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Second Circuit Affirms Confirmation of ICC Award Based on UAE’s Obligation of Good Faith

Brendan Nathanial Gooley


  • The Second Circuit Court of Appeals affirmed a district court's confirmation of an ICC award that applied UAE law, binding AGHC to agreements signed by one of its executives with an American airplane company.
  • The ICC concluded AGHC was bound by "good faith" under the UAE Civil Code due to its senior management's involvement in negotiations and awareness of the obligation.
  • The court rejected AGHC’s arguments that the ICC manifestly disregarded the law, affirming that the ICC provided a "barely colorable justification" for its decision, and upheld the district court’s denial of AGHC’s motion for reconsideration.
Second Circuit Affirms Confirmation of ICC Award Based on UAE’s Obligation of Good Faith
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The Second Circuit Court of Appeals recently affirmed a district court judgment that confirmed an award by the International Chamber of Commerce (ICC). The ICC award applied the law of the United Arab Emirates (UAE) and concluded that Al Ghaith Holding Company PJSC (AGHC) was bound by agreements that one of its executives had signed with an American airplane company.

Cessna Finance Corp. (Cessna) leased several private jets to startup company Prestige Jet Rental (Jet). Ghaith Al Ghaith, Jet’s chairman, guaranteed the lease agreements. In addition to being Jet’s chairman, Al Ghaith was also the deputy chairman of AGHC, a company based in the UAE. When Al Ghaith guaranteed Jet’s lease agreements, he did so in his capacity as deputy chairman of AGHC.

Jet defaulted under its leases, and Cessna, which later became CesFin Ventures LLC, commenced an ICC arbitration against AGHC. AGHC argued that it was not liable under the guarantee because its articles of association required the signatures of “two out of three” of its chairman, deputy chairman, and managing director to bind the company, and only Al Ghaith, its deputy chairman, had signed the guarantee.

The ICC rejected AGHC’s argument. It concluded that AGHC was “bound by ‘good faith’ under . . . the UAE Civil Code” because “AGHC’s senior management had been actively involved in negotiations and aware of AGHC’s obligation to provide a guarantee.” The ICC also determined “that the parties could not explain why only Al Ghaith executed the Agreements . . . and that the ‘most reasonable inference’ was that the parties had agreed to this method of execution” despite AGHC’s articles of association. The “ICC also found that once AGHC had discovered the purported invalidity of the Agreements, it should have notified Cessna, but had failed to do so.” Because AGHC acted as though the agreements were valid even though they were signed only by Al Ghaith, the ICC held that the UAE Civil Code bound AGHC.

Cessna moved to confirm the award, and AGHC moved to vacate it. The district court confirmed the award. It rejected AGHC’s arguments that the ICC had manifestly disregarded UAE law or that it incorrectly had held that, under UAE law, AGHC was bound by good faith.

AGHC then moved for reconsideration, which the district court denied.

On appeal, the Second Circuit affirmed. CesFin Ventures LLC v. Al Ghaith Holding Co. PJSC, No. 20-1106-cv (2d Cir. Apr. 22, 2021). Like the district court, the Second Circuit rejected AGHC’s argument that the ICC had “manifestly disregarded the law.” The court noted that a barely colorable justification was all that was needed for an award to be enforced against a challenge that an arbitrator manifestly disregarded the law, and it held that the standard was satisfied because the ICC had applied UAE law in a way that “provided at least a barely colorable justification for its decision.” More specifically, the Second Circuit concluded that the ICC had addressed and rejected AGHC’s arguments that it was not bound by the UAE Civil Code’s provisions regarding “good faith” as well as its argument that the agreements were invalid because Al Ghaith was the only executive who signed the agreements.

The Second Circuit also concluded that the district court did not err by denying AGHC’s motion for reconsideration, noting that there had not been an “intervening change of controlling law, new evidence, or clear error to correct.” The court therefore affirmed.