Commercial Litigation and Arbitration

New York Convention — Public Policy Defense

India and the United States are signatories to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (implemented at 9 U.S.C. § 201 ff.). After the Indian defendant won an international arbitration against the American plaintiff in London, the U.S. party sued to block enforcement in Detroit federal court. Among other things, the U.S. party claimed that enforcement of the award would violate Indian law, which requires that shares be valued at their fair market value, rather than the book value at which the parties’ contract provided the Indian party could obtain the shares following the American party’s default. The Sixth Circuit, in an unpublished opinion, concluded that ‛a showing that the enforcement of the Award would violate Indian law may well present a cognizable defense under the Convention.“ Because, however, it found no violation of Indian law (the necessary governmental approval had been obtained to use the challenged valuation method), this observation is not only tentative but also dicta.

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