Code and the
maritime law of the United States Code and any dispute
arising out of or in connection with this contract shall be
referred to three persons at New York . . . ; their decision
or that of any two of them shall be final, and for the
purposes of enforcing any award, judgement may be
entered on an award by any court of competent
jurisdiction. The proceedings shall be conducted in
accordance with the rules of the Society of Maritime
Arbitrators, Inc.
Joint App’x at 215-16.
B. The arbitration proceeding
By February 2016, the parties’ commercial relationship had
deteriorated. Seeking to recover for unpaid invoices, lost profits, and
attorney’s fees, CME commenced an arbitration proceeding before a
1More precisely, in 2010 CME entered a five-year time-charter for the
General Piar from the ship’s owner, and then sub-chartered the ship to
Ferrominera. The then-President and Chairman of the Board of Directors of
Ferrominera signed the charter, and the Board of Directors formally approved it.
5
panel of three arbitrators (the “Panel”) in New York City pursuant to
the rules of the Society of Maritime Arbitrators (the “SMA Rules”).
Ferrominera raised numerous jurisdictional defenses and
substantive counterclaims. Among other things, it argued that the
Panel lacked jurisdiction over the dispute because the General Piar
Charter and its arbitration agreement were obtained through
corruption and thus void, and that the arbitration agreement was
invalid under Venezuelan law. Ferrominera also argued that CME’s
claims fell outside the scope of the arbitration clause. In the
alternative, Ferrominera argued a variety of set-offs and
counterclaims.
On December 20, 2018, the Panel found for CME and rejected
Ferrominera’s defenses. 2 The Panel concluded that it had jurisdiction
over the dispute and that the arbitration agreement covered the
2The Panel issued the Final Award on December 20, 2018, which explained
the Panel’s reasoning in over 150 pages. On February 11, 2019, the Panel issued a
Corrected Award, which corrected clerical errors in the Final Award (together,
“the Award”).
6
claims and counterclaims. As to the contract defenses, the Panel
found that the General Piar Charter was not void or unenforceable,
and was not invalid under Venezuelan law. Specifically, the Panel
concluded that the evidence Ferrominera presented did not show that
CME had engaged in corruption with respect to the General Piar
Charter. As to the arguments of invalidity under Venezuelan law, the
Panel held that Venezuelan law did not apply because U.S. maritime
law was selected in the choice-of-law provision of the General Piar
Charter. Even if Venezuelan law did apply, the Panel agreed with an
expert in Venezuelan law offered by CME and determined that the
Charter and its arbitration agreement would nonetheless be
enforceable under the Venezuelan doctrine of “good faith.” The Panel
found for CME and issued an award for $12,655,594.36, plus post-
award interest at an annual rate of 5.5% until the award is fully paid
or confirmed and made a judgment of the court.
7
C. Court proceedings to confirm the arbitral award
On December 19, 2019, CME brought this action to confirm the
arbitral award in the Southern District of New York. CME sought
entry of a judgment against Ferrominera, including the Panel’s
Award of $12,655,594.36 plus interest, as well as costs and expenses
in favor of CME, including reasonable attorney’s fees.
Ferrominera argued that the award should not be confirmed. It
argued, inter alia, that the service of notice was defective; that the
Panel lacked jurisdiction to arbitrate the dispute; that the Panel's
award exceeded the scope of the arbitration agreement by failing to
credit Ferrominera for payments it had made to CME under the
General Piar Charter, and instead allocating them to different
contracts; and that enforcing the award would violate United States
public policy because the General Piar Charter was obtained through
corruption.
On December 10, 2020, the district court entered judgment in
favor of CME, granting CME’s application to confirm the award and
8
its request for attorney’s fees and costs. Ferrominera appeals this
judgment.
II. Discussion
On appeal, Ferrominera first challenges the district court’s
exercise of personal jurisdiction based on an alleged defect in service
of notice, namely CME’s failure to serve a summons. It next contests
the district court’s confirmation of the award, arguing (1) that the
Panel lacked jurisdiction over the dispute because the parties’
arbitration agreement was invalid under Venezuelan law; (2) that the
Award exceeded the scope of the arbitration provision because it
improperly allocated payments made by Ferrominera to CME to
other contracts; and (3) that enforcement of the Award would violate
United States public policy because the General Piar Charter had been
obtained through corruption. Finally, it challenges the award of
attorney’s fees in favor of CME.
9
For the reasons discussed below, we affirm the district court’s
ruling confirming the Award, but hold that it abused its discretion
in awarding attorney’s fees and costs to CME.
A. Governing legal standards
An application to confirm a foreign arbitral award 3 “’is a
summary proceeding that merely makes what is already a final
arbitration award a judgment of the court.’” Yusuf Ahmed Alghanim &
Sons v. Toys “R” Us, Inc., 126 F.3d 15, 23 (2d Cir. 1997) (quoting
Florasynth, Inc. v. Pickholz, 750 F.3d 171, 176 (2d Cir. 1984)). “The
review of arbitration awards is ‘very limited . . . in order to avoid
undermining the twin goals of arbitration, namely, settling disputes
efficiently and avoiding long and expensive litigation.’” Yusuf Ahmed
Alghanim & Sons, 126 F.3d at 23 (quoting Folkways Music Publishers,
Inc. v. Weiss, 989 F.2d 108, 111 (2d Cir. 1993)). That review is
3The New York Convention, also called the Convention on the Recognition
and Enforcement of Foreign Arbitral Awards, defines its application, in relevant
part, as to “awards not considered domestic.” Art. 1. As the Convention’s title
suggests, such non-domestic awards are also referred to as foreign awards, and
we will use the latter term here.
