Abu Dhabi Investment Authority v. Citigroup, Inc.
MEMORANDUM DECISION AND ORDER denying 17 Motion to Vacate Arbitration; granting 27 Motion to Confirm Arbitration. Petitioner ADIA's Motion to Vacate the arbitration award (Dkt. No. 17) is DENIED. Respondent Citi's Cross-Motion to Confirm the arbitration award (Dkt. No. 27) is GRANTED. The Clerk of the Court is directed to enter judgment on the award in Respondent's favor, and close this case. (Signed by Judge George B. Daniels on 3/4/2013) (ft)
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,i)i,J:( "rkONlCAlLY FILED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NE'V YORK
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ABC DHABI INVESTMENT AUTHORITY,
12 Civ. 283 (GBD)
GEORGE B. DANIELS, United States District Judge:
Petitioner Abu Dhabi Investment Authority ("ADIA") brings this petition to vacate an
arbitration award rendered in favor of Respondent, Citigroup, Inc. ("Citi") pursuant to an
arbitration agreement. ADIA contends that the award must be set aside because (1) the
arbitration tribunal's decision to apply New York law to ADIA's claims for common law fraud
and negligent misrepresentation was made in manifest disregard of the law in violation of the
Federal Arbitration Act ("FAA"), and (2) that certain evidentiary rulings by the tribunal left it
unable to present its case, in violation of both the FAA as well as The Convention on the
Recognition and Enforcement of Foreign Arbitral Awards ofJune 10,1958 ("New York
Convention"). Citi opposes ADIA's motion to vacate. Citi moves this Court to confirm the
award. ADL!\'s Motion to Vacate is DENIED. Citi's Cross-Motion to Confirm is GRANTED.
The award is confirmed.
The relevant facts are largely undisputed. In November 2007, ADIA made a $7.5 billion
investment in Chi. The investment agreement contained an arbitration clause, whereby ADIA
and Citi agreed to submit any dispute that arose out of the transaction to binding arbitration.
After irresolvable differences arose, ADIA filed a Statement of Claim with the agreed upon
arbitration organization, the International Centre for Dispute Resolution of the American
Arbitration Association ("ICDR") in December 2009. ADIA asserted claims against Citi for
common law and securities fraud, negligent misrepresentation, breach of fiduciary duty, breach
of contract, and breach of the implied covenant of good faith and fair dealing. ADIA demanded
either rescission of the contract and the return of its investment, or money damages of over four
Each party nominated one arbitrator, and these nominees jointly selected the third, neutral
member of the tribunal, who was designated its chair. The tribunal was deemed fully constituted
on May 3, 20 I O. All three arbitrators were
.S.-based attorneys. After extensive discovery and
a 16-day hearing in New York in which it heard 24 witnesses and received 5,988 exhibits, the
tribunal gave an award tor Citi and against ADIA ADIA then brought this petition to vacate the
award. It cited three tribunal decisions that it contends were made in manifest disregard of the
law, and which left it unable to present its case. ADIA contends that the tribunal's New York
choice of law decision on the common law tort claims, and two evidentiary rulings warrant
vacatur of the award.
The Choice of Law Decision
On November 18, 2010, ADIA infonned Citi by letter that the civil law of Abu Dhabi
"could arguably control certain issues relating to ADIA's tort claims," (Letter from Sascha Rand,
Toal, Ex. Z, at 7), and moved the tribunal on December 1,2010 to apply Abu Dhabi's civil law
to its claims for common law fraud and negligent misrepresentation. The investment agreement
explicitly stated that New York law would govern breach of contract claims, but did not contain
a choice of law provision specifically governing the substantive law applicable to non-contract,
common law tort claims. l To determine which substantive law to apply, ADIA "agree[d] with
Citi that the choice-of-Iaw framework in this arbitration is supplied by the two-step analysis of
Article 28(1) of the ICDR Rules," which calls for the tribunal to determine the "appropriate" law
to apply. Claimant's Reply in Support of Application of Abu Dhabi Law to Claimant's Tort
Claims ("Claimant's Reply"), Toal Ex. Yat 1. Citi opposed ADIA's motion to apply the civil
law of Abu Dhabi, and argued that New York substantive law ought to apply.
