BSH Hausgeräte GMBH v. Kamhi

• Decision Date: 02 March 2018
• Docket Number: 17 Civ. 5776
• Parties: BSH HAUSGERÄTE GMBH, Petitioner, v. Jak KAMHI, Respondent.
• Court: U.S. District Court — Southern District of New York

291 F.Supp.3d 437

BSH HAUSGERÄTE GMBH, Petitioner,

v.Jak KAMHI, Respondent.

17 Civ. 5776

United States District Court, S.D. New York.

Signed March 2, 2018

Attorneys for Petitioner, PILLSBURY WINTHROP SHAW PITTMAN LLP, 1540 Broadway, New York, NY 10036–4039, By: Kenneth W. Taber, Esq., Nicholas M. Buell, Esq.

Attorneys for Respondent, DAVIDOFF HUTCHER & CITRON LLP, 605 Third Avenue, 34^th Floor, New York, NY 10158, By: Eric J. Przybylko, Esq.

OPINION

ROBERT W. SWEET, U.S.D.J.

Petitioner BSH Hausgerate GMBH ("BSH" or the "Petitioner") has petitioned, pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 6, 1958, 21 U.S.T. 2517, codified at 9 U.S.C. § 201 et seq. (the "New York Convention" or "Convention"), for an order confirming a foreign arbitration award of a money judgment for BSH and against Respondent Jak Kamhi ("Kamhi" or the "Respondent") in the amount of: (1) $544,230; (2) €1,900,487.13; and (3) interest on those amounts under Article 4(a) of the Turkish Law No. 3095, at the applicable rate, compounded annually, from February 7, 2017, until full and final settlement of the award (the "Final Award"). See Am. Pet. 5, Dkt. No. 20.

Based upon the conclusions set forth below, the petition is granted, and the Final Award is confirmed.

Prior Proceedings

Background on the relationship of the parties, the parties' arbitration agreements, the foreign arbitration process before a panel of three arbitrators (the "Arbitral Tribunal"), and the Final Award were set forth in the Court's October 18, 2017, Opinion (the "October 18 Opinion"). See BSH Hausgerate, GmbH v. Kamhi, No. 17 Civ. 5776 (RWS), 282 F.Supp.3d 668, 669 – 72, 2017 WL 4712226, at *1–*2 (S.D.N.Y. Oct. 18, 2017). Familiarity is assumed. The following is drawn from briefing for the October 18 Opinion and the instant petition.

BSH is a corporation incorporated under German law. Am. Pet. ¶ 1. Kamhi is a Turkish national. Id. ¶ 2.

On October 2, 2003, BSH and Kamhi entered into a Share Sale and Purchase Agreement, under which BSH purchased shares in BSH Profilo Elektrikli Gerecler Sanayii A. S. (the "SPA–BSH"). See Declaration of Nicholas M. Buell dated July 28, 2017 ("Buell July 28 Decl."), Ex. A, Dkt. No. 10. The SPA–BSH contained an agreement to arbitrate disputes through the International Chamber of Commerce's International Court of Arbitration (the "ICC") and under the ICC's Rules of Arbitration (the "ICC Rules"). Id., Ex. A, ¶ 10.

On October 7, 2003, Kamhi also signed a separate Share and Sale Purchase Agreement with another party (the "SPA–DB" and, together with the SPA–BSH, the "Agreements"), and to which BSH was not a party. See id., Ex. B. Like the SPA–BSH, the SPA–DB also contained an agreement to arbitrate disputes before the ICC and under the ICC Rules. See id., Ex. B ¶ 5.

On October 7, 2013, Kamhi, one of five claimants (the "Claimants"), submitted a Request for Arbitration to the ICC. See id., Exs. C, E ¶ 1 (defining the five claimants as "Claimants"). In the arbitration, Claimants sought monetary and non-monetary relief based on the theory that the termination of a distributorship agreement in 2008 (the "DA"), to which BSH was not a party, triggered an automatic rescission that terminated the SPA–BSH; accordingly, Claimants requested either that BSH return its SPA–BSH shares or pay damages for allegedly causing the breach. See id., Exs. C, E ¶¶ 143–47. On January 15, 2014, BSH filed its Answer to the Request for Arbitration, consenting to the ICC's jurisdiction. See id., Exs. D ¶¶ 11–12, E ¶ 10. The parties and Arbitral Tribunal agreed to the arbitration's Terms of Reference on May 19, 2014. See Declaration of Nicholas M. Buell dated September 22, 2017 ("Buell Sept. 22 Decl.") Ex. A, Dkt. No. 44.

During the arbitration proceedings, BSH and the other respondents in the arbitration moved to have the arbitration bifurcated as to whether (i) the DA's termination automatically terminated the SPA–BSH (the "Automatic Termination Claim") and (ii) BSH caused the breach of the DA (the "Breach Claim"); on August 11, 2015, after briefings, an initial denial, and a renewed motion for bifurcation, the Arbitral Tribunal granted the request. Declaration of Eric J. Przybylko dated September 14, 2017 ("Przybylko Decl."), Exs. 2–3, 7, Dkt. No. 39. The Arbitral Tribunal noted that, after resolving the question of automatic termination, subsequent issues, "if any, will be determined by the [Arbitral] Tribunal in consultation with the Parties." Id., Ex. 7 ¶ 47.

