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Albtelecom SH.A v. UNIFI Communications, Inc.

United States District Court, S.D. New York

May 30, 2017


          OPINION & ORDER

          PAUL A. ENGELMAYER, District Judge:

         This decision resolves a petition to confirm a foreign arbitration award. On November 18, 2016, petitioner Albtelecom SH.A ("Albtelecom") filed a petition to confirm an arbitration award (the "Award") pursuant to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 38, 9 U.S.C. §§ 201-08 (the "New York Convention"); see also 9 U.S.C. § 203 (giving United States district courts original jurisdiction over actions or proceedings falling under the New York Convention). Dkt. 1 (the "Petition" or "Pet."). The 41-page Award, rendered September 2, 2015 by an arbitrator of the ICC International Court of Arbitration ("ICC") on consent of the parties, is against respondent UNIFI Communications, Inc. ("Unifi"). In addition to confirmation of the Award, Albtelecom seeks a damages award from Unifi based on Unifi's alleged breach of the Award. It argues that Unifi's failure, post-Award, to make all payments required by the Award triggers an enhanced damages remedy under the Award. Unifi resists confirmation of the Award, but principally resists Albtelecom's bid for a judgment of damages premised on a finding of breach. Unifi asks the Court to dismiss or stay Albtelecom's petition for confirmation and enforcement. It notes, inter alia, that, after the filing of Albtelecom's petition, Unifi initiated a new ICC arbitration in Switzerland, aimed at examining whether the parties' post-Award communications excused Unifi's obligations under the Award.

         For the reasons that follow, the Court confirms the arbitration Award and enters judgment in favor of Albtelecom consistent with the terms of that Award. However, the Court does not reach in this ruling whether Unifi has complied with or breached the Award; whether compliance with the Award was excused in whole or part based on the parties' post-Award dealings; or what, if any, damages may be merited for Albtelecom under the Award to the extent of any noncompliance by Unifi. The Court also does not reach the issue of whether, assuming Albtelecom were continue to pursue a claim of breach, whether this Court is the proper forum to resolve such a claim, or whether such claims are more properly resolved elsewhere (e.g., the ICC arbitration that Unifi represents it has brought in Switzerland).

         I. Background

         A. Factual Background[1]

         1. The Arbitral Award

         This matter stems from the Contract between Albtelecom and Unifi, entered into on August 8, 2006, for the provision of international telecommunications services. A dispute later arose under the Contract, with Albtelecom claiming that Unifi had not paid Albtelecom fully for its services rendered. Award ¶ 4.

         On June 29, 2012, Albtelecom initiated arbitral proceedings against Unifi. Bollen Decl. ¶ 4. It did so pursuant to paragraph 21 of the Contract, which provided that disputes between the parties were to be resolved by arbitration pursuant by an arbitrator appointed by the ICC pursuant to the ICC's rules. Bollen Decl. ¶ 3 (citing Contract ¶ 21). On January 11, 2013, on consent of the parties, an arbitral tribunal, consisting of a sole arbitrator, Joachim Knoll, was constituted. Bollen Decl. ¶ 5; Award ¶¶ 16-17.

         Arbitration proceedings proceeded before arbitrator Knoll throughout 2013 and into October 2014. Award ¶¶ 18-56. On October 5, 2014, counsel for Albtelecom and Unifi jointly advised the arbitrator that they were engaged in settlement discussion. Bollen Decl. ¶ 14; Award ¶¶ 57-58. The arbitrator therefore stayed further proceedings, but when these discussions broke down, arbitration proceedings resumed. Award ¶¶ 59-78.

         On April 17, 2015, counsel jointly advised the arbitrator that a settlement agreement had been entered into. Bollen Decl. ¶ 14; Award ¶ 96 (reproducing parties' settlement agreement, including detailed payment schedule); id. ¶ 97. On April 18, 2015, upon the parties' joint request, the arbitrator stayed the arbitral proceedings and cancelled a scheduled evidentiary hearing. Id. ¶ 98. On April 21, 2015, the parties asked the arbitrator "to issue a Consent Award whch shall in its general part (ground of the award) reproduce the settlement agreement and in its decision (ruling) reproduce clause 2 as well as the annex of the Settlement agreement." Bollen the supplemental declaration of Daniel Hochstrasser, Dkt. 21 ("Hochstrasser Suppl. Decl."); and the supplemental declaration of Adrian Shatku, Dkt. 32 ("Shatku Reply Decl."). Decl. ¶ 14; Award ¶ 100. The parties thereafter furnished the arbitrator with a copy of the settlement agreement. Award ¶ 102.

         On June 16, 2015, the arbitrator provided a draft of his proposed Award to the parties, for their review and comment. Award ¶ 106. The parties commented on the draft award, suggesting minor changes which the arbitrator accepted. Id. The arbitrator agreed to issue an Award on consent. Id. ¶ 115 ("Against this background, and in the absence of any public policy-based concerns against the rendering of an award by consent, the Sole Arbitrator agrees to render an award by consent.") On July 29, 2015, the arbitrator closed the arbitral proceedings, pursuant to Article 27 of the ICC. Id. ¶ 106.

         The Award was issued September 2, 2015. It awarded Albtelecom the amount of EUR 1, 088, 000, which Unifi was to pay by bank transfer in 39 monthly installments, which the Award specified by date and amount. Award ¶ 118. The Award further provided that, should Unifi fail to make payments consistent with the schedule it set and fail to cure under the terms provided by the settlement agreement, Albtelecom was entitled to claim EUR 2, 100, 000 from Unifi. Id. The Award further provided that payments overdue under the Award were to "bear interest at the rate of 2.5% per year, and fixed costs of $115, 000, which were to be born by Albtelecom." Id. Each party was responsible for bearing its own legal and other costs in connection with the arbitral proceedings and the settlement agreement. Id. Neither party appealed the Award. Bollen Decl. ¶I8.

         2. Unifi's Alleged Failure to Pay Under the Award

         Albtelecom alleges that, after the Award issued, Unifi made the first three installment payments under it-due in September, October, and November 2015-although the latter two were paid after the deadline set in the Award. Bollen Decl. ¶¶ 21-23. However, it alleges, Unifi did not make any further payments or cure its failure to timely pay. Id. ¶ 24. Albtelecom alleges that after it issued a notice of failure to pay, Unifi responded with the "spurious" claim that "any delay in payment occurred with Albtelecom's full knowledge and understanding." Id. ΒΆ 26. Albtelecom alleges that, as of November 16, 2017, Unifi had paid it only EUR 396, 000, and that it is therefore entitled, under the Award to EUR 1, 704, 000 ...

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