Rhone Mediterranee Compagnia Francese di Assicurazioni E Riassicurazoni v. Lauro - 712 F.2d 50 (3d Cir. 1983)

Rule:

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (Convention), June 10, 1958, 21 U.S.T. 2517, art. V, §1 says that enforcement of an award may be refused on the basis of the law of the country where it was made. Where the law of such a country generally favors enforcement of arbitration awards, and the defect is at best one of a procedural nature, art. V, § 1 certainly permits another forum to disregard the defect and enforce. That is especially the case when defendants come before the court and, relying on Convention art. II, seek a stay of the action in favor of arbitration.

Facts:

After a fire loss which occurred when the vessel Angelina Lauro burned at the dock of the East Indian Co. Ltd. in Charlotte Amalie, St. Thomas, plaintiff insurer, as subrogee of charterer, brought an action against defendants, vessel owner and vessel master, alleging breach of the charter, unseaworthiness, and negligence. The district court granted defendants' motion for a stay of the action pending arbitration pursuant to the provision in the charter providing for arbitration of all disputes in Napoli, Italy. The plaintiff appealed, arguing that under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (Convention), June 10, 1958, 21 U.S.T. 2517, to which both Italy and the United States were parties thereto, the arbitration clause was unenforceable.

Issue:

Was the arbitration clause unenforceable, thereby rendering the decision of the district court to stay the action pending arbitration an error? 

Answer:

No.

Conclusion:

On appeal, the court rejected plaintiff's contentions that under the Convention the arbitration clause was unenforceable. The court held that the rule of Italy as to the required number of arbitrators did not implicate the fundamental concerns of either the international system or forum. The Convention provided that enforcement of an award may be refused on the basis of the law of the country where it was made. Here, the agreement was made in the United States, and that law did not impose an odd number of arbitrators rule, and thus the arbitration agreement was enforceable. Accordingly, the court affirmed.