The tribunal concluded that New York substantive law would govern all claims,
including ADIA's claims for common law fraud and negligent misrepresentation.
issued a seven page, single spaced, statement of reasons explaining its decision on December 31,
2010. The tribunal found that the parties' contract had not designated the substantive law that
was to apply to these tort claims in any of their agreements, and that the choice oflaw process
was indeed governed by Article 28(1). It then stated that in order to determine which law was
"appropriate," it was going to apply two frameworks: "choice of law authorities in international
The choice of law clause of the Investment Agreement states:
Governing Law; Submission to Jurisdiction, Etc. The Transaction Documents will be governed by
and construed in accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such State. In the case of any permitted court proceedings,
including any request for Interim Measures, each of the parties hereto agrees (i) to submit to the
personal jurisdiction of the State or Federal courts in the Borough of Manhattan, the City of New
York, (ii) that exclusive jurisdiction and venue shall lie in the State or Federal courts in the State
of New York, and (iii) that notice may be served upon such party at the address and in the manner
set forth for such party in Section 5.10. The parties may seek to enforce an arbitral award in any
court in which jurisdiction may be had.
Investment Agreement, Toal Ex. A,
arbitration practice," and New York's "interest analysis." Order on Governing Law: Statement
of Reasons ("Statement of Reasons"), Toal Ex. M, at 1-3.
The tribunal first addressed choice of law principles from international arbitration
practice. It found that the following relevant factors, gleaned from choice of law principles as
articulated in two treatises on international arbitration, supported the application of New York
law: the contract was denominated in U.S. dollars; the contract was performed in New York;
applying New York law furthered the internationally recognized goals of predictability and
celiainty in international commerce; and doing so subjected all issues arising from the contract to
a single legal regime. rd. at 3.
Turning next to the interest analysis, the tribunal recognized that both New York and Abu
Dhabi had "legitimate interests and concerns relating to ADIA's fraud and negligent
misrepresentation claims," but ultimately concluded that New York's interest was greater. Id. at
3. The tribunal recognized that the plaintiff is based in Abu Dhabi and that its injury allegedly
took place there, but found that the "overwhelming center of the events giving rise to the claims
is New York." rd. It found that the alleged misrepresentations were made in New York; that the
"substantial majority" of the activities leading up to the signing of the agreement took place in
New York; that the parties relied on the advice of New York counsel when drafting the
investment agreement, who rendered opinions on the agreement pursuant to the laws of New
York (and not Abu Dhabi); that New York had a "significant interest" in regulating the conduct
of New York-based financial institutions (such as Citi); and that the choice of New York law
"appropriately reflects the reasonable expectations of Parties whose cumulative actions indicate a
reliance on that jurisdiction's law to govern their conduct ..." Id. at 4.
Consistent with its attempt to validate the parties' reasonable expectations, the tribunal
devoted several pages of its decision to a discussion of the parties' course of dealing. It did not
find any evidence during the negotiations leading up to the agreement, in the agreement itself, or
in the history of the arbitration prior to ADIA's November 18,20 I 0 letter (which was sent nearly
a year into the arbitration) that either party ever contemplated that the civil law of Abu Dhabi
might apply. In its statement of claim, ADIA framed its claims as common law fraud and
negligent misrepresentation, notwithstanding the fact that Abu Dhabi is a civil law jurisdiction
that does not recognize common law claims. Id. The law of New York was the only law that the
parties designated as applicable to any anticipated dispute.
The parties engaged in substantial discovery prior to the ultimate hearing. Citigroup
produced over 550,000 pages of documents from thirty-two custodians, including some ofCiti's
highest executives, such as its then Chief Executive Officer, Chief Financial Officer, and several
other officers and directors. Citi's document production largely related to the valuation of its
securitized assets and its near-term capital needs. At one point, the tribunal itself noted that the
scope of discover that it allowed went "beyond what [the tribunal understood] generally to be the
international nom1 as set out, for example, in the ICDR guidelines." Kovember 7,2010 Order,
Toal Ex. Cat 2, n.I.
ADIA argues that the tribunal's denial oftwo of its almost sixty document requests (see
August 12,2010 Order, Toal
D) left it unable to present its case and warrants vacating the
award. ADIA's discovery request No. 35 sought all documents relating the "significant but
possibly unrecognized financial losses" referenced in an email (that ADIA had in its possession)
that was sent by Richard Bowen, a manager in Citi' s real estate lending group, to high level Citi
executives. Bowen Email, Spray Ex. 14 at 1. ADIA argued that in the email, Bowen alerted top
Citi officials, including CFO Gary Crittenden, of "breakdowns of internal controls and resulting
significant but possibly unrecognized financial losses" within Citi. Id. Although the tribunal did
not explicitly state its reasons for denying this request, it allowed both sides the opportunity to
brief the issue and several hours of oral argument.
