Various Insurers, Reinsurers and Retrocessionaires v. General Electric International, Inc.

At a glance

Parties

Various Insurers, Reinsurers and Retrocessionaires subscribing to the listed policies, as subrogees of Shariket Kahraba Hadjret En Nouss (SKH), v. General Electric International, Inc., General Electric Company, GE Power Services Engineering, GE Power and various John Doe corporations

Case no.

U.S. Court of Appeals for the Eleventh Circuit, No. 23-11211 (appeal from N.D. Ga., D.C. Docket No. 1:21-cv-04751-VMC)

Court

United States Court of Appeals for the Eleventh Circuit

Forum and rules

Motion to compel arbitration under the New York Convention and Chapter 2 of the Federal Arbitration Act (9 U.S.C. §§ 201 et seq.). The underlying Services Contract provides for ICC arbitration.

Treaty

New York Convention (1958); arbitration clause in Art. 25.2 of the Services Contract

Court

Circuit Judges Jordan (author of the opinion), Newsom and Brasher

Sector

Power generation; insurance subrogation

Outcome

The court affirmed the district court's order compelling arbitration (18 March 2025).

The dispute

A turbine failed catastrophically at the Hadjret En Nouss Power Plant in Tipaza, Algeria. The plant is owned by SKH and was operated for SKH by SNC-Lavalin Constructeurs International Inc. (SNC). SKH's insurers, as subrogees, sued the GE Entities in Georgia's state-wide business court, and the GE Entities removed the case to federal court. The GE Entities then moved to compel arbitration under the arbitration clause in a Services Contract between SNC and General Electric International. They argued that SKH, and therefore its insurers, were bound by the clause as a third-party beneficiary. The insurers argued that SKH was not a party to the contract or a beneficiary bound by it, and challenged the referral of arbitrability questions to the arbitrator.

Key holdings

1. The only Convention prerequisite in dispute was whether there was a written agreement to arbitrate. The Services Contract contains an arbitration clause. The question was whether that clause binds SKH as a third-party beneficiary, and therefore binds the insurers as SKH's subrogees. p. 5–6
2. The court applied federal common law, because the parties had argued the case under it, without deciding which law governs. It applied Restatement (Second) of Contracts § 302(1)(b) and held that SKH was an intended third-party beneficiary of the Services Contract. The contract repeatedly names SKH as Project Owner. It lets SKH decide on changes to the Power Train Sets (Art. 1.57), gives SKH access to operation and maintenance reports (Art. 6.14), and allows SKH to act alone in an emergency (Art. 21). pp. 7–9
3. The First Circuit decisions in InterGen v. Grina and Hogan v. SPAR Group did not apply. The court's conclusion did not rest on corporate relationships: SNC owns 51% of Algerian Utilities, which owns 51% of SKH. It rested on SKH being named in the contract and holding explicit rights to direct work essential to the contract. pp. 9–11
4. The insurers did not argue separately against the right of the GE Entities that did not sign the Services Contract to compel arbitration, so they abandoned that point. If the insurers must arbitrate against General Electric International, they must also arbitrate against the other GE Entities. p. 3
5. The Services Contract incorporates the ICC Conciliation and Arbitration Rules (Art. 25.2). Following Terminix v. Palmer Ranch, this is a clear and unmistakable delegation of arbitrability to the arbitrator. The arbitrator will therefore decide which, if any, of the insurers' claims must be arbitrated. pp. 11–13

Procedural history

1. July 2006SNC and SKH sign the Operation and Maintenance Contract, under which SNC is the sole Operator and SKH the Project Owner.
2. 2023The U.S. District Court for the Northern District of Georgia grants the GE Entities' motion to compel arbitration (662 F. Supp. 3d 1298).
3. 18 March 2025The Eleventh Circuit affirms the order compelling arbitration.

Keywords

• motion to compel arbitration
• third-party beneficiary
• non-signatory
• subrogation
• New York Convention
• Federal Arbitration Act Chapter 2
• Restatement (Second) of Contracts § 302
• delegation of arbitrability
• ICC Rules
• Terminix
• InterGen v. Grina
• power plant
• turbine failure
• Algeria
• Hadjret En Nouss
• federal common law

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