Ministry of Defense & Support for the Armed Forces of the Islamic Republic of Iran v. Cubic Defense Systems, Inc.
665 F.3d 1091
| 9th Cir. | 2011Background
- Cubic and Iran entered a 1977 contract for a military air range; nonperformance followed the 1979 Iranian Revolution.
- Cubic’s predecessor later resold equipment and Canada purchased a modified version in 1981.
- Iran pursued breach claims through the Iran-U.S. Claims Tribunal (1982) and ICC arbitration (1991–1997).
- ICC issued final award in May 1997 ordering Cubic to pay Iran $2,808,591 plus $60,000 costs and pre-award interest.
- Cubic failed to pay; in 1998 Iran sought to confirm the ICC award under the New York Convention; the district court granted confirmation in 1998, with post-judgment issues later raised.
- The district court denied prejudgment interest and attorney’s fees; the Ninth Circuit granted partial relief and remanded for reconsideration, with continued sanctions context affecting payment feasibility.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether confirmation violates US public policy under Article V(2)(b) | Cubic argues public policy against Iran-related trade/finance; sanctions imply policy clash. | Ministry argues strong policy favoring enforcement; sanctions do not bar confirmation. | Not contrary to public policy; strong policy in favor of arbitration recognition prevails. |
| Whether the award had become binding before confirmation | Cubic contends award not yet binding, so enforcement invalid. | Ministry asserts all appeals exhausted; award binding. | Award had become binding; Article V(1)(e) inapplicable. |
| Whether district court could award post-award prejudgment interest | Ministry seeks prejudgment interest; district court lacked authority. | Cubic argues no authority to award prejudgment interest under the Convention. | Federal law allows post-award prejudgment interest; remanded for determination. |
| Whether district court could/should award attorney’s fees | Ministry seeks fees for bad faith; district court lacked authority. | Cubic argues no express authority. | Authority to award attorney’s fees exists; remanded for appropriate proceedings. |
Key Cases Cited
- Scherk v. Alberto-Culver Co., 417 U.S. 506 (U.S. 1974) (federal policy supporting arbitration minimizes public policy defenses)
- Parsons & Whittemore Overseas Co. v. Societe Generale De L’Industrie Du Papier (RAKTA), 508 F.2d 969 (2d Cir. 1974) (public policy defense construed narrowly; high respect for arbitration)
- Yusuf Ahmed Alghanim & Sons v. Toys “R” Us, Inc., 126 F.3d 15 (2d Cir. 1997) (nature of enforcement and confirmation of foreign arbitral awards)
- TermoRio S.A. E.S.P. v. Electranta S.P., 487 F.3d 928 (D.C. Cir. 2007) (public policy defense limits; enforceability of awards)
- Waterside Ocean Navigation Co. v. International Navigation Ltd., 737 F.2d 150 (2d Cir. 1984) (prejudgment interest within NY Convention actions)
- Parsons & Whittemore Overseas Co. v. Societe Generale De L’Industrie Du Papier (RAKTA), 508 F.2d 969 (2d Cir. 1974) (public policy defense narrowly construed)
- N.Y. Convention, Article V, 9 U.S.C. § 207 (-) (governs grounds for refusal/enforcement of foreign arbitral awards)