The other document request that the tribunal denied pertained to production of Citi' s
bank examiner reports. 3 ADIA requested these reports not in its initial document request of July
23,2010, but in a supplemental document request dated October 29,2010. In a three page,
single spaced, decision, the tribunal denied ADIA's request, finding it untimely. November 7,
2010 Order, Toal Ex. C at 2. The tribunal continued that even assuming the request was timely,
it still would have denied it because of the schedule demands ofthe arbitration, the extensive
scope of the discovery already allowed, the refusal of the FRB and OCC to waive their bank
regulator privilege, and because in its best judgment, the information contained in the bank
examiner reports would have been cumulative. Id. at 2-3.
This petition to vacate the arbitration award is governed by two sources oflaw. The
New York Convention governs the recognition and enforcement of arbitral awards "not
considered as domestic awards in the State where their recognition and enforcement are sought."
2 Document request No. 35 demanded "All Documents from October 15, 2007 to January 31, 2008, referring to,
commenting on, or describing the 'significant but possibly unrecognized financia110sses' referenced in Mr. Richard
Bowen's email to Mr. Rubin dated November 3,2007 (a copy of which is attached hereto as Exhibit 2), including
any analysis prepared by or considered by Mr. Bowen that supported these assertions." August 12, 2010 Order,
Toal Ex. D at 6.
3 These reports were prepared by the Federal Reserve ("FRB"), Federal Deposit Insurance Corporation ("FDIC"),
and the Office of the Comptroller of the Currency ("OCC"), among other agencies, in the course of their routine
audit of Citibank. See generally, In re Franklin Nat'l Bank Sec. Litig., 478 F. Supp. 577 (E.D.N".Y. 1979).
Convention, Art. 1. The FAA requires enforcement of the Convention, except in instances
concerning "a relationship which is entirely between citizens of the United States." 9 U.S.c. §§
201,202. The Convention applies here because ADIA is a public investment fund established
under the laws of the Emirate of Abu Dhabi, and Citi is a Delaware corporation with its principal
place of business in New York.
A district court "shall confirm the award unless it finds one of the grounds for refusal or
deferral of recognition or enforcement of the award specified in the said Convention [in Article
V]." ld. § 207. ADlA brings this petition under Article V(l)(b), which permits a court to refuse
an award if the party against whom the award was invoked was "unable to present his case ...."
Convention, Art. V(l)(b). The Second Circuit has interpreted this ground as being akin to a
violation of due process, requiring an "opportunity to be heard at a meaningful time and in a
meaningful manner." Iran Aircraft Industries v. Avco Corp., 980 Fold 141, 146 (2d. Cir. 1992).4
The second source of law is the FAA itself. The FAA standards for recognition and
enforcement of arbitration awards also apply to disputes that fall under the Convention to the
extent that they are "not in conflict" with those of the Convention. 9 U.S.c. § 208;
Deitsch, 500 F.3d 157, 164 (2d Cir. 2007). Neither party contends that the Convention's
standards for vacatur conflict with those of the FAA here. They do not. Cowis routinely apply
both the Convention and the FAA to motions to vacate or confirm arbitral awards that were
rendered in the United States. 5 See Yusuf Ahmed Alghanim & Sons, W.L.L. v. Tovs "R" Us,
Although there are few Second Circuit cases that discuss the specific process due, one Fifth Circuit court has held
that in order for an arbitration to be fundamentally fair, it must meet "the minimal requirements of fairness
adequate notice, a hearing on the evidence, and an impartial decision by the arbitrator.. . . The right to due process
does not include the complete set of procedural rights guaranteed by the Federal Rules of Civil Procedure.
Bodas Co., L.L.c. v. Pemsahaan Pertambangan Minyak Dan Gas Bumi Negra, 364 F.3d 274, 298-99 (5th Cir. 2004)
(internal quotations and citations omitted).
5 The most common instance in which courts deem the Convention and FAA in conflict are instances where the
arbitral award was
in or under the laws of a foreign jurisdiction, which is not applicable here. See Yusuf
0!!~", 126 F.3d at 20 (collecting cases).
