Superior Energy Services Columbia S.A.S. and Superior Energy Services, Inc. v. Premium Petroleum Services S. de R.L., Victor Augusto Palacio Gaitan, and Maria Eugenia Hernandez Rojas

At a glance

Parties

Superior Energy Services Columbia S.A.S. and Superior Energy Services, Inc. (petitioners) v. Premium Petroleum Services S. de R.L., Victor Augusto Palacio Gaitan and Maria Eugenia Hernandez Rojas (respondents)

Case no.

No. 18-CV-7704 (ALC)

Court

U.S. District Court, Southern District of New York (Andrew L. Carter, Jr., District Judge)

Underlying award(s)

Final Award of 19 July 2018 (130 pages), made under the arbitration clause of the Sales Purchase Agreement of 1 March 2013

Forum and rules

Petition to confirm a foreign award under Chapter 2 of the Federal Arbitration Act (New York Convention)

Treaty

Contract arbitration clause (Sales Purchase Agreement); New York Convention Articles V(1)(b) and V(2)(b)

Sector

Oil and gas services

Outcome

Petition to vacate denied; petition to confirm granted; judgment entered for Superior (28 June 2019).

Amount

Award and judgment: USD 4,507,165.33 (a 20% price reduction of USD 5,600,000, less the withheld Second Holdback Amount of USD 1,250,000).

The dispute

Mr. Palacio and Ms. Hernandez, through the Panamanian company Premium Petroleum, sold the Colombian cementation services company Ingenieria y Tecnologia de Servicios S.A.S. (ITS) to Superior for USD 28 million under a Sales Purchase Agreement (SPA) signed on 1 March 2013. The sale excluded Petrodynamic Petroleum Services S.A.S., a supplier to ITS partly owned by Ms. Hernandez, and Section 10.17 of the SPA set a non-compete period. In 2014 Superior learned that Mr. Palacio was still involved with Petrodynamic. The arbitral tribunal found breaches of Sections 6(a) and 10.17(b) and awarded Superior USD 4,507,165.33. Superior petitioned the court to confirm the award. Premium asked the court to vacate it, arguing that it could not present its case, that the tribunal manifestly disregarded Section 10.17(e) of the SPA, and that the award was a penalty contrary to public policy.

Key holdings

1. Premium was able to present its case (Article V(1)(b)). The tribunal had already dealt with the approach a Superior employee made to Premium's witness, Mr. Villamarin, just before the hearing. It admitted his witness statement in full, denied Superior the chance to cross-examine him, and did not exclude Premium's related evidence. The court found no abuse of discretion. pp. 5–6
2. No manifest disregard of the contract. The tribunal applied the 20% price reduction in Section 10.17(c)(i), which the parties had negotiated. The award neither contradicts an express term of the SPA nor departs from it. Premium did not contest the finding of breach. pp. 6–8
3. The award is not contrary to public policy (Article V(2)(b)). That defence is construed very narrowly. New York's policy against contractual penalties is not enough for vacatur. In any event, the 20% reduction is a fair approximation of the loss in value of ITS, and Premium offered no evidence that it works as a penalty. pp. 8–9
4. Absent grounds to vacate, modify or correct, the court must confirm the award (9 U.S.C. § 9). Judgment was entered for Superior for USD 4,507,165.33, and Superior's request for post-confirmation discovery was granted. p. 9

Procedural history

1. 1 March 2013The parties sign the Sales Purchase Agreement for the sale of ITS.
2. 17 September 2014Superior Energy is notified of possible breaches of the SPA.
3. 22 January 2016Request for arbitration filed under the SPA. The judgment says Premium filed it.
4. 19 July 2018Final Award: the tribunal finds Mr. Palacio in breach and awards Superior USD 4,507,165.33.
5. 23 August 2018Superior files its Petition to Confirm in the Southern District of New York.
6. 24 October 2018Premium files its Response and a Petition to Vacate.
7. 12 November 2018Superior files its Reply and its Opposition to the Petition to Vacate.
8. 28 June 2019Opinion & Order: the court denies vacatur, confirms the award and enters judgment.

Tribunal, counsel and experts

Decided by

• Jr. Andrew L. Carter Judge, U.S. District Court, Southern District of New York

Run a conflict check on these names →

Keywords

• New York Convention
• confirmation of award
• vacatur
• Article V(1)(b)
• inability to present case
• witness interference
• manifest disregard
• Article V(2)(b)
• public policy
• penalty clause
• non-compete
• share purchase agreement
• purchase price adjustment
• Federal Arbitration Act
• oil and gas services
• Colombia
• Petrodynamic
• ITS

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