Subway International B.V. v. Bleta
RULING granting re 1 Complaint (Application to Confirm Arbitration Award) filed by Subway International B.V.. Signed by Judge Janet C. Hall on 4/2/2012. (Oliver, T.)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
SUBWAY INTERNATIONAL B.V.,
CIVIL ACTION NO.
APRIL 2, 2012
RULING RE: APPLICATION TO CONFIRM ARBITRATION AWARD (DOC. NO. 1)
Subway International B.V. (“SIBV”) petitions the court to confirm an arbitration
award pursuant to Section 9 of the Federal Arbitration Act (“FAA”). Defendant Panayota
Bletas (“Bletas”) opposes SIBV’s petition. For the reasons herein, SIBV’s Application to
Confirm Arbitration Award (Doc. No. 1) is granted.
Plaintiff SIBV, an international franchisor of SUBWAY® sandwich stores, is a
Netherlands limited liability corporation with its principal place of business in
Amsterdam. On March 31, 2005, SIBV and Bletas entered into Franchise Agreement
No. 36829 (“Franchise Agreement”), permitting Bletas to operate a Subway restaurant
in Greece provided that Bletas pays SIBV weekly royalty and advertising fees out of the
restaurant’s gross sales. Pl.’s Appl. to Confirm Arbitr. Award (Doc. No. 1) ¶¶ 5-7. The
Franchise Agreement contained a dispute resolution clause that provides in relevant
part: “[t]he parties will arbitrate any Dispute the parties do not settle under the
discussion procedures above, and any Dispute which this Agreement provides will be
submitted directly to arbitration, except as provided in the Agreement.” Franchise Agr.
(Doc. Nos. 1-1 & 1-2) ¶ 10.c. The parties also stipulated in the Franchise Agreement
that they would arbitrate such disputes in accordance with the United Nations
Commission on International Trade Regulations and Law Arbitration Rules administered
by an arbitration agency, such as the International Centre for Dispute Resolution, at a
hearing to be held in New York, New York. Id.
On September 3, 2009, SIBV filed a Demand for Arbitration with the International
Centre for Dispute Resolution, alleging that Bletas breached paragraphs 2 and 5.i of the
Franchise Agreement by failing to pay royalty and advertising fees. Pl.’s Appl. to
Confirm Arbitr. Award ¶ 9. In response, Bletas filed defenses and counterclaims with
the International Centre for Dispute Resolution. Id. Upon review of all claims and
defenses raised by SIBV and Bletas, Arbitrator John Holsinger issued a fourteen page
partial award dated June 17, 2010, and a final award dated August 11, 2010. See
Partial Final Arbitration Award (Doc. No. 1-3) & Final Arbitration Award (Doc. No. 1-5).
Pursuant to the arbitration awards, the Franchise Agreement was terminated, SIBV was
awarded 11,367.82 Euros for outstanding royalty and advertising fees and 2,200 Dollars
for filing fees and other expenses associated with the administration of the arbitration.
Partial Final Arbitration Award ¶ 56 & Final Arbitration Award ¶ 24.
On September 10, 2010, Bletas filed an action in New York state court seeking
to vacate the arbitration award at issue in this case. Mot. to Dismiss, Ex. A (Doc. No.
65). The state court action was dismissed on December 9, 2010, due to improper
service and “lack of merit.” Mot. to Dismiss, Ex. B (Doc. No. 66). On September 10,
2010, Bletas also filed an action in New York state court seeking to vacate a different
arbitration award, and that action was dismissed on November 10, 2010, due to
improper service. Id. On December 14, 2010, Bletas combined the two previously
dismissed actions and again filed them in New York state court as a single petition to
vacate the arbitration awards. That petition was dismissed on August 29, 2011, due to
improper service. Bletas, Panayota v. Subway International B.V., 116156/2010 (N.Y.
Sup. Ct. 8/29/2011).
