United States District Court, S.D. New York
OPINION & ORDER
ABRAMS, United States District Judge.
Al Maya Trading Establishment ("Al Maya") petitions
for confirmation of an arbitral award entered in its favor
against Respondent Global Export Marketing Co., Ltd.
("GEMCO") pursuant to the Federal Arbitration Act
("FAA"), 9 U.S.C. § 1 et seq., and
the United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards (the "New York
Convention" or "Convention"), 21 U.S.T. 2517,
codified at 9 U.S.C. § 201 et seq.
GEMCO moves to vacate the award pursuant to 9 U.S.C. §
10(a)(3). Al Maya contends that GEMCO's motion
is frivolous and intended to cause delay, and thus moves for
sanctions pursuant to Federal Rule of Civil Procedure 11. For
the reasons set forth below, the Court confirms the award.
GEMCO's motion to vacate and Al Maya's motion for
sanctions are denied.
is a United Arab Emirates ("UAE") company with its
headquarters and principal place of business in Dubai. Pet.
¶ 3; Karlan Decl. Ex. A ("Final Award") ¶
It is a family-owned business that distributes food products
in the UAE and elsewhere. Pet. ¶ 3; Final Award ¶
10. GEMCO is a New York domestic business corporation with
its principal place of business in New York City. Pet. ¶
4; Final Award ¶ 10. GEMCO, which is also a family-owned
company, is in the business of exporting foodstuffs and
related products. Pet. ¶ 5; Final Award ¶ 10.
16, 1999, Al Maya and GEMCO entered into an Agency Agreement
pursuant to which Al Maya served as the exclusive distributor
of GEMCO's American Garden ("AG") line of food
products in the UAE. Final Award ¶¶ 1-2; Karlan
Decl. Ex. C (the "Agreement"). The duration of
the Agreement was two years, but it provided for automatic
renewal unless either party chose to terminate it no later
than three months before the renewal date. Final Award ¶
15; Agreement ¶ 8. Paragraph 9 of the Agreement provided
that "[a]ll disputes and or differences that may arise
between the parties [to the Agreement] out of or in relation
to or in connection with [the Agreement] or for any breach
thereof shall be settled through arbitration." Agreement
relationship between Al Maya and GEMCO deteriorated over time
due to a variety of alleged breaches of the Agreement by Al
Maya. See Final Award ¶¶ 17-26. In late
2012, GEMCO decided to terminate its relationship with Al
Maya and began negotiating with other distributors.
Id. ¶ 26. The Agreement was set to renew
automatically on June 16, 2013. See Final Award
¶ 15; Agreement ¶ 8. However, despite the fact that
"[t]he reasons underlying [GEMCO's] decision had all
materialized prior to early 2013, " GEMCO did not
terminate the Agreement prior to the March 16, 2013
termination deadline. Final Award ¶ 26. Instead, GEMCO
stopped fulfilling Al Maya's orders during the summer of
2013, and informed Al Maya during a meeting on September 26,
2013 that GEMCO was terminating the Agreement. Id.
asserted breach of contract and tortious interference claims,
and, on January 14, 2014, filed a petition to compel
arbitration in the United States District Court for the
Southern District of New York. Final Award ¶ 3; Karlan
Decl. Ex. D. The petition to compel arbitration was assigned
to the Honorable Paul A. Engelmayer. Pet. ¶ 18. Despite
initially disputing the authenticity of the Agreement,
see Final Award ¶ 3, on August 25, 2014, GEMCO
signed a Stipulation and Order agreeing to arbitrate Al
Maya's claims, and conceded "[t]he authenticity,
validity, and enforceability of the [Agreement], " at
least for purposes of the arbitration, Karlan Decl. Ex. B.
The Stipulation and Order provided that the American
Arbitration Association (the "AAA") would
administer the arbitration pursuant to its Rules for
Commercial Arbitration and that New York law would apply in
the arbitration as to all procedural and substantive issues.
Id. Judge Engelmayer so-ordered the Stipulation and
Order on August 27, 2014. Id.
September 4, 2014, Al Maya filed a Demand for Arbitration
with the AAA, which GEMCO answered on September 22, 2014.
