472 F. App'x 11
2d Cir.2012Background
- This appeal concerns whether Iraq may compel arbitration against BNP Paribas USA under an UN contract related to Oil-for-Food program proceeds.
- Iraq seeks to arbitrate contract and fiduciary-duty claims as a purported third-party beneficiary of the UN–BNP Paribas agreement.
- BNP Paribas moved to stay arbitration; Iraq opposed, arguing disputes should be arbitrated.
- The district court denied arbitration and later denied Iraq’s motion to compel arbitration; the court stayed arbitration for BNP Paribas’s defense.
- The clause provides arbitration for disputes “arising out of or relating to this Agreement” but references “Parties” and 60-day amicable settlement; it does not expressly grant third-party arbitration rights.
- The Second Circuit holds that the arbitrability question remains for the court, not the arbitrator, and that Iraq cannot compel arbitration as a non‑party beneficiary under this clause.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides arbitrability of Iraq’s request | Iraq argues arbitrability should be decided by arbitrators under the clause incorporating arbitration rules | BNP Paribas argues the clause contemplates court determination unless clearly vested in arbitration | Court decides arbitrability (not the arbitrator) |
| Whether Iraq, as a purported third‑party beneficiary, has rights to compel arbitration | If Iraq is a third party beneficiary, it must show the contract intended to confer arbitration rights | Even if third-party beneficiary, the clause does not demonstrate an intent to confer arbitration rights to Iraq | No enforceable right for Iraq to compel arbitration |
| Effect of the contract language on arbitral vs judicial resolution | Arbitration should follow the UN contract under its terms | Language limits to the Parties; third-party beneficiary status not shown | Language defeats Iraq’s arbitral entitlement |
Key Cases Cited
- Telenor Mobile Commc’ns AS v. Storm LLC, 584 F.3d 396 (2d Cir. 2009) (presumption that arbitrability is decided by courts, not arbitrators, unless clear evidence otherwise)
- Contec Corp. v. Remote Solution, Co., 398 F.3d 205 (2d Cir. 2005) (whether arbitrability is for court or arbitrator depends on agreement text)
- Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 130 S. Ct. 1758 (2010) (arbitration requires consent; non-party claims must be within intent to arbitrate)
- Republic of Ecuador v. Chevron Corp., 638 F.3d 384 (2d Cir. 2011) (incorporation of UNCITRAL rules does not by itself show intent to arbitrate rights of non‑parties)
- Sokol Holdings v. BMB Munai, 542 F.3d 354 (2d Cir. 2008) (arbitration permitted only to the extent the signatory intended; non‑parties not bound)
- Progressive Cas. Ins. Co. v. C.A. Reaseguradora Nacional De Venezuela, 991 F.2d 42 (2d Cir. 1993) (third‑party beneficiary rights require clear intent to confer arbitration rights)
- Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (2009) (preemption by federal law and NY law on who may arbitrate)