In a recent case, the Fourth Circuit was faced with a question about the enforcement of a Singapore arbitration award under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. In Reddy v. Buttar, the court held that an arbitration award from a Singapore arbitration proceeding could be enforced in the Fourth Circuit, after finding that the court had subject matter jurisdiction and personal jurisdiction over the matter. This case may be illustrative for others wondering about the enforceability of foreign arbitration awards.
Reddy v. Buttar
Rashid Buttar, then a citizen and resident of North Carolina, and Rachan Reddy, a citizen and resident of Vietnam, signed a “Share Sale and Purchase Agreement” dated June 21, 2010, by which Buttar agreed to sell Reddy shares of companies owning indirectly Dumanpalit Island in the Philippines for $3 million. After execution of the agreement, Reddy paid $1.5 million in advances toward the purchase price. However, soon after, Reddy learned that a local indigenous tribe claimed ownership of the island and that the Philippines National Commission on Indigenous Peoples had conveyed title to the island to the tribe about six months before Buttar and Reddy had signed their agreement. Reddy demanded a refund of the $1.5 million, but Buttar sought to enforce the agreement, demanding the remaining portion of the purchase price. Reddy commenced an arbitration proceeding in Singapore, as provided for in the agreement.
The arbitrator found that Buttar was not in a position to sell the island to Reddy and that he breached the agreement’s warranty of title. By order dated April 10, 2015, the arbitrator enforced the agreement and ordered Buttar to pay Reddy $1.55 million, plus legal fees and arbitration costs. Reddy commenced this action on April 6, 2018, to enforce the award under the Convention. Buttar argued that the court lacked subject matter jurisdiction and personal jurisdiction over the action. The district court granted Reddy summary judgment, enforcing the award.
The Convention on the Recognition and Enforcement of Foreign Arbitral Awards is an international treaty aimed at “encourag[ing] the recognition and enforcement of commercial arbitration agreements in international contracts.” The Convention sets forth standards for the observance and enforcement of arbitration awards and requires signatory states to recognize and enforce such arbitration awards from other states. The United States acceded to the Convention in 1970 and Congress enacted an implementing statute that same year, which provided district courts with original jurisdiction over actions “falling under the Convention.” The statute specifically provides that actions “falling under the Convention” arise under the laws of the United States and may be filed in U.S. district courts. An arbitration agreement or award “falls under the Convention” when it “aris[es] out of a legal relationship, whether contractual or not, which is considered as commercial,” but excluding “[a]n agreement or award arising out of such a relationship which is entirely between citizens of the United States . . . unless that relationship involves [among other things] property located abroad.” The court here found that this statute confers subject matter jurisdiction on U.S. district courts over enforcement actions brought under the Convention.
General personal jurisdiction allows a court to “hear any claim against [a] defendant, even if all the incidents underlying the claim occurred in a different State.” The forum for the exercise of general jurisdiction is the individual’s “domicile.” To establish a domicile in a State, it must be shown that the individual has a physical presence in that State with “an intent to make [that] State a home.” A domicile “is presumed to continue until it is shown to have been changed.” Here, Buttar argues that he was not subject to the personal jurisdiction of the district court, because, although he was a citizen and resident of North Carolina up until June or July 2016, he then moved to New Zealand and no longer had contacts with North Carolina sufficient to subject him to the personal jurisdiction of a court there when the action was commenced in April 2018.
The district court found, and the Fourth Circuit upheld the finding, that Buttar still had sufficient contacts with North Carolina to extend personal jurisdiction. The court considered many facts, including that Buttar still maintains significant family ties to North Carolina as his ex-wife and children still live in the state; Buttar still receives mail, including legal documentation, in North Carolina; on April 20, 2018, Buttar’s own attorney served notice on Buttar of a state court hearing at Buttar’s North Carolina address; Buttar’s sole bank account lists a North Carolina address; and Buttar is registered to vote in North Carolina and voted absentee in the November 2016 presidential election. The court acknowledged evidence of a possible domiciliary change, including Buttar’s lack of North Carolina-based property and driver’s license, and his New Zealand address and permanent resident visa. However, the court ultimately concluded that Buttar was a domiciliary of North Carolina at the time this action was commenced in April 2018.
Thus, after finding that the district court did have subject matter jurisdiction and personal jurisdiction over the matter, the Fourth Circuit upheld the district court’s order that the arbitration award be enforced.
What Does Reddy v. Buttar Mean for You?
Whether or not a court has jurisdiction over a party or matter is a fact-intensive inquiry and may not always be decided the same way this case was. Specifically, the relevant countries need to be parties to the Convention for the treaty to be applicable and to extend subject matter jurisdiction. Additionally, the parties must have sufficient contacts with a state to justify a grant of personal jurisdiction, as was found here. However, this case can be illustrative for similar fact situations.
If you’re dealing with enforcement of a foreign arbitration award, GCPC arbitration attorneys can help you work through the process. Call General Counsel PC at 703-293-5439 today to see how we can help you.