On July 8, 2022, the Eleventh Circuit, on remand from the U.S. Supreme Court, held that although GE Energy Power Conversion France SAS, Corp. (GE), a subcontractor, did not sign the contract in question or any arbitration agreement, GE could require arbitration of its claims. Outokumpu Stainless USA, LLC v. Coverteam SAS, No. 17-10944, 2022 WL 2643936 (11th Cir. July 8, 2022).
The predecessor of Outokumpu Stainless USA, LLC (Outo) had entered into various contracts with F.L. Industries, Inc. (Fives) for the provision of cold rolling mills. The contracts contained an arbitration clause for “any dispute arising between the two parties in connection with the performance of the contract.” The contracts defined Outo as the buyer and Fives as the seller, referred to buyer and seller individually as a party, and referred to them collectively as parties. However, the contracts also provided that “when referring to the Seller, this also includes the subcontractors.” In addition, a list of subcontractors for Outo and Fives was attached to each contract, and it included GE.
GE entered into a subcontractor agreement with Fives to provide nine motors to power the cold rolling mills. When those motors failed, Outo sued GE in Alabama state court. GE removed the case to federal court and then moved to compel arbitration, relying on the arbitration clauses in the contracts between Fives and Outo. The district court granted the motion, concluding that both Outo and GE were parties to the agreement because the contract defined the word “parties” to include subcontractors, listed GE as a subcontractor and did not exclude subcontractors from the arbitration clause. The Eleventh Circuit reversed holding that that the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) only permitted parties who actually sign the arbitration agreement to enforce the arbitration agreement. The Supreme Court reversed and remanded.
Supreme Court Holding
The heart of the Supreme Court’s ruling is that the New York Convention requires arbitration agreements to be in writing and signed to be enforceable, but that it is silent as to who may enforce them. As a consequence, the New York Convention does not displace domestic law. According to the Supreme Court, article II of the convention (1) governs only the recognition of arbitration agreements by contracting states and (2) defines the term "written agreement" but does not regulate who is bound by it. In the instant case, the agreements were both written and signed, and thus they satisfied article II. The convention, by its terms, therefore, allows GE to compel arbitration under principles of domestic law, even if it did not sign the arbitration clause between Outo and Fives.