Getma Int’l v. Republic of Guinea, No 16-7087 (D.C. Cir. July 7, 2017)
In 2008, the Republic of Guinea (“Guinea”) sought bids to expand and operate a port in Conakry, the country’s capital. Getma International (“Getma”) submitted the winning bid. Getma and the Republic of Guinea then entered into a twenty-five-year Concession Agreement.
Their partnership was short-lived. In December 2010, Guinea elected a new president, who quickly terminated the Agreement. Getma, protesting that the government’s sudden about-face violated the contract, demanded a termination fee. Guinea denied any breach of the contract, alleging among other complaints that Getma had won the bidding process by bribing the previous Guinean administration.
The Agreement’s dispute-resolution provision stipulated that the parties could “irrevocably settle” any disputes through arbitration proceedings subject to the Arbitration Rules of the Common Court of Justice and Arbitration of the Organization for the Harmonization of Business Law in Africa (the “CCJA”), a court of supranational jurisdiction for Western and Central African States. The parties selected a tribunal of three arbitrators, all of whom were based in France.
The CCJA fixed the arbitrators’ fees at approximately €61,000. However, approximately 14 months into the arbitration, the arbitrators wrote to the CCJA seeking an increase in their fees to €450,000. The request was denied by the CCJA, which stated that arbitrators fees and expenses are set exclusively by the CCJA. The arbitrators and Getma urged the CCJA to reconsider, to no avail.
The arbitrators then told the parties they would withhold the arbitral award until the parties paid them €450,000. The CCJA warned Getma that the award would be “subject to invalidation” if it included an “invalid arrangement” for arbitrator fees. The arbitrators released the award with no mention of a demand for increased arbitrators fees. However, the tribunal continued to pursue payment and Getma paid the arbitrators €225,000.
Guinea appealed the award to the CCJA. The CCJA set aside the award, concluding that the arbitrators breached their duty by ignoring the “mandatory provisions” governing fees. While the CCJA provided that the arbitral proceedings could be reopened, Getma did not seek to do so. Instead, Getma sought to enforce the award in the United States under the Federal Arbitration Act, 9 U.S.C. §§ 201-208, which implements the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention“).
One of the limited grounds for refusing to enforce an arbitration award under the New York Convention is if “a competent authority” has set it aside under the law of the country in which the award was made. The district court for the District of Columbia refused to enforce the annulled award on that ground. Getma appealed the district court’s decision.
On appeal, the D.C. Circuit explained that there was no dispute that the CCJA was a competent authority for the purposes of the New York Convention. It then stated that, for reasons of international comity, it would not “second-guess” a competent authority’s annulment of an arbitral award absent “extraordinary circumstances.” The standard is high, and infrequently met, such that a court cannot enforce an annulled award on a mere showing that the annulment is erroneous or conflicts with the United States’ public policy. Instead, the court will only set aside an annulment if it violates this country’s “most basic notions of morality and justice.”
Getma’s arguments included a claim that the CCJA thwarted the parties’ intent to contract around the CCJA’s fee schedule. However, the D.C. Circuit found that the contract evidenced no such intent. In any event, even if the parties intended to opt out of the CCJA’s fee schedule, the CCJA’s decision to enforce its set fees for arbitrators is not repugnant to fundamental notions of what is decent and just in the United States. Despite the United States’ “emphatic federal policy” in favor of arbitration, a foreign sovereign’s differing policy was not repugnant to our own. The CCJA’s policy in setting arbitral fees even against the parties’ wishes does not violate the United States’ most basic norms of morality and justice.
The D.C. Circuit also held that, although the CCJA’s decision to set aside Getma’s entire award might seem to be a harsh penalty, the parties had fair notice that the arbitrators’ insistence on increased fees could jeopardize the award.
