GE Energy Power Conversion France SAS, Corp., formerly known as, Converteam SAS v. Outokumpu Stainless USA, LLC et al.

At a glance

Parties

GE Energy Power Conversion France SAS, Corp., formerly known as Converteam SAS (petitioner) v. Outokumpu Stainless USA, LLC, et al. (respondents)

Case no.

U.S. Supreme Court, No. 18-1048; 590 U.S. ___ (2020)

Court

Supreme Court of the United States, on certiorari to the U.S. Court of Appeals for the Eleventh Circuit

Treaty

New York Convention (1958), Article II; Federal Arbitration Act, Chapters 1 and 2 (9 U.S.C. §208)

Sector

Steel manufacturing; industrial equipment (cold rolling mill motors)

Outcome

Unanimous opinion by Justice Thomas, with a concurrence by Justice Sotomayor (1 June 2020). The Convention does not conflict with domestic equitable estoppel doctrines that let nonsignatories enforce arbitration agreements. The Eleventh Circuit's judgment (902 F.3d 1316) was reversed and the case remanded.

The dispute

In 2007 ThyssenKrupp Stainless USA, LLC signed three contracts with F. L. Industries, Inc. to build cold rolling mills at its steel plant in Alabama. Each contract had an arbitration clause. F. L. Industries then subcontracted GE Energy, then known as Converteam SAS, to supply motors, and GE Energy delivered nine motors in 2011–2012. Outokumpu Stainless USA, LLC later acquired the plant. It said the motors had failed by the summer of 2015, and in 2016 it and its insurers sued GE Energy in Alabama state court. GE Energy removed the case to federal court under 9 U.S.C. §205 and moved to compel arbitration under the clauses. The District Court granted the motion. The Eleventh Circuit reversed: in its view, the New York Convention requires that the parties actually sign the arbitration agreement, so GE Energy, as a nonsignatory, could not rely on state-law equitable estoppel. The question before the Supreme Court was whether the Convention conflicts with domestic equitable estoppel doctrines that allow nonsignatories to enforce arbitration agreements.

Key holdings

1. The New York Convention does not conflict with domestic equitable estoppel doctrines that permit nonsignatories to enforce arbitration agreements. These doctrines therefore apply to Convention cases through 9 U.S.C. §208. Opinion, pp. 1, 6–7, 12
2. The Convention says nothing on nonsignatory enforcement, and that silence decides the question. Article II(3) requires referral to arbitration in certain circumstances. It contains no exclusionary language and does not prevent domestic laws that are more generous in enforcing arbitration agreements. Article II also expects domestic law to fill its gaps, for example on arbitrability and on what is 'null and void'. Opinion, pp. 6–7
3. The drafting history does not set up a 'rule of consent' that displaces domestic law. At most it shows that the drafters meant to impose baseline requirements on contracting states. The later understanding of other contracting states supports the same reading: court decisions, Peru's legislation and the 2006 UNCITRAL recommendation. Because these sources date from decades after 1958, they carry less weight. Opinion, pp. 8–10
4. The Court's reading of the text matches the Executive's interpretation. The Court therefore did not need to decide whether the Executive's view deserves weight or deference. Opinion, pp. 10–11
5. The Eleventh Circuit relied wrongly on Article II(1) and (2). Those provisions deal with the recognition of written agreements, not with who is bound by them. Only Article II(3) addresses who may ask for referral to arbitration. On remand, the Eleventh Circuit may decide whether GE Energy can enforce the clauses through equitable estoppel and which law governs that question. Opinion, pp. 11–12
6. Concurrence (Sotomayor, J.): any domestic nonsignatory doctrine applied under the Convention must rest on consent to arbitrate. Lower courts must decide case by case whether a doctrine reflects consent. She also doubted that any such doctrine was needed here, because the contract defined the seller to include subcontractors, and its list of subcontractors named Converteam. Concurrence, pp. 1–3

Procedural history

1. 2007ThyssenKrupp Stainless USA and F. L. Industries sign three contracts with arbitration clauses. F. L. Industries then subcontracts the motors to Converteam (now GE Energy).
2. 2016Outokumpu and its insurers sue GE Energy in Alabama state court. GE Energy removes the case to federal court under 9 U.S.C. §205.
3. 30 January 2017The U.S. District Court for the Southern District of Alabama grants GE Energy's motion to dismiss and compel arbitration. It extends the order to additional insurers on 3 February 2017.
4. 2018The Eleventh Circuit reverses (902 F.3d 1316).
5. 21 January 2020Argument before the U.S. Supreme Court.
6. 1 June 2020The Supreme Court reverses and remands in a unanimous opinion; Justice Sotomayor concurs.

Keywords

• New York Convention Article II(3)
• nonsignatory
• equitable estoppel
• enforcement of arbitration agreement
• compel arbitration
• Federal Arbitration Act
• 9 U.S.C. §208
• treaty interpretation
• consent to arbitrate
• subcontractor
• Eleventh Circuit
• Arthur Andersen v. Carlisle
• UNCITRAL 2006 recommendation
• executive deference
• cold rolling mill
• Converteam
• ThyssenKrupp

Summary generated with AI from the published documents — refer to the award for the authoritative text.