10
“extremely deferential” to the findings of the arbitration panel. Porzig
v. Dresdner, Kleinwort, Benson, N. Am. LLC, 497 F.3d 133, 139 (2d Cir.
2007).
The parties do not dispute that this case falls under the New
York Convention. See Bergesen v. Joseph Muller Corp., 710 F.2d 928, 932
(2d Cir. 1983) (holding that the New York Convention’s application
to arbitral awards “not considered as domestic” includes awards
“involving parties domiciled or having their principal place of
business outside the enforcing jurisdiction”); see also 9 U.S.C. §§ 201-
208 (incorporating the New York Convention). Article V of the New
York Convention governs a district court’s review of an application
to confirm a foreign arbitral award. That Article contains an
exhaustive list of seven defenses to confirmation,4 and states that the
4 In full, Article V of the New York Convention states:
1. Recognition and enforcement of the award may be refused, at the request of the
party against whom it is invoked, only if that party furnishes to the competent
authority where the recognition and enforcement is sought, proof that:
11
“party opposing enforcement of an arbitral award has the burden to
prove that one of the seven defenses” applies. Encyclopaedia
Universalis S.A. v. Encyclopaedia Britannica, Inc., 403 F.3d 85, 90 (2d Cir.
2005) (citing the New York Convention, Art. V(1)); see also 9 U.S.C.
(a) The parties to the agreement . . . were, under the law applicable to them,
under some incapacity, or the said agreement is not valid under the law to
which the parties have subjected it or, failing any indication thereon, under
the law of the country where the award was made; or
(b) The party against whom the award is invoked was not given proper
notice of the appointment of the arbitrator or of the arbitration proceedings
or was otherwise unable to present his case; or
(c) The award deals with a difference not contemplated by or not falling
within the terms of the submission to arbitration, or it contains decisions
on matters beyond the scope of the submission to arbitration, provided
that, if the decisions on matters submitted to arbitration can be separated
from those not so submitted, that part of the award which contains
decisions on matters submitted to arbitration may be recognized and
enforced; or
(d) The composition of the arbitral authority or the arbitral procedure was
not in accordance with the agreement of the parties, or, failing such
agreement, was not in accordance with the law of the country where the
arbitration took place; or
(e) The award has not yet become binding on the parties, or has been set
aside or suspended by a competent authority of the country in which, or
under the law of which, that award was made.
2. Recognition and enforcement of an arbitral award may also be refused if the
competent authority in the country where recognition and enforcement is sought
finds that:
(a) The subject matter of the difference is not capable of settlement by
arbitration under the law of that country; or
(b) The recognition or enforcement of the award would be contrary to the
public policy of that country.
12
§ 207 (“The court shall confirm the award unless it finds one of the
grounds for refusal or deferral of recognition or enforcement of the
award specified in the said Convention.”). “The burden is a heavy
one, as ‘the showing required to avoid summary confirmance is
high.’” Encyclopaedia Universalis, 403 F.3d at 90 (quoting Yusuf Ahmed
Alghanim & Sons, 126 F.3d at 23). “In sum, a district
court must enforce an arbitral award unless a litigant satisfies one of
the seven enumerated defenses [under the New York Convention]; if
one of the defenses is established, the district court may choose to
refuse recognition of the award.” Corporación Mexicana de
Mantenimiento Integral, S. De R.L. De C.V. v. Pemex-Exploración y
Producción (“Pemex”), 832 F.3d 92, 106 (2d Cir. 2016).
On appeal of a district court’s confirmation of an arbitral
award, “[w]e review a district court’s legal interpretations of the New
York Convention as well as its contract interpretation de novo;
findings of fact are reviewed for clear error.” Leeward Constr. Co., Ltd.
13
v. Am. Univ. of Antigua-Coll. of Med., 826 F.3d 634, 638 (2d Cir. 2016)
(quoting VRG Linhas Aereas S.A. v. MatlinPatterson Glob. Opportunities
Partners II L.P., 717 F.3d 322, 325 (2d Cir. 2013)); see also Pemex, 832
F.3d at 100.
B. Personal jurisdiction
Ferrominera first challenges the district court’s exercise of
personal jurisdiction in this proceeding, antecedent to the question of
whether any of the seven defenses to confirmation under the New
York Convention apply. Ferrominera argues that because it is an
instrumentality of a foreign state, the Foreign Sovereign Immunities
Act (“FSIA”), 28 U.S.C. § 1608, requires the delivery of a summons
upon it to properly effect service. Because CME never served a
summons, Ferrominera claims, service was fatally deficient and the
14
district court erred in exercising personal jurisdiction over
Ferrominera. 5
For the reasons that follow, we are not persuaded by
Ferrominera’s argument. The FAA explicitly requires only service of
notice of the application to confirm the arbitral award, not also a
summons. Although the FAA partially incorporates the FSIA
(through the Federal Rules of Civil Procedure) to fill gaps in how
service must be made on a foreign instrumentality, those cross-
references do not alter what must be served under the FAA.
5 CME mailed the petition to confirm the Award and its supporting
documents to the last known addresses of Ferrominera’s counsel in the United
States, France, and England and to Ferrominera’s last known address in
Venezuela. It also delivered the petition by hand courier to Ferrominera’s
Venezuelan address.
CME argues that Ferrominera has waived its service of process objection
by failing to raise that argument sufficiently before the district court. We disagree.
Ferrominera raised its objection in its initial appearance before the district court
and, in its brief opposing CME’s petition to confirm the Award, cross-referenced
that argument in a footnote. That was enough to put the district court on notice
as to Ferrominera’s jurisdictional defenses and to preserve the issue for appeal.
