Soaring Wind Energy, LLC v. Catic USA Inc., No. 18-11192 (5th Cir. 2020)Annotate this Case
Catic, a California corporation with Chinese corporate parentage, appealed the district court's confirmation of an adverse arbitral award. The arbitration panel awarded Soaring Wind Energy $62.9 million against Catic and ordered that Catic be divested of its shares in Soaring Wind Energy without compensation.
The Fifth Circuit held that it had subject matter jurisdiction because this case related to an arbitration agreement or award falling under the NY Convention. In this case, a Chinese entity's actions on foreign soil could (and did) trigger breach for one of the Soaring Wind Energy's (domestic) members, and the arbitral award holds those Chinese affiliates jointly and severally liable for damages to the claimants. Therefore, such factors were enough for the agreement to bear a relation to China sufficient for federal jurisdiction under the NY Convention.
The court held that whether Catic's non-signatory affiliates themselves be subject to the arbitration is irrelevant, because Catic assumed the obligation of its affiliates. Therefore, the district court did not err by confirming the award without first reviewing the arbitrators' power over Catic's Chinese affiliates. The court also held that the arbitration panel was not improperly constituted, and the award was not improper. The court rejected Catic's claims to the contrary and affirmed the arbitration award.