Alstom Chile S.A. et al v. Mapfre Compania de Seguros Generales Chile S.A.
Filing
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MEMORANDUM OPINION AND ORDER: For the foregoing reasons, Plaintiffs petition to compel arbitration is granted. The parties are directed to proceed promptly to arbitration in accordance with section 14.2.1 of the Agreement. Plaintiffs request for inju nctive relief is also granted. Defendant, its officers, agents, servants, employees, attorneys, and any other person in active concert or participation with any of them are hereby permanently enjoined from prosecuting the Chilean Action. Defendant is further directed to seek dismissal of any pending appeal and of the underlying Chilean Action, if the case is still pending. The Clerk of the Court is requested to enter judgment and close this case. (Signed by Judge Laura Taylor Swain on 10/31/2013) (cd)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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ALSTOM CHILE S.A., et al.,
Plaintiffs,
-v-
No. 13 Civ. 2416 (LTS)(DCF)
MAPFRE COMPANIA DE SEGUROS
GENERALES CHILE S.A.,
Defendant.
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MEMORANDUM OPINION AND ORDER
Alstom Chile S.A. and Alstom Power Systems S.A. (“Plaintiffs”) filed a
Complaint and Petition on April 11, 2013, seeking to compel Mapfre Compania De Seguros
Generales Chile S.A. (“Defendant”) to arbitrate certain claims arising under and relating to the
performance of a contract (the “Agreement”) for the engineering, procurement, and construction
of a power generation facility in Mejillones, Chile (the “Facility”). Plaintiffs also seek an
injunction barring the further prosecution in Chile of litigation regarding these matters. The
Court has jurisdiction of this action pursuant to 9 U.S.C. § 301.
For the following reasons, the Court orders Defendant to arbitrate its claims
relating to the Agreement and the Facility against Plaintiffs and permanently enjoins Defendant
from prosecuting the related proceedings in Chile.
BACKGROUND
Plaintiffs entered into the Agreement with Gas Atecama Generacion S.A. (“Gas
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Atecama”) on or about August 6, 1997.1 Defendant provided all risk insurance to Gas Atecama
for the Facility under a certain Fire and Accessories Policy. The Facility was completed in
December 1999, and subsequently Gas Atecama filed a claim against Defendant alleging
material damages and loss of benefits arising from events at the Facility in 2007 and 2008.
Defendant allegedly paid Gas Atacama $33,002,051 for the loss. Defendant thereafter filed a
suit against Plaintiffs in civil court in Santiago, Chile, in January 2012 (the “Chilean Action”),
seeking to recover the monies it had paid to Gas Atecama. Defendant, as Gas Atecama’s
subrogee, asserts two causes of action against Plaintiffs: 1) for breach of the Agreement and 2)
for indemnification based on tort liability. On July 5, 2013, the Chilean court ordered that
Defendant’s contract breach claim be arbitrated and that the tort-based indemnification claim be
suspended pending resolution of the arbitration.
The Agreement requires a 60-day period of good faith discussions (the “60-day
Negotiation”) among senior officers of the parties prior to a demand for arbitration. Specifically,
section 14.1 of the Agreement provides that:
Owner and Contractor desire that this Agreement operate between them fairly and
reasonably. If, during the term of this Agreement, a dispute arises between Owner
and Contractor which is not resolved by good faith discussions between the
parties, then the matter shall be referred to senior officers of the respective
parties, who shall endeavor in good faith to resolve such disputed issues
expeditiously. Neither party shall seek arbitration of any dispute arising in
connection with this Agreement until a period of at least sixty (60) Days has
elapsed since the dispute was referred to such senior officers, without a
resolution.
Section 14.2.1 provides that, following the 60-day Negotiation:
[a]ny further controversy, dispute, or claim between Contractor and Owner
arising out of or relating to this Agreement, or the breach thereof, if not settled by
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The relevant portion of the Agreement is attached to the Complaint and Petition as
Exhibit A. (Docket entry no. 1.)
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the parties by agreement subject to Section 14.1, shall be settled finally and
conclusively by arbitration, in English, in accordance with the Rules of
Arbitration of the International Chamber of Commerce (and with the procedural
law of the State of New York, United States of America, in matters as to which
such Rules of Arbitration are silent) by arbitrators appointed in accordance with
Section 14.2.3. This Agreement to arbitrate shall be specifically enforceable
under the prevailing arbitration law.
The Agreement additionally provides that it is to “to be governed by the law of the State of New
York, United States of America, excluding the laws of such State pertaining to conflict of laws.”