See Transaero, Inc v. La Fuerza Aerea Boliviana, 162 F.3d 724, 729 (2d Cir. 1998).
15
Accordingly, the district court correctly rejected Ferrominera’s
service argument and appropriately exercised personal jurisdiction.
To understand how service must be made on an
instrumentality of a foreign government in a proceeding to confirm a
foreign arbitral award, we must consider a series of cross-references
involving the FAA, the Federal Rules of Civil Procedure, and the
FSIA.
Our starting point is Chapter 2 of the FAA, which codifies
enforcement of foreign arbitral awards under the New York
Convention. Chapter 2 instructs parties on how to file an application
to confirm such an award, and how to defend against confirmation,
but it does not lay out any rules for service of process. Section 207
authorizes a party to “apply” to a competent court “for an order
confirming [an] award.” 9 U.S.C. § 207. Such an application must be
confirmed unless the court finds “one of the grounds for refusal or
deferral of recognition or enforcement of the award specified” in the
16
New York Convention. Id. But aside from requiring the party to file
its application to confirm, neither Chapter 2 nor the New York
Convention specifies how an adverse litigant must be notified of the
new proceeding.
To fill that gap, Chapter 2 resorts (with some caveats) to the
rules governing domestic arbitral awards set forth in Chapter 1 of the
FAA. Specifically, § 208 incorporates the provisions of Chapter 1,
though only “to the extent that [Chapter 1] is not in conflict with
[Chapter 2] or the Convention as ratified by the United States.”
9 U.S.C. § 208. One of these incorporated provisions is § 9 of the FAA,
which sets forth the procedure for confirming domestic awards,
including service-of-process rules. Section 9 tells us that “[i]f the
adverse party shall be a nonresident [of the district within which the
award was made], then the notice of the application shall be served by
the marshal of any district within which the adverse party may be
found in like manner as other process of the court.” 9 U.S.C. § 9 (emphasis
17
added). As the italicized language indicates, § 9 specifies both what is
to be served (“notice of the application”) and how it is to be served
(“in like manner as other process of the court”). But that latter
phrase—“in like manner as other process of the court”—requires us
to look elsewhere to understand how “other process” is carried out.6
6 Although Ferrominera contends that service of a summons was required
(in light of further cross-references to the FSIA that we shall discuss shortly), it
does not argue that such overseas service had to be accomplished by the U.S.
Marshals Service under § 9 of the FAA. Nor would such a contention make any
sense. Although § 9 indicates that notice shall be served “by the marshal of any
district within which the adverse party may be found,” that provision is
incorporated into Chapter 2 (governing foreign arbitral awards) only “to the
extent” that it does not “conflict” with Chapter 2 or the New York Convention. In
a foreign arbitral proceeding where the adverse party is overseas, there is often no
“district within which the adverse party may be found,” and hence no such
marshal to be employed. And in any event, service by the U.S. Marshal—a
domestic law enforcement official—would often be impossible on a foreign
instrumentality overseas. This is why private process servers are now the norm,
even in the context of foreign sovereigns. See Foreign Process, U.S. Marshals,
https://www.usmarshals.gov/what-we-do/service-of-process/civil-
process/foreign-process (last visited on Sept. 2, 2022). Because it would seemingly
conflict with the New York Convention to require parties to use a mode of service
that cannot be executed, it is hard to imagine how § 9’s reference to marshals
would be incorporated by reference into Chapter 2’s codification of the New York
Convention with respect to foreign parties. See, e.g., In re Arbitration Between
InterCarbon Bermuda, Ltd. and Caltex Trading & Transp. Corp., 146 F.R.D. 64, 67 n.3
(S.D.N.Y. 1993) (“Section 12 [governing motions to vacate arbitral awards] is an
anachronism not only because it cannot account for the internationalization of
arbitration law subsequent to its enactment, but also because it cannot account for
the subsequent abandonment of United States marshals as routine process
18
Thus, we turn to the Federal Rules of Civil Procedure, which
establish the general mode of serving process in federal courts. It is
well established that—with one important qualification—Rule 4 sets
forth the basic procedures for serving process in connection with
arbitral awards. Reed & Martin, Inc. v. Westinghouse Elec. Corp., 439
F.2d 1268, 1277 (2d Cir. 1971) (“The phrase ‘in like manner as other
process of the court’ found in § 9 of the Arbitration Act refers to Fed.
R. Civ. P. 4 on the accomplishment of appropriate service[.]”). That
qualification, however, is set forth in Rule 81, which provides that the
Federal Rules of Civil Procedure, “to the extent applicable, govern
proceedings under the [FAA], except as [that] law[] provide[s] other
procedures.” Fed. R. Civ. P. 81(a)(6)(B). And so our next question is
how Rule 4, only to the extent consistent with the FAA, directs service
of process in the circumstances before us.
servers.”). But Ferrominera does not press the point, and so we need not resolve
the issue here.
19
Here, where the adverse party is the instrumentality of a
foreign state, Rule 4 cross-references special rules of the FSIA.
