KT Corporation and KTSAT Corporation v. ABS Holdings, Ltd. and ABS Global, Ltd.

At a glance

Parties

KT Corporation and KTSAT Corporation (Korea) v. ABS Holdings, Ltd. and ABS Global, Ltd. (Bermuda; headquartered in Hong Kong)

Case no.

U.S. Court of Appeals, Second Circuit, No. 18-2300-cv (on appeal from S.D.N.Y. No. 17-civ-7859)

Court

U.S. Court of Appeals for the Second Circuit (summary order)

Judges

Richard C. Wesley, Denny Chin, Joseph F. Bianco, Circuit Judges

Underlying award(s)

ICC Partial Award of 18 July 2017 (title to the satellite) and Final Award of 9 March 2018 (breach and damages), both in favour of ABS

Forum and rules

Confirmation and vacatur under the New York Convention and the Federal Arbitration Act

Sector

Satellite communications

Outcome

The Second Circuit affirmed the district court's orders confirming both awards and denying KT's petitions to vacate them.

Amount

Satellite purchase price: $500,000. The damages awarded are not stated in the judgment.

The dispute

KT, a Korean satellite communications provider, agreed in 2010 to sell a geostationary satellite to ABS and to operate it on ABS's behalf. Both agreements were governed by New York law and contained arbitration clauses. ABS paid the $500,000 price, and title passed in September 2011. On 18 December 2013 Korea's Ministry of Science, ICT and Future Planning (MSIP) declared the Purchase Agreement null and void because KT had not obtained an export permit under the Foreign Trade Act. It also cancelled KT's frequency permission. In ICC arbitration the panel held that ABS owned the satellite and that KT had breached the agreements by failing to obtain and maintain the required government approvals. KT sought to vacate both awards on three grounds: the panel exceeded its powers, it manifestly disregarded the law, and the awards breach public policy. ABS sought confirmation.

Key holdings

1. The panel did not exceed its powers. Its statements that the MSIP Order was unauthorized, ultra vires and contrary to due process formed only an alternative holding in a coda to the Partial Award. Its principal conclusions on title and breach applied New York law to the agreements and at least arguably construed the contract. KT had also refused to challenge the MSIP Order in Korea and had said that the validity of the contract was for the arbitration to decide. pp. 8–9
2. There was no manifest disregard of the law. Under Korean law, the mandatory and retroactive nature of the MSIP Order was far from well defined, explicit and clearly applicable; KT's own expert called it a controversial and debatable interpretation. The panel applied New York law and had at least a colorable justification for its result. KT's argument on technical engineering fees also failed. pp. 9–10
3. The public policy defense under Article V(2)(b) of the New York Convention is construed very narrowly. Even if it is well-defined policy to give effect to foreign administrative decrees, it was far from clear that the MSIP Order was enforceable under Korean law. The panel's conclusion that the Order did not retroactively unwind the agreements does not violate the most basic notions of morality and justice. pp. 10–11
4. The district court's orders confirming the Partial and Final Awards and denying KT's petitions to vacate were affirmed. p. 11

Procedural history

1. 2010KT and ABS enter into the Purchase Agreement and the Operations Agreement for the satellite.
2. September 2011ABS pays $500,000, and KT delivers bills of sale transferring title.
3. 18 December 2013The MSIP Order declares the Purchase Agreement null and void under the Foreign Trade Act.
4. 22 December 2013The parties proceed to ICC arbitration.
5. 18 July 2017ICC Partial Award: ABS holds title to the satellite.
6. 9 March 2018ICC Final Award: KT breached the agreements and is liable for damages.
7. 10 July 2018The S.D.N.Y. denies KT's petition to vacate the Partial Award and confirms it.
8. 12 July 2018The S.D.N.Y. confirms the Final Award and denies KT's cross-petition to vacate it.
9. 12 September 2019The Second Circuit affirms by summary order.

Tribunal, counsel and experts

Decided by

• Richard C. Wesley Judge, U.S. Court of Appeals for the Second Circuit
• Denny Chin Judge, U.S. Court of Appeals for the Second Circuit
• Joseph F. Bianco Judge, U.S. Court of Appeals for the Second Circuit

For the claimant

Sheppard Mullin Richter & Hampton LLP

For the respondent

Milbank, Tweed, Hadley & McCloy LLP

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Keywords

• New York Convention Article V(2)(b)
• public policy
• manifest disregard of the law
• excess of powers
• vacatur
• confirmation
• Federal Arbitration Act
• satellite
• geostationary satellite
• MSIP Order
• Korean Foreign Trade Act
• export permit
• foreign administrative decree
• ICC
• New York law
• Second Circuit

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