Burr & Forman

01.22.2020   |   Firm News

Burr Client In Arbitration Case Before The United States Supreme Court

In a case before the United States Supreme Court, Burr attorneys Cheri Gatlin, Travis Ramey, and Devin Dolive served as part of the legal team for client Outokumpu Stainless USA, LLC and argued against a non-party’s attempt to compel international arbitration in a case governed by the New York Convention. Outokumpu Stainless USA in Calvert, Alabama is part of a group of companies that is one of the world’s largest producers of stainless steel.

In 2014, motors designed, engineered, and manufactured by GE Energy Power Conversion France SAS (GE France) began to fail at Outokumpu’s cold-rolling mills in Alabama, even though the motors had been in operation for less than two years. The failure of the motors shut down one of the mills for six months and caused over $120 million dollars in damages. When Outokumpu and its insurers filed suit against GE France in Alabama state court, GE France removed the case to federal court and sought to compel an international arbitration under contracts Outokumpu’s predecessor had with a predecessor of Fives St Corp. These 2007 contracts between Outokumpu’s predecessor and Fives’s predecessor governed construction of the cold rolling mills and provided for arbitration of disputes between “both parties” in Germany, under an arbitration agreement governed by German law. The federal district court granted GE France’s motion to compel arbitration, but the Eleventh Circuit Court of Appeals reversed on grounds that GE France was not a party to any arbitration agreement with Outokumpu. GE France petitioned the United States Supreme Court for review.

The case presents a unique application of the New York Convention, a treaty the United States joined in 1970 and which governs arbitration of international commercial disputes. Under Chapter 1 of the Federal Arbitration Act (FAA), which applies to domestic disputes, courts have allowed non-parties to use state-law doctrines like equitable estoppel to compel arbitration of disputes. GE France argues that the same state-law doctrines should also apply to cases governed by FAA Chapter 2 and the New York Convention. Outokumpu argues that state-law doctrines should not apply when they conflict with the New York Convention text and that it makes no sense to apply state-law doctrines like equitable estoppel to an arbitration agreement that specifies German law.  The United States Supreme Court held oral argument on January 21, 2020, and the Supreme Court is expected to issue its decision no later than June of this year.

For more than a century, Burr & Forman LLP’s experienced legal team has served clients at the intersection of business and government with local, national, and international interests in numerous industry and practice areas, ranging from commercial litigation and class actions to corporate transactions, including bankruptcy and restructurings. A Southeast regional firm with 360 attorneys and 19 offices in Alabama, Delaware, Florida, Georgia, Mississippi, North Carolina, South Carolina and Tennessee, Burr & Forman attorneys draw from a diverse range of resources to help clients achieve their goals and address their complex legal needs. The firm operates as Burr Forman McNair in North Carolina and South Carolina. For more information, visit the firm’s website at www.burr.com.

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