Specifically, Rule 4 provides that “[a] foreign state or its political
subdivision, agency, or instrumentality must be served in accordance
with 28 U.S.C. § 1608.” Fed. R. Civ. P. 4(j)(1). Section 1608(b), in turn,
provides a series of cascading alternatives to serve such a foreign
instrumentality:
(1) by delivery of a copy of the summons and
complaint in accordance with any special
arrangement for service between the plaintiff and
the agency or instrumentality; or
(2) if no special arrangement exists, by delivery of a
copy of the summons and complaint either to an
officer, a managing or general agent, or to any
other agent authorized by appointment or by law
to receive service of process in the United States;
or in accordance with an applicable international
convention on service of judicial documents; or
(3) if service cannot be made under paragraphs (1) or
(2), and if reasonably calculated to give actual
notice, by delivery of a copy of the summons and
complaint, together with a translation of each into
the official language of the foreign state—
20
(A) as directed by an authority of the foreign
state or political subdivision in response to a
letter rogatory or request or
(B) by any form of mail requiring a signed
receipt, to be addressed and dispatched by
the clerk of the court to the agency or
instrumentality to be served, or
(C) as directed by order of the court consistent
with the law of the place where service is to
be made.
28 U.S.C. § 1608(b)(1)-(3). It is here, in each of the three options listed
in § 1608(b)(1), (2), and (3), that Ferrominera points to the requirement
that service be accomplished by “delivery of a copy of the summons
and complaint.”
Given that wandering path, we pause to briefly restate the
journey. Neither Chapter 2 of the FAA nor the New York Convention
mention service requirements for an application to confirm an arbitral
award. Chapter 2 of the FAA incorporates Chapter 1 as a gap-filler,
insofar as the two do not conflict. Chapter 1 of the FAA requires
service of a “notice of application,” which must be done “in like
manner” as other court process. The phrase “in like manner” refers
21
to Federal Rule of Civil Procedure 4 (which, Rule 81 reminds us, must
always be consistent with the FAA). For foreign instrumentalities,
Rule 4(j) directs us to § 1608 of the FSIA, which describes various
methods of service on foreign instrumentalities or agencies. And it is
only at this last stop—§ 1608(b)—that we find the first mention of a
“summons and complaint.”
Ferrominera argues that because CME failed to serve it with a
summons, it failed to comply with the service requirements of the
FSIA. It contends that the FSIA dictates “the exclusive means by
which service of process may be effected,” and that § 1608(b) of the
FSIA requires service of “a summons” even in proceedings to confirm
an arbitral award. Appellant Br. at 12 (quoting Seramur v. Saudi
Arabian Airlines, 934 F. Supp. 48, 51 (E.D.N.Y. 1996)). We are not
persuaded.
We hold that a summons is not required to properly effect
service when seeking confirmation of a foreign arbitral award against
22
a foreign instrumentality. We reach this conclusion for two principal
reasons: (1) the FAA itself defines the documents to be served, and
cross-references other provisions (including Rule 4 and the FSIA) only
to fill gaps in the permissible manner of serving those documents; and
(2) it would make no sense to import the FSIA’s requirement of
service of a “summons and complaint” into the FAA because motions
to confirm arbitral awards are not commenced by the filing of a
complaint.
First, a plain reading of the relevant statutes and rules supports
the conclusion that the only thing that must be served is the notice of
application. Chapter 1, § 9 of the FAA specifies that “the notice of the
application shall be served . . . in like manner as other process of the
court.” 9 U.S.C. § 9 (emphasis added). The FAA does not require
service beyond this. Although the FSIA mentions delivery of
something different from a notice of application—a “summons and
complaint,” 28 U.S.C. § 1608(b)(1)-(3)—recall that procedures
23
otherwise provided for are not incorporated upstream into the FAA.
Rule 81(a)(6)(B) of the Federal Rules of Civil Procedure enables only
limited incorporation of the FSIA into Rule 4—that is, “except as [the
FAA] provide[s] other procedures.” Here, § 9 of the FAA provides a
procedure on what notice shall be served upon the opposing party—
"notice of the application”—thereby triggering the exception to
incorporation. 9 U.S.C. § 9 (emphasis added). Because the reference
in § 1608(b)(1)-(3) to “the delivery of a copy of the summons and
complaint” remains unincorporated, it bears no weight. Moreover,
§ 9 of the FAA cross-references other provisions only to determine the
“manner” in which notice of the application must be served. The
FSIA is therefore incorporated into the FAA only to the extent it
answers how to serve process, not to supplant the FAA’s specification
of what must be served.
Second, a proceeding to confirm an arbitral award under the
FAA is commenced by an application rather than a “complaint”;
24
accordingly, there is no basis for serving a “summons and complaint,”
which are the documents referenced in § 1608(b). We have explained
that “’confirmation of an arbitration award is a summary proceeding
that merely makes what is already a final arbitration award a
judgment of the court.’” Yusuf Ahmed Alghanim & Sons, 126 F.3d at 23(quoting Florasynth, Inc., 750 F.2d at 176). Lest there be any doubt, the
FAA’s provision implementing the New York Convention calls for a
party merely to “apply to” the court for an “order confirming the
award[.]” 9 U.S.C. § 207; see 9 U.S.C. § 9 (“notice of the application [to
confirm an arbitral award] shall be served” on the adverse party “in
like manner as other process of the court”) (emphasis added); accord
Int’l Standard Elec. Corp. v. Bridas Sociedad Anonima Petrolera, Industrial
y Comercial, 745 F. Supp. 172, 182 (S.D.N.Y. 1990) (“A confirmation
proceeding under the Convention is not an original action, it is, rather
in the nature of a post-judgment enforcement proceeding.” (internal
quotation marks and alterations omitted)). Given the summary
25
nature of confirmation proceedings, it is unsurprising that the FAA
would require only service of notice of an application as opposed to
service of a full summons and complaint. See Teamsters Local 177 v.
United Parcel Serv., 966 F.3d 245, 252, 254 (3d Cir. 2020) (agreeing with
Florasynth, 750 F.2d at 176, that confirmation of an arbitration award
is a summary proceeding, and noting that summary proceedings may
be “conducted without formal pleadings, on short notice, without
summons and complaints, generally on affidavits, and sometimes
even ex parte” (quoting New Hampshire Fire Ins. Co. v. Scanlon, 362 U.S.
