Telenor Mobile Communications AS v. Storm LLC, No. 07-4974 (2d Cir. 2009)

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07-4974-cv(L); 08-6184-cv(CON); 08-6188-cv(CON) Telenor Mobile Communications AS v. Storm LLC 1 UNITED STATES COURT OF APPEALS 2 FOR THE SECOND CIRCUIT 3 August Term, 2008 4 (Argued: February 4, 2009 Decided: October 8, 2009) 5 6 Docket Nos. 07-4974-cv(L); 08-6184-cv(CON); 08-6188-cv(CON) 7 ------------------------------------- 8 TELENOR MOBILE COMMUNICATIONS AS, 9 Petitioner-Appellee, 10 - v. - 11 STORM LLC, 12 Respondent-Appellant, 13 14 ALTIMO HOLDINGS & INVESTMENTS LIMITED, ALPREN LIMITED, HARDLAKE LIMITED, 15 Additional Contemnors-Appellants. 16 ------------------------------------- 17 SACK and PARKER, Circuit Judges, and STANCEU, Judge.* Before: 18 Consolidated appeals from a judgment and post-judgment 19 orders of the United States District Court for the Southern 20 District of New York. 21 (Gerard E. Lynch, Judge) confirmed a final arbitral award in 22 favor of the petitioner and denied the respondent's cross-motion 23 to vacate. 24 panel did not "manifestly disregard" the law either by failing to * In the judgment, the district court We agree with the district court that the arbitration The Honorable Timothy C. Stanceu, of the United States Court of International Trade, sitting by designation. 1 give preclusive effect to Ukrainian court judgments that the 2 parties' dispute was not arbitrable because the respondent's 3 agent lacked authority to execute the agreement giving rise to 4 the dispute, or by failing to require a trial to determine the 5 agreement's arbitrability pursuant to Sphere Drake Ins. Ltd. v. 6 Clarendon Nat'l Ins. Co., 263 F.3d 26 (2d Cir. 2001). 7 agree with the district court that the agreement was arbitrable 8 as a matter of law because the respondent's agent had the 9 apparent authority to execute it. 10 We also Affirmed. 11 12 13 14 ROBERT L. SILLS, Orrick, Herrington & Sutcliffe LLP (Jay K. Musoff, of counsel), New York, NY, for PetitionerAppellee. 15 16 17 PIETER VAN TOL, Lovells LLP (Gonzalo S. Zeballos, of counsel), New York, NY, for Respondent-Appellant. 18 19 20 RONALD S. ROLFE, Cravath, Swaine & Moore LLP, New York, NY, for Additional Contemnors-Appellants. 21 22 SACK, Circuit Judge: Telenor Mobile Communications AS ("Telenor"), a 23 Norwegian company, and Storm LLC ("Storm"), a Ukrainian company, 24 own Kyivstar G.S.M. ("Kyivstar"), a Ukrainian mobile 25 telecommunications company. 26 three companies dated January 30, 2004 (the "2004 Agreement") 27 sets forth the terms of such ownership and provides that any 28 disputes that arise in connection with the agreement will be A shareholders agreement among the 2 The present consolidated appeals1 1 submitted to arbitration. 2 result from an arbitration, commenced by Telenor, seeking relief 3 for Storm's alleged breach of the 2004 Agreement. 4 This opinion addresses appeal No. 07-4974-cv, in which 5 Storm challenges a judgment of the United States District Court 6 for the Southern District of New York.2 7 (Gerard E. Lynch, Judge) granted Telenor's petition to confirm 8 the arbitral award in its favor and denied Storm's cross-motion 9 for vacatur. 10 The district court On appeal, Storm argues that the arbitration panel 11 "manifestly disregarded" the law in two respects. First, Storm 12 contends it was reversible error for the panel to fail to give 13 preclusive effect to Ukrainian court judgments concluding that 14 the 2004 Agreement was not arbitrable because, according to the 15 Ukrainian courts, the agent who signed the agreement on behalf of 16 Storm was not authorized to do so. 17 contends, the panel manifestly disregarded our decision in Sphere 18 Drake Ins. Ltd. v. Clarendon Nat'l Ins. Co., 263 F.3d 26 (2d Cir. 19 2001), by failing to require a trial on the arbitrability issue 20 in the district court. In the alternative, Storm We conclude that the panel had colorable 1 On October 5, 2009, the parties sought by stipulation to "withdraw [this appeal] from active consideration." We decline to do so. Cf. Khouzam v. Ashcroft, 361 F.3d 161, 167 (2d Cir. 2004) ("Action by the court is not a subject that the parties may negotiate among themselves, and a judicial act, such as a dismissal of a petition, is normally taken only when the appellate court determines that such action is warranted on the merits.") 2 We address appeals from post-judgment orders of the district court in an accompanying summary order. 3 1 reasons for rejecting both arguments and it therefore did not 2 manifestly disregard the law in either respect. 3 contends, on the merits, that the 2004 Agreement is not 4 arbitrable. 5 district court, that Storm's agent had at least the apparent 6 authority to execute the 2004 Agreement on behalf of Storm, and, 7 therefore, that the agreement is arbitrable. 8 9 Storm also We conclude, as did the arbitration panel and the The judgment of the district court is therefore affirmed. BACKGROUND 10 11 Events Prior to 2004 12 In 2002, a shareholders agreement dated March 26, 1998, 13 (the "1998 Agreement") set forth the terms of the ownership of 14 Kyivstar's shares. 15 of five stakeholders, including Telenor and Storm. 16 in early 2002, however, Telenor and Storm agreed to attempt to 17 buy out the other three stakeholders. 18 they had nearly succeeded: only Omega JSC ("Omega") remained. 19 light of Kyivstar's newly altered ownership structure and in 20 anticipation of Omega's eventual capitulation, Storm and Telenor 21 negotiated an interim voting agreement between themselves (the 22 "Voting Agreement"), which supplemented and altered their rights 23 and obligations as to each other under the 1998 Agreement. 24 The 1998 Agreement contemplated the existence At some point By August of that year, In The Voting Agreement was executed on September 2, 2002. 