Fertilizer Corp. of India v. IDI Management, Inc.

• Decision Date: 11 January 1982
• Docket Number: No. C-1-79-570.,C-1-79-570.
• Citation: 530 F. Supp. 542
• Parties: FERTILIZER CORPORATION OF INDIA, et al., Petitioners, v. IDI MANAGEMENT, INC., Respondent.
• Court: U.S. District Court — Southern District of Ohio

530 F. Supp. 542

FERTILIZER CORPORATION OF INDIA, et al., Petitioners, v. IDI MANAGEMENT, INC., Respondent.

No. C-1-79-570.

United States District Court, S. D. Ohio, W. D.

January 11, 1982.

Gerald L. Draper, Columbus, Ohio, for petitioners.

James R. Bridgeland, Jr., L. Clifford Craig, Cincinnati, Ohio, for respondent.

OPINION AND ORDER DENYING RESPONDENT IDI'S MOTION TO RECONSIDER

SPIEGEL, District Judge:

This matter came on for consideration of respondent's motion to reconsider, 517 F.Supp. 948 (doc. 46), petitioners' memo in opposition (doc. 49), and respondent IDI's reply (doc. 50). Respondent IDI Management, Inc.'s motion for reconsideration of the Court's Memorandum Opinion and Decision (doc. 33) is based on newly discovered evidence. That portion of the Memorandum Opinion and Decision which respondent is asking the Court to reconsider concerns IDI's third affirmative defense "public policy — arbitrator Sen's relationship with FCI" (doc. 33, pp. 9-11). IDI originally claimed that enforcement of the Nitrophosphate Award would violate the public policy of the United States, in violation of Article V(2)(b) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, a treaty to which the United States became a party in December 1970, and which was ratified by India in 1961. The Convention is codified in Chapter 2 of Title 9 of the United States Code. The Convention provides "recognition and enforcement of an arbitral award may be refused if the competent authority in the country where recognition and enforcement is sought finds that: ... (b) the recognition or enforcement of the award would be contrary to the public policy of that country." Convention Article V, paragraph 2.

Respondent claims that Mr. B. Sen, the arbitrator nominated by FCI had served as counsel for FCI in at least two other legal or arbitral proceedings, and that these facts were not disclosed to IDI, and that the nondisclosure of the relationship is fatal to enforcement despite the fact that the arbitration was unanimous and even though actual fraud or bias, may be incapable of proof. There is a factual dispute as to whether IDI had constructive or other notice of Mr. Sen's relationship with FCI. FCI responded that Mr. Sen was chosen properly under the ICC rules, as well as the Convention.

In our Memorandum Opinion and Order (doc. 33) we observed that "the ICC rules applicable at the time made no mention of neutrality, and not until the 1975 ICC rules became effective was an `independent' arbitrator required." IDI has submitted an impressive affidavit of Robert William Metcalf Thompson, a solicitor of the Supreme Court of Judicature of England and Wales, who worked in the Secretariat of the Court of Arbitration of the International Chamber of Commerce, becoming Secretary General of such Court on May 23, 1973, where he served until February 28, 1977, which affidavit was attached to IDI's reply (doc. 50). Mr. Thompson was asked for his opinion and the factual and legal basis supporting it "as to whether under the 1955 rules an arbitrator nominated by a party might be subject to disapproval or disqualification due to a prior close relationship with the party appointing him and notably due to previously acting as legal counsel to that party" (paragraph 7). Mr. Thompson concluded as follows:

8. Both under the 1955 and 1975 rules, the Court of Arbitration of the International Chamber of Commerce, the institution which administers and controls ICC arbitrations, reserved the power to disapprove or disqualify arbitrators, in its discretion, in order to preserve the integrity of ICC arbitration.

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19. It apparently has been alleged by FCI in the instant proceeding that under the 1955 rules a party-appointed arbitrator was not required to be independent and disqualification would not lie for lack of independence. Some support of this theory is sought to be found in the text of Article 2.4 of the 1975 rules which specifically provides a reference to independence, not existing in the prior rules....

20. It is true that the 1975 rules make it explicit that a party shall nominate only an `independent' arbitrator. Furthermore, the court of arbitration, making use of the biographical data which the arbitrator nominee is to supply it with has an obligation to approve the nomination only of arbitrators who, prima facie, are independent of the party appointing them. Hence, under the 1975 rules, the Court has a more explicit mandate to act on its own initiative to screen party-nominated arbitrators, and to appoint only those, who from the information given to them by the arbitrator, appear to demonstrate sufficient qualities of independence.

21. However, nothing in the text of Article 2.4 of the 1975 rules, having to do with the nomination and appointment of arbitrators, and the additional burdens of the Court of Arbitration in respect thereto, removes the possibility of disqualification of an arbitrator at the instance of the other party, a provision which remains substantially the same under the 1955 rules (Article 7.4) and 1975 rules (Article 2.7). As has been pointed out above, lack of independence has been, in the ICC practice, a cause for disqualification under the 1955 rules. It continues to be so under the 1975 rules.

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26. Mr. Spiegel, District Judge, in the context of the present proceedings, has stated in his Memorandum of Opinion and Decision:

`The ICC rules applicable at the time made no mention of neutrality and not until the 1975 rules became effective was an independent arbitrator required.'

With respect to Mr. Spiegel, although I agree that the provision for independence was not specifically provided in the 1955 rules, in my opinion, the independence of an arbitrator has always been one of the principal requirements expected of an arbitrator so much so that prior to the 1975 ICC rules, no specific provision was considered necessary.

27. However, there can be absolutely no implication that the 1955 rules, by remaining silent on the question of independence, intended to permit the appointment of partial arbitrators.

28. In effect, the petitioners' maintain, and Mr. Spiegel, District Judge, has upheld, that the ICC rules applicable at the time of the present dispute made no provisions for:

1) The appointment of an independent arbitrator,

2) The obligation of disclosure by an arbitrator.

I am of the opinion that these obligations have always been a fundamental and accepted, if not codified, obligation of the parties arbitrating under the ICC rules.

This Court is persuaded by Mr. Thompson's reasoning that the ICC rules have always required that the arbitrators be impartial and/or independent, and that any information bearing on the ability of an arbitrator to be impartial and/or independent must be disclosed.

IDI's motion to reconsider is based on an affidavit of Mr. Robert Layton, a New York lawyer, who saw this Court's Memorandum Opinion and Decision...