Telecom Business Solution, LLC v. Terra Towers Corp.
25-2020
| 2d Cir. | Aug 19, 2025Background
- Petitioners (Telecom Business Solution, LLC, LATAM Towers, LLC, and AMLQ Holdings (Cay), Ltd.) and Respondents (Terra Towers Corp., TBS Management, and DT Holdings, Inc.) entered a 2015 shareholders' agreement (SHA) concerning the development and operation of telecommunications towers in Central and South America.
- Terra was the majority shareholder; Petitioners could unilaterally initiate a sale of the company after a five-year lock-up period, per the SHA, governed by New York law.
- After the lock-up period expired, Petitioners attempted a company sale that Terra blocked, leading to arbitration.
- Multiple partial final awards (ordering sale, imposing sanctions, anti-suit injunctions, attorney fees) were issued by the arbitral tribunal and confirmed by the court; the Second Circuit affirmed.
- The Fifth Partial Final Award (5thPFA) awarded $300M+ in damages, including punitive damages, and imposed related injunctive relief, holding Terra, DTH, and Jorge Hernandez jointly and severally liable.
- Respondents and Hernandez moved to vacate the 5thPFA on various grounds, while Petitioners moved to confirm it under the FAA and New York Convention.
Issues
| Issue | Plaintiff’s Argument | Defendant’s Argument | Held |
|---|---|---|---|
| Tribunal exceeded its powers | Relief is within AAA Rules | Tribunal granted unrequested relief and calculated damages beyond Petitioners’ claims | Tribunal did not exceed its powers |
| Finality of the 5thPFA | Award is final and definite | Damages not final due to unresolved deductions and possible future claims | Award is final and definite |
| Manifest disregard of law (NY law) | Law was properly applied | Tribunal ignored contract language, granting damages in disregard of NY law | No manifest disregard; Tribunal properly applied NY law |
| New York Convention defenses (public policy, incapacity, notice) | Award complies and parties had notice | Public policy violated (double recovery), incapacity under BVI law, lack of notice/opportunity | Defenses not satisfied; confirmation appropriate |
| Jurisdiction over Hernandez | Direct benefits estoppel applies | Tribunal lacked jurisdiction; Hernandez not bound by arbitration | Jurisdiction valid; Tribunal’s determination stands |
Key Cases Cited
- Rich v. Spartis, 516 F.3d 75 (2d Cir. 2008) (describing the high deference due when reviewing arbitral awards)
- Landy Michaels Realty Corp. v. Local 32B–32J Serv. Employees Int’l, 954 F.2d 794 (2d Cir. 1992) (holding that an arbitral award should stand if there is a barely colorable justification for the outcome)
- Duferco Int’l Steel Trading v. T. Klaveness Shipping A/S, 333 F.3d 383 (2d Cir. 2003) (manifest disregard standard for arbitral awards is severely limited and deferential)
- Waterside Ocean Nav. Co. v. Int’l Nav. Ltd., 737 F.2d 150 (2d Cir. 1984) (public policy defense to enforcement of arbitration awards is construed narrowly)
- D.H. Blair & Co. v. Gottdiener, 462 F.3d 95 (2d Cir. 2006) (confirmation of an arbitration award is a summary proceeding)