Dreymoor Fertilizers Overseas PTE LTD v. AVAGRO and AVAGRO LLC

At a glance

Parties

Dreymoor Fertilizers Overseas PTE LTD (Singapore) v. UAB "AVAGRO" (Lithuania) and AVAGRO LLC (United States)

Case no.

Lietuvos apeliacinis teismas, civil case No. e2T-34-943/2020 (court process No. 2-60-3-00020-2020-7)

Court

Court of Appeal of Lithuania, Civil Division (Vilnius)

Underlying award(s)

Final award of 15 February 2020, American Arbitration Association International Centre for Dispute Resolution (ICDR), arbitration case No. 01-19-0000-3381

Forum and rules

Recognition and enforcement under the 1958 New York Convention and the Lithuanian Law on Commercial Arbitration

Treaty

New York Convention 1958 (Articles II and V)

Court

Judges Marius Bajoras, Egidija Tamošiūnienė (presiding and rapporteur), Agnė Tikniūtė

Sector

Fertilizer trade finance

Outcome

Award recognised and declared enforceable in Lithuania on 3 July 2020; the request to postpone enforcement was rejected.

Amount

Award: EUR 6,211,091.06 and USD 273,998.92, plus USD 65,762.50 for ICDR and arbitrator costs, with daily interest of 0.02% after 30 days. Court costs: EUR 5,322.54 to the applicant (EUR 2,661.27 from each respondent), plus EUR 29.04 from each respondent to the State for translation.

The dispute

Dreymoor Fertilizers Overseas, a Singapore company, signed a contract with UAB "AVAGRO" on 22 October 2018. Under it, Dreymoor financed AVAGRO's purchase of about 25,000 metric tonnes of urea ammonium nitrate solution, which AVAGRO was to sell before repaying Dreymoor. AVAGRO LLC, AVAGRO's sole shareholder, signed Amendment No. 2 on 26 November 2018. AVAGRO started ICDR arbitration, and Dreymoor counterclaimed for the product repurchase price and other losses. In a final award of 15 February 2020, the tribunal held both AVAGRO entities liable. Dreymoor then asked the Court of Appeal of Lithuania to recognise and enforce the award. The respondents made four objections: AVAGRO LLC had never agreed to arbitrate; the award was declaratory and could not be enforced; AVAGRO LLC had no assets in Lithuania; and, in the alternative, enforcement should be postponed until the cargo was sold.

Key holdings

1. AVAGRO LLC was bound by the arbitration clause. Amendment No. 2, which it signed, stated that all other terms of the original contract remained in force, so it accepted the contract's terms, including the arbitration clause. As parent company it knew of the clause. It also agreed in writing on 9 April 2019 to take part in the arbitration (New York Convention Article II(1)–(2)). ¶¶ 15–17
2. The court gave weight to the fact that the US Federal District Court for Kansas had confirmed the award in full on 22 May 2020. That court had rejected the same objection that the clause did not apply to AVAGRO LLC. ¶ 18
3. Neither ground under Article V(2) applies. Contract damages between private companies can be arbitrated. The respondents showed no breach of international public policy, which the court reads narrowly. ¶¶ 19–23
4. The award orders the respondents to pay money and adds interest for late payment. It is therefore a condemnatory award that can be enforced, not a declaratory one. ¶ 28
5. The respondents did not prove that AVAGRO LLC had no assets in Lithuania. In any case, it owns UAB "AVAGRO", a company registered in Lithuania. ¶ 29
6. Enforcement is not postponed until the cargo is sold. The condition would depend only on the debtor's own conduct, and the debt can be paid from other assets. Granting it would also change the substance of the award, which the enforcing court may not review. ¶¶ 35–36
7. The court rejected the claim that the applicant had abused its procedural rights and awarded it EUR 5,322.54 in costs, in equal shares. It admitted only the US court memoranda from the applicant's late evidence. ¶¶ 8, 38–39

Procedural history

1. 22 October 2018Dreymoor and UAB "AVAGRO" sign the financing contract containing the arbitration clause.
2. 26 November 2018AVAGRO LLC signs Amendment No. 2 to the contract.
3. 9 April 2019AVAGRO LLC agrees by email to take part as a party in the arbitration.
4. 15 February 2020ICDR tribunal issues its final award (case No. 01-19-0000-3381) against both AVAGRO entities.
5. 12 March 2020Dreymoor applies to the Court of Appeal of Lithuania for recognition and enforcement.
6. 22 May 2020US Federal District Court for Kansas confirms the award in full.
7. 3 July 2020Court of Appeal of Lithuania recognises the award, declares it enforceable and refuses to postpone enforcement. A cassation appeal to the Supreme Court of Lithuania was possible within 30 days.

Tribunal, counsel and experts

Decided by

• Egidija Tamošiūnienė Judge, Court of Appeal of Lithuania (presiding judge and rapporteur)
• Marius Bajoras Judge, Court of Appeal of Lithuania
• Agnė Tikniūtė Judge, Court of Appeal of Lithuania

For the claimant

Advokatų profesinė bendrija "Logus"

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Keywords

• New York Convention
• recognition and enforcement
• Lithuania
• ICDR
• AAA
• non-signatory
• extension of arbitration agreement
• parent company
• competence-competence
• public policy
• arbitrability
• condemnatory award
• postponement of enforcement
• urea ammonium nitrate
• fertilizer
• Klaipėda
• Article V(1)(a)

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