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When an Arbitration Award Isn’t an Arbitral Award

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The US Court of Appeals for the Ninth Circuit recently reversed a district court’s order treating an arbitrator’s order as a foreign arbitral award under the New York Convention.

In Castro v. Tri Marine Fish Company LLC, the parties were located in the Philippines and agreed to a settlement related to an injury that Michael D. Castro suffered on a fishing vessel. Although no arbitration had been filed, Tri Marine provided a Filipino arbitrator with a joint motion to dismiss pursuant to the parties’ settlement. The arbitrator then entered an order recognizing the settlement and dismissing the case with prejudice.

Subsequently, Mr. Castro sued Tri Marine in Washington, USA state court because he required additional surgery related to his injury. Invoking the New York Convention, Tri Marine removed the case to federal court and moved to confirm the arbitral order as a foreign arbitral award. The district court confirmed the order as a foreign arbitral award and dismissed the case.

On appeal, the Ninth Circuit analyzed whether there was an “arbitral award” under the New York Convention. The Court noted that the Convention does not define “arbitral award.” It thus interpreted “the term by applying its common meaning and common sense.” The Court concluded that there was no outstanding dispute to arbitrate when the arbitrator got involved, and the purported arbitration did not follow the parties’ prior agreements to arbitrate. In essence, the arbitrator’s order did not have the hallmarks of an arbitral award. “[T]he parties’ free-floating settlement agreement and order did not transform into an arbitral award simply because the parties convened with an arbitrator.” The Court thus held that the arbitrator’s order was not an arbitral award under the New York Convention.

The Ninth Circuit’s Opinion is available here.

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