126 F.3d 15, 19-20 (2d Cir. 1997) (noting that the Convention and the FAA work together
and have "overlapping coverage"); accord Sole Resort, S.A. de c.V. v. Allure Resorts Mgmt.,
F.3d 100, 103 n.1 (2d Cir. 2006).
A court may vacate an award pursuant to one of the enumerated grounds for vacatur in
the FAA. Hall St. Assocs., L.L.c. v. MatteI, Inc., 552 U.S. 576, 586 (2008). ADIA brings this
petition pursuant to § lO(a)(3) of the FAA. Section § 10(a)(3) states, in pertinent part, that this
court may vacate the award "where the arbitrators were guilty of misconduct ... in refusing to
hear evidenee pertinent and material to the controversy; or of any other misbehavior by which
the rights of any party have been prejudiced." 9 U.S.c. § 10(a)(3). ADIA claims that the
tribunal's errors were so severe that its choice of law decision and denial of two document
requests amount to a manifest disregard of the law, and require vacatur. 6
A party seeking to vacate an award under the FAA faces a "high hurdle." Stolt-Nielsen
S.A. v. Animalfeeds Int'l Corp., 130 S. Ct. 1758, 1766 (2010). Awards are vacated on grounds
of manifest disregard only in "those exceedingly rare instances where some egregious
impropriety on the part of the arbitrator  is apparent," T.Co Metals, LLC v. Dempsey Pipe &
Supplv. Ine., 592 F.3d 329,339 (2d Cir. 2010) (quoting Duferco Int'l Steel Trading v. T.
Klaveness Shipping AlS, 333 F.3d 383, 389 (2d Cir. 2003)). It is not enough for the petitioner to
show that the panel committed an error of law-even a serious one. Eastern Associated Coal
Corp. v. Mine Workers, 531 U.S. 57, 62 (2000). Misunderstandings of law or arguable
(, Courts in this Circuit have long used "manifest disregard" as the standard for vacating arbitral awards under
§10(a). See, e.g., T.Co Metals. LLC v. Dempsey Pipe & Supply, Inc., 592 F.3d 329, 339-40 (2d Cir. 2010). While
the Supreme Court has explicitly not decided whether this standard survived its decision in
disregard" is not mentioned in the statute,
130 S. Ct. at 1768, n.3 ("We do not decide whether
.. " ) the Second Circuit continues to employ it.
'manifest disregard' survives our decision in
STMicroelectronics. N.V. v. Credit Suisse Sec. (USA) L.L.c., 648 F.3d 68,78 (2d Cir. 2011) (assuming that it
592 F.3d at 340 (positing that Hall reconceptualized manifest disregard "as a judicial gloss on
the specific grounds for vacatur." (quoting Stgh-Nielsen SA v. AnimalFeedsJ.l1t.'1 Corp., 548 F.3d 85, 94 (2d Cir.
130 S.Ct. 1758 (2010»).
differences in a law's application will not suffice.
592 F.3d at 339. In order to meet this
standard, there must be "a barely colorable justification for the outcome reached," or the
petitioner must clearly demonstrate that the arbitrator "intentionally defied the law." Id. (quoting
Wallace v. Buttar, 378 F.3d 182, 190 (2d Cir. 2004)); see also STMicroelectronics, 648 F.3d at
There are three components to the manifest disregard standard.
592 F.3d at 339.
First, this Court must "consider whether the law that was allegedly ignored was clear, and in fact
explicitly applicable to the matter before the arbitrators. An arbitrator obviously cannot be said to
disregard a law that is unclear or not clearly applicable. Thus, misapplication of an ambiguous
law does not constitute manifest disregard." Id. Second, this Court must find that the law was
improperly applied, and that this improper application led to an erroneous outcome. Id. The
third element is whether the arbitrators actually knew about the law and then intentionally
disregarded it. Id.
The Tribunal's Application of New York Law Did not Violate the FAA
ADIA argues that the tribunal's refusal to apply the civil law of Abu Dhabi to its
common law fraud and negligent misrepresentation claims constituted manifest disregard of the
law. 7 It argues that the tribunal was required to apply the New York State choice oflaw analysis,
Although ADIA nominally claims that the tribunal's refusal to apply Abu Dhabi law violated the Convention by
preventing ADIA from being able to present its case, ADIA appears to abandon this argument. The only section of
its brief that purports to raise this argument. entitled "The Tribunal Manifestly Disregarded Well-Established
Choice-of-Law Principles In Denying ADIA's Motion To Apply Abu Dhabi Law and Thereby Denied ADIA the
Opportunity To Present Its Case In a Meaningful Way," does not offer as much of a sentence of argument as to how
the tribunal's purportedly erroneous choice oflaw decision violated the Convention.