25 Valeriy Nilov, Storm's "General Director," signed for Storm. 26 Three days earlier, Storm had sent Telenor a copy of a unanimous 4 1 resolution by Storm shareholders authorizing Nilov to do so. See 2 Storm LLC, Notice Regarding Resolutions Adopted by Written 3 Polling, Aug. 30, 2002, at 2-3 ("Authorization of the General 4 Director of . . . 'Storm', Nilov Valeriy Vladimirovich, to 5 execute and deliver [inter alia, the Voting Agreement] 6 and . . . take or cause to be taken any and all other actions, as 7 are required or desirable in connection with this Resolution and 8 the above-referenced agreements."). 9 The Voting Agreement contained a promise by each of the 10 parties to execute a new shareholders agreement once Storm bought 11 Omega's shares or the 1998 Agreement was terminated, whichever 12 occurred first. 13 within three days after the earlier of either condition, "the 14 Shareholders [viz., Telenor and Storm] agree to, and to cause 15 [Kyivstar] to, execute and deliver the New Shareholders 16 Agreement"). 17 agreement was attached to the Voting Agreement as an exhibit. 18 was in all substantive respects but one -- a provision setting 19 forth the terms of material breach, which was later amended at 20 Storm's request identical to what would be the 2004 Agreement. 21 See Voting Agreement § 2.05 (providing that, A form for the contemplated new shareholders It On October 29, 2002, Storm sent Telenor a document, 22 signed by Nilov, entitled "Certificate of Senior Officer of 23 Purchaser." 24 of the Storm shareholders resolution authorizing Nilov to execute 25 the Voting Agreement, and minutes of a meeting occurring on 26 October 7, 2002, which confirmed the resolutions adopted by The Certificate included, among other things, a copy 5 1 written polling on August 30, 2002. The Certificate provided 2 that those documents "constitute[] valid approval under the laws 3 of Ukraine of [Storm's] execution, delivery and performance of 4 [inter alia, the Voting Agreement] and any other documents in 5 implementation of [inter alia, the Voting Agreement]." 6 The 2004 Agreement 7 In January 2004, Storm purchased the outstanding 8 Kyivstar shares from Omega. After negotiations between Storm and 9 Telenor about possible alteration of the material breach 10 provision of the contemplated new shareholders agreement, a 11 negotiator for Storm wrote to Telenor by email on January 29, 12 saying: "Storm reviewed the language of the New Shareholders 13 Agreement that you distributed yesterday and agreed to it. 14 are ready to sign it tomorrow." 15 We The following day, Nilov and representatives from 16 Telenor and Kyivstar signed the 2004 Agreement. 17 Telenor two documents, each entitled "Certificate of Incumbency 18 and Authority of Storm," which were signed by the chairman of 19 Storm and another Storm official, respectively. 20 each certified that Nilov was "duly authorized to sign, on behalf 21 of Storm[,] . . . the Shareholders Agreement dated January 30, 22 2004 between and among Telenor, Storm, Omega and Kyivstar." 23 Unlike the 2002 "Certificate of Senior Officer of Purchaser," 24 however, the "Certificate[s] of Incumbency and Authority of 25 Storm" did not attach or incorporate by reference copies of 26 documentation of the shareholder authorization. 6 Storm sent The documents 1 The 2004 Agreement contains an arbitration provision 2 stating that "[a]ny and all disputes and controversies arising 3 under, relating to or in connection with this Agreement shall be 4 settled by arbitration by a panel of three (3) arbitrators under 5 the United Nations Commission on International Trade Law 6 (UNCITRAL) Arbitration Rules then in force." 7 12.01(a). 8 with any matter arising out of or in connection with this 9 Agreement," except for actions in connection with arbitration. 10 2004 Agreement § It precludes any other sort of action "in connection Id. § 12.01(b). 11 The Arbitration and the Ukrainian Proceedings 12 Pursuant to the 2004 Agreement's arbitration provision, 13 Telenor instituted an arbitration against Storm on February 7, 14 2006, alleging that Storm had breached the 2004 Agreement by (1) 15 violating its obligation thereunder not to frustrate Kyivstar 16 board activities through Storm's absence; (2) violating a 17 noncompete provision therein by "acquiring an equity interest in 18 at least one other company engaged in the mobile 19 telecommunications business in Ukraine"; and (3) violating the 20 arbitration provision therein by "prosecut[ing] a series of court 21 actions throughout Ukraine, attacking provisions of the 22 Shareholders Agreement and Kyivstar's charter." 23 among other relief, a declaration that Storm had breached the 24 2004 Agreement, an injunction requiring Storm to participate in 25 the governance and management of Kyivstar, an anti-suit 26 injunction, and damages. 7 Telenor sought, 1 On April 14, 2006 -- the day of the first conference of 2 the arbitration panel -- Alpren Limited ("Alpren"), a Cyprus- 3 based subsidiary of Altimo Holdings & Investment Limited 4 ("Altimo"), brought suit in a Ukrainian court against Storm. 5 Alpren and Altimo are the owners of Storm, and Alpren, Altimo, 6 and Storm all belong to the same Russian corporate group, the 7 Alfa Group Consortium. 8 a declaration that the 2004 Agreement was invalid because Nilov 9 lacked the authority to execute it on Storm's behalf. Alpren applied to the Ukrainian court for 10 Apparently, neither Telenor nor the arbitration panel were 11 notified of the Alpren lawsuit. 12 Storm retained no counsel and submitted no written 13 defense to the Alpren suit. 14 officer responsible for that company's "litigation" and 15 "arbitration" but who is not an attorney-at-law, appeared for 16 Storm and registered an oral opposition on the ground that the 17 arbitration panel had jurisdiction over Alpren's claim. 