Gulf LNG Energy v. ENI USA Gas Marketing, 242 A.3d 575

Background

Gulf LNG Energy and Gulf LNG Pipeline ("Gulf") and Eni USA Gas Marketing ("Eni") contracted under a Terminal Use Agreement (TUA) that contains a broad arbitration clause and makes the Federal Arbitration Act (FAA) the exclusive post-award review mechanism.
In the First Arbitration Eni argued frustration of purpose and contractual breaches; the tribunal found the TUA frustrated, terminated it as of March 1, 2016, and awarded Gulf substantial damages; the award was later confirmed by the Delaware Court of Chancery (reduced by crediting payments made).
After confirmation, Eni filed a Second Arbitration asserting breach-of-contract claims (Articles 22.4(a) and 22.4(e)) and negligent misrepresentation, seeking to recoup amounts paid under the First Award (e.g., decommissioning costs).
Gulf sued in the Delaware Court of Chancery under the FAA to enjoin the Second Arbitration as an improper collateral attack on the confirmed First Award; the Chancery enjoined Eni’s negligent misrepresentation claim but allowed the contract claims to proceed to arbitration.
On appeal the Delaware Supreme Court held the Chancery had jurisdiction to enjoin collateral attacks on arbitration awards under the FAA and concluded the Second Arbitration as pleaded amounted to a collateral attack; it affirmed in part and reversed in part, directing the Chancery to enjoin all claims in the Second Arbitration.

Issues

Issue	Gulf's Argument	Eni's Argument	Held
1) May the Court of Chancery enjoin a follow‑on arbitration that collaterally attacks a prior arbitration award when the FAA governs?	FAA review is exclusive; follow‑on arbitration is an improper end‑run around FAA §§9–12 and must be enjoined.	The parties’ broad arbitration clause delegates arbitrability to arbitrators; courts lack jurisdiction to enjoin arbitration.	Court has jurisdiction to enjoin collateral attacks where the FAA governs; parties’ agreement to FAA review means follow‑on arbitration cannot circumvent FAA time limits and remedies.
2) Does Eni’s negligent misrepresentation claim in the Second Arbitration collaterally attack the First Award?	Gulf: yes—claim alleges misconduct that tainted the First Award and seeks to undo its monetary effect, so it must be raised via FAA §10 vacatur, not a new arbitration.	Eni: claim is independent and seeks relief in connection with the broader Guarantee Agreement and New York litigation, not simply to undo the award.	Held to be a collateral attack and properly enjoined: it alleges irregularities in the First Arbitration that could only be pursued under FAA vacatur procedure and is time‑barred.
3) Do Eni’s breach‑of‑contract claims in the Second Arbitration impermissibly collaterally attack the First Award?	Gulf: yes—substance and relief sought (recouping amounts paid under the First Award) show the real aim is to revisit the First Award outside FAA review.	Eni: the First Tribunal never reached the merits of those contract claims (found them academic), so they are independent and arbitrable.	Majority: the Court of Chancery should have enjoined the contract claims too—focus is on whether the second proceeding aims to rectify harm from the first award, not whether the claim was formally decided previously.
4) Does Henry Schein (delegation to arbitrator) or res judicata precedent prevent court intervention?	Gulf: Schein does not eliminate courts’ power to enjoin collateral attacks that subvert FAA exclusivity and finality.	Eni: Schein and cases where arbitrators decide preclusive effect show arbitrability and preclusion questions belong to arbitrators.	Schein and res judicata cases do not control here; because parties agreed FAA exclusivity for review of awards, courts may enjoin follow‑on proceedings that seek to bypass FAA remedies.

Key Cases Cited

AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (endorses strong federal policy enforcing arbitration agreements according to their terms).
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (arbitration policy and framework for resolving gateway arbitrability questions).
Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008) (Sections 10 and 11 of the FAA provide exclusive grounds for judicial review of arbitration awards).
Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002) (distinguishes questions presumptively for courts from those for arbitrators).
Corey v. New York Stock Exchange, 691 F.2d 1205 (6th Cir. 1982) (follow‑on claims alleging arbitrator bias or misconduct that effectively challenge award are impermissible collateral attacks; FAA is exclusive remedy).
Decker v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 205 F.3d 906 (6th Cir. 2000) (enjoining second arbitration that mirrored an improper collateral attack; FAA exclusivity applies to follow‑on arbitrations).
Texas Brine Co., L.L.C. v. Am. Arbitration Assoc., Inc., 955 F.3d 482 (5th Cir. 2020) (allegations of wrongdoing justifying vacatur indicate a collateral attack on an arbitration award).
Citigroup, Inc. v. Abu Dhabi Inv. Auth., 776 F.3d 126 (2d Cir. 2015) (arbitrators ordinarily decide claim‑preclusive effect of a prior judgment confirming an arbitration award where the arbitration clause is broad).
John Hancock Mut. Life Ins. Co. v. Olick, 151 F.3d 132 (3d Cir. 1998) (courts should limit inquiry to validity of arbitration agreement and whether the dispute falls within it when considering preclusion/compelling arbitration).
ConnTech Dev. Co. v. Univ. of Conn. Educ. Props., Inc., 102 F.3d 677 (2d Cir. 1996) (defining when an award is "mutual, final, and definite" for Section 10(a)(4) vacatur).