(Agreement at section 15.13.) Any arbitration under the Agreement must be held in New York,
New York, “unless the parties mutually agree otherwise.” (Agreement at section 12.2.5.)
Plaintiffs argue that this arbitration provision of the Agreement requires Defendant to resolve the
disputes underlying the subrogation litigation through an arbitration and pursuant to the laws of
New York. Defendant argues that Plaintiffs breached the Agreement because they did not
comply with the 60-day Negotiation requirement of section 14.1, and that the arbitration
provision is thus unenforceable. Secondarily, Defendant argues that considerations of
international comity and judicial efficiency counsel the Court to stay this proceeding pending the
outcome of the Chilean Action.
DISCUSSION
Whether a suit is subject to compulsory arbitration is a matter of state contract
law. Bell v. Cendant Corp., 293 F.3d 563, 566 (2d Cir. 2002). Therefore, “[a] party cannot be
required to submit to arbitration for any dispute which it has not agreed so to submit.” Louis
Dreyfus Negoce S.A. v. Blystad Shipping & Trading Inc., 252 F.3d 218, 224 (2d Cir. 2001).
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Petition to Compel Arbitration
Plaintiffs seek to compel Defendant to arbitrate the disputes underlying the
Chilean Action. The Court concludes that these claims must be arbitrated pursuant to the
Agreement. “The determination of whether a dispute is arbitrable under the FAA comprises two
questions: (1) whether there exists a valid agreement to arbitrate at all under the contract in
question . . . and if so, (2) whether the particular dispute sought to be arbitrated falls within the
scope of the arbitration agreement.” Hartford Acc. & Indem. Co. v. Swiss Reinsurance Amer.
Corp., 246 F.3d 219, 226 (2d Cir. 2001) (quotation marks omitted). It is well established that
“arbitration is a matter of contract and a party cannot be required to submit to arbitration any
dispute which he has not agreed to so submit.” AT & T Tech., Inc. v. Communications Workers
of Am., 475 U.S. 643, 648 (1986). To determine whether there is a valid agreement to arbitrate,
a court must apply the “generally accepted principles of contract law.” Genesco, Inc. v. T.
Kakiuchi & Co., 815 F.2d 840, 845 (2d Cir. 1987). “[A] party is bound by the provisions of a
contract that [it] signs, unless [it] can show special circumstances that would relieve [it] of such
obligation.” Id. A court should consider only “whether there was an objective agreement with
respect to the entire contract.” AT & T Tech., 475 U.S. at 648.
Here, the parties do not dispute that the Agreement contains a valid arbitration
clause that requires the arbitration of all disputes “arising out of or relating to” the Agreement.
Where an arbitration clause is broad in scope, “there arises a presumption of arbitrability and
arbitration of even a collateral matter will be ordered if the claim alleged implicates issues of
contract construction or the parties’ rights and obligations under it.” ACE Capital Re Overseas
Ltd. v. Cent. United Life Ins. Co., 307 F.3d 24, 34 (2d Cir. 2002). “Absent an express provision
excluding a particular grievance from arbitration, only the most forceful evidence of a purpose to
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exclude the claim from arbitration will satisfy a party’s substantial hurdle to rebut this
presumption of arbitrability.” Vera v. Saks & Co., 335 F.3d 109, 117 (2d Cir. 2003).
The obvious breadth of the contractual provision at issue requires this Court to
presume that any claim arising from or relating to the relationship between Plaintiffs and Gas
Atecama, as Defendant’s subrogor, is subject to arbitration. See Ace Capital, 307 F.3d at 34.
Defendant has offered no evidence of any contrary intent to rebut this presumption. Because
both of Defendant’s claims against Plaintiffs are based on conduct pursuant to or relating to the
Agreement, both are plainly arbitrable.
Defendant argues that Plaintiffs’ petition should be denied because Plaintiffs
failed to comply with the 60-day Negotiation provision prior to filing the instant petition to
compel arbitration. However, it was Defendant that filed the Chilean Action, apparently without
prior negotiation. Defendant, having eschewed the 60-day Negotiation process, cannot now
invoke it as a barrier to enforcement of the Agreement’s arbitration provision. Defendant’s
interpretation of the negotiation provision is absurd, because it would nullify the purpose of the
arbitration clause, that is, to require an aggrieved party to the Agreement to seek redress pursuant
to arbitration rather than suit. See, e.g., RJE Corp. v. Northville Indus. Corp., 329 F.3d 310, 314
(2d Cir. 2003) (holding that courts must consider the entire contract to “safeguard against
adopting an interpretation that would render any individual provision superfluous”) (quotation
marks omitted).
