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Grupo Unidos Por El Canal, S.A. v. Autoridad Del Canal De Panama

United States District Court, S.D. Florida

June 20, 2018

Grupo Unidos Por El Canal, S.A. and Sacyr, S.A., Petitioners,
Autoridad del Canal de Panama, Defendant.


          Robert N. Scola, Jr. United States District Judge

         This matter is before the Court upon multiple motions filed by the parties in this case. The Petitioners Grupo Unidos Por El Canal, S.A. (“GUPC”) and Sacyr, S.A. initiated this action requesting that the Court vacate a final arbitral award. Thereafter, the Petitioners filed an amended motion to vacate (ECF No. 15), which the Respondent Autoridad del Canal de Panama (“ACP”) seeks to dismiss (ECF No. 43), and opposes in substance (ECF No. 44). The Respondent ACP also filed a motion to confirm the arbitration award (ECF No. 50). For the reasons set forth below, the Court finds that the Petitioners' motion to vacate is time-barred, and that ACP's motion to confirm should be granted in part.

         1. Background

         This case arises as a result of a dispute related to the design and construction of the third set of locks on the Pacific and Atlantic sides of the Panama Canal. The Petitioner GUPC is the contractor that designed and built the third set of locks, and the Petitioner Sacyr is one of GUPC's shareholders. The Respondent ACP is an entity established by the Panamanian constitution to operate, manage, and preserve the Panama Canal. The underlying dispute involved significant time delays and cost overruns of almost $200 million on the Pacific side of the project, related to the design and construction of a cofferdam, which would allow a dry work area, and a diversion of the nearby Cocoli River. According to the Petitioners, the delay and increased costs occurred due to unexpected site conditions because of extensive prior dredging in the area, which ACP knew about, yet failed to disclose. As set forth in the parties' agreement, the dispute was arbitrated in Miami pursuant to the Rules of Arbitration of the International Chamber of Commerce (“ICC”). Ultimately, the arbitration resulted in an award in favor of ACP, ordering the Petitioners (and additional claimants not parties to the instant case) to reimburse ACP for significant legal, administrative, and other costs, for a total of over $22 million. The Petitioners now request that the Court vacate the award pursuant to 9 U.S.C. section 10(a)(3), arguing that the arbitration tribunal majority refused to consider relevant and necessary evidence as a result of ACP's repeated failure to produce pertinent documentation and witnesses. ACP argues that the Petitioners' motion to vacate is barred because they failed to timely serve notice as required by the Federal Arbitration Act (“FAA”), 9 U.S.C. § 12, and the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1608. In addition, ACP requests that this Court confirm the underlying arbitration award.

         2. Legal Standard

         It is “well settled that judicial review of an arbitration award is narrowly limited.” Davis v. Prudential Sec., Inc., 59 F.3d 1186, 1190 (11th Cir. 1995). In fact, such review is “among the narrowest known to the law.” AIG Baker Sterling Heights, LLC v. Am. Multi-Cinema, Inc., 508 F.3d 995, 1001 (11th Cir. 2007) (citation and quotation marks omitted). As long as an arbitrator is even arguably construing the issues before him based on the parties' agreement, and acting within the scope of his authority, “that a court is convinced he committed serious error does not suffice to overturn his position.” United Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29, 38 (1987). In short, “it is only when an arbitrator strays from interpretation and application of the agreement and effectively dispenses his own brand of industrial justice that his decision may be unenforceable.” White Springs Agric. Chems., Inc. v. Glawson Invs. Corp., 660 F.3d 1277, 1281 (11th Cir. 2011) (alterations omitted) (quoting Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662, 671 (2010)). The Federal Arbitration Act “imposes a heavy presumption in favor of confirming arbitration awards and federal courts should defer to an arbitrator's decision whenever possible.” Pochat v. Lynch, No. 12-22397-CIV, 2013 WL 4496548, at *5 (S.D. Fla. Aug. 22, 2013) (Rosenbuam, J.) (quoting Riccard v. Prudential Ins. Co. of Am., 307 F.3d 1277, 1288 (11th Cir. 2002) and Frazier v. CitiFinancial Corp., LLC, 604 F.3d 1313, 1321 (11th Cir. 2010)) (quotation marks omitted). Ultimately, “a court's confirmation of an arbitration award is usually routine or summary.” Riccard, 307 F.3d at 1288.