ADIA Br. at 18-20. ADIA
does not devote any of the fifteen pages in its reply brief that discuss this choice of law error to this argument.
ADIA Reply Br. at 4-19. The tribunal set a briefing schedule on this issue and provided the parties with a
single-spaced statement ofreasons on December 31,2010. It appears beyond reproach (as ADIA's abandonment
implicitly recognizes) that ADIA had ample time and opportunity to argue this issue before the tribunal, and that the
tribunal met its basic obligations of fairness.
and that had it properly applied such analysis, the only conclusion it could have reached was that
Abu Dhabi civil law applied. It argues that while it might have been unable to meet the New
York standards for fraud and negligent misrepresentation, it would have been able to meet the
standards under the civil law of Abu Dhabi, which are lower. 8 Citi argues that the tribunal was
bound to and properly did apply the choice oflaw framework supplied by Article 28(1) the
ICDR rules, which required it apply the "appropriate" substantive law.
A careful review of the tribunal's actions and decisions indicates that it did not act with
manifest disregard ofthe law. While the investment agreement specified that the transaction
documents would be governed by and construed in accordance with New York law, it did not
specify which set of laws would govern other common law claims that did not arise directly from
the agreement. Investment Agreement, Toal Ex. A,
The parties agreed that any dispute
that they could not resolve would be decided through arbitration administered by the ICDR in
accordance with its International Arbitration Rules. rd.
5.6(a). Article 28(1) of the
International Arbitration Rules states that should the parties fail to designate a set of substantive
laws for the tribunal to apply in their agreement, "the tribunal shall apply such law(s) or rules of
law as it determines to be appropriate." International Arbitration Rules, Toal Ex. N, Art. 28(1).
In briefing the choice of law issue for the tribunal, ADIA stated that it "agrees with Citi
that the choice-of-Iaw framework in this arbitration is supplied by the two-step analysis of
Article 28(1) of the ICDR Rules: (1) Have the parties designated a jurisdiction's substantive law
as applicable to the dispute?; (2) Failing such a designation by the parties, which such law(s) are
appropriate?" Claimant's Reply, Toal Ex. Y, at 1 (internal quotations omitted). The tribunal did
ADlA contends that "The Civil Code provides remedies for misrepresentations (without distinguishing between
intentional, negligent or reckless misrepresentations) that include both damages and, under appropriate
circumstances, rescission. , , . The minimum threshold for imposing tort liability under (J the Civil Code is whether
the conduct alleged was harmful
\vTongful or unreasonable) and caused injury to the plaintiff." ADIA Br., Dkt
No. 18, at 16.
not manifestly disregard the law when it heeded ADIA's own argument to apply ICDR Rule
Heeding ADIA's argument, the tribunal undertook a searching inquiry to determine
which substantive body of law was "appropriate" to apply, considering "the choice of law
principles followed in New York, as well as choice of law authorities in international arbitration
practice." Statement of Reasons, Toal Ex. M, at 3. It turned first to the "internationally
recognized cumulative approach." It balanced "predictability and certainty in international
commerce," "the practical utility of applying one law" to the entire dispute, "party autonomy" in
selecting the body of law to apply, and "the need to respect" ADIA's motion to apply Abu Dhabi
civil law. rd. It looked at treatises on international arbitration and reasoned that this approach
pointed toward the application of New Yark law because of (1) the benefits of applying a "single
legal regime" to the dispute, (2) the fact the transaction was denominated in U.S. dollars, and (3)
the fact that performance of the contract took place in New York. Id.
The tribunal then turned to the New York framework, identified the proper interest
analysis, and proceeded to balance the factors on each side to determine which jurisdiction had
the greatest interest. Id. (citing Curlev v. AMR Corp., 153 F.3d 5, 12 (2d Cir. 1998)). It
recognized that ADIA was based in Abu Dhabi and that ADIA's alleged injury took place there.
it concluded that the "overwhelming center of events giving rise to the claims is
"Jew York." Statement of Reasons, Toal
M, at 3. It found that the "substantial majority of
the activities leading up to the signing of the Investment Agreement" were in New York; that the
parties had each retained New York attorneys to draft the agreements and advise them; that many
of the alleged misrepresentations were made in New York; and that New York had a significant
interest in regulating the conduct of New York-based financial institutions. Id. at 4. Rather than
disregarding New York's interest analysis, the tribunal explicitly applied it.
