South-Western Legal Studies in Business

U.S. Courts May Not Intervene in Arbitration Subject to Law of another Country
Description U.S. court refused to hear a suit brought by a U.S. company that won an arbitration award in a contract dispute with a company from another country. Since the courts of that country vacated the award, that resolves the matter and there is no appeal to U.S. courts.
Topic International Law
Key Words Arbitration; Enforcement; Jurisdiction
C A S E   S U M M A R Y
Facts LeaseCo, from Oregon, was hired to modernize the power plants owned by Electranta, the power company owned by the government of Columbia. LeaseCo established TermoRio to run its operations in Columbia. A dispute arose between Electranta and LeaseCo. The matter went to the International Chamber of Commerce for arbitration. It awarded TermoRio $60 million. Electranta and the government of Columbia refused to pay. For the next five years, TermoRio battled in Columbian courts to enforce the arbitral award. Various Columbian courts and government agencies refused to comply with the award and began criminal investigations of executives who worked for TermoRio. TermoRio then sued in U.S. federal court, contending that the arbitral award should be upheld and that the criminal investigations in Columbia were bad faith efforts to intimidate people in Columbia.

Complaint dismissed. U.S. courts have no subject matter under the Convention on the Recognition and Enforcement of Arbitral Awards. The matter is subject to the jurisdiction of the courts of Columbia. If they refuse to enforce the award, that is the decision that U.S. courts recognize, and they will not intervene in the matter.

Citation TermoRio S.A. v. Electrificadora del Atlantico S.A., ---F.Supp.2s--- (2006 WL 695832, D. D.C., 2006)

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