Técnicas Reunidas De Talara S.A.C. v. SSK Ingeniería Y ConstruccióN S.A.C.

• Decision Date: 22 July 2022
• Docket Number: 21-13776
• Citation: 40 F.4th 1339
• Parties: TÉCNICAS REUNIDAS DE TALARA S.A.C., a Peruvian corporation, Petitioner-Appellant, v. SSK INGENIERÍA Y CONSTRUCCIÓN S.A.C., a Peruvian corporation, Respondent-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

40 F.4th 1339

TÉCNICAS REUNIDAS DE TALARA S.A.C., a Peruvian corporation, Petitioner-Appellant,

v.SSK INGENIERÍA Y CONSTRUCCIÓN S.A.C., a Peruvian corporation, Respondent-Appellee.

No. 21-13776

United States Court of Appeals, Eleventh Circuit.

Filed: July 22, 2022

Brian Joseph Stack, Denise Crockett, Sammy Epelbaum, Robert Harris, Stack Fernandez Anderson & Harris, PA, Miami, FL, Sean R. Santini, Santini Law Firm, Miami, FL, for Petitioner-Appellant.

David Dunn, Hogan Lovells US LLP, New York, NY, Daniel Eduardo Gonzalez, Senior Attorney, Hogan Lovells US LLP, Miami, FL, Jessica Alder Black Livingston, Hogan Lovells US LLP, Denver, CO, for Respondent-Appellee.

Before William Pryor, Chief Judge, Luck, Circuit Judge, and Moorer,^* District Judge.

William Pryor, Chief Judge:

This appeal concerns whether a party to an international arbitration can obtain a vacatur of an adverse arbitral award because two of its attorneys withdrew and joined the opposing party's law firm during the arbitral proceedings. Because Técnicas Reunidas de Talara S.A.C., the losing party in the arbitration, had knowledge of the attorney side-switching but did not object until Técnicas received an adverse award more than a year later, Técnicas waived its right to complain. We affirm the judgment confirming the arbitral award.

I. BACKGROUND

Técnicas Reunidas de Talara S.A.C., a Peruvian corporation, entered into a general contract to update an oil refinery in Talara, Peru. Técnicas subcontracted with SSK Ingeniería y Construcción S.A.C., another Peruvian corporation, to provide electromechanical work on the refinery project. The contract was governed by Spanish law and required any disputes to be submitted to the International Chamber of Commerce International Court of Arbitration. The contract also required arbitrations to be held in Miami, Florida.

SSK filed a demand for arbitration in the International Court of Arbitration regarding a contractual dispute with Técnicas. SSK was represented throughout the arbitration by Alberto Fortún Costea, an attorney at the Cuatrecasas law firm. Técnicas was represented for a portion of the arbitration by Cristián Conejero and Ramiro Portocarrero, attorneys at the Philippi Prietocarrizosa Ferrero DU & Uria law firm. An associate of that firm, Gianfranco Lotito, also represented Técnicas.

In early March 2020, Conejero participated in the final arbitration hearing, which was held in Spain by agreement of the parties. Conejero delivered a portion of Técnicas's opening statement and cross-examined two of SSK's witnesses. At the conclusion of the hearing, Conejero told Leandro Meneses, Técnicas's corporate representative for the arbitration, that he would be leaving Ferrero DU to form his own international arbitration boutique, Conejero y Asociados.

On April 10, 2020, Conejero emailed Meneses to inform him that Conejero and Lotito had left Ferrero DU to join Cuatrecasas on March 31, 2020. That email was the first time that Conejero had communicated to Técnicas that he was leaving Ferrero DU to join Cuatrecasas, but Portocarrero had informed Técnicas on April 9, 2020, about the move.

The next business day, April 13, Conejero informed the arbitral panel and the lead counsels, Portocarrero and Costea, that he and his associate Lotito were leaving Ferrero DU to join Cuatrecasas. In his letter, he asked for this information to be kept confidential. And he explained that both he and Lotito would "maintain continued and absolute confidentiality on the matters we have discussed in the framework of the privileged attorney-client relationship."

On April 14, the parties requested an extension to file posthearing briefs, and those briefs were submitted on April 21. Neither the briefs nor the request for the extension mentioned Conejero's departure from Ferrero DU for Cuatrecasas.

On March 18, 2021, the arbitral panel issued a $40 million award to SSK, and that award was transmitted to Técnicas on March 29, 2021. More than a month later, on April 28, 2021, Técnicas objected in the International Court of Arbitration to alleged conflicts of interest held by the arbitrators, but its objection made no mention of Conejero's move to Cuatrecasas.