         3. Analysis

         At the outset, the Court notes that although the Federal Rules of Civil Procedure apply to actions relating to arbitration, the FAA does not provide a procedural mechanism for dismissal of an action, such as Rule 12 of the Federal Rules of Civil Procedure. See Fed. R. Civ. P. 81(6)(B) (stating that “[t]hese rules, to the extent applicable, govern proceedings under [9 U.S.C., relating to arbitration], except as these laws provide other procedures”). Rather, the proper procedure for seeking review of an arbitration award is to file a motion, to which the respondent would present its defenses in a response. See O.R. Secs., Inc. v. Prof'l Planning Assocs., Inc., 857 F.2d 742, 745-46 (11th Cir. 1988) (setting out the proper procedure for seeking to vacate an arbitration award). Indeed, “[t]he manner in which an action to vacate an arbitration award is made is obviously important, for the nature of the proceeding affects the burdens of the various parties as well as the rule of decision to be applied by the district court.” Id. at 745. In the instant case, ACP filed both a motion to dismiss pursuant to Rule 12(b)(5) based upon the failure to timely serve notice under the FAA, and a substantive response to the Petitioners' motion to vacate. In the context of this proceeding, however, ACP's motion to dismiss is better construed as an additional substantive argument in response to the Petitioners' motion to vacate. See Id. at 746 (construing a Rule 12(b)(6) motion as a response to a motion to vacate); see also Belz v. Morgan Stanley Smith Barney, LLC, No. 3:13-cv-636-J-34MCR, 2014 WL 897048, at *3 (M.D. Fla. Mar. 5, 2014) (same) (citing additional cases). The Court thus considers the instant motions through this lens.

         A. The motion to vacate is time-barred

         The parties agree that the motion to vacate is governed by the FAA. According to the FAA, “[n]otice of a motion to vacate, modify, or correct an award must be served upon the adverse party or his attorney within three months after the award is filed or delivered.” 9 U.S.C. § 12. The parties also agree that ACP is an “instrumentality of a foreign state” within the meaning of the FSIA. The Federal Rules of Civil Procedure provide that “[a] foreign state or its political subdivision, agency, or instrumentality must be served in accordance with 28 U.S.C. § 1608.” Fed.R.Civ.P. 4(j)(1). ACP argues that the Petitioners failed to serve notice of the petition in accordance with 28 U.S.C. § 1608(b)(1). The Petitioners contend that they delivered notice in compliance with the “special arrangement for service” under the FSIA, that there was substantial compliance because ACP had actual notice of the petition, and that, in any event, they should have an opportunity to cure, if the Court finds that service was not sufficient. The Court considers each argument in turn.

         The relevant portion of the FSIA states that “[s]ervice in the courts of the United States and of the States shall be made upon an agency or instrumentality of a foreign state by delivery of a copy of the summons and complaint in accordance with any special arrangement for service between the plaintiff and the agency or instrumentality.” 28 U.S.C. § 1608(b)(1). The Respondents contend that no special arrangement for service exists in this case, and that the Petitioners' emailed petition to ACP's arbitration counsel, electronic submission and delivery in hard copy to ACP's arbitration counsel and ACP via courier does not constitute valid service.

         In response, the Petitioners rely upon language from the parties' Conditions of Contract (ECF No. 47-7) and the Terms of Reference of the Arbitration (ECF No. 47-4) to demonstrate the existence of a “special arrangement for service” between them. According to the Terms of Reference,

All written notifications and communications arising in the course of this arbitration shall be deemed to have been validly made to each Party where they have been transmitted to [ACP's arbitration counsel].
. . .
All written communications of less than twenty pages shall be sent by email (eventually confirmed by fax or courier service) and all written communications of twenty or more pages, including formal submissions and all attachments, ...

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