Furthermore, to the extent there is any genuine dispute as to interpretation of the
Agreement, the plain language of the arbitration clause itself requires the parties to submit the
controversy to arbitration. Plaintiffs’ petition to compel arbitration will, accordingly, be granted.
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Anti-Suit Injunction
Where a party seeks to enjoin a parallel litigation in a foreign forum, it must
demonstrate satisfaction of two threshold factors, showing that: 1) “the parties are the same in
both matters,” and 2) “resolution of the case before the enjoining court is dispositive of the
action to be enjoined.” Paramedics Electromedicina Comercial, Ltda v. GE Med. Sys. Info.
Tech., Inc., 369 F.3d 645, 652 (2d Cir. 2004). In this case there is no dispute that the parties to
the arbitration will be identical to those in the Chilean Action. As to the second threshold factor,
“although this Court will not determine the outcome of the underlying dispute, an order by this
Court compelling arbitration will result in a determination of the dispute in the arbitration.” See
Stolt Tankers BV v. Allianz Seguros, S.A., No. 11 Civ. 2331, 2011 U.S. Dist. LEXIS 67755, at
*17 (S.D.N.Y. June 16, 2011). Defendant argues that, because the indemnification claim based
on tort damages is not a contract claim, and New York law does not provide for such a cause of
action, arbitration in New York cannot be dispositive of the issues raised in the Chilean Action.
This argument, however, is unavailing. The parties agreed to arbitrate “[a]ny further
controversy, dispute, or claim between Contractor and Owner arising out of or relating to this
Agreement” pursuant to the law of the State of New York. The entire controversy must be
submitted to arbitration, regardless of whether the contractual choice of law clause might
foreclose an otherwise viable cause of action under the law of another jurisdiction. The second
threshold factor is met.
Once the threshold criteria are met, courts must weigh five additional factors in
determining if the injunction is appropriate. See China Trade & Dev. Corp. v. M.V. Choong
Yong, 837 F.2d 33, 35 (2d Cir. 1987). The Court must consider whether:
(1) [denial of an injunction would lead to] frustration of a policy in the enjoining
forum; (2) the foreign action would be vexatious; (3) [prosecution of the other
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litigation would pose] a threat to the issuing court’s in rem or quasi in rem
jurisdiction; (4) the proceedings in the other forum prejudice other equitable
considerations; or (5) adjudication of the same issues in separate actions would
result in delay, inconvenience, expense, or a race to judgment.
Stolt Tankers, 2011 U.S. Dist. LEXIS 67755, at *10. Furthermore, where a party initiates a
foreign suit in “an attempt to sidestep arbitration,” an anti-suit injunction may be particularly
appropriate “given the federal policy favoring liberal enforcement of arbitration clauses.” See
LAIF X SPRL v. Axtel, S.A. de C.V., 390 F.3d 194, 199 (2d Cir. 2004) (quoting Paramedics
Electromedicina Comercial, Ltda v. GE Med. Sys. Info. Technologies, Inc., 369 F.3d 645, 652
(2d Cir. 2004)) (quotation marks omitted).
The China Trade factors warrant the granting of an injunction prohibiting
prosecution of the Chilean Action pending arbitration in New York. First, permitting Defendant
to continue to pursue the Chilean Action would impede the important federal policy preference
for the enforcement of arbitration agreements. See Ibeto Petrochemical Indus., Ltd. v. M/T
“Beffen”, 412 F. Supp. 2d 285, 289 (S.D.N.Y. 2005). Second, requiring Plaintiffs to litigate the
same issues simultaneously on two continents would, in light of the mandatory arbitration
provision, be vexatious to Plaintiffs. Third, equitable considerations favor enjoining Defendant
from pursuing the Chilean Action, as the Court must deter forum shopping and it appears here
that Defendant sought an alternative forum to avoid the application of New York law. Finally,
the litigation of two suits would, at minimum, be inconvenient for the Plaintiffs, would increase
litigation costs, and could result in inconsistent judgments.
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CONCLUSION
For the foregoing reasons, Plaintiffs’ petition to compel arbitration is granted.
The parties are directed to proceed promptly to arbitration in accordance with section 14.2.1 of
the Agreement.
Plaintiffs’ request for injunctive relief is also granted. Defendant, its officers,
agents, servants, employees, attorneys, and any other person in active concert or participation
with any of them are hereby permanently enjoined from prosecuting the Chilean Action.
Defendant is further directed to seek dismissal of any pending appeal and of the underlying
Chilean Action, if the case is still pending.
The Clerk of the Court is requested to enter judgment and close this case.
Dated: New York, New York
October 31, 2013
/S
LAURA TAYLOR SWAIN
United States District Judge
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