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Fluor Daniel Intercontinental, Inc. v. General Electric Co.

March 13, 2007

IN THE MATTER OF THE ARBITRATION BETWEEN: FLUOR DANIEL INTERCONTINENTAL, INC., AND FLUOR ARABIA LIMITED, CLAIMANTS-RESPONDENTS,
v.
GENERAL ELECTRIC COMPANY, GE POWER SYSTEMS, INC., GENERAL ELECTRIC INTERNATIONAL, INC., GENERAL ELECTRIC TECHNICAL SERVICES COMPANY, INC., AND SAUDI AMERICAN GENERAL ELECTRIC COMPANY, RESPONDENTS-PETITIONERS.



The opinion of the court was delivered by: Gerard E. Lynch, District Judge

OPINION AND ORDER

Respondents-Petitioners General Electric Company, GE Power Systems, Inc., General Electric International, Inc., General Electric Technical Services Company, Inc., and Saudi American General Electric Company ("SAMGE") (collectively, "General Electric" or "GE") move, pursuant to 9 U.S.C. § 9, for an order confirming a partial arbitration award. The motion will be granted with respect to all claims finally and definitely disposed of by the award, subject to the procedure described below.

BACKGROUND

This case is one of a series of legal proceedings arising out of a dispute related to the construction of a power plant in Rabigh, Saudi Arabia. In October 1998, Fluor Daniel Intercontinental, Inc. and Fluor Arabia Limited (collectively, "Fluor") filed a civil fraud action in the United States District Court for the Southern District of New York against General Electric, seeking $160 million in damages due to General Electric's alleged intentional misrepresentation, innocent misrepresentation, concealment, negligent misrepresentation, and breach of contract relating to the construction project. General Electric moved to compel arbitration, pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 3. The court granted the motion to compel arbitration and a final judgment issued. Fluor Daniel Intercont'l, Inc. v. Gen. Elec. Co., No. 98 Civ. 7181, 1999 WL 637236 (S.D.N.Y. Aug. 20, 1999). After agreeing upon an arbitral panel and rules for the proceedings, the parties engaged in an extensive, 28-day arbitration proceeding, American Arbitration Association Case No. 50 T 110 00373 99, divided into two phases. Phase I focused on the issue of fraud and was held in April 2001. Phase II focused on liability and damages and was held in June and December 2002 and January 2003. (GE Pet. to Conf. 4.)

The arbitral tribunal issued a lengthy and thorough "Corrected Partial Award" dated June 24, 2005. (GE Pet. to Conf. Exh. H (the "Partial Award").) On April 28, 2006, General Electric initiated the present civil action to confirm this partial award, acknowledging that the Arbitral Tribunal (also referred to as "the Panel") still retains jurisdiction over many of the original claims. Fluor argues that the motion to confirm should be denied on the grounds that, inter alia, the Partial Award is not "final and complete."

On June 5, 2006, Fluor submitted to the Panel a request for clarification of the Panel's intent as to the Partial Award, arguing that the Partial Award was not final and should not be confirmed. (Rosen Decl. Exhs. A-B.) The Panel responded with a brief letter, stating that the Award "is final only with respect to matters resolved in that Award." (Rosen Decl. Exh. C.)

The issue now presented is whether the partial award is sufficiently final to be confirmed; Fluor does not raise any objections to the content of the award.

DISCUSSION

The FAA includes a strong presumption that if an award is final and neither party has a legitimate objection, the court should confirm it. See 9 U.S.C. § 207; see alsoWall Street Assocs., L.P. v. Becker Paribas Inc., 27 F.3d 845, 849 (2d Cir. 1994). There are thus two questions that are presented here: (1) whether we may confirm any part of the partial award and (2) if so, what parts of the award may be considered final and confirmable.

I. The Confirmation of Partial Awards

Under the FAA, "a district court does not have the power to review an interlocutory ruling by an arbitration panel." Michaels v. Mariform Shipping, S.A., 624 F.2d 411, 414 (2d Cir. 1980). See also Yonir Techs, Inc. v. Duration Sys. (1992) Ltd., 244 F. Supp. 2d 195, 206 (S.D.N.Y. 2002) (there is no judicial authority over "an interlocutory order related to an ongoing arbitration.").

However, a district court is not precluded from confirming final resolutions of claims that have been decided once and for all by the arbitrators, where the arbitrators have expressly confirmed that the award was intended to be final with respect to those claims fully adjudicated. "[A]n award which finally and definitely disposes of a separate independent claim may be confirmed although it does not dispose of all the claims that were submitted to arbitration." Metallgesellschaft A.G. v. M/V Capitan Constante, 790 F.2d 280, 283 (2d Cir. 1986). Thus, a partial award that is "independent and separate from the remaining issues before the arbitrators and [can] be finally determined without reference to those legally irrelevant issues" may be confirmed. Id. at 282. SeealsoYonir Techs.,244 F. Supp. 2d at 204 ("[D]isposition of an issue that is separate from other issues before the arbitrators can be deemed final and subject to judicial review." (internal citations omitted)).

Fluor correctly points out that Michaels prohibits the confirmation of "interim" awards. In Michaels, the arbitrators had resolved only some of the many liability issues at hand, had not addressed damages at all, and were still actively receiving testimony. The Court thus regarded the interim award as interlocutory. Id. at 413-14. Subsequent case law, however, has recognized Michaels for the proposition that partial and severable claims can be confirmed as final when they were intended as such by the arbitrator. See Private Sanitation Local 813, Int'l Bhd. of Teamsters v. V & J Rubbish Removal, No. 89 Civ. 5945, 1990 WL 144207, at *2 (S.D.N.Y. Sept. 26, 1990) (collecting cases).

This Court is to determine if the Partial Award at issue here resolves issues "definitively enough so that the rights and obligations of the two parties . . . do not stand in need of further adjudication." Rocket Jewelry Box, Inc. v. Noble Gift Packaging, Inc., 157 F.3d 174, 176 (2d Cir. 1998). The Partial Award at issue here generally conforms to these standards, and is quite different from the one at issue in Michaels, which did not decide any of one entity's claims, did not determine damages on any of the ...


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