404, 406 (1960))). And because no “complaint” is involved in a motion
to confirm an arbitral award, it would make little sense to read the
FAA as incorporating the FSIA’s instruction to serve both “a
summons and complaint” (and even less sense to conclude that only
half of that pair of documents—namely, a summons—must be
served). Thus, we hold that the New York Convention and the FAA
26
require only service of notice of the application to confirm a foreign
arbitral award, and not also a summons.7
Having reached this legal conclusion, we easily determine that
CME properly effected service of notice on Ferrominera. Under the
first of the three modes of service listed in § 1608(b) of the FSIA,
7 This conclusion is consistent with at least three district courts in this
Circuit to have faced similar questions. See Associated Indus. Ins. Co. v. Excalibur
Reinsurance Corp., No. 13 CIV. 8239, 2014 WL 6792021, at *4 (S.D.N.Y. Nov. 26,
2014) (service of summons not required to commence proceeding to vacate
domestic arbitration award under the FAA); Scandinavian Reinsurance Co. v. St.
Paul Fire & Marine Ins. Co., 732 F. Supp. 2d 293, 305-06 (S.D.N.Y. 2010) (service of
summons not required to commence proceeding to confirm foreign arbitral award
under the New York Convention and FAA), rev’d on other grounds, 668 F.3d 60 (2d
Cir. 2012); Home Ins. Co. v. RHA/Pennsylvania Nursing Homes, Inc., 113 F. Supp. 2d
633, 635 n.10 (S.D.N.Y. 2000) (service of summons not required for purpose of
commencing proceeding to confirm domestic arbitration award under the FAA).
Ferrominera points to two district court actions in Florida between these
same parties where, in both cases, the courts held that it was improper for CME to
fail to serve a summons in filing its application for enforcement of other, related
arbitral awards. See Commodities & Minerals Enterprise Ltd. v. CVG Ferrominera
Orinoco, C.A., No. 17-20196-CIV, 2017 WL 11625759, at *3 (S.D. Fla. Apr. 4, 2017);
Commodities & Mins. Enter. Ltd. v. CVG Ferrominera Orinoco, C.A., 338 F.R.D. 664,
667 (S.D. Fla. 2021); see also Ballantine v. Dominican Republic, 19 Civ. 3598, 2020 WL
4597159, at *2-4 (D.D.C. Aug. 11, 2020) (holding that petitioners failed to effect
valid service on the Dominican Republic of a motion to vacate an arbitral award
for various reasons, including failure to serve a timely summons under the FSIA).
Those courts relied on the phrase “summons and complaint” in § 1608(b) of the
FSIA to conclude that service of a summons was required. In our view, these
courts erred in failing to start their analysis with the FAA, which incorporates the
FSIA’s requirements only as to the manner of service, not what must be served.
27
service “shall be made . . . in accordance with any special arrangement
for service between the plaintiff and the agency or instrumentality.”
28 U.S.C. § 1608(b)(1). Here, neither party disputes that the General
Piar Charter incorporated the SMA Rules and that those rules
constitute a “special arrangement” for the purposes of § 1608.8 SMA
Rule 35 provides that
Wherever parties have agreed to arbitration under these
Rules, they shall be deemed to have consented to service
of any papers, notices or process necessary to initiate or
continue an arbitration under these Rules or a court
action to confirm judgment on the Award issued. Such
documents may be served:
a. By mail addressed to such party or counsel at
their last known address; or
b. By personal service.
8 Ferrominera separately contests whether the arbitration agreement
(which incorporates the SMA rules) is valid. This argument is addressed later in
this opinion. See infra at Section II.C. But that argument aside, Ferrominera does
not contest that if the arbitration agreement is valid, it incorporates the SMA Rules,
nor that the SMA Rules are an incorporated “special arrangement” under § 1608
of the FSIA.
28
Joint App’x at 237. The district court found, and the parties do not
dispute, that CME complied with this special arrangement.
Commodities & Minerals Enter., Ltd. v. CVG Ferrominera Orinoco, C.A.,
No. 19-cv-11654-ALC, 2020 WL 7261111, at *2, *4 (S.D.N.Y. Dec. 10,
2020) (“CME served the instant petition and supporting documents
on arbitration counsel to [Ferrominera] . . . and on [Ferrominera] at its
last known address, in Venezuela by mail.”). As a result, CME
complied with the service of notice requirements of the New York
Convention and the FAA, and the district court properly exercised
personal jurisdiction over Ferrominera.
C. Confirmation of the Award
Ferrominera next raises three arguments challenging the
district court’s confirmation of the award: (1) the arbitration
agreement was invalid under Venezuelan law, and therefore the
panel lacked jurisdiction to hear the dispute; (2) in the alternative, if
the arbitration agreement was valid, the Panel nonetheless exceeded
the scope of its jurisdiction under the arbitration agreement in its
29
calculation of damages; and (3) confirming the Award would violate
United States public policy because the General Piar Charter was the
product of corruption.
We reject all three arguments.
1. Validity of the arbitration agreement
Ferrominera first challenges the confirmation of the Award on
the ground that the Panel lacked jurisdiction because the arbitration
agreement was invalid under Venezuelan law.
