GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless

Whether the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) permits a non-signatory to an arbitration agreement to compel arbitration based on the doctrine of equitable estoppel.

Respondent entered into purchase contracts with another company which contained arbitration clauses. Petitioner is included in the contracts as a preferred manufacturer. Petitioner provided Respondent with motors which later failed. Respondent sued Petitioner in state court and Petitioner timely removed under 9 U.S.C § 205, which allows removal of an action arising out of an arbitration agreement that falls under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (Convention). Petitioner moved to dismiss and compel arbitration. The district court granted Petitioner’s motion to dismiss and compel arbitration because the contracts contained arbitration clauses as required under the Convention. The Eleventh Circuit reversed the grant of Petitioners motion to dismiss and compel arbitration in relevant part reasoning that the Convention allows a party to compel arbitration only if it is a party to an agreement in writing and Petitioner is not a signatory on the contracts. Petitioner points out the First and Fourth circuits hold Petitioner’s view that equitable estoppel allows a non-signatory to compel arbitration while the Ninth and Eleventh have held that non-signatories may not compel arbitration under the Convention even if equitable estoppel should apply. Petitioner argues the Eleventh Circuit’s decision threatens international commerce. By not allowing equitable estoppel principles to govern, nothing will prevent signatories from evading arbitration agreements when suing non-signatories.