ADIA now urges that this was an "erroneous application" of New York's interest
analysis that warrants vacating the tribunal's award. ADIA Reply Br. at 10. Not only is this
application not erroneous, but even if it were, it would not meet the standard for vacatur. See
531 U.S. at 62 (2000) (noting that a court cannot vacate an award
even if the panel committed a serious error of law). In arguing that the tribunal erred as a matter
of law, ADIA relies on statements by courts to the effect that when conflicting laws involve
standards of conduct (as fraud and negligent misrepresentation do 9), New York's interest
analysis leads to the conclusion that the jurisdiction in which the loss occurred generally has the
greatest interest. See, e.g., Sound Video Unlimited, Inc. v. Video Shack, Inc., 700 F. Supp. 127,
133-34 (S.D.N.Y. 1988).
ADIA's argued outcome-which it submits as a preordained result of New York's
interest analysis-is not automatic. It gives way to the more multi-faceted interest analysis that
the tribunal employed when the conduct that caused the injury took place in a jurisdiction apart
from where the injury was felt. See Simon v. Philip Morris, 124 F. Supp. 2d 46, 57-58
(S.D.N.Y.2000). The New York Court of Appeals has explicitly held that the New York interest
analysis is not rigid, but rather is determined by "an evaluation of the facts or contacts which
related to the purpose of the particular law in conflict." Padula v. Lilam Properties Corp., 84
N.Y.2d 519, 521 (1994). This interest analysis is fact intensive and "flexible."
Osgood Mach., Inc., 81 N.Y.2d 66, 72 (1993); see also White Plains Coat & Apron Co., Inc. v.
Cintas Corp., 460 F.3d 281, 284-285 (2d Cir. 2(06) ("New York courts have adopted a flexible
The New York interest analysis
between loss-allocation rules and conduct-regulating rules. Padula,
84 N.Y .2d at 521-22. Fraud and negligent misrepresentation are conduct-regulating rules. ==~===-'-==-'-'=
Servs. v. Casuccio, 350 F. Supp. 2d
364 (E.D.N.Y. 2003).
choice oflaw approach and seek to apply the law of the jurisdiction with the most significant
interest in, or relationship to, the dispute."). While the place where the injury was felt is an
important factor, it is not conclusive.
c.f. Cummins v. Suntrust Captial Mkts., Inc., 649 F. Supp.
==-,-,237 (S.D.N.Y. 2009); see also Simon, 124 F. Supp. 2d at 58. Rather, the overriding
principle that the law of the forum with the "greater interest in having its law applied in the
litigation" governs the analysis. 10 Padula v. Lilarn Props. Corp., 84 N.Y.2d 519, 521 (1994).
The nature of New York's flexible interest analysis, and the thoughtful way in which the
tribunal applied it, are fatal to ADIA's argument that the tribunal acted in manifest disregard of
the law. New York's interest analysis is subject to balancing and differing interpretations, and
this Court cannot accept ADIA's invitation to reconsider the merits of its argument and reweigh
the interests in its favor. See Major League Baseball Players Ass'n v. Garvey, 532 U.S. 504, 509
(courts are not authorized to review the merits of an arbitrator's decision, despite factual or legal
errors). Given the flexibility of the analysis, it cannot be said that the law was improperly
applied and or that its application led to an erroneous outcome, as the manifest disregard
standard requires. The tribunal dutifully followed Article 28(1)-as urged by both parties
determined that New York law was "appropriate."
ADIA urges that the Supreme Court's recent decision in ==-=.~=="-='-"-"''--'-'.
AnimalFeeds InCI Corp. compels vacating the award. l ! 130 S. Ct 1758 (2010). In Sto1t-~ielsen,
the Supreme Court overturned an arbitration decision to allow class-wide arbitration because the
10 As explained by the New York Court of Appeals, cases that focus on the location where the loss occurred only do
so in order to protect the reasonable expectations of the parties who relied on the laws of that jurisdiction to regulate
65 N.Y.2d 189,198 (1985). As the tribunal properly
recognized, "There is no indication in the materials we have reviewed, including the Investment Agreement's
drafting history, that either Party ever considered the possibility that any law other than New York's should apply to
their dealings." Statement of Reasons, Toal Ex. Mat 5. Applying the civil law of Abu Dhabi would not have
protected the reasonable expectations of the parties~it would have undermined them.
