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United States: Court of Appeals for the Second Circuit Decision in Fotochrome, Inc. v. Copal Company. Ltd.*

Published online by Cambridge University Press:  04 April 2017

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Extract

Appeal from an order of the District Court for the Eastern District of New York, Jack B. Weinstein, J., reversing an order of the Bankruptcy Court. The Court of Appeals, Gurfein, Circuit Judge, held that where a foreign creditor files a claim in Chapter Xl proceeding based on a foreign arbitral award rendered in Japan in an arbitration commenced before the filing of the petition but completed afterwards, and where the foreign creditor was not within the personal jurisdiction of the Bankruptcy Court for purposes of a stay.

Type
Judicial and Similar Proceedings
Information
International Legal Materials , Volume 14 , Issue 4 , July 1975 , pp. 1006 - 1013
Copyright
Copyright © American Society of International Law 1975

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Footnotes

*

[The U.N. Convention on the Recognition and Enforcement of Foreign Arbitral Awards appears at 7 I.L.M. 1046 (1968). The U.S. Supreme Court decision in Scherk v. Alberto-Culver Co. appears at 13 I.L.M. 974 (1974). The U.S. Court of Appeals for the Second Circuit decision in Parsons & Whittemore Overseas Co., Inc. v. Société Générale de l'Industrie du Papier appears at 14 I.L.M. 504 (1975).]

References

* Of the Southern District of New York, sitting by designation.

1 21 U.S.T. 2517, T.I.A.S. 6997, 330 U.N.T.S. 38 (Dec. 29, 1970); implemented by 9 U.S.C. § 201 et seq.

2 4 U.S.T. 2063, T.I.A.S. 2863 (April 2, 1953).

3 As Judge Weinstein noted, though the United States acceded to the Convention after the contract in suit was signed and shortly after the award was made, the Convention contains no prospective language and should be applied retroactively to existing arbitration agreements and awards. 377 F. Snpp. at 30, citing Quigley, Convention on Foreign Arbitration Awards, 58 A.B.A.J. 821, 822 (1972).

4 The Japanese Treaty, a general treaty, is not quite as specific in its arbitration clause as the Convention. Article IV, ¶ 2 provides:

“Awards duly rendered pursuant to any . . . contracts [providing for arbitration of disputes], which are final and enforceable under the laws of the place where rendered, shall be deemed conclusive in enforcement proceedings brought before the courts of competent jurisdiction of either Party, and shall be entitled to be declared enforceable by such courts, except where found contrary to public policy.” 4 U.S.T. 2063 at 2068, T.I.A.S. 2863 at 7.

To the extent that there may be a conflict between the Treaty and the Convention, we think that where both parties to a bilateral treaty, Japan and the United States, later become signatories to a multinational convention covering the same subject matter, the Convention is intended to control. We reach this conclusion despite the saving clause preserving the validity of bilateral agreements between the contracting states. Convention, Article VII. The adhesion of additional signatories does not affect the circumstance that each signatory, bound by bilateral agreement, is modifying its earlier engagement vis-a-vis the other, but only to the extent necessary. Furthermore, inasmuch as both agreements further the same purpose, the one tending to further that purpose most forcefully, the Convention, should be given effect.

5 The question whether foreign arbitral awards will be enforceable in the United States courts has become a subject of only historical interest so far as nationals of countries signatory to the Convention are concerned, for 9 U.S.C. § 207 gives federal jurisdiction for the enforcement of such awards, implementing the Convention.

Before the Convention, although an arbitral award rendered in another state of the Union was entitled to full faith and credit, Fauntleroy v. hum, 210 U.S. 230 (1908), that obviously did not, in terms, apply to awards made in foreign countries. See generally, Von Mchren and Trautman, Recognition of Foreign Adjudications, 81 Harv. L. Rev. 1601, 1606 (1968); Eestatement 2d, Conflict of Laws § 98, Comment b (1971). No state had a statute providing for the enforcement of foreign arbitral awards, see Domke, Enforcement of Foreign Arbitral Awards in the United States, 13 Arb. J. (N.S.) 91, 92 (1958), and, curiously, the Federal Arbitration Act, though it embraces foreign commerce, makes no provision for the enforcement of foreign arbitral awards under the Act unless the parties, by agreement, have specified a court in which an order confirming the award may be made. See 9 U.S.C. § 9. That is now largely covered by Sections 203 and 207 of Title 9.