Inversiones Y Procesadora Tropical Inprotsa, S.A. v. Del Monte International GMBH
921 F.3d 1291
| 11th Cir. | 2019Background
- Del Monte developed and commercialized the MD-2 pineapple variety and contracted with Costa Rican grower INPROTSA (2001–2013) to supply MD-2 planting material gratis in exchange for INPROTSA’s exclusive sale of MD-2 to Del Monte and an obligation to return or destroy plant stock on contract termination.
- After the agreement expired, INPROTSA sold MD-2 fruit to third parties instead of returning/destroying plant stock; Del Monte initiated ICC arbitration and prevailed. The tribunal ordered return/destruction of 93% of vegetative material, injunctive relief, and disgorgement damages of $26.133 million (93% of 2014 MD-2 sales).
- INPROTSA sought correction/clarification of the award under ICC rules; the tribunal declined to revisit substantive damages, stating Article 35 did not authorize merits reconsideration.
- INPROTSA filed a petition to vacate in Florida state court; Del Monte removed to federal court under the Convention Act (9 U.S.C. §§ 203, 205). The district court dismissed the vacatur petition for failing to assert a Convention-ground defense and later confirmed the award.
- On appeal INPROTSA argued (1) federal courts lacked subject-matter jurisdiction over a vacatur petition removed under § 205, (2) the district court wrongly applied Eleventh Circuit precedent limiting vacatur to Convention grounds, and (3) the award should not have been confirmed because it was procured by fraud and contrary to public policy.
Issues
| Issue | Plaintiff's Argument (INPROTSA) | Defendant's Argument (Del Monte) | Held |
|---|---|---|---|
| Subject-matter jurisdiction over vacatur petition removed under 9 U.S.C. §205/§203 | §203 is limited to causes of action expressly created by the Convention Act (compel arbitration, confirm award); vacatur is not one, so federal courts lack jurisdiction | §203 covers actions that "fall under the Convention" (i.e., sufficiently relate to Convention agreements/awards); §205 removal and §203 should be read consistently to allow federal jurisdiction | Court held federal district court had subject-matter jurisdiction: removal under §205 and relatedness to a Convention award satisfy §203’s scope |
| Whether Convention provides exclusive grounds for vacatur (reliance on Industrial Risk) | Industrial Risk was wrongly decided or overruled by BG Group; vacatur may be available under FAA grounds or other principles beyond Convention Article V defenses | Eleventh Circuit precedent (Industrial Risk) controls; BG Group did not clearly overrule it | Court followed Industrial Risk: defenses enumerated in the Convention (Article V) are the proper grounds; INPROTSA’s petition failed to assert a valid Convention defense, so dismissal proper |
| Alleged excess of arbitrator authority / contract interpretation and damages | Tribunal rewrote the contract (misread "as long as"), awarded excessive disgorgement contrary to Florida law, and refused to apply ICC correction procedures | Tribunal reasonably interpreted ambiguous contract language, limited damages to available evidence (refused to speculate), and properly construed ICC rules to deny merits re‑examination | Court held arbitrator did not exceed authority: contract interpretation was within arbitral powers; damages award and denial of correction were not vacatur-worthy errors |
| Fraud/public-policy defense at confirmation | Fraudulent inducement (and Magistrate Judge’s Dole Litigation finding) makes enforcement contrary to public policy; court should independently adjudicate fraud | Fraud was litigated and rejected in arbitration; public-policy exception is narrow and does not permit relitigation of arbitrated fraud known at arbitration | Court held public-policy/fraud defense failed: arbitration resolution precludes relitigation, and enforcing the award does not offend "most basic notions of morality and justice" |
Key Cases Cited
- Industrial Risk Insurers v. M.A.N. Gutehoffnungshütte GmbH, 141 F.3d 1434 (11th Cir.) (Convention Article V defenses are exclusive grounds for vacatur of Convention awards)
- BG Group PLC v. Republic of Argentina, 572 U.S. 25 (2014) (addressed standard of review for arbitrator interpretations; did not overrule Industrial Risk)
- Escobar v. Celebration Cruise Operator, Inc., 805 F.3d 1279 (11th Cir. 2015) (Convention Act forum/causes-of-action discussion)
- Outokumpu Stainless USA, LLC v. Converteam SAS, 902 F.3d 1316 (11th Cir. 2018) (relatedness test for whether a case falls under the Convention)
- Bamberger Rosenheim, Ltd. v. OA Dev., Inc., 862 F.3d 1284 (11th Cir.) (public-policy defense under the Convention is narrow)
- Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967) (fraud-in-the-inducement arbitrability principle)
- Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974) (noted that fraud-based public-policy defense may exist under Article V but did not authorize relitigation of arbitrated fraud)
- Wiregrass Metal Trades Council AFL-CIO v. Shaw Envt’l & Infrastructure, Inc., 837 F.3d 1083 (11th Cir. 2016) (arbitrator does not exceed authority by construing ambiguous contract)
- Powerex Corp. v. Reliant Energy Servs., Inc., 551 U.S. 224 (2007) (removal and subject-matter jurisdiction can differ in certain circumstances)