With respect to this challenge, Ferrominera fails to identify
what (if any) specific defense it invokes under Article V(1) of the New
York Convention. This is a serious lapse. Because the defenses listed
under Article V are exhaustive and Ferrominera carries a heavy
burden to prove such a defense, see Encyclopaedia Universalis, 403 F.3d
at 90, a party must first identify which defense it is invoking to
establish any potential entitlement to that defense. When faced with
this same briefing deficiency at the district court, Judge Carter
construed this argument as falling within Article V(1)(a) and
30
characterized Ferrominera’s challenge as against the “validity” of the
agreement. See Commodities & Minerals Enter., 2020 WL 7261111, at *4
n.3. On appeal, Ferrominera has not challenged Judge Carter’s
characterization, and so we limit ourselves to that enumerated
defense. 9
Ferrominera argues that the arbitration agreement was not
“valid” because it was not authorized under any of three different
Venezuelan laws. Specifically, it argues that various approvals were
not in place from different Venezuelan officials, which were necessary
for this state-owned business to enter an arbitration agreement. This
argument is premised on the notion that the existence of a valid
arbitration agreement is governed by Venezuelan law.
9 We note that Article V(1)(a) also provides for another defense, distinct
from the invalidity of the arbitration agreement, that “[t]he parties to the
[arbitration] agreement . . . were, under the law applicable to them, under some
incapacity . . . .” Ferrominera has not cited this provision in its briefing before this
Court, nor did it do so before the district court. Accordingly, we limit ourselves
to the question of whether the arbitration agreement was “valid” within the
meaning of Article V(1)(a).
31
But Article V(1)(a) says otherwise. Whether an arbitration
agreement is “valid” is governed by “the law to which the parties
have subjected it” (or “failing any indication thereon, under the law
of the country where the award was made”). New York Convention,
Art. V(1)(a). Consistent with this language, we have repeatedly held
that the existence or validity of an arbitration agreement is governed
by a choice-of-law clause where one exists, because choice-of-law
clauses are separable when the contract’s validity is otherwise
disputed. See Motorola Credit Corp. v. Uzan, 388 F.3d 39, 50-51 (2d Cir.
2004) (applying choice-of-law clause selecting Swiss law to determine
validity of international arbitration agreement); Sphere Drake Ins. Ltd.
v. Clarendon Nat’l Ins. Co., 263 F.3d 26, 32 n.3 (2d Cir. 2001) (applying
New Jersey and New York choice-of-law clauses to a party’s claim
that the underlying arbitration agreements were void because they
were signed by an unauthorized agent); Int’l Minerals & Res., S.A. v.
Pappas, 96 F.3d 586, 592 (2d Cir. 1996) (applying an English choice-of-
32
law clause to an issue of contract formation); see also 3 Gary Born,
International Commercial Arbitration § 26.05(C) (3d ed. 2021) (“A choice
of law agreement is effective to select the law governing the
arbitration agreement even if one party denies the validity or
existence of those agreements.”).
Ferrominera contends that applying the Charter’s choice-of-
law clause to questions of validity inappropriately presumes the
conclusion—namely, that the dispute resolution provision in which
that choice-of-law clause sits is valid. Ferrominera relies on Schnabel
v. Trilegiant Corp., 697 F.3d 110, 119 (2d Cir. 2012), to support this
argument, but Schnabel is readily distinguished from the present case.
In Schnabel, the Court declined to enforce the choice-of-law clause
when considering whether the underlying contract was valid because
there was a dispute about whether the choice-of-law clause had been
part of the contract at the time of its formation. Id. at 114-19. Because
the choice-of-law clause was specifically challenged, “[a]pplying [it]
33
to resolve the contract formation issue would presume the
applicability of a provision before its adoption by the parties has been
established.” Id. at 119. Thus, rather than a broad exception to the
ordinary rule (that choice-of-law clauses are separable), Schnabel
presents only a narrow corollary to the logic of separability: if the
validity of the choice-of-law clause is specifically challenged, that
clause cannot be evaluated separately from the contract. 10
Here, unlike in Schnabel, there is no dispute that the choice-of-
law clause is included in the General Piar Charter, which both parties
signed. Therefore, the ordinary rule—that choice-of-law clauses are
separated out from contracts for questions of validity—applies in full
force. See Motorola, 388 F.3d at 50-51. Applying that rule, we find that
the General Piar Charter contained a choice-of-law clause, and that
10 A similar rule exists in the context of arbitration clauses. Although
arbitration agreements are ordinarily separable from questions of broader contract
validity, see Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 402 (1967),
they cannot be separated when the arbitration agreement is itself challenged as
invalid. Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 446-49 (2006).
34
clause opted for U.S. maritime law. Joint App’x at 215-16.
Accordingly, U.S. law, and not Venezuelan law, governs the General
Piar Charter, including any question about the arbitration
agreement’s validity.11
Ferrominera’s arguments as to why there is no valid arbitration
agreement, however, are limited exclusively to Venezuelan law. It
has made no such arguments under U.S. maritime law. Because a
party resisting confirmation of a foreign arbitral award has the
burden of establishing a defense under Article V(1), we conclude that
Ferrominera has not borne its burden to show that the arbitration
11 Although the district court correctly determined that U.S. law applied, it
reached that conclusion by finding that the arbitration clause encompassed issues
of arbitrability, and therefore deferred to the Panel’s findings, even on the choice
of law issue. Commodities & Minerals Enter., 2020 WL 7261111, at *5. As outlined
here, however, on a motion to confirm a foreign arbitral award the law governing
the validity of the arbitration agreement is dictated not by deference to the Panel’s
decision, but rather by Article V(1)(a) of the New York Convention, which directs
the court to review issues of arbitration agreement validity under “the law to
which the parties have subjected it or, failing any indication thereon, under the
law of the country where the award was made.” The district court’s deference to
the Panel on this point was therefore unwarranted, but we agree with the
conclusions of both the Panel and the district court that U.S. maritime law applies.