In this case, subject-matter jurisdiction is conferred by 9 U.S.C. § 203, which
provides federal jurisdiction over actions to confirm or vacate an arbitration award
governed by the Convention on the Recognition and Enforcement of Foreign Arbitral
Awards (the “New York Convention”).1 The New York Convention applies in this case
because SIBV is a foreign corporation, and Bletas is a foreign citizen. See 9 U.S.C. §
Because the Final Arbitration Award was entered in the United States, however,
“the domestic provisions of the FAA also apply, as is permitted by Articles V(1)(e) and
V(2) of the New York Convention.” Scandinavian Reinsurance Co. Ltd. v. Saint Paul
Fire and Marine Ins. Co., 2012 WL 335772, at *7 (2d Cir. February 3, 2012). See also
Zeiler v. Deitsch, 500 F.3d 157, 164 (2d Cir. 2007) (describing overlap of New York
Convention and the FAA); Yusuf Ahmed Alghanim & Sons, W.L.L. v. Toys “R” Us, Inc.,
126 F.3d 15, 19–23 (2d Cir. 1997), cert. denied, 522 U.S. 1111 (1998). “[T]he FAA and
the New York Convention work in tandem, and they have overlapping coverage to the
extent that they do not conflict.” Sole Resort, S.A. de C.V. v. Allure Resorts Mgmt.,
The FAA does not independently confer subject matter jurisdiction on the federal courts. See,
e.g., Durant, Nichols, Houston, Hodgson & Cortese–Costa, P.C. v. Dupont, 565 F.3d 56, 63 (2d Cir. 2009);
Perpetual Securities, Inc. v. Tang, 290 F.3d 132, 136 (2d Cir. 2002). “[T]here must be an independent
basis of jurisdiction before a district court may entertain petitions” to confirm or vacate an award under the
Act. Durant, 565 F.3d at 63 (internal quotation marks omitted).
LLC, 450 F.3d 100, 103 n. 1 (2d Cir. 2006) (internal quotation marks omitted).
STANDARD OF REVIEW
Confirmation of an arbitration award is generally “a summary proceeding that
merely makes what is already a final arbitration award a judgment of the court.” D.H.
Blair & Co., Inc. v. Gottdiener, 462 F.3d 95, 110 (2d Cir. 2006) (quoting Florasynth, Inc.
v. Pickholz, 750 F.2d 171, 176 (2d Cir. 1984)). It is well settled that the court’s function
in confirming or vacating an Arbitrator’s Award is “severely limited,” Willemijn
Houdstermaatschappij, BV v. Standard Microsystems Corp., 103 F.3d 9, 12 (2d Cir.
1997) (citations omitted) (“Willemijn”), and the district court “must grant” a petition to
confirm the arbitration award “unless the award is vacated, modified, or corrected.” 9
U.S.C. § 9. The arbitrator need not explain his rationale for an award, and the district
court will confirm the award “if a ground for the arbitrator’s decision can be inferred from
the facts of the case.” D.H. Blair, 462 F.3d at 110 (quoting Barbier v. Shearson Lehman
Hutton, Inc., 948 F.2d 117, 121 (2d Cir. 1991)). A district court may vacate an
arbitration award where an arbitrator acted in “manifest disregard of the law.” Willemijn,
103 F.3d at 12 (citations omitted), but only “a barely colorable justification for the
outcome reached” by the arbitrators is necessary to confirm the award. D.H. Blair, 462
F.3d at 110 (quoting Landy Michaels Realty Corp. v. Local 32B-32J, Service Employees
Int’l Union, 954 F.2d 794, 797 (2d Cir. 1992)). A party moving to vacate an arbitration
award has the burden of proof, and the showing required to avoid confirmation is very
high. Willemijn, 103 F.3d at 12.
Bletas opposes confirmation of the arbitration award, claiming (1) lack of
personal jurisdiction due to improper service of process, and (2) lack of personal
jurisdiction because SIBV’s counsel allegedly committed fraud and perjury by submitting
a false certificate of service.
Bletas argues that personal jurisdiction is lacking because she was improperly
served. Bletas previously raised this defense in her Motion to Dismiss, and the court
(Dorsey, J.) has already ruled that Bletas forfeited her personal jurisdiction defense
arising from improper service of process by participating in a settlement conference in
this case on February 4, 2011, during which she did not raise the issue of defective
service of process or expressly state that she did not waive the defense by participating
in the conference. See Ruling on Motions to Transfer and Dismiss (Doc. No. 91) at 5-6.
Bletas further claims the arbitration award should not be confirmed because
SIBV Attorney Kristin Corcoran committed perjury and fraud upon the court by
improperly serving SIBV’s Application to Confirm Arbitration Award upon Bletas. This
claim is a mere reiteration of the personal jurisdiction defense Bletas raised in her
Motion to Dismiss. She may not now repackage that defense as a claim of fraud.
For the reasons herein, the Application to Confirm Arbitration Award (Doc. No. 1)
Dated at Bridgeport, Connecticut, this 2nd day of April, 2012.
/s/ Janet C. Hall
Janet C. Hall
United States District Judge
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