Pet. ¶¶ 24-25; Karlan Decl. Exs. E-F. On April 3,
2015, a three-member arbitration panel (the
"Panel") was confirmed. Pet. ¶ 26; Final Award
¶ 4. The Panel held a preliminary hearing by telephone
on April 22, 2015 during which "[t]he parties confirmed
that the Commercial Arbitration Rules of AAA/ICDR, and New
York substantive and procedural law [would] appl[y]" to
the arbitration. Final Award ¶ 5. During the preliminary
hearing, "[t]he parties . . . indicated that they
wish[ed] to reach a speedy and efficient resolution of their
dispute, " and that "there need[ed] to be focused
disclosure of documents, consistent with Rule 22 of the
Commercial Arbitration Rules of AAA." Shapiro Decl. Ex.
present dispute is about the scope of discovery. On June 1,
2015, after reviewing Al Maya's previous productions,
GEMCO asked Al Maya to provide "Profit and Loss
Statements for the entity (or entities) that sold AG . . .
and for any related entity where expenses relating to the
sales, marketing and distribution of AG may appear."
Mawji Decl. Ex. E. GEMCO explained that these statements
would "allow [GEMCO] to determine [Al Maya's]
incremental costs, which [GEMCO] need[ed] in order to
determine the lost incremental profit, if any, that Al Maya
would have earned resulting from any lost incremental AG
sales." Id. After Al Maya failed to produce the
requested materials, GEMCO sent a letter to the Panel seeking
an order compelling Al Maya to produce them, explaining that
they were necessary for an accurate calculation of Al
Maya's lost incremental profit. Id. Ex. F. On
June 17, 2015, the Panel ordered Al Maya to "produce
profit and loss statements for the entities that sold [AG]
brands products" from 2010 through 2013, as well as any
"documents reflecting" "expenses or costs
relating to the sales, marketing, and distribution of [AG]
products in the UAE." Id. Ex. I. The Panel gave
the parties until July 1, 2015 to "request a ruling on
the production of focused additional documents"
if their experts believed that they needed them. Id.
However, the Panel reminded the parties that they were
participating in "an arbitration under the Commercial
Arbitration Rules, not a domestic litigation."
30, 2015, Al Maya produced the profit and loss statements
(the "P&Ls"). Shapiro Decl. ¶ 14. The
P&Ls covered the period from 2004 to 2015 (year-to-date),
and were generated from Al Maya's financial accounting
system. Id.; Mawji Decl. Ex. V ("Hr'g
Tr.") 763:2-8, 782:3-8. On July 1, 2015, GEMCO wrote a
letter to the Panel explaining that "GEMCO ha[d] no
ability to verify the accuracy and completeness of the
allocations" in the P&Ls "below the gross
profit level, " and asking the Panel to compel Al Maya
to provide various supporting documentation. Mawji Decl. Ex.
K. On July 6, 2015, Al Maya opposed this request as untimely,
cumulative, and unduly burdensome. See Id. Ex. L. On
July 7, 2015, GEMCO responded to Al Maya's letter via
e-mail, conceding that the P&Ls complied with the
Panel's June 17 order, but arguing that GEMCO needed the
additional information that it was requesting "to verify
the accuracy and completeness of the allocations" in the
P&Ls. Id. Ex. M. On July 8, 2015, the Panel
denied GEMCO's request without explanation (the
"July 8 Ruling"). See Id. Ex. N.
Panel ultimately found that GEMCO had breached the Agreement.
Final Award ¶ 60. Both parties offered expert testimony
on the calculation of lost profits. Id. ¶ 61.
The Panel adopted the analysis of GEMCO's expert, Maureen
Loftus, partly because of the extensive reliance that Al
Maya's expert, Carlyn Irwin, had placed on the P&Ls,
which the Panel viewed as having "significant
problems." See Id. ¶¶ 61, 63,
65-69. The Panel thus adopted the damages
calculation submitted by Loftus, who had adjusted her lost
profits analysis to account for perceived
"anomalies" and "understatements" in the
P&Ls. Id. ¶ 69; Mawji Decl. Ex. R, at 19.
March 4, 2016, the Panel issued the Final Award. The Panel
awarded Al Maya a total of $5, 733, 023.52, which was
compromised of $4, 254, 000 in damages, $379, 023.52 in
prejudgment interest, and $1, 100, 000 in legal fees and
costs. Pet. ¶ 35; Final Award at 22.
issues are before the Court: (1) whether to confirm or vacate
the Final Award; and (2) whether to sanction GEMCO pursuant