18 proceeding lasted approximately 20 minutes. 19 Instead, Vadim Klymenko, an Altimo The On April 25, 2006, the Ukrainian court concluded that 20 Nilov lacked the authority to execute the 2004 Agreement on 21 behalf of Storm. 22 "null and void in full, including the arbitration clause, from 23 the time of [Nilov's] execution [of the document]." 24 appealed. The court's decision "rendered" that agreement Storm On May 25, 2006, the Ukrainian appeals court affirmed. 8 1 Five days later, Storm filed a statement of defense in 2 the arbitration panel arguing, among other things, that Telenor's 3 claims were not arbitrable in light of the Ukrainian judgment. 4 Storm also moved before the panel to dismiss the arbitration. 5 October 22, 2006, the panel issued a partial final award and 6 denied the motion. 7 to determine the 2004 Agreement's arbitrability. 8 concluded that the dispute was arbitrable, notwithstanding the 9 Ukrainian decision in the Alpren suit, because it found that 10 Storm and Telenor "had a clear intent to have their disputes 11 resolved through arbitration," and that the arbitration provision 12 of the 2004 Agreement was severable and thus not subject to the 13 Ukrainian judgment. 14 that the Ukranian court did not address the severability 15 question, because Alpren and Storm did not present the question 16 to the court and because Telenor was never even notified of the 17 proceeding. 18 On The panel concluded that it had jurisdiction Partial Final Award 11-13. It also The panel noted Id. at 14. Shortly thereafter, Storm asked the Ukrainian court of 19 appeals to clarify whether, in the court's opinion, the 20 arbitration provision of the 2004 Agreement and the agreement as 21 a whole were invalid in light of the potential severability of 22 the arbitration clause. 23 concluded, by now unsurprisingly, that the arbitration agreement 24 was invalid and that any arbitration pursuant to it was in 25 violation of the court's prior order. On November 8, 2006, the court 9 1 On November 13, 2006, Storm applied in New York State 2 Supreme Court for an injunction terminating the arbitration 3 proceedings and vacating the partial final award in light of the 4 Ukrainian decisions. 5 United States District Court for the Southern District of New 6 York. 7 preliminary injunction. 8 the grounds that the panel's order was interlocutory and 9 therefore not ordinarily subject to appeal, and that Storm was 10 11 Telenor removed the New York lawsuit to the Storm then made a motion in that forum seeking a The district court denied the motion on unlikely to prevail on the merits. A Ukrainian court then, upon Alpren's application, 12 enjoined Telenor, Storm, and Klymenko from participating in the 13 arbitration. 14 was not a party to this new Alpren lawsuit. 15 to the arbitration panel to stop the arbitration pursuant to the 16 Ukrainian injunction, but the panel denied each application. 17 Telenor received no notice of the injunction and Storm twice applied In an attempt to put a stop to the Ukrainian 18 litigation, Telenor applied in these federal district court 19 proceedings for an anti-suit injunction against Storm and its 20 related entities. 21 restraining order. 22 The district court issued such a temporary Following an evidentiary hearing, the district court 23 issued an anti-suit injunction, writing that "there is no doubt 24 that [the Ukrainian] litigation has been designed to, and has had 25 the effect of, interfering in the arbitration process" -- indeed, 26 that it was "conducted in the most vexatious way possible" -- and 10 1 that the court substantially agreed that "Nilov . . . had at 2 least apparent authority to sign the [2004 Agreement]" under 3 either New York or federal law. 4 Commc'ns AS, No. 06 Civ. 13157(GEL), 2006 WL 3735657, at *8-*9, 5 2006 U.S. Dist. LEXIS 90978, at *23-*26 (S.D.N.Y. Dec. 18, 2006). 6 7 With the injunction in place, the arbitration hearings continued. 8 9 Storm LLC v. Telenor Mobile Storm refused to participate. On July 2, 2007, the arbitration panel issued a final award, which reaffirmed the partial final award's findings in 10 light of subsequent events. See Final Award 33-36. The panel 11 held, as relevant to this appeal, that Nilov had both actual and 12 apparent authority under New York law to execute the 2004 13 Agreement on Storm's behalf, see id. at 36, 43-53, and that Storm 14 was in breach of the agreement in several respects, see id. at 15 55. 16 id. at 65-68. Telenor was granted injunctive relief but no damages. 17 The Confirmation of the Award 18 See Telenor petitioned the district court for a 19 confirmation of the final arbitral award. Storm cross-moved for 20 vacatur. 21 decreasing patience with Storm's tactics, Telenor Mobile Commc'ns 22 AS v. Storm LLC, 524 F. Supp. 2d 332 (S.D.N.Y. 2007), the court 23 granted Telenor's application and denied Storm's. 24 rejected Storm's contentions that the panel had manifestly 25 disregarded the law by failing to give determinative effect to 26 the Ukrainian judgments that the 2004 Agreement was never With a lengthy opinion that appears to reflect 11 The court 1 executed by Storm and thus not arbitrable. 2 own independent assessment of arbitrability, the district court 3 concluded that Storm had proffered insufficient evidence to 4 warrant a trial on the issue. 5 6 7 8 9 10 11 12 13 14 15 After conducting its The court wrote: Storm provided every conceivable assurance to Telenor that its signatory officers were empowered to bind it to [the 2004 Agreement]. When Storm breached the agreement, it was provided with precisely the fair and impartial hearing it had bargained for . . . despite making repeated efforts to renege on its agreement and to torpedo the proceeding by collusive and vexatious litigation. Id. at 369. Storm appeals. 