829 F.3d 1201
10th Cir.
2016
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Background

  • CEEG (Chinese manufacturer) and LUMOS (Colorado buyer) entered a Co-Branding Agreement (English-language communications and disputes) and a later Sales Contract for shipment of solar panels; the Sales Contract referenced CIETAC arbitration but did not specify arbitration language.
  • LUMOS received two shipments, alleged defects, and withheld final payment pending warranty remedies; communications over two years were conducted in English.
  • CEEG filed for arbitration at CIETAC. CIETAC/CEEG served LUMOS with an April 4, 2013 notice written in Chinese; LUMOS’ executives did not recognize it as an arbitration notice.
  • LUMOS had 15 days to appoint an arbitrator but failed to respond because it did not understand the Chinese notice; CIETAC and CEEG appointed arbitrators without LUMOS’ input.
  • The CIETAC panel (proceeding in Chinese) held LUMOS breached and awarded payment; CEEG moved to confirm the award in U.S. district court, and LUMOS moved to dismiss under the New York Convention’s notice and tribunal-composition defenses.
  • The district court found the Chinese-language notice was not reasonably calculated to apprise LUMOS (given prior English-only dealings and contract language) and that LUMOS was prejudiced by being prevented from participating in arbitrator selection; the court dismissed with prejudice. The Tenth Circuit affirmed.

Issues

Issue Plaintiff's Argument (LUMOS) Defendant's Argument (CEEG) Held
Was notice "proper" under the New York Convention? Chinese notice insufficient; not reasonably calculated to notify because prior dealings and contracts were in English. CIETAC sent notice; default CIETAC language may be Chinese; LUMOS later received actual notice. Notice in Chinese was not reasonably calculated to apprise LUMOS; defense applies.
Did insufficient notice prejudice LUMOS requiring refusal to confirm award? Yes — LUMOS was deprived of chance to participate in appointing arbitrators, causing substantial prejudice. No — appointed arbitrators were neutral and LUMOS later had actual notice before appointments were final; no prejudice shown. Prejudice found: inability to participate in panel selection was substantial; New York Convention defense met.
Must LUMOS show prejudice for notice-related defense to apply? (Assumes yes) LUMOS asserts prejudice and satisfies burden. CEEG argues prejudice is required and not shown. Court assumed prejudice requirement but found prejudice established.
Was deference due to the arbitral panel’s interpretation of contract language controlling the notice-language analysis? Agreement’s English-language provisions and course of dealings support expectation of English notices. Panel concluded Agreement did not govern the Sales Contract; arbitration panel’s findings should be respected. Court relied on Agreement and prior communications as evidence of expectation of English; did not defer on this procedural notice issue.

Key Cases Cited

  • Dominion Video Satellite, Inc. v. EchoStar Satellite L.L.C., 430 F.3d 1269 (10th Cir. 2005) (standard of review for confirmation of arbitral award)
  • Middleton v. Stephenson, 749 F.3d 1197 (10th Cir. 2014) (clear-error standard for district court factual findings)
  • ARW Expl. Corp. v. Aguirre, 45 F.3d 1455 (10th Cir. 1995) (deference to arbitrators; narrow review)
  • United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29 (U.S. 1987) (arbitrator’s error in law/fact not a ground for vacatur if arguably construing contract)
  • Karaha Bodas Co. v. Perusahaan, 364 F.3d 274 (5th Cir. 2004) (discussion of defenses under New York Convention and prejudice)
  • Encyclopaedia Universalis S.A. v. Encyclopaedia Britannica, Inc., 403 F.3d 85 (2d Cir. 2005) (refusal to confirm award where tribunal composition was inconsistent with parties’ agreement)
  • Iran Aircraft Indus. v. Avco Corp., 980 F.2d 141 (2d Cir. 1992) (applying Mullane due-process standard to international arbitration notice)
  • Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (U.S. 1950) (notice must be reasonably calculated to apprise interested parties)
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