On June 16, 2021, Técnicas filed a petition to vacate the arbitral award in federal court alleging that Conejero and Lotito's move to Cuatrecasas created "a direct, material, adverse, and nonwaivable conflict of interest." Técnicas argued that under the New York Convention, see Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, as enforceable through the Federal Arbitration Act, 9 U.S.C. §§ 201 – 08, an international arbitral award must be vacated if "there is an explicit, well-defined and dominant [United States] policy which the award contravenes or violates." Técnicas alleged that attorney side-switching during an arbitration proceeding violates the public policy of the United States, relying on the Florida Rules of Professional Conduct.

SSK moved to dismiss the petition to vacate and for monetary sanctions against Técnicas and argued that the award should be confirmed. It argued that Técnicas's petition was deficient because the New York "Convention does not provide a cause of action for vacatur of arbitral awards." It also argued that "the Florida Rules of Professional Conduct do not apply to ... Conejero and Lotito" because they never "engaged in a permitted representation in Florida." (Emphasis omitted.) SSK argued alternatively that Técnicas waived its objection to the alleged unethical conduct because it was aware of the conduct but failed to raise it until an adverse award issued. SSK also argued that Técnicas was not prejudiced by Conejero and Lotito's move to Cuatrecasas, and so the award itself did not contravene public policy. And SSK argued that Técnicas should be sanctioned because Técnicas's claims were objectively frivolous, and the petition was filed for the improper purpose of delaying enforcement of an arbitral award. See FED. R. CIV. P. 11(b)–(c).

Técnicas argued that because Florida was the seat of the arbitration, the Florida Rules of Professional Conduct applied and that it was irrelevant that Conejero and Lotito were never physically present in Florida. Técnicas also argued that it did not waive its objection to the side-switching because "Conejero and Lotito never informed [Técnicas] of its legal rights and did not seek or obtain [Técnicas]’s written, signed waiver of, or informed consent to, the conflict of interest before agreeing to join Cuatrecasas." Técnicas argued that it did not need to show prejudice or taint of the arbitral proceedings because prejudice is presumed when a lawyer switches sides. And Técnicas argued that the arbitral award contravenes the public policy of Florida and the United States because the proceeding was "fundamentally unjust" due to the side-switching.

The district court construed SSK's motion to dismiss as a motion to confirm the award and granted the motion, but it denied the motion for sanctions. The district court first explained that the Panama Convention, not the New York Convention, governed the proceedings because both SSK and Técnicas were Peruvian corporations and Peru ratified the Panama Convention and is a member of the Organization of American States. See 9 U.S.C. §§ 301 – 07. Nevertheless, the district court concluded that the parties’ mistake about the relevant convention was "of little concern" because "there is no substantive difference between the two Conventions." (Internal quotation marks omitted.) And it explained that it was bound by decisions of this Court "permitting vacatur under" the conventions. The district court then concluded that Técnicas's arguments were not frivolous and denied the motion for sanctions.

The district court explained that to vacate an arbitral award under the public-policy defense, the "award [must] be contrary to an explicit, well-defined, and dominant, United States public policy such that enforcement would be fundamentally unfair." (Alterations adopted and internal quotation marks omitted.) The district court agreed with Técnicas that a public policy against attorney side-switching exists in the United States but concluded that the public policy was not contravened in this case because there was no actual prejudice and Técnicas waived its objection to the side-switching. It explained that, although it is true that prejudice is presumed in a motion-to-disqualify context, when parties proceed to final judgment "a showing of prejudice is required in order to reverse the final judgment," and Técnicas "ha[d] offered no evidence of actual prejudice." (Internal quotation marks omitted.) It explained that Técnicas also waived its objection to the potentially unethical behavior because "[i]n an effort to discourage tactical gamesmanship, courts in the United States require that a party object with reasonable promptness after a party discovers the facts underlying a purported conflict." (Internal quotation marks omitted.) The district court reasoned that to hold otherwise would allow Técnicas to "keep a proverbial ace up its sleeve" by "wait[ing] until it received a final adverse ruling to state its concerns." (Internal quotation marks omitted.)

II. STANDARDS OF REVIEW

We review de novo the confirmation of an arbitral award under the Panama Convention based on the lack of a valid public-policy defense to enforcement. See Indus. Risk Insurers v. M.A.N. Gutehoffnungshütte GmbH , 141 F.3d 1434, 1443 (11th Cir. 1998) (explaining the standard applied under the New York Convention); Corporación Mexicana De Mantenimiento Integral, S. De R.L. De C.V. v. Pemex-Exploración Y Producción , 832 F.3d 92, 105 (2d Cir. 2016) (explaining that the same standards apply to the Panama Convention and the New York Convention); accord Corporacion AIC, SA v. Hidroelectrica Santa Rita S.A. , 34 F.4th 1290, 1293 (11th Cir. 2022). We review the factual findings of the...