16 DISCUSSION 17 I. Governing Legal Standards 18 19 A. Review of Arbitral Awards Under the New York Convention Federal jurisdiction over the final arbitral award in 20 favor of Telenor arises from Chapter 2 of the Federal Arbitration 21 Act ("FAA"), 9 U.S.C. §§ 201-08, which empowers the federal 22 courts to enforce arbitrations, such as this one, governed by the 23 New York Convention on the Recognition and Enforcement of Foreign 24 Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 38 25 (the "New York Convention" or the "Convention"). 26 § 201 ("The Convention . . . shall be enforced in United States 27 courts in accordance with this chapter."); id. § 203 ("An action 28 or proceeding under the Convention shall be deemed to arise under 29 the laws and treaties of the United States. 30 of the United States . . . shall have original jurisdiction over 12 See 9 U.S.C. The district courts 1 such an action or proceeding . . . ."); Vaden v. Discover Bank, 2 129 S. Ct. 1262, 1271 n.9 (2009).3 3 "Given the strong public policy in favor of 4 international arbitration, review of arbitral awards under the 5 New York Convention is very limited in order to avoid undermining 6 the twin goals of arbitration, namely, settling disputes 7 efficiently and avoiding long and expensive litigation." 8 Encyclopaedia Universalis S.A. v. Encyclopaedia Britannica, Inc., 9 403 F.3d 85, 90 (2d Cir. 2005) (citation, internal quotation 10 marks, and ellipsis omitted). 11 implicate three types of such limited review. 12 Storm's arguments on appeal 1. Defenses to Enforcement of the Arbitral Award. 13 Pursuant to the New York Convention as incorporated by the FAA, a 14 district court, upon petition by a party to a qualifying arbitral 15 award, "shall confirm the award unless it finds one of the 16 grounds for refusal or deferral of recognition or enforcement of 17 the award specified in the . . . Convention." 18 The Convention sets forth seven grounds for denial of 19 confirmation, including, of relevance to this appeal, if 3 9 U.S.C. § 207. The parties assume that the New York Convention governs this commercial dispute, and, because the dispute is between two foreign corporations, we conclude that that assumption is correct. See Yusuf Ahmed Alghanim & Sons, W.L.L. v. Toys "R" Us, Inc., 126 F.3d 15, 19 (2d Cir. 1997) (holding that New York Convention governed dispute involving conduct occurring in the Middle East between nondomestic parties and a domestic corporation, because Convention encompasses awards "pronounced in accordance with foreign law or involving parties domiciled or having their principal place of business outside the enforcing jurisdiction" (quoting Bergesen v. Joseph Muller Corp., 710 F.2d 928, 932 (2d Cir. 1983)), cert. denied, 522 U.S. 1111 (1998). 13 1 "recognition or enforcement of the award would be contrary to the 2 public policy of [the] country [in which that relief is sought]," 3 New York Convention, art. V(2)(b).4 4 The grounds are: (a) The parties to the agreement [to arbitrate] were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country were the award was made; or (b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or (c) The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or (d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or (e) The award has not yet become binding on the parties, or has been set aside by a competent authority of the country in which, or under the law of which, that award was made. New York Convention art. V(1). And: (a) The subject matter of the difference is not capable of settlement by arbitration 14 1 "The party opposing enforcement of an arbitral award 2 has the burden to prove that one of the seven defenses under the 3 New York Convention applies." 4 F.3d at 90. 5 to avoid summary confirmance is high." 6 and internal quotation marks omitted); see also Zeiler v. 7 Deitsch, 500 F.3d 157, 164 (2d Cir. 2007) (same). 8 9 Encyclopaedia Universalis, 403 "The burden is a heavy one, as the showing required 2. Arbitrability. Id. (citations, ellipsis, A dispute is arbitrable only if the parties contractually bind themselves to arbitrate it. See, 10 e.g., AT&T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 11 648 (1986) (noting that "arbitration is a matter of contract"); 12 see also First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 13 943 (1995) ("[T]he arbitrability of the merits of a dispute 14 depends upon whether the parties agreed to arbitrate that 15 dispute."). 16 when, as here, someone asserts that an arbitral award should not 17 be enforced because there was no effective agreement to arbitrate 18 the dispute. 19 A question of arbitrability is therefore raised Review of arbitrability questions is subject to two 20 important presumptions: First, "the federal policy in favor of 21 arbitration requires that 'any doubts concerning the scope of under the law of that country [i.e., the country where recognition and enforcement is sought]; or (b) The recognition or enforcement of the award would be contrary to the public policy of that country. Id. art. V(2). 15 1 arbitrable issues' be resolved in favor of arbitration.'" Shaw 2 Group Inc. v. Triplefine Int'l Corp., 322 F.3d 115, 120 (2d Cir. 3 2003) (quoting Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 4 460 U.S. 1, 24-25 (1983)). 5 presumptively to be decided by the courts, not the arbitrators 6 themselves. 7 decide arbitrability . . . [t]he law [presumptively] favor[s] 8 judicial rather than arbitral resolution."); see also First 9 Options, 514 U.S. at 944-45. Second, arbitrability questions are See id. ("[W]hen the doubt concerns who should We have written that the latter 10 presumption can be rebutted only by "clear and unmistakable 11 evidence from the arbitration agreement, as construed by the 12 relevant state law, that the parties intended that the question 13 of arbitrability shall be decided by the arbitrator." 