35
agreement is invalid where, as here, it has put forth no arguments
whatsoever under the applicable law.12 Accordingly, the arbitration
agreement is valid and enforceable.
2. The scope of the arbitration agreement
Ferrominera next argues that the Award should not be
confirmed under Article V(1)(c) of the New York Convention because
the Panel exceeded its authority in calculating damages. Specifically,
Ferrominera contends that the Panel incorrectly allocated past
payments it made to CME to contracts other than the General Piar
12Ferrominera also argues that the Panel’s decision on the validity of the
arbitration agreement should have been reviewed de novo by the district court. But
we need not reach this issue. Regardless of how much (if any) deference might
have been warranted, the fact remains that Ferrominera presented no arguments
under U.S. maritime law to justify disturbing the Panel’s conclusion that it had
jurisdiction to arbitrate the dispute.
Furthermore, while it is true that there is caselaw suggesting that a court
can review challenges to the validity of an arbitration agreement when those
challenges are either to the arbitration agreement itself (rather than the contract as
a whole) or to the whole contract as void ab initio, see, e.g., Buckeye Check Cashing,
546 U.S. at 444 n.1, 446-48; Sphere Drake Ins. Ltd., 263 F.3d at 32, those cases all arose
at the threshold stage of arbitration, on motions to compel. Whether those cases
also stand for the proposition that a court may (or must) review the validity of an
arbitration agreement de novo on a motion to confirm (or, for that matter, on a
motion to vacate), does not necessarily follow. For the reasons stated above,
however, we need not address this question.
36
Charter. In so doing, its argument goes, the Panel violated
Ferrominera’s right to decide how to allocate payments among these
contracts and improperly shifted moneys already paid to the disputed
General Piar Charter.
But Ferrominera’s claim amounts to nothing more than a
quarrel over how much it owes in damages, which was properly a
question for the arbitrators. As the district court correctly held,
Article V(1)(c) provides a defense to confirmation where an
arbitration award “deals with a difference not contemplated by or not
falling within the terms of the submission to arbitration, or it contains
decisions on matters beyond the scope of the submission to
arbitration.” The question of the correct calculation of damages “falls
squarely within the broad arbitration clause in the General Piar
Charter.” Commodities & Minerals Enter., 2020 WL 7261111, at *5.
Ferrominera’s argument—which is, at most, that the Panel calculated
damages incorrectly—thus falls outside of Article V(1)(c) and, in fact,
37
outside of any defense listed in Article V. Cf. Stolt-Nielsen S.A. v.
AnimalFeeds Int’l Corp., 559 U.S. 662, 671 (2010) (“It is not enough for
petitioners to show that the panel committed an error—or even a
serious error. It is only when an arbitrator strays from interpretation
and application of the agreement and effectively dispenses his own
brand of industrial justice that his decision may be unenforceable.”
(cleaned up)); Parsons & Whittemore Overseas Co. v. Societe Generale De
L'Industrie Du Papier (RAKTA), 508 F.2d 969, 976-77 (2d Cir. 1974)
(rejecting appellant’s attack on money awarded for start-up expenses
and costs because the New York Convention “does not sanction
second-guessing the arbitrator’s construction of the parties’
agreement”).
3. United States public policy
Ferrominera brings its final argument against confirmation of
the Award under Article V(2)(b) of the New York Convention. The
thrust of this argument is that the General Piar Charter was procured
38
through corruption and, therefore, enforcement of the Award would
violate United States public policy.
This argument, however, falls outside the narrow public policy
exception codified by Article V(2)(b). Article V(2)(b) allows a court to
refuse “recognition or enforcement of the award [if such recognition
or enforcement] would be contrary to the public policy of that
country.” See Telenor Mobile Commc’ns AS v. Storm LLC, 584 F.3d 396,
405, 411 (2d Cir. 2009) (holding that confirming a foreign arbitral
award was not contrary to New York’s public policy against
compelling a party to violate a foreign judgment). But “Article
V(2)(b) must be ‘construed very narrowly’ to encompass only those
circumstances ‘where enforcement would violate our most basic
notions of morality and justice.’” Id. at 411 (quoting Europcar Italia
S.p.A. v. Maiellano Tours, Inc., 156 F.3d 310, 315 (2d Cir. 1998)). In
reviewing an arbitral award for violations of public policy, a court
may not “revisit or question the fact-finding or the reasoning which
39
produced the award.” IBEW, Local 97 v. Niagara Mohawk Power Corp.,
143 F.3d 704, 716 (2d Cir. 1998). Instead, “a court’s task in reviewing
. . . possible violations of public policy is limited to determining
whether the award itself, as contrasted with the reasoning that
underlies the award, ‘create[s] [an] explicit conflict with other laws
and legal precedents’ and thus clearly violates an identifiable public
policy.” Id. (quoting United Paperworkers Int’l Union v. Misco, Inc., 484
U.S. 29, 43 (1987)). When a party claims that an underlying contract
is invalid for violating public policy, that claim is “to be determined
exclusively by the arbitrators.” Europcar Italia, 156 F.3d at 315.
Ferrominera’s public policy argument attacks the General Piar
Charter itself, not the Award or its enforcement. The Panel carefully
considered Ferrominera’s corruption allegations and gave
Ferrominera ample opportunity to substantiate its claim. Despite
extensive discovery and opportunity to present its case, the Panel
concluded that the General Piar Charter was not, as a factual matter,
40
the product of corrupt acts by CME. Both before the district court and
here, Ferrominera merely seeks to relitigate the Panel’s factual
determination on this point. It offers no argument that enforcement
itself, “within the parameters of the arbitrator’s interpretation of the
facts,” IBEW, Local 97, 143 F.3d at 726, violates public policy.13
In sum, Ferrominera’s public policy argument asks this Court
to relitigate the Panel’s factual determinations underlying the validity
of the Charter. But this argument falls outside of Article V(2)(b)’s
narrow public policy exception, and the district court properly
rejected it.
