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Alstom Chile Sa v. Mapfre Compania De Seguros Generales Chile S.A.

United States District Court, Second Circuit

October 31, 2013

ALSTOM CHILE S.A., et al., Plaintiffs,
v.
MAPFRE COMPANIA DE SEGUROS GENERALES CHILE S.A., Defendant.

MEMORANDUM OPINION AND ORDER

LAURA TAYLOR SWAIN, District Judge.

Alstom Chile S.A. and Alstom Power Systems S.A. ("Plaintiffs") filed a Complaint and Petition on April 11, 2013, seeking to compel Mapfre Compania De Seguros Generales Chile S.A. ("Defendant") to arbitrate certain claims arising under and relating to the performance of a contract (the "Agreement") for the engineering, procurement, and construction of a power generation facility in Mejillones, Chile (the "Facility"). Plaintiffs also seek an injunction barring the further prosecution in Chile of litigation regarding these matters. The Court has jurisdiction of this action pursuant to 9 U.S.C. ยง 301.

For the following reasons, the Court orders Defendant to arbitrate its claims relating to the Agreement and the Facility against Plaintiffs and permanently enjoins Defendant from prosecuting the related proceedings in Chile.

BACKGROUND

Plaintiffs entered into the Agreement with Gas Atecama Generacion S.A. ("Gas Atecama") on or about August 6, 1997.[1] Defendant provided all risk insurance to Gas Atecama for the Facility under a certain Fire and Accessories Policy. The Facility was completed in December 1999, and subsequently Gas Atecama filed a claim against Defendant alleging material damages and loss of benefits arising from events at the Facility in 2007 and 2008. Defendant allegedly paid Gas Atacama $33, 002, 051 for the loss. Defendant thereafter filed a suit against Plaintiffs in civil court in Santiago, Chile, in January 2012 (the "Chilean Action"), seeking to recover the monies it had paid to Gas Atecama. Defendant, as Gas Atecama's subrogee, asserts two causes of action against Plaintiffs: 1) for breach of the Agreement and 2) for indemnification based on tort liability. On July 5, 2013, the Chilean court ordered that Defendant's contract breach claim be arbitrated and that the tort-based indemnification claim be suspended pending resolution of the arbitration.

The Agreement requires a 60-day period of good faith discussions (the "60-day Negotiation") among senior officers of the parties prior to a demand for arbitration. Specifically, section 14.1 of the Agreement provides that:

Owner and Contractor desire that this Agreement operate between them fairly and reasonably. If, during the term of this Agreement, a dispute arises between Owner and Contractor which is not resolved by good faith discussions between the parties, then the matter shall be referred to senior officers of the respective parties, who shall endeavor in good faith to resolve such disputed issues expeditiously. Neither party shall seek arbitration of any dispute arising in connection with this Agreement until a period of at least sixty (60) Days has elapsed since the dispute was referred to such senior officers, without a resolution.

Section 14.2.1 provides that, following the 60-day Negotiation:

[a]ny further controversy, dispute, or claim between Contractor and Owner arising out of or relating to this Agreement, or the breach thereof, if not settled by the parties by agreement subject to Section 14.1, shall be settled finally and conclusively by arbitration, in English, in accordance with the Rules of Arbitration of the International Chamber of Commerce (and with the procedural law of the State of New York, United States of America, in matters as to which such Rules of Arbitration are silent) by arbitrators appointed in accordance with Section 14.2.3. This Agreement to arbitrate shall be specifically enforceable under the prevailing arbitration law.

The Agreement additionally provides that it is to "to be governed by the law of the State of New York, United States of America, excluding the laws of such State pertaining to conflict of laws." (Agreement at section 15.13.) Any arbitration under the Agreement must be held in New York, New York, "unless the parties mutually agree otherwise." (Agreement at section 12.2.5.) Plaintiffs argue that this arbitration provision of the Agreement requires Defendant to resolve the disputes underlying the subrogation litigation through an arbitration and pursuant to the laws of New York. Defendant argues that Plaintiffs breached the Agreement because they did not comply with the 60-day Negotiation requirement of section 14.1, and that the arbitration provision is thus unenforceable. Secondarily, Defendant argues that considerations of international comity and judicial efficiency counsel the Court to stay this proceeding pending the outcome of the Chilean Action.

DISCUSSION

Whether a suit is subject to compulsory arbitration is a matter of state contract law. Bell v. Cendant Corp. , 293 F.3d 563, 566 (2d Cir. 2002). Therefore, "[a] party cannot be required to submit to arbitration for any dispute which it has not agreed so to submit." Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trading Inc. , 252 F.3d 218, 224 (2d Cir. 2001).

Petition to Compel Arbitration

Plaintiffs seek to compel Defendant to arbitrate the disputes underlying the Chilean Action. The Court concludes that these claims must be arbitrated pursuant to the Agreement. "The determination of whether a dispute is arbitrable under the FAA comprises two questions: (1) whether there exists a valid agreement to arbitrate at all under the contract in question... and if so, (2) whether the particular dispute sought to be arbitrated falls within the scope of the arbitration agreement." Hartford Acc. & Indem. Co. v. Swiss Reinsurance Amer. Corp. , 246 F.3d 219, 226 (2d Cir. 2001) (quotation marks omitted). It is well established that "arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed to so submit." AT & T Tech., Inc. v. Communications Workers of Am. , 475 U.S. 643, 648 (1986). To determine whether there is a valid agreement to arbitrate, a court must apply the "generally accepted principles of contract law." Genesco, Inc. v. T. Kakiuchi & Co. , 815 F.2d 840, 845 (2d Cir. 1987). "[A] party is bound by the ...


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