14 Cendant Corp., 293 F.3d 563, 566 (2d Cir. 2002) (internal 15 quotation marks and emphasis omitted); see also Shaw Group, 322 16 F.3d at 120-21.5 Bell v. 5 In Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006), the Supreme Court made clear that in light of the severability of agreements to arbitrate generally, see id. at 445, the presumption of judicial resolution of arbitrability applies only when a party has specifically challenged the arbitration agreement -- "unless the challenge is to the arbitration clause itself, the issue of the contract's validity is considered by the arbitrator in the first instance," id. at 445-46. But Buckeye expressly limited its holding to challenges to a "contract's validity," as distinguished "from the issue whether any agreement between the alleged obligor and obligee was ever concluded," including, as relevant to this appeal, "whether the signor lacked authority to commit the alleged principal." Id. at 444 n.1. We have not modified our previous ruling that such questions about whether a contract was ever made -- like the question before us in the instant case -- are presumptively to be decided by the court even without a specific challenge to the agreement 16 1 The presumption that the court should decide 2 arbitrability questions also applies when a party seeks to compel 3 arbitration under the New York Convention. 4 Convention, art. II(3) (providing that the court "shall, at the 5 request of one of the parties, refer the parties to arbitration, 6 unless it finds that the . . . agreement is null and void, 7 inoperative or incapable of being performed"). 8 a motion to compel in Sphere Drake Ins. Ltd. v. Clarendon Nat'l 9 Ins. Co., 263 F.3d 26 (2d Cir. 2001), writing that when "the See New York We addressed such 10 making of the agreement to arbitrate is placed in issue . . . the 11 court must set the issue for trial," so long as "the party 12 putting the agreement to arbitrate in issue . . . present[s] 13 'some evidence' in support of its claim." 14 Interocean Shipping Co. v. Nat'l Shipping & Trading Corp., 462 15 F.2d 673, 676 (2d Cir. 1972)). 16 inarbitrability, we noted that the party might also be required 17 to make a specific challenge to the arbitration clause. Id. at 30 (quoting Depending on the type of claimed See id. to arbitrate. See Sphere Drake Ins. Ltd. v. Clarendon Nat'l Ins. Co., 263 F.3d 26, 31-32 (2d Cir. 2001) (holding that if a party alleges that an agreement is "void" -- as distinct from "voidable" -- the agreement's validity is subject to judicial resolution by "trial" without the party's having to challenge the arbitration clause in particular, so long as the party alleges "that [the] contract is void and provides some evidence in support"). Because we conclude below that even if Storm challenged the arbitration clause of the 2004 Agreement in particular, it has still failed to provide sufficient evidence that this dispute was not arbitrable, we need not decide whether this aspect of Sphere Drake survives Buckeye. Cf. Rubin v. Sona Int'l Corp., 457 F. Supp. 2d 191, 193 (S.D.N.Y. 2006) (concluding that, in light of Buckeye, "[whether a party] argues that [an] agreement is void or voidable, [the party] may only avoid arbitration if it can successfully challenge the validity of the arbitration clause itself"). 17 1 at 31-32 (noting that in setting an arbitrability issue for 2 trial, a party alleging that a contract is void need not 3 challenge the arbitration clause, but a party alleging that a 4 contract is voidable must challenge the arbitration clause in 5 particular); see also supra n.[4]. 6 3. Manifest Disregard. Federal courts with 7 jurisdiction to enforce an arbitral award may also consider 8 whether the award was in "manifest disregard" of the law. 9 Stolt-Nielsen SA v. Animalfeeds Int'l Corp., 548 F.3d 85, 91-92, 10 94-95 (2d Cir. 2008).6 6 See The boundaries of the manifest disregard In Hall St. Assocs., L.L.C. v. Mattel, Inc., 128 S. Ct. 1396 (2008), the Supreme Court observed that the "manifest disregard" doctrine might be a ground for review independent of the FAA, or might instead be a name for some, or all, of the grounds for vacatur of arbitral awards set forth in Section 10(a) of the FAA, 9 U.S.C. § 10(a), including circumstances "where the arbitrators were guilty of misconduct," id. § 10(a)(3), or "exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made," id. § 10(a)(4). See Hall St. at 1403-04 ("Maybe the term 'manifest disregard' was meant to name a new ground for review, but maybe it merely referred to the § 10 grounds collectively, rather than adding to them."). In StoltNielsen, we read Hall St. to hold that the FAA set forth the "exclusive" grounds for vacating an arbitration award, and that the term "manifest disregard" was merely a "judicial gloss" on some of those grounds. Stolt-Nielsen, 548 F.3d at 94. The Supreme Court has granted certiorari to review StoltNielsen explicitly on another issue, see 129 S. Ct. 2793 (2009), but even if it confirms or rejects our interpretation of the term "manifest disregard," that will not affect this appeal. If the Stolt-Nielsen interpretation is correct, we may review this arbitral award for manifest disregard because the arbitration took place in the United States and therefore is "subject to the FAA provisions," like Section 10(a), "governing domestic arbitration awards." See Zeiler, 500 F.3d at 164; see also 9 U.S.C. § 208. If our interpretation was incorrect, this opinion will be applying a judicially created "non-statutory defense to enforcement." Telenor Mobile Commc'ns AS v. Storm LLC, 524 F. Supp. 2d 332, 344 (S.D.N.Y. 2007). 18 1 concept are not precisely defined, but the term "clearly means 2 more than error or misunderstanding with respect to the law." 3 Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Bobker, 808 F.2d 4 930, 933 (2d Cir. 1986). 