13 Hardy Expl. & Prod. (India), Inc. v. Gov’t of India, Ministry of Petroleum &
Nat. Gas, 314 F. Supp. 3d 95 (D.D.C. 2018), relied on by Ferrominera, only
highlights the insufficiency of its argument. In Hardy, the court found that
enforcement of an arbitration award against India would violate public policy. Id.
at 110-11. But the award at issue was one for specific performance that required
India to turn over certain land in that country to the plaintiff. Id. In that case,
enforcement of the award itself violated clear United States policy respecting a
sovereign nation’s right to control its own land. Id. Those facts stand in sharp
contrast to Ferrominera’s argument here, which is nothing more than a collateral
attack on the General Piar Charter and a thinly veiled effort to relitigate factual
determinations made by the Panel. Ferrominera makes no argument that
enforcing the Award, standing alone, violates public policy.
41
D. Attorney’s fees
Lastly, Ferrominera challenges the district court’s award of
attorney’s fees in favor of CME.
The district court granted CME’s request for attorney’s fees “in
light of Ferrominera’s failure to comply with the award or come
forward with a good faith reason for not complying.” Commodities &
Minerals Enter., 2020 WL 7261111, at *7. Although our review of fee
awards is “highly deferential,” Mautner v. Hirsch, 32 F.3d 37, 39 (2d
Cir. 1994), we conclude that the district court abused its discretion
here.
Generally, “in a federal action, attorney’s fees cannot be
recovered by the successful party in the absence of statutory authority
for the award.” Int’l Chem. Workers Union (AFL-CIO), Local No. 227 v.
BASF Wyandotte Corp., 774 F.2d 43, 47 (2d Cir. 1985). Section 9 of the
FAA does not provide such statutory authority, because it makes no
mention of the recovery of attorney’s fees. Still, a court retains
“inherent equitable powers” to “award attorney’s fees when the
42
opposing counsel acts ‘in bad faith, vexatiously, wantonly, or for
oppressive reasons.’” Id. (quoting F.D. Rich Co. v. United States ex rel.
Indus. Lumber Co., 417 U.S. 116, 129 (1974)). “As applied to suits for
the confirmation and enforcement of arbitration awards, the guiding
principle has been [that] ‘when a challenger refuses to abide by an
arbitrator’s decision without justification, attorney’s fees and costs
may properly be awarded.’” Int’l Chem. Workers Union, 774 F.2d at 47(quoting Bell Production Engineers Ass'n v. Bell Helicopter Textron, 688
F.2d 997, 999 (5th Cir. 1982)).
Here, although we ultimately disagree with Ferrominera’s
arguments, we conclude that those arguments were not presented
“without justification,” id., and that Ferrominera did not act “in bad
faith, vexatiously, wantonly, or for oppressive reasons.” F.D. Rich Co.,
417 U.S. at 129. In particular, we note that the first question addressed
in this opinion—namely, whether service of a summons is required to
apply to a court for an order confirming a foreign arbitration award—
43
is a question of first impression for this Court. Furthermore, we
acknowledge that Ferrominera twice achieved some success on this
exact argument in another federal district court. See Commodities &
Minerals Enterprise Ltd. v. CVG Ferrominera Orinoco, C.A., No. 17-
20196-CIV, 2017 WL 11625759 (S.D. Fla. Apr. 4, 2017); Commodities &
Mins. Enter. Ltd. v. CVG Ferrominera Orinoco, C.A., 338 F.R.D. 664, 667
(S.D. Fla. 2021). We therefore cannot say that its arguments were
brought in bad faith. See Oliveri v. Thompson, 803 F.2d 1265, 1272 (2d
Cir. 1986) (“[W]e have declined to uphold [fee] awards under the bad-
faith exception absent both ‘clear evidence’ that the challenged
actions are ‘entirely without color, and [are taken] for reasons of
harassment or delay or for other improper purposes’ and a ‘high
degree of specificity in the factual findings of [the] lower courts.’”
(quoting Dow Chemical Pacific Ltd. v. Rascator Maritime S.A., 782 F.2d
329, 344 (2d Cir. 1986))).
44
Accordingly, we vacate the portion of the judgment that
awarded attorney’s fees and costs to CME.
III. Conclusion
In sum, we hold as follows:
(1) A party applying to a court to confirm a foreign arbitral
award under Chapter 2 of the Federal Arbitration Act and
the New York Convention is not required to serve a
summons on the adverse party to satisfy the FAA’s service
of notice requirement. CME properly effected service of
notice on Ferrominera because its service of notice complied
with the parties’ “special arrangement” as permitted under
28 U.S.C. § 1608(b)(1).
(2) The district court properly enforced the arbitration award
because Ferrominera failed to establish that the arbitration
agreement was invalid under U.S. maritime law, the Panel
did not exceed its authority under the arbitration agreement
45
in issuing the Award, and the Award is not contrary to U.S.
public policy.
(3) The district court abused its discretion in awarding
attorney’s fees and costs in favor of CME.
We therefore AFFIRM the judgment of the district court to the
extent that it recognized and enforced the Award in favor of CME and
VACATE the judgment of the district court to the extent that it
awarded attorney’s fees and costs in favor of CME.
46