II At oral argument, ADIA referred to Stolt-Nielsen as a "landmark" decision and devoted much of its time to
discussing It, (Tr. at 3), despite not citing it a single time in its opening brief.
panel's application of its own policy choice exceeded its delegated powers. The contract at issue
there was silent on class-wide arbitration. The panel, instead of seeking to identify the proper
rule of law governing that situation, "proceeded as if it had the authority of a common-law court
to develop what it viewed as the best rule to be applied in such a situation," and failed to conduct
a choice of law analysis. See Stolt-Nielsen, 130 S. Ct. at 1769.
The present action is readily distinguishable. The instant tribunal did not simply make up
the law that it decided to apply, but it expressly conducted a choice of law analysis pursuant to
the ICDR rules and the parties submissions. Rather than adducing what law ought to govern
based on its own policy preference, the tribunal looked extensively at evidence of what law the
parties intended would control. Statement of Reasons, Toal Ex. M, at 4-6; see Mitsubishi Motors
Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614,626 (1985) (in arbitrations, the parties
"intentions control"). And as opposed to applying no law, the tribunal applied both choice of
law principles derived from international arbitration and the New York interest analysis. In sum,
this tribunal did the opposite of what prompted reversal in Stolt-Nielsen: it identified a rule of
decision, and applied it.
The Tribunal's Denial of Two of ADIA's Evidentiary Requests Did Not Violate the
Convention or the FAA
The tribunal denied two of ADIA's nearly sixty document requests. ADIA claims that
the denials violated the Convention because they left ADIA "unable to present [its] case,"
(Convention, Art. V (1 )(b », and that "refusing to hear evidence pertinent and material to the
controversy" rendered the tribunal "guilty of misconduct," in violation of the FAA. 9 U.S.c. §
10(a)(3). In order to set the arbitral award aside under these standards, the denial of the
document request must have amounted to a violation of due process or fundamental fairness.
Tempo Shain Corp. v. Bertek. Inc., 120 F.3d 16,20 (2d Cir. 1997). "In making evidentiary
determinations, an arbitrator 'need not follow all the niceties observed by the federal courts.'"
rd. (quoting Bell Aerospace Co. Div. of Textron v. Local 516, 500 F.2d 921,923 (2d Cir. 1974)).
Review by this court is limited to determining whether the procedure used was fundamentally
unfair. Tempo Shain, 120 F.3d at 20 (citing Teamsters, Local Union 657 v. Stanley Structures,
735 F.2d 903,906 (5th Cif. 1984)).
Denial of ADIA's request for all documents related to Bowen's email, in which he
references "significant but possibly unrecognized financial losses," did not render the
proceedings fundamentally unfair. Bowen Email, Spray Ex. 14 at I. The tribunal granted 56 of
ADIA's 58 document requests, allowing ADIA access to over 550,000 pages of documents
concerning Citi's expected capital needs. ADIA cross-examined several ofCiti's top level
ofticers regarding Citi's expected capital needs, including Vikram Pandit, its fonner Chief
Executive Officer, Gary Crittenden, its former Chief Financial Officer, and Zion Shohet, its
fonner Treasurer. All of these executives presumably knew much more about Citigroup's capital
needs than Bowen, a lower level employee who worked in Citi's consumer lending group and
had no idea whether Citi retained any exposure to the loans that he saw as problematic. 12
Further, ADIA did not call Bowen as a witness, nor did it cross-examine any other
witness about his email at the hearing. AlthoughBowenwasonADIA'sinitialwitnesslist,it
dropped him without explanation shortly before the hearing. ADIA did call Crittenden, a
recipient of Bowen's email, but did not ask him a single question about it. Although ADIA now
claims to not have had enough time at the hearing to "explore the issues raised by Mr. Bowen"
In a recent decision dismissing, in part, securities claims against Citibank, Judge Stein failed to credit Bowen's
warnings as raising a strong inference of scienter on the part of Citi executives, describing them as "lack[ing]
specifics" and "vague in both their content and their timing." Inn Fund Mgmt. S.A. v. Citigroup Inc., No. 09 Civ.
8755 et aI, 2011 WL 4529640, at *10 (S.D.N.Y. Sept. 30, 2011).
