391 F.3d 433 (2nd Cir. 2004), 03-9000, Phoenix Aktiengesellschaft v. Ecoplas, Inc.

Docket Nº:03-9000.
Citation:391 F.3d 433
Party Name:PHOENIX AKTIENGESELLSCHAFT, Petitioner-Appellee, v. ECOPLAS, INC. (formerly known as Plastek Corporation, formerly known as Plaslok Corporation), Respondent-Appellant.
Case Date:December 10, 2004
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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391 F.3d 433 (2nd Cir. 2004)



ECOPLAS, INC. (formerly known as Plastek Corporation, formerly known as Plaslok Corporation), Respondent-Appellant.

No. 03-9000.

United States Court of Appeals, Second Circuit

December 10, 2004

Argued: May 28, 2004.

Alan J. Bozer, Phillips Lytle, LLP, Buffalo, New York, for Respondent-Appellant.

Kevin D. Szczepanski, Hodgson Russ LLP, Buffalo, New York, for Petitioner-Appellee.

Before: NEWMAN, CALABRESI and SOTOMAYOR, Circuit Judges.

SOTOMAYOR, Circuit Judge.

Ecoplas, Inc. ("Ecoplas") appeals from a judgment entered in the United States District Court for the Western District of New York (Arcara, J.) granting a motion by Phoenix Aktiengesellschaft ("Phoenix") to confirm an arbitration award. Because 9 U.S.C. § 207 preempts the consent-to-confirmation requirement of 9 U.S.C. § 9 in cases brought pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, T.I.A.S. No. 6997 (the "Convention"), we reject Ecoplas's contention

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that the lack of consent to confirmation in the arbitration agreement provides a ground for reversal. We also reject Ecoplas's claim under Article V(1) (b) of the Convention that it was unable to present its case in arbitration and that the award therefore should not be enforced. Accordingly, we affirm the judgment of the district court.


The parties entered into a licensing agreement in December 1993 under which Phoenix, a German corporation, granted Ecoplas, an American corporation, an exclusive license to produce and sell "Phoenix polyester-(UP)-moulding compounds." Phoenix further agreed to provide Ecoplas with "secret technical knowledge as well as technical know-how relative to the manufacture" of those compounds. In exchange Ecoplas agreed to pay Phoenix royalties and an annual licensing fee.

The licensing agreement contained an arbitration clause, which provided in relevant part:

The parties shall make a diligent effort to settle amicably all disagreements in conjunction with this contract. If an amicable agreement is not reached then the arbitration court of the International Chamber of Commerce in Zurich shall have jurisdiction at the exclusion of regular courts. This agreement is subject to Swiss law.

In August 1997, Phoenix informed Ecoplas that it had sold a business portfolio to Bakelite AG, a German company, and requested that Ecoplas agree to a transfer of the licensing contract to Bakelite AG as well. Ecoplas, in response, informed Phoenix that it would "not be continuing the license agreement with Bakelite AG, and it is being considered terminated." A dispute then arose over whether Ecoplas had terminated the agreement prematurely. Phoenix claimed that because Ecoplas refused to allow the license transfer, the original contract obligations between Phoenix and Ecoplas remained in place. Ecoplas maintained that the contract had been terminated in 1997 by mutual agreement. Ecoplas did not pay the license fees for 1997 and 1998.

On April 7, 1999, Phoenix filed a complaint with the International Court of Arbitration of the International Chamber of Commerce ("ICC"). Defending its failure to pay the fees, Ecoplas argued that Phoenix's sale of its business portfolio to Bakelite AG had dissolved the licensing agreement between Phoenix and Ecoplas, and that, in any event, Phoenix had failed to provide usable technical advice as required by the agreement.

The arbitrator rejected Ecoplas's contentions and rendered a decision in favor of Phoenix on December 15, 2000. He found that the sale of assets to Bakelite AG did not void the contractual relationship between Phoenix and Ecoplas, and that the licensing agreement did not require Phoenix to provide Ecoplas with more technical assistance than had already been provided. The arbitrator awarded Phoenix approximately $100,000, plus $5751 in arbitration costs and 40,000 Swiss Francs in legal fees.

Because Ecoplas failed to pay the arbitration award, Phoenix commenced an action seeking confirmation of the award in the Western District of New York pursuant to the Convention. In response, Ecoplas claimed that the federal district court lacked jurisdiction over Phoenix's action because the arbitration agreement did not reflect the parties' intent to consent to judicial confirmation of the arbitration award, as required by § 9 of the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-16, 201-08, 301-07 (2000). Citing Article

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(V) (1) (b) of the Convention, Ecoplas further argued that the district court should not honor the arbitration award because the arbitrator had refused to hear certain evidence regarding the competency of the technical advice provided by Phoenix.

The district court adopted a recommendation from Magistrate Judge Hugh B. Scott that the court confirm the award. In doing so, the court observed that it remained an open question whether the consent-to-confirmation provision of § 9 had been preempted by § 207 for cases arising under the Convention. The court held, however, that even if the requirements of § 9 did apply, the licensing agreement complied with those requirements. The agreement, Judge Arcara wrote, "sufficiently demonstrates the parties' intent that the result of the ICC arbitration be final and binding, such that the claims would not be heard de novo in any court." By adopting the reasoning of Magistrate...

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