Certiorari Sought for Review of Fifth Circuit’s Ruling Interpreting a PDAA To Provide for a Nine-Arbitrator Panel

This article was first published in the SAA Blog, here.

SCOTUS is being asked to take up whether to let stand a decision upholding a large Award issued by a numerically unbalanced panel.

Soaring Wind Energy, LLC v. CATIC USA Inc., No. 18-11192 (5th Cir. Jan. 7, 2020), was decided back in January 2020 and involved a dispute among members of Soaring Wind Energy, LLC (Soaring Wind) that was submitted to an arbitration panel (see our coverage in SAA 2020-03 (Jan. 22)). The Arbitrators awarded Soaring Wind $62.9 million against CATIC USA (and its AVIC-group affiliates) and ordered that CATIC USA be divested of its shares in Soaring Wind without compensation. A judgment of the District Court confirmed the Award and the Fifth Circuit affirmed the lower court’s ruling. 

Core Question for Review: A Lopsided Panel

CATIC USA on July 6 filed a Petition for a Writ of Certiorari in an effort to prevent enforcement of the massive judgment. CATIC USA presented three questions to the Court, one of them being whether SCOTUS should confirm an arbitration Award where the selection of an arbitration panel leads to one side of the dispute selecting a “supermajority” of the arbitration panel through an “absurd interpretation” of the parties’ arbitration agreement. The core of the disagreement was whether the arbitration agreement provides that each side got to select an arbitrator or if each party got to select an arbitrator. The Fifth Circuit ruled in favor of the latter and held that the PDAA provided that each party was entitled to select an arbitrator. In its Petition for Cert., CATIC USA argues that the interpretation of the agreement adopted by the court below was a “hyper-technical reading of the agreement that drained it of all rational means for reaching a fair result.” CATIC USA further argues that the “Fifth Circuit interpretation of the Agreement leads to absurd results which are inconsistent with widely recognized principles of fairness and impartiality (and those reflected in the Agreement itself).” Accordingly, CATIC USA argues that the panel was not appointed pursuant to the agreed upon method, and therefore, the Award should be vacated.

Other Questions Presented

CATIC USA also challenged the lower court’s determination that there was jurisdiction under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, arguing that the Fifth Circuit improperly found that a foreign element was present by accepting the argument that the agreement related to China. The third question presented was whether the Arbitrators may make adverse inferences against non-signatories to the PDAA when a court had not determined whether they were subject to the arbitration agreement.

Hadn’t the Deadline to Seek Review Passed?

For those readers who are wondering, the Petition was timely even though the case was decided in January. How? A Petition for Rehearing was denied by the Fifth Circuit on February 4. CATIC USA’s deadline to seek Certiorari would have passed by this point, since normally the deadline to file is 90 days from the entry of judgment. However, due to the ongoing Covid-19 pandemic the Court on March 19 extended the deadline from 90 days to 150 days. This meant that CATIC USA’s deadline to file the Petition had been extended until July 6 – the date it filed.

(ed: *The SCOTUS case is CATIC USA Inc. v. Soaring Wind Energy, L.L.C, No. 20-40. **The Court only accepts a little over 1 percent of the cases it is asked to hear, so it is statistically likely that the Fifth Circuit’s ruling will stand. ***This Squib was authored by Theodore Ryan, a 3L at St. John’s School of Law. He is currently an intern with the school’s Securities Arbitration Clinic, assisting investors with disputes against their brokers. Theodore is also the Managing Editor of the New York International Law Review at St. John’s.(SAC Ref. No. 2020-28-01)


Theodore Ryan

Theodore Ryan is a 3L at St. John's School of Law. Theodore is the Managing Editor of the New York International Law Review at St. John's and Secretary of the Corporate and Securities Law Society. MORE >

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