Ballinasmalla Holdings Limited and Corrib Oil Biofuels, LLC v. FCStone Merchant Services, LLC and INTL FCStone Markets, LLC

At a glance

Parties

Ballinasmalla Holdings Limited (Ireland) and Corrib Oil Biofuels, LLC (petitioners) v. FCStone Merchant Services, LLC and INTL FCStone Markets, LLC (respondents)

Case no.

No. 18-cv-12254 (PKC)

Court

U.S. District Court, Southern District of New York (P. Kevin Castel, U.S.D.J.)

Underlying award(s)

AAA Partial Final Award (19 March 2018) and Final Award (30 November 2018, modified 10 January 2019), sole arbitrator Matthew E. Draper, seat New York

Forum and rules

Federal Arbitration Act; New York Convention; AAA Commercial Arbitration Rules in the underlying arbitration

Treaty

Arbitration clauses in the Soybean Contract Guaranty and the ISDA Guaranty

Sector

Soybean oil trade; swap transactions

Outcome

The petition to vacate was denied. Both awards were confirmed, and the respondents were awarded their fees and costs for the court proceedings.

Amount

Final Award of about USD 5 million in total. This included the USD 360,128.50 Partial Final Award, USD 4,328,416.32 owed under the ISDA Agreement, and attorney's fees of USD 100,000 and USD 50,000 for the two phases.

The dispute

Corrib Oil Biofuels agreed to buy crude degummed soybean oil from FCStone Merchant Services, and Ballinasmalla Holdings (BHL) guaranteed the contract. BHL also guaranteed payments that Corrib Oil Company Ltd., which was not a party to this case, owed to INTL FCStone Markets on swaps under an ISDA agreement. Both guaranties called for AAA arbitration seated in New York. The FCStone entities demanded arbitration on 24 June 2016 over the quality of soybean deliveries and the unpaid ISDA debt. INTL FCStone also sued Corrib Ltd. on the debt in New York State court. After the arbitrator issued two awards against them, BHL and Corrib Oil asked the court to vacate the Final Award, and the FCStone entities cross-moved to confirm both awards. The petitioners made three arguments. The award was not final while Corrib Ltd.'s state appeal was pending. The arbitrator manifestly disregarded the law by refusing to stay the ISDA Guaranty claim. He also manifestly disregarded the law by awarding attorney's fees without supporting evidence.

Key holdings

1. The New York Convention applies because BHL and Corrib Oil are foreign parties. Because the arbitration took place in the United States, the FAA governs whether the award is confirmed or vacated. p. 4
2. The Final Award is mutual, final and definite under 9 U.S.C. § 10(a)(4), because it decided both liability and damages. Under New York law, a judgment binds the parties and can be enforced while an appeal is pending unless it is stayed, and no stay was shown. The chance that further litigation may follow the state appeal does not make the award non-final. pp. 6–9
3. Refusing to stay the ISDA Guaranty claim was not a manifest disregard of the law. A stay is a procedural matter within the arbitrator's discretion under the AAA Commercial Rules. Discretionary doctrines are not clearly governing law, and the arbitrator considered BHL's arguments. pp. 9–11
4. Awarding attorney's fees of USD 100,000 and USD 50,000 was not a manifest disregard of the law. The arbitrator stated the governing law and had evidence of the time and effort spent, which gives at least a barely colorable justification. His factual findings on damages are not open to review. pp. 11–12
5. The Partial Final Award is confirmed because the petitioners did not oppose it. p. 6 n. 3
6. Under the guaranties, the FCStone entities are entitled to the costs and reasonable attorney's fees of the court action. Post-judgment interest accrues by operation of law. pp. 13–14

Procedural history

1. 24 June 2016FCStone and INTL FCStone demanded AAA arbitration against BHL and Corrib Oil.
2. November 2017First evidentiary hearing held.
3. 19 March 2018Partial Final Award: Corrib Oil and BHL ordered to pay USD 360,128.50 under the Soybean Contract Guaranty. The ISDA Guaranty claim was dismissed.
4. 9 April 2018The New York state court granted summary judgment for INTL FCStone against Corrib Ltd., which appealed. The arbitrator then reinstated the ISDA Guaranty claim.
5. October 2018Second hearing held.
6. 30 November 2018Final Award: BHL held liable on the ISDA Guaranty, about USD 5 million awarded in total. The award was modified on 10 January 2019 to correct BHL's name.
7. 27 December 2018Petition to vacate filed. The cross-motion to confirm followed on 25 January 2019.
8. 11 April 2019Opinion and Order: vacatur denied and both awards confirmed.

Tribunal, counsel and experts

Decided by

• P. Kevin Castel Judge, U.S. District Court, Southern District of New York — appointed by a court

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Keywords

• vacatur
• confirmation
• New York Convention
• Federal Arbitration Act
• manifest disregard of the law
• final and definite award
• 9 U.S.C. § 10(a)(4)
• guaranty
• ISDA
• swap transactions
• soybean oil
• AAA Commercial Rules
• stay pending appeal
• attorney's fees
• Corrib Oil
• FCStone

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