Chromalloy Aeroservices v. Arab Republic - 939 F. Supp. 907 (1996)

Rule:

Title 28 U.S.C.S. § 1605(a)(B)(a) states: A foreign state shall not be immune from the jurisdiction of courts of the United States in any case (6) in which the action is brought, either to enforce an agreement made by the foreign state with or for the benefit of a private party to submit to arbitration all or any differences which have arisen or which may arise between the parties with respect to a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration under the laws of the United States, or to confirm an award made pursuant to such an agreement, if (B) the agreement or award is governed by a treaty or other international agreement in force for the United States calling for the recognition and enforcement of arbitral awards.

Facts:

Petitioner United States corporation entered into a military procurement contract with Egypt. Over three years later, Egypt terminated the contract. Thereafter, the corporation notified Egypt that it rejected the cancellation of the contract and commenced arbitration proceedings on the basis of the arbitration clause contained in the contract. An arbitral panel ordered Egypt to pay certain sums. Thereafter, the corporation filed a petition to recognize and enforce the arbitral award. Egypt filed an appeal with the Egyptian Court of Appeal, seeking nullification of the award, and filed a motion with the court to adjourn the corporation's petition to enforce the award. The Egyptian Court of Appeal suspended and later nullified the award, and Egypt filed a motion to dismiss the corporation's petition to enforce the award.

Issue:

Could the arbitral award be enforced in the United States, notwithstanding the Egyptian court’s order nullifying the award? 

Answer:

Yes.

Conclusion:

The court held that the arbitral award was valid. The court found that Egypt's arguments against enforcement were insufficient to allow the court to disturb the award. Further, the court ruled that the arbitral award was proper as a matter of U.S. law and that the court need not grant res judicata effect to the decision of the Egyptian court.