5 arbitration panel made "the wrong call on the law" does not show 6 manifest disregard; "the award should be enforced . . . if there 7 is a barely colorable justification for the outcome reached." 8 Wallace v. Buttar, 378 F.3d 182, 190 (2d Cir. 2004) (emphasis in 9 original) (internal quotation marks omitted). A mere demonstration that an Examples of 10 manifest disregard therefore tend to be extreme, such as 11 "explicitly reject[ing] controlling precedent" or otherwise 12 reaching a decision that "strains credulity" or lacks even a 13 "barely colorable" justification. 14 93 (internal quotation marks omitted). 15 to obtain relief from an arbitral award under this doctrine. 16 at 91 & n.7 (internal quotation marks omitted). Stolt-Nielsen, 548 F.3d at 92It is, in a word, "rare" 17 The "manifest disregard" inquiry has three steps: 18 19 20 21 First, we must consider whether the law that was allegedly ignored was clear, and in fact explicitly applicable to the matter before the arbitrators. . . . 22 23 24 25 26 27 28 29 30 31 32 33 Second, once it is determined that the law is clear and plainly applicable, we must find that the law was in fact improperly applied, leading to an erroneous outcome. . . . Third, once the first two inquiries are satisfied, we look to the subjective element, that is, the knowledge actually possessed by the arbitrators. In order to intentionally disregard the law, the arbitrator must have known of its existence, and its applicability to the problem before him. 19 Id. 1 Id. at 93 (quoting Duferco Int'l Steel Trading v. T. Klaveness 2 Shipping A/S, 333 F.3d 383, 389-90 (2d Cir. 2003)). 3 B. Standard of Review 4 As a general matter, "[w]e review a district court's 5 decision to confirm an arbitration award de novo to the extent it 6 turns on legal questions, and we review any findings of fact for 7 clear error." 8 review de novo the question whether the arbitration panel erred 9 in a respect explicitly set forth by the FAA as a ground for Duferco, 333 F.3d at 388. Accordingly, here we 10 vacatur of an arbitral award. 11 Daihatsu Motor Co., 304 F.3d 200, 219-23 (2d Cir. 2002). 12 See, e.g., Westerbeke Corp. v. Similarly, "'[w]hen a party challenges the district 13 court's review of an arbitral award under the manifest disregard 14 standard, we review the district court's application of the 15 standard de novo.'" 16 Group, LLC v. Benderson, 326 F.3d 75, 77 (2d Cir. 2003)). 17 18 19 Wallace, 378 F.3d at 189 (quoting The GMS II. Analysis A. The Ukrainian Judgments Storm argues that the arbitration panel manifestly 20 disregarded the law governing the preclusive effect of foreign 21 judgments when it failed to give such effect to the Ukrainian 22 court judgments holding that the 2004 Agreement was never 23 executed by Storm and is therefore not arbitrable. 24 argues that its compliance with the arbitral award as enforced by 25 the district court would entail actions that would place it in 20 Storm also 1 contempt of the Ukrainian courts, contrary to New York public policy. 2 1. Manifest Disregard. In Ackermann v. Levine, 788 3 F.2d 830 (2d Cir. 1986), we reiterated the "well-settled rule" 4 that 5 6 7 8 9 10 11 12 a final judgment obtained through sound procedures in a foreign country is generally conclusive as to its merits unless (1) the foreign court lacked jurisdiction . . . ; (2) the judgment was fraudulently obtained; or (3) enforcement of the judgment would offend the public policy of the state in which enforcement is sought. 13 Id. at 837 (emphasis in original). 14 arbitration panel manifestly disregarded this rule by failing to 15 give conclusive weight to the Ukrainian judgments that the 2004 16 Agreement is not arbitrable.7 17 Storm contends that the The district court disagreed. It concluded that the 18 judgments obtained by Alpren against Storm had contravened the 19 rule against "friendly litigation," see Lord v. Veazie, 49 U.S. 20 (8 How.) 251, 256 (1850) (concluding that such litigation results 21 in a judgment which "is a mere form" and is therefore "a 22 nullity"). 23 arbitration panel had both previously found the Alpren litigation 24 to have been collusive. 25 district court also concluded that the Ukrainian proceedings had 26 afforded Telenor no notice or opportunity to be heard prior to 27 the entry of the judgment, and that they were intended to 7 The district court remarked that it and the Telenor, 524 F. Supp. 2d at 346-47. The The first and third steps of the manifest disregard inquiry -- that the Ackermann rule was clear, plainly applicable, and made known to the arbitration panel -- are undisputed. 21 1 undermine a possible confirmation of an award in Telenor's favor. 2 Id. at 347. 3 the Ukrainian procedures were not "sound" for Ackermann purposes 4 and therefore not binding on the arbitration panel. 5 In light of those conclusions, the court found that Id. at 348. Storm argues that the arbitration panel did not 6 actually find that the Ukrainian actions by Alpren were 7 collusive. 8 "collusive" in its partial or final award. 9 mention, repeatedly, that the Alpren litigation was conducted To be sure, the panel did not employ the word But the panel does 10 among related corporate entities, see, e.g., Final Award 21 ("As 11 previously noted, Alpren and Storm were under the direct or 12 indirect control of Altimo, and the ultimate control of Alfa."), 13 without notice to or appearance by Telenor, see, e.g., id. at 17 14 ("Telenor . . . had no notice of the Ukrainian proceedings until 15 after the order of the Ukrainian appellate court . . . ."); id. 16 ("[T]he April-May 2006 Ukrainian court proceedings came as a 17 surprise to both the Tribunal and to Telenor . . . ."). 18 panel's repeated observations along these lines make clear that 19 the panel considered the Ukrainian proceedings to have been 20 collusive, even though the panel understandably elected to avoid 21 using that term in relation to proceedings before a duly 22 constituted foreign court. 