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Supreme Court rules non-signatories can enforce arbitration agreements
MarkThomas / Pixabay
Supreme Court rules non-signatories can enforce arbitration agreements

The US Supreme Court ruled Monday that the New York convention does not conflict with state law doctrines of equitable estoppel which allow non-signatories to an arbitration agreement to compel arbitration.

The case involves an American company (ThyssenKrupp Stainless USA) and a French company (F.L. Industries Inc.), which entered into three contacts, all of which imposed arbitration as the mechanism for dispute resolution between the parties. Per these contracts, F.L. had to build cold rolling mills for ThyssenKrupp’s steel manufacturing plant.

F.L. then signed a subcontractor contract with another French company (GE Energy), whereby GE Energy was to supply F.L. with  motors for the cold mills. When GE Energy’s motors failed in 2015, Outokumpu Stainless USA, which had bought Thyssenkrupp’s plant, sued GE Energy.

Although it was not one of the parties who signed the three contracts requiring that disputes be resolved through arbitration, GE Energy tried to compel arbitration. The Spureme Court ruled Monday that GE Energy was allowed to do so even though it was not a signatory to the contracts imposing arbitration.

The court explained that the New York Convention, a treaty that requires countries who have signed it to recognize and enforce arbitral awards issued in other such countries, is silent on  whether non-signatories can compel arbitration.

It then held that when the convention is silent on an issue, domestic laws can be used to fill in the gaps left by the convention; and, since the domestic doctrine of equitable estoppel allows non-signatories to compel arbitration in cases like this one, GE Energy can force Outokumpu to resolve their dispute in arbitration.