Mobil Oil Indonesia Inc. v. Asamera Oil (Indonesia) Ltd.

• Decision Date: 19 December 1977
• Citation: Mobil Oil Indonesia Inc. v. Asamera Oil (Indonesia) Ltd., 401 N.Y.S.2d 186, 43 N.Y.2d 276, 372 N.E.2d 21 (N.Y. 1977)
• Parties: , 372 N.E.2d 21 MOBIL OIL INDONESIA INC., Appellant, v. ASAMERA OIL (INDONESIA) LTD. et al., Respondents.
• Court: New York Court of Appeals Court of Appeals

Page 186

401 N.Y.S.2d 186

43 N.Y.2d 276, 372 N.E.2d 21

MOBIL OIL INDONESIA INC., Appellant, v. ASAMERA OIL (INDONESIA) LTD. et al., Respondents.

Court of Appeals of New York.

Dec. 19, 1977.

William E. Jackson, Adlai S. Hardin, Jr., Richard C. Tufaro and Edward G. Williams, New York City, for appellant.

C. MacNeil Mitchell, Stephen R. Lang and Paul J. Weiner, New York City, for respondents.

OPINION OF THE COURT

GABRIELLI, Judge.

In this proceeding, petitioner seeks to vacate "the interlocutory award of the arbitral tribunal" on the ground that the arbitrators exceeded their authority in determining the applicable procedural rules to be used during the course of the arbitration. We decline to do so and hold that the courts have no authority to review an interlocutory ruling made by the arbitrators.

On July 16, 1968 the appellant entered into a contract with respondents involving rights to exploration and production of vast petroleum reserves in Sumatra, Republic of Indonesia. The contract contained a broad arbitration clause providing that "(a)ny dispute arising out of or relating to this Agreement shall be settled by arbitration in accordance with the Rules of the International Chamber of Commerce" (hereinafter rules). A dispute arose over the payment of certain royalties due under the agreement and the respondents then caused the International Chamber of Commerce to serve a request for arbitration on appellants. At the time the agreement was executed and indeed at the time of the institution of this arbitration proceeding, the rules promulgated June 1, 1955 were in effect. Article 13 of the 1955 rules provided that "(w)hen the parties agree to submit their case to arbitration by the International Chamber of Commerce, they shall be deemed to submit to arbitration in a accordance with the present Rules." Under the 1955 rules the arbitrators were directed to apply the procedural law of "the country" where the arbitration was to be held.

On June 1, 1975 new rules became effective, providing, inter alia, that "(w) here the parties have agreed to submit to arbitration by the International Chamber of Commerce, they shall be deemed thereby to have submitted ipso facto to the present Rules." The 1975 rules differ from the old rules by providing that in the absence of an agreement to the contrary and where the rules are otherwise silent, the procedural law to be applied is to be determined by the arbitrators which, of course, would not necessarily be the procedural law of the country where the arbitration was to be held.

The arbitrators were asked to determine which set of rules would govern the proceeding. The question arose in the context of a request for discovery. As noted, if the 1955 rules were applicable then the arbitrators would determine procedural rules on the basis of the law of the country where the arbitration was to be held. Under these rules the arbitrators would have to look to the law of New York (or Federal law) to determine whether they had the power to order discovery. However, if the 1975 rules were applicable then the arbitrators would have the authority under the agreement to determine whatever procedural rules they deemed appropriate and to order discovery aside and apart from the State or Federal policy regarding this subject.

The majority of the arbitrators decided that the arbitration clause reference to the Rules of the International Chamber of Commerce must be construed as a reference "to those Rules as they are from time to time", and concluded that the 1975 rules were applicable. Consequently discovery was ordered. The dissenting arbitrator found that the parties intended the 1955 rules to apply. After the International Chamber of Commerce Court of Arbitration refused to interfere, the arbitrators formalized their decision in an interlocutory award declaring the applicability of the 1975 rules.

Appellant moved to vacate the interlocutory award pursuant to CPLR 7511 (subd. (b), par. 1, cl. (iii)) which provides that an "award shall be vacated" when "an arbitrator * * * (has) exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made" (emphasis added). No one contests the...