VRG Linhas Aereas S.A. v. MatlinPatterson Global Opportunities Partners II L.P.
717 F.3d 322
2d Cir.2013Background
- VRG filed a petition in SDNY to confirm an ICC arbitral award under the New York Convention.
- MatlinPatterson contends the Arbitral Tribunal lacked jurisdiction over VRG's dispute.
- The district court denied VRG's petition, ruling the arbitration scope did not cover the purchase-price dispute.
- Addendum 5 to the March 2007 Agreement, signed by MatlinPatterson, limited competition but did not specify arbitration.
- The ICC Arbitral Tribunal held MatlinPatterson agreed to arbitration and that the purchase-price dispute was within scope, issuing the award in 2010.
- On review, the district court's handling of arbitrability was questioned, and the case was remanded to decide who determines the scope of the arbitration agreement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides arbitrability scope, court or arbitrators | VRG argues the court erred by deciding scope. | MatlinPatterson contends the court can decide scope unless clearly assigned to arbitrators. | Remand to decide who determines scope; if clearly assigned to arbitrators, defer to them. |
| Whether §14/arbitration clause covers scope questions | VRG contends Addendum 5 with §14 binds to arbitration of scope. | MatlinPatterson disputes incorporation of arbitration provisions. | Remand to determine if MatlinPatterson agreed to §14; if yes, arbitrators decide scope. |
Key Cases Cited
- First Options of Chi., Inc. v. Kaplan, 514 U.S. 938 (Supreme Court 1995) (three questions about arbitrability and who decides them)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (Supreme Court 2002) (rules for deciding who decides arbitrability)
- Shaw Group Inc. v. Triplefine International Corp., 322 F.3d 115 (2d Cir. 2003) (ICC clause commits to arbitrating arbitrability questions)
- Republic of Ecudor v. Chevron Corp., 638 F.3d 384 (2d Cir. 2011) (distinguishes questions of arbitrability and scope)
- Encyclopaedia Universalis S.A. v. Encyclopaedia Britannica, Inc., 403 F.3d 85 (2d Cir. 2005) (strong policy in favor of arbitration; defenses under NY Convention)
- Sarhank Grp. v. Oracle Corp., 404 F.3d 657 (2d Cir. 2005) (three questions approach to arbitrability and scope)
- Fishoff v. Coty Inc., 634 F.3d 647 (2d Cir. 2011) (construes NY Convention standards on review)