Antoine Savine v. Interactive Brokers, LLC

At a glance

Parties

Antoine Savine (petitioner-appellant) v. Interactive Brokers, LLC (respondent-appellee)

Case no.

U.S. Court of Appeals, Second Circuit, No. 19-2747; U.S. District Court, District of Connecticut, No. 3:18-cv-01846 (KAD)

Court

U.S. District Court for the District of Connecticut (Kari A. Dooley, J.); U.S. Court of Appeals for the Second Circuit (Dennis Jacobs, Susan L. Carney, Joseph F. Bianco, Circuit Judges)

Underlying award(s)

Final award of August 2018 in favour of Interactive Brokers, LLC, made by a sole arbitrator in a London Court of International Arbitration proceeding in the United Kingdom

Treaty

New York Convention 1958 (Articles V(1)(e) and V(2)(b)); Federal Arbitration Act, Chapter 2

Sector

Securities brokerage; foreign exchange trading

Outcome

The petition to vacate the foreign award was dismissed for lack of subject matter jurisdiction. The Second Circuit affirmed by summary order on 3 April 2020.

Amount

Interactive Brokers sought a margin account deficit of USD 631,002.88 in the arbitration. The published documents do not state the amount of the award.

The dispute

Antoine Savine used Interactive Brokers, LLC, a broker/dealer based in Connecticut, to execute currency exchange trades. He suffered heavy losses on short positions on the Swiss franc against the euro. Interactive Brokers liquidated positions in his margin account, but a deficit of USD 631,002.88 remained. Interactive Brokers pursued the deficit in an arbitration before the London Court of International Arbitration and won a final award. Savine then petitioned the U.S. District Court for the District of Connecticut to vacate the award. He relied on the public policy exception in Article V(2)(b) of the New York Convention and on U.S. securities and commodities laws. Interactive Brokers moved to dismiss, arguing that only the courts of the United Kingdom, where the award was made, could vacate it.

Key holdings

1. Under Article V(1)(e) of the New York Convention, only the country in which, or under whose law, the award was made may set it aside. The award was made in the United Kingdom under United Kingdom arbitral law, so vacatur had to be sought there. The United States is a country of secondary jurisdiction. District Court Memorandum, pp. 4–5
2. Applying Connecticut or U.S. substantive law in the arbitration does not give U.S. courts primary jurisdiction to set the award aside. District Court Memorandum, p. 5 n. 3
3. Article V defences, including public policy, can be raised only against an enforcement action. They give no independent basis for vacatur in a secondary jurisdiction. Because no enforcement action had been brought, the Court lacked subject matter jurisdiction and granted the motion to dismiss. District Court Memorandum, pp. 5–6
4. On de novo review, the Second Circuit held that the United Kingdom has primary jurisdiction, since the arbitration took place there and its arbitral law governed the proceedings. As a secondary jurisdiction, a U.S. court may only enforce or refuse to enforce the award; it may not set it aside or vacate it. Summary Order, pp. 2–3
5. Article V(2)(b) gives only a ground for refusing enforcement on public policy grounds. It does not confer jurisdiction over a petition to vacate. The dismissal was affirmed. Summary Order, pp. 3–4

Procedural history

1. August 2018Final award made in the United Kingdom in favour of Interactive Brokers in an LCIA arbitration, after a two-day evidentiary hearing.
2. 9 November 2018Savine files a Petition to Vacate in the U.S. District Court for the District of Connecticut.
3. 14 January 2019Interactive Brokers moves to dismiss the petition. Savine files his objection on 22 February 2019.
4. 16 July 2019Oral argument before the District Court.
5. 5 August 2019District Court grants the motion to dismiss for lack of subject matter jurisdiction.
6. 3 April 2020Second Circuit affirms by summary order (without precedential effect). The order refers to the District Court judgment as entered on 3 June 2019.

Tribunal, counsel and experts

Decided by

• Kari A. Dooley Judge, U.S. District Court, District of Connecticut
• Dennis Jacobs Judge, U.S. Court of Appeals, Second Circuit
• Susan L. Carney Judge, U.S. Court of Appeals, Second Circuit
• Joseph F. Bianco Judge, U.S. Court of Appeals, Second Circuit

For the claimant

Day Pitney LLP

For the respondent

Drohan Lee LLP

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Keywords

• New York Convention
• Article V(1)(e)
• Article V(2)(b)
• public policy
• vacatur
• set-aside
• primary jurisdiction
• secondary jurisdiction
• foreign arbitral award
• subject matter jurisdiction
• Federal Arbitration Act
• LCIA
• broker-dealer
• margin account
• Swiss franc
• foreign exchange trading
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Summary generated with AI from the published documents — refer to the award for the authoritative text.