(ADIA Br. at 22), it is undisputed that ADIA had over 23 remaining hours allotted to it at the
time the hearing ended. Marks Email ofMay31.2011.ToaIEx.Sat2.ADIA had the
opportunity to present evidence regarding Bowen's email, but made the strategic choice not to.
Having had this opportunity and made this choice, it cannot complain that it was denied a
fundamentally fair hearing.
Next, ADIA complains that the hearing was fundamentally unfair because the tribunal
denied its request for Citi's Bank Examiner Reports. The tribunal ruled that ADIA's request for
these reports was untimely, and even if it had been timely, the tribunal was disinclined to require
their production given (1) the schedule ofthe arbitration, (2) "the extended scope of document
production already mandated by the Tribunal," (3) tbe refusal ofCiti's regulators to waive their
privilege, and (4) the tribunal's judgment that they were not likely to produce infOlmation that
was non-cumulative. November 7,2010 Order, Toal
Together, these reasons were more than sufficient to deny ADIA's request. Tribunals
have "great latitude to detennine the procedures governing their proceedings and to restrict or
control evidentiary proceedings." Supreme Oil Co., Inc. v. Abondolo, 568 F.Supp.2d 401, 408
(S.D.N.Y.2008). They are endowed with "discretion to admit or reject evidence and determine
what materials may be cumulative or irrelevant." Fairchild Corp. v. Alcoa, Inc., 510 F.Supp.2d
280,285 (S.D.N.Y.2007). Further, a tribunal's judgment with respect to privilege is a legal
judgment, which is not reviewable by this Court for error-even ifthe error is serious. Eastern
Associated Coal Corp., 531 U.S. at 62.
The tribunal allowed ADIA more than an adequate opportunity to present evidence to
support its case. The tribunal allowed ADIA access to reams of internal documents regarding the
valuation ofCiti's structured securities and its capital needs. ADIA was pennitted to cross
examine Citi's top executives on all of these pertinent subjects. The tribunal listened to 24
'vvitnesses over 16 days oftestimony and accepted 5,988 exhibits relevant to these subjects.
Denying ADIA's two individual requests did not render the tribunal guilty of misconduct or
result in fundamental unfairness, as is required by the FAA and the Convention to set aside the
award. ADIA cites no federal case-and this Court could find none
where a court vacated an
arbitral award because the panel denied one party a document request. l3
In sum, the denial of these two document requests did not render the proceedings
fundamentally unfair. ADIA had expansive access to discovery materials, well in excess of the
scope of discovery usually permitted in arbitration. ADIA cannot tum this discovery dispute into
an issue of fundamental due process sufficient to set aside the award.
The Tribunal's Award Must Be Confirmed
In addition to opposing ADIA's motion to vacate, Citi moved this Court to confirm the
tribunal's award. Under the FAA, "a court must confirm an arbitration award unless it is
vacated, modified or corrected as prescribed in §§ 10 and 11." Scandinavian Reinsurance Co. v.
St. Paul Fire & Marine Ins. Co., 668 F.3d 60, 78 (2d Cif. 2012) (quoting Hall, 552 U.S. at 582)
(internal citations omitted). For petitions also brought under the Convention, "[t]he court shall
confirm the award unless it finds one ofthe grounds for refusal or deferral of recognition or
enforcement of the award specified in the said Convention," 9 U.S.c. § 207. Because this Court
13 The two cases that ADIA cites in support of its argument are unavailing. In Iran Aircraft Industries, the district
court vacated the award because the tribunal essentially duped one of the parties into not presenting evidence that
was crucial to its case, and then faulted that party for not presenting it, a condition not present here. See 980 F.2d
141,146 (2d Cir. 1992). And in
the Second Circuit vacated the award at issue because it found that
the tribunal improperly prevented one party from calling a witness whose testimony would have been crucial and
non-cumulative. Here, the tribunal never prevented ADIA from calling Bowen as a witness. Bowen's testimony
and the bank examiner reports themselves would most likely have been cumulative and did not necessarily contain
any information that ADIA could not, or did not, otherwise obtain from the 56 other document requests that the
finds no reason to vacate or modify the award, Citi's Cross-Motion to Confinn the award must
Petitioner ADIA's Motion to Vacate the arbitration award (Dkt. No. 17) is DENIED.
Respondent Citi's Cross-Motion to Confinn the arbitration award (Dkt. No. 27) is GRANTED.
The Clerk of the Court is directed to enter judgment on the award in Respondent's favor, and
close this case.
Dated: New York, New York
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