On September 5 and 6, 2016, the Arbitral Tribunal conducted hearings in Switzerland. Buell July 28 Decl., Ex. E ¶ 134.

On February 6, 2017, the Arbitral Tribunal issued its Final Award, awarding BSH a money judgment against the Claimants in the amount of: (1) $544,230; (2) €1,900,487.13; and (3) interest on those amounts under Article 4(a) of the Turkish Law No. 3095, at the applicable rate, compounded annually, from February 7, 2017 until full and final settlement of the award. See Buell July 28 Decl., Ex. E ¶¶ 67–142, 574–79 & sec. XVIII. Prior to rendering its decision, the Arbitral Tribunal accepted briefing on whether a second phase would be unnecessary if the claim regarding automatic termination was rejected and, after determining that the SPA–DB had not been terminated, found in its Final Award that "no issue remains to be determined in any second phase of the proceedings" with regard to the Breach Claim. Id., Ex. E ¶¶ 488, 492; see id. ¶¶ 457–59, 475–88, 510, 515.

On July 28, 2017, BSH filed the instant petition to confirm, which was amended on August 3, 2017. Dkt. Nos. 1, 20.

On August 2, 2017, Petitioner moved to confirm an order of attachment issued against Respondent's real property located at 15 West 53rd Street, Apt. 32B, New York, New York 10019, which was granted in the October 18 Opinion. See id., 282 F.Supp.3d at 676, 2017 WL 4712226, at *7.

Following the October 18 Opinion, the parties requested oral argument on the instant petition, which was heard and marked fully submitted on December 6, 2017.

Applicable Standard

"Arbitration awards are not self-enforcing, [and] they must be given force and effect by being converted to judicial orders by courts; these orders can confirm and/or vacate the award, either in whole or in part." Power Partners MasTec, LLC v. Premier Power Renewable Energy, Inc., No. 14 Civ. 8420 (WHP), 2015 WL 774714, at *1 (S.D.N.Y. Feb. 20, 2015) (quoting D.H. Blair & Co. v. Gottdiener, 462 F.3d 95, 104 (2d Cir. 2006) ). "When a party seeks confirmation of an arbitral award under the New York Convention, ‘[t]he court shall confirm the award unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention.’ " Albtelecom SH.A v. UNIFI Commc'ns, Inc., No. 16 Civ. 9001 (PAE), 2017 WL 2364365, at *4 (S.D.N.Y. May 30, 2017) (quoting 9 U.S.C. § 207 ); see Yusuf Ahmed Alghanim & Sons v. Toys "R" Us, Inc., 126 F.3d 15, 23 (2d Cir. 1997) ("[T]he Convention is equally clear that when an action for enforcement is brought in a foreign state, the state may refuse to enforce the award only on the grounds explicitly set forth in Article V of the Convention.").

"Article V of the Convention specifies seven exclusive grounds upon which courts may refuse to recognize an award." Encyclopaedia Universalis S.A. v. Encyclopaedia Britannica, Inc., 403 F.3d 85, 90 (2d Cir. 2005) ; see also CBF Industria de Gusa S/A v. AMCI Holdings, Inc., 850 F.3d 58, 76–77 (2d Cir.), cert. denied, ––– U.S. ––––, 138 S.Ct. 557, 199 L.Ed.2d 437 (2017). These grounds are:

(a) The parties to the agreement ... were ... under some incapacity, or the said agreement is not valid under the law ...; or

(b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings ...; or

(c) The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration ...; or

(d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties ...; or

(e) The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

Convention art. V(1). Enforcement may also be refused if "[t]he subject matter of the difference is not capable of settlement by arbitration," or if "recognition or enforcement of the award would be contrary to the public policy" of the country in which enforcement or recognition is sought. Convention art. V(2).

Normally, "[t]he confirmation of an arbitration award is a summary proceeding that merely makes what is already a final arbitration award a judgment of the court." Corporacion Mexicana De Mantenimiento Integral, S. De R.L. De C.V. v. Pemex–Exploracion Y Produccion, 832 F.3d 92, 111 (2d Cir. 2016) (quoting Florasynth, Inc. v. Pickholz, 750 F.2d 171, 176 (2d Cir. 1984) ), cert. dismissed, ––– U.S. ––––, 137 S.Ct. 1622, 197 L.Ed.2d 746 (2017). "The arbitrator's rationale for an award need not be explained, and the award should be confirmed ‘if a ground for the arbitrator's decision can be inferred from the facts of the case[.]’ " D.H. Blair, 462 F.3d at 110 (quoting Barbier v. Shearson Lehman Hutton, Inc., 948 F.2d 117, 121 (2d Cir. 1991) ). "Only ‘a barely colorable justification for the outcome reached’ by the arbitrators is necessary to confirm the award." Id. (quoting Landy Michaels Realty Corp. v. Local 32B–32J, Serv. Emps. Int'l Union, 954 F.2d 794, 797 (2d Cir. 1992) ).

"The party opposing enforcement of an arbitral award has the burden to prove that one of the seven defenses under the Convention applies. The burden is a heavy one, as the showing required to avoid summary confirmance is high." Albtelecom, 2017 WL 2364365, at *4 (internal...