USA District Court Stays Enforcement Proceedings Pending Foreign Appeal Of Award

Baker McKenzie review the decision in Gretton Ltd. v. Republic of Uzbekistan, No. 18-cv-01755 (D.D.C. Feb. 6, 2019), where Gretton funded an arbitration on behalf of Oxus, from whom the Republic of Uzbekistan had allegedly expropriated two gold-mining operations.  The tribunal found Uzbekistan liable and Oxus obtained recognition of the award from a court in Paris and filed a request with the Paris Court of Appeal for a partial vacatur of the award, seeking to set aside the portions of the arbitral award that denied its claims but to leave intact the portion on which it had prevailed. 

Pending a determination of those proceedings, Gretton filed a petition against Uzbekistan in the U.S. district court to enforce the portion of the award already recognized in France and Uzbekistan sought outright dismissal on several grounds, including lack of subject-matter jurisdiction, defective service and forum non conveniens, and, in the alternative, a stay of the case pending the outcome of the set-aside proceedings in Paris.

The district court noted that under the Federal Arbitration Act (which codifies the New York Convention), a court may stay enforcement proceedings if an application to set aside or suspend an award has been made to a competent authority.  Noting that neither the New York Convention nor the FAA dictate how a court should weigh a request for a stay, the court considered the following six factors in reaching its decision to grant a stay:

  • the general objectives of arbitration, including the expeditious resolution of disputes and the avoidance of protracted and expensive litigation;
  • the status of the foreign proceedings, which weighed strongly in favor of Uzbekistan given that a decision by the Paris Court of Appeals was expected within several months;
  • whether the award would receive greater scrutiny in foreign proceedings;
  • the characteristics of the foreign proceeding;
  • the possible hardships to the parties;
  • other circumstances that might shift the balance.

About Phillip Rompotis

Phillip practices as a barrister and arbitrator in Hong Kong. He has over 25 years’ litigation and arbitration experience in commercial disputes relating to construction & engineering, financial services, joint venture & shareholders agreements, technology, trusts, property and landlord & tenant. He is a Fellow of the Chartered Institute of Arbitrators, the Singapore Institute of Arbitrators, the Malaysian Institute of Arbitrators, and a member of various lists/panels of arbitrators.

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