23 had previously "made clear" that it was not "ignoring the 24 decisions of the Ukrainian courts . . . [or] impugning the 25 integrity of those courts or their decisions"). The See id. at 25 (noting that the panel 22 1 Politic or not, in light of the "strong presumption 2 that an arbitration tribunal has not manifest[ly] disregarded the 3 law," Westerbeke, 304 F.3d at 212 n.8, the panel's multiple 4 references to the Alfa-internal and ex parte nature of the Alpren 5 litigation supply a sufficiently "colorable" justification for 6 its refusal to give the Ukrainian judgments controlling weight. 7 Cf. Motorola Credit Corp. v. Uzan, 388 F.3d 39, 60-61 (2d Cir. 8 2004) (affirming denial of comity to injunctions entered by 9 Turkish courts that "were the product of collusion"). 10 Storm does not seriously dispute that the Alpren 11 litigation was a cooperative venture among allied interests.8 12 argues, instead, that Storm "had no contact" with its adversary 13 during the litigation, that it "presented a defense" in the 14 proceedings, and that it "appealed." 15 these assertions, if true, would not refute the panel s finding 16 of collusion on the facts of this case and would not be a basis 17 upon which the district court was required to overturn that 18 finding. 19 decidedly modest efforts in the Alpren suit to be material or 20 meaningful.9 Appellant Br. 42. It But The panel was not obliged to interpret Storm's 8 Storm does rely upon a declaration from Klymenko, submitted after judgment was entered by the district court, which says that Storm, Alpren, and Altimo are not "the same entities." We decline to find clear error on the basis of a self-serving declaration that the district court had no opportunity to consider. 9 Moreover, Storm offers no good reason why we should not affirm on the district court's finding of collusion. See Telenor, 524 F. Supp. 2d at 346-47. 23 1 Moreover, "the force of" the Ukrainian judgments as 2 against Telenor is "further reduced" by the fact that Telenor was 3 not a party to the Alpren litigation and was continually denied 4 notice of the proceedings. 5 22, 25-27; Telenor, 524 F. Supp. 2d at 346-47. 6 the Ukranian court to afford Telenor what we would regard as 7 rudimentary due process, see Parklane Hosiery Co. v. Shore, 439 8 U.S. 322, 327 n.7 (1979) ("It is a violation of due process for a 9 judgment to be binding on a litigant who was not a party or privy Final Award 34; see also id. at 21The failure of 10 and therefore never had an opportunity to be heard."), provides 11 an independent colorable justification for the panel's conclusion 12 that the Ukrainian proceedings were unsound for Ackermann 13 preclusion purposes. 14 It was the opinion of a witness whom Storm proffered as 15 an expert that "Telenor . . . could have intervened" in the 16 Alpren litigation after it was notified of the judgment against 17 it "for purposes of filing an appeal to Ukraine's highest court" 18 but "chose not to do so." 19 two reasons. 20 constitute competent evidence of the process actually available 21 to Telenor in the Alpren litigation, would fail to demonstrate 22 that Telenor, after intervening solely for purposes of appeal, 23 would have been afforded a full and fair opportunity to be heard 24 on the merits of the issues decided in that litigation. 25 it would not in any event be sufficient to have warranted a 26 reversal by the district court under the "manifest disregard" That is beside the point for at least First, this opinion testimony, if assumed to 24 Second, 1 standard. See Stolt-Nielsen, 548 F.3d at 91 ("We do not . . . 2 'recognize manifest disregard of the evidence as proper ground 3 for vacating an arbitrator's award.'" (quoting Wallace, 378 F.3d 4 at 193) (emphasis added in Stolt-Nielsen)). 5 The Ukrainian decisions therefore provide no basis for 6 a denial of enforcement of the final arbitral award on "manifest 7 disregard" grounds. 8 2. Public Policy. 9 Storm argues that the arbitral award should nonetheless 10 be vacated pursuant to Article V(2)(b) of the New York Convention 11 because, Storm says, it is contrary to New York public policy to 12 force a party to comply with an arbitral award that will cause it 13 to violate a foreign judgment. 14 properly invoke the protection of any such policy. 15 We do not think that Storm can Two factfinders have concluded that Storm brought the 16 Ukrainian judgments upon itself through use of highly 17 questionable litigation tactics. 18 Telenor, 524 F. Supp. 2d at 346-47, 356-58. 19 like that of the apocryphal parricide seeking mercy because he 20 had been orphaned, is entirely of its own making. 21 See Final Award 21, 25; Storm's situation, Our view, in light of the findings of the arbitration 22 panel and the district court, is that it is Storm's improper 23 collateral litigation, not the arbitral award, that is contrary 24 to public policy, viz., the well-established federal public 25 policy in favor of arbitration. 26 Textiles, Inc. v. Bombay Dyeing & Mfg. Co., 189 F.3d 289, 294 (2d See, e.g., Chelsea Square 25 1 Cir. 1999) ("Through the FAA, Congress has declared a strong 2 federal policy favoring arbitration as an alternative means of 3 dispute resolution." 4 Collateral and unilateral litigation of arbitrability or any 5 other issue pertinent to an arbitration, for that matter -- 6 undertaken in a foreign forum by a party to that arbitration in 7 an attempt to protect itself from an adverse arbitral award 8 would, if indulged, tend seriously to undermine the underlying 9 scheme of the FAA and the New York Convention. 10 (internal quotation marks omitted)). Article V(2)(b) must be "construed very narrowly" to 11 encompass only those circumstances "where enforcement would 12 violate our most basic notions of morality and justice." 