Pao Tatneft filed suit in Washington, D.C., district court seeking to enforce a $112 million foreign arbitral award entered in its favor against the nation of Ukraine. Confirmation was sought pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the “New York Convention.”
Ukraine argued against confirmation of the award on the grounds that the arbitration panel was not impartial, and that confirmation would be contrary to U.S. public policy. Regarding impartiality, Ukraine claimed the panel’s neutral arbitrator was, in fact, not neutral, having failed to disclose that he accepted an offer from Pao Tatneft’s law firm to serve as an arbitrator in a wholly separate arbitration in which he would earn upwards of $300,000. The parties disputed the standard by which to assess any alleged impartiality. Ukraine argued that the less stringent “evident partiality” standard set forth in Section 10(a)(2) of the Federal Arbitration Act applied. Pao Tatneft argued that Article V of the New York Convention contained the only grounds upon which the court could refuse to enforce the award. The court agreed with Pao Tatneft, but found Ukraine failed to meet its burden under both standards in any event. Ukraine argued alternatively that the award should not be confirmed based on U.S. public policy, but these claims were found to be speculative and/or factually unsupported. As such, the court granted Pao Tatneft’s petition to confirm the award and left the total amount payable after interest for additional briefing.