i've just been asked to remind counsel to speak into the microphone because otherwise we won't have a recording of your argument so just make sure you put it in front of you effectively resulted in the forfeiture of the joint venture interest which the conoco parties admitted was worth between three hundred fifty and five hundred forty million dollars based on a delay in payment of contract damages of six point nine million dollars contend that that is a penalty that it is on enforceable as a matter of public policy of the united states of all fifty states in the united states and of the united states government the federal government district court a call option price was was zero the call option price was zero you want yes and that was because the parties had received one point one billion dollars in dividends right the parties had received in excess of dividends in returns on their investment in excess of the amount that they had originally invested both parties had only once i mean it was a profitable joint venture for both sides indeed it was profitable for both you and her and that joint venture continued profitability of the half construction this prudish as a termination provision rather than a penalty provision tell me what you think our ability to  find it was not a penalty what the tribunal said was only a liquidated damages provision can constitute a penalty this is a terminations provision and therefore because it is not a liquidated damages provision that ends our analysis so they did not go on to analyze whether we godless of the label which is the law regardless of the label that the parties and shows you still have to examine the effect of the clause with its termination cla is called an option whether it's called liquidated damages is relevant so the tribunal did not do the analysis that the tribunal was obligated to do you know specifically say it's not just a matter of the layman and they looked at the substance of the provisions but they didn't do the analysis or on the they said we stopped our analysis when we determined this is not liquidated damages but it didn't in effect is a terminations clause and i point out that there's an internal inconsistency in the tribunal's own reasoning because the tribunal goes on to determine that in fact the call option is a remedy we we review the reasoning or rationales  i understand there are two things that seem to me to be going on at the same time one has to do with whether it was a penalty what did the arbitrator decide was it right under the law the other one is the forum state's most basic notions of morality and justice now are we do we have to find the second one in order to rule in your favorite the that is serious public policy or  what are we looking at what the court is to look at is whether or not you foresman this contractual provision is a violation of public policy so the arbitrators have decided to use a public policy yes i mean public policy in the sense in which it with respect international arbitration which is safety is public i mean public policy you know that's the first thing you learn to throw in a question in law school you don't know what the law is a set against public policy i do it every day but the question is what does that mean against public policy in this context in this context you are it was defined by the supreme court and grace case and the supreme court said that public policy is well defined and dominant and has to be ascertained by reference to the laws and legal precedents and not from general considerations of supposed public interests so applying the supreme court test which is an objective test it's not a subjective test the basic notions of morality and justice is  existed in the federal yes that every time there's any law that all fifty states of adopted that we have a matter of public policy and i don't understand that to be how the law generally deals with the mean there is this basic sense that it has to be repugnant to state notions of what is decent and just in the state where the enforcement is sought we said that just recently in our corporate xian mexicano decision so what is it about this provision that is that is repugnant to fundamental notions of what's decent and just in new york state fact it's far greater than that because let's remember it's not that it's not a failure to pay the six point nine million dollars the trigger because it was a ninety one days the way because immediately when the p d parties of got the letter from conoco phillips they said here's the money and conoco phillips said with the money you want your interest we want the five hundred forty million dollars interest we're not interested in the six point nine million dollars so that is what has to offend public policy let me positive example because the court below held that as a matter of law contractual penalty can never rise to the level of a violation of public policy we think this is a case in which you can but we posit a hypothetical let's say you have a consumer and you have a credit card contract decided that if they can't count on each other to abide by the terms of the joy and share it will be terminated not not by just splitting the better but by one side then forfeiting th the interest to the other now i am not sure that you have pointed us to anything in new york law that says that kind of provision to terminate a joint venture offends public policy that maybe i overlooked something help us out what you want to first of all it's not quite correct that the exercise of the qual option was altered in determination of the joint venture because the refinery which they continue to do and continue to do to this day and the parties recognize that the major contribution to the joint venture on the part of a suicide was the supply of crude oil and so to say that the venture has been participate in the profits of the venture have been forfeit have been taken but the continuation of the business as work goes on and that supply of the benefit to kind of philips from the part of a society in the form of wo just violate any policy it must violate a policy that strikes at the very hostile of what is basic in just the notions of morality and justice of this nation oppose invokes the language of public policy applies but the tribunal ignores it refuses to apply it it's an intentional misapplication of law the criteria are very strict the criteria are very strict and that's vets from your decision installed nielson the criteria forfeiture of you know a five hundred million dollars interest in a joint venture because of a failure to pay six million dollars in damages does violate notions of fairness and justice and  the violation must touch upon our notions of morality and justice not just violate any law because if that were true then what your tosk would be every time an arbitration award came before you would be to analyze that award against every potentially a p that when one considers what their failure was at one point considers what the consequences are one gas that's the argument tell me why that doesn't then raise the question of whether we've got a public policy concern that your client is basically getting so much more than anyone would think was warranted in the circumstances and under the answer basis of trust that underlies this joint venture and the parties ex ante decided that for events that interfere with our ability to trust each other in this joint venture we're going to one wonders and that's the critical thing is that we're dealing with the unwinding of a joint venture not just you know failure to pay on a home pay on for goods received it's the fact that the parties are i did get there and you're saying that the breach of trust meant that they ought to liquidated damages cause so when we start from that position then we have a contract that embodies determination provision and then we ask the public policy question this appeal resolves itself because there's no allegation that a terminations provision viol it's not enough for it to be a violation of the law it has to violate the most basic principles of morality and justice it was defined by this court in the roost in ninety ninety six as something that you agree just in nature and particularly harmful to society things like awards that jeopardize public health and safety awards that contravene the government's foreign policy priorities awards for  example that relates to contracts of servitude these are the types of things that touch upon the most basic notions of morality and justice a contractual provision in a commercial contract between two highly sophisticated commercial parties doesn't touch upon