13 Europcar Italia S.p.A. v. Maiellano Tours, Inc., 156 F.3d 310, 14 315 (2d Cir. 1998) (internal quotation marks omitted). 15 Consistent with that rule, we conclude that enforcing the 16 arbitral award as against Storm would not be contrary to public 17 policy. 18 B. 19 Sphere Drake and Arbitrability Storm argues that the panel manifestly disregarded 20 Sphere Drake when it failed to arrange for a trial to be held on 21 the arbitrability of the 2004 Agreement. 22 the district court erred in making its own determination, de 23 novo, that the 2004 Agreement was executed by Storm. 24 to the contrary that Storm failed to present "some evidence" of a 25 dispute as to arbitrability so as to warrant a trial under Sphere 26 Storm also argues that We conclude 1 Drake.10 2 evidence to support its allegation that Nilov lacked apparent 3 authority to execute the agreement on behalf of Storm. In particular, Storm has not provided sufficient Under New York law,11 an agent has apparent authority 4 5 if "a principal places [the] agent in a position where it appears 6 that the agent has certain powers which he may or may not 7 possess." 8 Cir. 1964). 9 judgment as a matter of law against the principal. Masuda v. Kawasaki Dockyard Co., 328 F.2d 662, 665 (2d The apparent authority question is susceptible to See, e.g., 10 Warnock Cap. Corp. v. Hermitage Ins. Co., 21 A.D.3d 1091, 803 11 N.Y.S.2d 606 (2d Dep't 2005). 12 fact, let alone a material one, as to Nilov's apparent authority: 13 There is substantial evidence that Telenor received multiple 14 notices from Storm that Nilov had the authority to execute the 15 2004 Agreement and there is no evidence, at least that has been 10 Here, there is no genuine issue of We do not reach the question of required to challenge the arbitrability clause, in particular, or whether it in Storm challenged the arbitration clause we would reach the same result. 11 whether Storm was of the arbitration fact did so. Even if itself, as it contends, The 2004 Agreement provides that it "shall be governed by, and construed in accordance with," New York law, "without giving effect to any conflicts of laws principles . . . which would result in the application of the laws of another jurisdiction." 2004 Agreement § 13.06. This choice of law clause governs Storm's arbitrability challenge. See Motorola Credit Corp. v. Uzan, 388 F.3d 39, 50 (2d Cir. 2004) ("[A] choice-of-law clause in a contract will apply to disputes about the existence or validity of that contract."), cert. denied, 544 U.S. 1044 (2005). By the terms of the clause, Storm is incorrect that Ukrainian law applies to the dispute as a matter of New York conflicts principles. 27 1 brought to our attention, that Telenor should have thought 2 otherwise. 3 The record reflects that Storm sent Telenor a variety 4 of signals that Nilov had the authority to execute the 2004 5 Agreement. Among them: 6 7 8 9 10 11 12 13 14 15 16 ! In 2002, Telenor received a copy of the August 20, 2002 Storm shareholders resolution, which referenced both the Voting Agreement and the draft shareholders agreement that ultimately became the 2004 Agreement and authorized Nilov "to execute and deliver [those] agreements" and to "take or cause to be taken any and all other actions, as are required or desirable in connection with this Resolution and the abovereferenced agreements." Storm LLC, Notice Regarding Resolutions Adopted by Written Polling, Aug. 30, 2002, at 3. 17 18 19 20 ! Nilov executed -- with actual authority -- the Voting Agreement providing that Storm "agree[d] to . . . execute and deliver the New Shareholder Agreement." Voting Agreement § 2.05. 21 22 23 24 ! Telenor received an email from a Storm negotiator stating that Storm was "ready to sign" the 2004 Agreement, and discussing Nilov's availability to sign it, the day before Nilov actually signed it. 25 26 27 28 29 ! Telenor received documentation from Storm signed by Storm's chairman and another official, stating that Nilov was "duly authorized" to execute the agreement on Storm's behalf. See Storm LLC, Certificate of Incumbency and Authority of Storm, Jan. 30, 2004. 30 Storm does not challenge the validity of these 31 representations to Telenor of Nilov's apparent authority to 32 execute the agreement. 33 have deduced from the Storm charter and from having not received 34 documentation of any shareholder meeting specifically authorizing 35 Nilov to sign the 2004 Agreement, despite Storm's repeated 36 statements that he was so authorized, that Nilov's execution Rather, Storm argues that Telenor should 28 1 required a shareholder meeting for authorization. 2 raise a genuine issue of material fact. 3 cites nothing in the record (including in the charter) to support 4 the proposition that Nilov required shareholder approval to 5 execute the 2004 Agreement on his company's behalf. 6 there is no evidence from which a rational juror might infer that 7 Telenor should have concluded that there was no such meeting, in 8 light of Storm's repeated assurances that Nilov was indeed duly 9 authorized. 10 11 12 This fails to For one thing, Storm For another, Storm has, moreover, failed to explain why Nilov would sign the agreement without authorization. In any event, the record evidence shows that everyone 13 at the relevant time, including Storm, thought that Nilov had the 14 authority to execute the agreement. 15 which to conclude that Storm has failed to proffer sufficient 16 evidence from which a rational juror could conclude that Nilov 17 lacked apparent authority to execute the 2004 Agreement and that 18 no trial was required to find out if the agreement was, or was 19 not, arbitrable. CONCLUSION 20 21 22 That is sufficient ground on For the foregoing reasons, the judgment of the district court is affirmed. 29

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