201 F. Supp. 3d 696
D. Maryland2016Background
- Fakhri, a former shareholder/officer of Lebanese company Jnah (hotel owner), claimed he received an Assignment of Rights (AOR) and an Irrevocable Power of Attorney (POA) from Jnah’s new owners when he sold his shares, authorizing him to pursue arbitration claims against Marriott for termination of a hotel management agreement.
- Multiple ICC arbitrations arose: Jnah 2 (award to Jnah, later paid to Fakhri), Jnah 3 (brought by Fakhri claiming wrongful termination damages), and later Jnah 4 (renewed request). The ICC panel in Jnah 3 held Fakhri lacked authority and dismissed for lack of jurisdiction; French courts subsequently reviewed and ultimately upheld that dismissal.
- While Jnah 3 was pending, Marriott negotiated and executed a settlement with Jnah’s new owners (Shayah-owned Jnah) that included payments and assistance to show Fakhri lacked authority; Fakhri alleges this was a secret, illicit agreement that induced testimony against him and deprived him of his contractual rights.
- Fakhri sued Marriott in U.S. district court for tortious interference under Lebanese law, seeking damages that largely derive from the alleged deprivation of his right to pursue the Jnah 3 claims (including lost contractual damages, legal fees, reputational and emotional harms).
- Marriott moved to dismiss for lack of subject-matter jurisdiction, arguing the suit is a collateral attack on the foreign arbitration award and barred by the New York Convention; Marriott also brought counterclaims related to the Jnah 2 payment. The court stayed earlier jurisdictional rulings, permitted limited discovery, and ultimately held it lacked jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal court may hear Fakhri’s tort claim given arbitration clause/exclusive ICC jurisdiction | Fakhri: claim is an independent tort under Lebanese law, not an attempt to relitigate arbitration merits | Marriott: dispute arises from Management Agreement and thus falls under ICC jurisdiction/arbitration clause | Court: Dismissed — claim effectively seeks relief for the same contract claims tied to the Management Agreement and implicates ICC-awarded matters, so not properly before this court |
| Whether New York Convention bars a U.S. court from hearing collateral attacks on a foreign arbitral award | Fakhri: his claim concerns independent pre-arbitral misconduct and AOR rights distinct from Jnah 3 award | Marriott: suit is a collateral attack seeking to overturn or remedy the Jnah 3 outcome, so Convention precludes jurisdiction | Court: Held Convention bars this suit as a collateral attack because harm is tied to the effect on the Jnah 3 award |
| Whether damages sought are co-extensive with those in Jnah 3 (i.e., relitigation of arbitration remedies) | Fakhri: seeks distinct tort damages (reputational, emotional, attorneys’ fees) and AOR-based remedies | Marriott: damages Fakhri seeks are essentially the same lost contractual recovery from the Management Agreement that Jnah 3 sought | Court: Held damages are co-extensive — plaintiff’s true objective is to recover what he was denied in Jnah 3, supporting dismissal |
| Jurisdiction over Marriott’s counterclaims (fraud, negligent misrepresentation, unjust enrichment) after dismissal of Fakhri’s claim | Fakhri: moved to dismiss counterclaims as time-barred and inadequate on merits | Marriott: counterclaims depend on court retaining jurisdiction over main claim | Court: Dismissed counterclaims for lack of subject-matter jurisdiction because Marriott conceded counterclaims lacked independent jurisdictional basis |
Key Cases Cited
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (U.S. 1985) (federal policy strongly favors arbitration and international comity)
- Gulf Petro Trading Co. v. Nigerian Nat. Petroleum Corp., 512 F.3d 742 (5th Cir. 2008) (U.S. courts lack jurisdiction over suits that are collateral attacks on foreign arbitral awards)
- Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 364 F.3d 274 (5th Cir. 2004) (secondary-jurisdiction courts cannot vacate or modify foreign awards; enforce-or-refuse framework under New York Convention)
- Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 335 F.3d 357 (5th Cir. 2003) (a court may enforce an award even while set-aside proceedings occur in the primary jurisdiction)
- Decker v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 205 F.3d 906 (6th Cir. 2000) (domestic precedent dismissing collateral attacks on arbitration awards)
- Europcar Italia, S.p.A. v. Maiellano Tours, Inc., 156 F.3d 310 (2d Cir. 1998) (district court’s limited role in enforcement stage and Article V defenses under the Convention)