Opinion ID: 787187
Heading Depth: 3
Heading Rank: 1

Heading: The Scope of the Arbitral Panel's Authority

Text: 22 The partial arbitral award is based on the panel's decision that the contracts between the parties gave the panel exclusive authority to arbitrate the issue of arbitrability. In other words, the arbitral panel concluded that, under the contracts, the courts of Venezuela do not have the power to determine whether the dispute should be sent to arbitration or resolved elsewhere. Consorcio argues that the panel exceeded the scope of its authority under the contracts because they expressly provide that courts should decide the scope of the arbitral panel's authority if a party seeks such a determination. 23 Article V(1)(c) of the Convention provides that arbitral awards should not be confirmed where the award deals with a [dispute]... not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration. In other words, if the parties did not agree in the contracts to submit certain disputes to arbitration, then arbitral awards purporting to resolve those disputes should not be confirmed. 24 At bottom, the dispute between the parties hinges on the language of the contracts themselves. The provision in dispute, which appears identically in each of the four contracts at issue, states that the parties may seek, in court, such mandatory, declaratory, or injunctive relief as may be necessary to define or protect the rights and enforce the obligations contained in this [contract] pending the settlement of a [d]ispute in accordance with the arbitration procedures set forth [elsewhere in this contract]. Consorcio understands this to mean that the parties may resort to courts to resolve whether a dispute is arbitrable. However, Four Seasons reads the provision to mean, in context, that courts may become involved only to support the work of the arbitral panel or to resolve disputes that cannot be resolved by the arbitral panel due to time constraints, for instance if the panel has not yet been convened and the dispute must be resolved immediately. 25 Because Consorcio failed to raise its argument that the language of the contracts prohibits the arbitral panel from determining the arbitrability, we decline to address the merits of its argument. Formby v. Farmers & Merchants Bank, 904 F.2d 627, 634 (11th Cir.1990) (As a general rule, an appellate court will not consider a legal issue or theory raised for the first time on appeal.) (internal quotation marks and citations omitted). Nowhere in its twenty-five page district court brief did Consorcio cite to Article V(1)(c) as a basis for refusing to confirm the award; instead, Consorcio cited to, and offered arguments based on, Article V(1)(a) (allowing courts to reject arbitral awards where they are not valid under the law to which the parties have subjected them), Article V(1)(e) (allowing courts to reject arbitral awards where a competent authority has suspended them), and Article VI (allowing courts to stay arbitral awards where an application to set aside or suspend the award has been made to a competent authority). Similarly, nowhere in its district court brief did Consorcio cite to any of the various cases that support its current contention that courts should not assume that the parties agreed to arbitrate the issue of arbitrability unless the contract explicitly includes such a provision. Likewise, nowhere in its district court brief did Consorcio even quote or cite the contractual language on which it now bases its entire argument. 26 Undeterred by its district court brief's failure to cite to the statutory provision, precedents, and contractual language that it now asks us to consider, Consorcio maintains that it properly argued its position below and refers us to a paragraph of its district court brief designated III(A)(3)(f). This subsection reads, in pertinent part: 27 The Arbitral Tribunal exceeded its power and the Partial Award offends notions of international comity: Although this consideration is normally [only] a basis for vacatur of a domestic arbitral award ... and therefore does not apply to a non-domestic award such as the one at issue here, the Arbitral Panel has so clearly exceeded its authority in this case that this fundamental arbitration policy should be taken into consideration as a basis to deny Petitioners' Motion and stay enforcement of the Partial Award. With the full knowledge that Venezuelan law applies to the agreements in question here, and that Venezuelan courts have found that the arbitration agreements violate Venezuelan law, the Arbitral Tribunal not only proceeded with arbitration but also rendered this interim decision. By doing so, the Arbitral Tribunal completely disregarded the law that governs the arbitration agreements, as well as the authority of Venezuelan courts to interpret it. In addition, while recognizing that Venezuelan law applies, the Arbitral Tribunal insists in its Partial Award that it is empowered to usurp the power, jurisdiction, and authority of the Venezuelan courts and order [Consorcio] to withdraw all of its pending actions there. The arbitrators' power in this case was, by agreement of the parties, limited by Venezuelan law. They have chosen to ignore this fact. Such conduct clearly exceeds the power granted to them. In addition, this attempts to override decisions already made on the same issues by a court of competent jurisdiction in Venezuela, a shocking offense to international comity. These factors should be considered by the Court as weighing in favor of denying Petitioners' Motion. 28 Nothing in this lone paragraph could have possibly alerted the district judge to the argument that Consorcio makes on appeal, namely, that the parties to the contract included a provision in the contract limiting the scope of the arbitral panel's authority to determine the arbitrability of the dispute. Rather, the argument made in this paragraph, as far as we can discern, is that because (1) the parties agreed that the arbitral panel should apply Venezuelan law, and (2) Venezuelan courts had already determined that the dispute was not amenable to arbitration, the arbitral panel exceeded its authority by improperly construing Venezuelan law. In other words, Consorcio argued below that the panel exceeded its authority under Venezuelan law; but it did not argue that the panel exceeded its authority under the language of the contracts governing which disputes would be arbitrated. 29 Perhaps most important, the language of paragraph (f) of Consorcio's district court brief expressly disclaims reliance on any statutory basis for refusal to confirm the award. The opening sentence states that the basis for rejecting the arbitral award discussed in the paragraph does not apply to a non-domestic award such as the one at issue here and only finds statutory authority in the domestic award context. As the district judge correctly held, the statutory provisions governing when a district court must refuse to confirm a non-domestic arbitral award are exclusive, and thus non-statutory defenses may not be entertained. Indus. Risk Insurers v. M.A.N. Gutehoffnungshutte, 141 F.3d 1434, 1443 (11th Cir.1998). Consorcio's express repudiation of a statutory basis for refusing to confirm the award for the reasons expressed in paragraph (f) was more than sufficient to indicate to the district judge that it was not making an argument based on Article V(1)(c). 30 We do not suggest, of course, that the absence of citation to statutory authority and precedent or the inartful wording of a brief necessarily will require us to conclude that a party has waived an argument. To be clear, it is not our position that Consorcio waived its argument because it did not sufficiently raise it below; rather, the considerations discussed above, taken together, cause us to conclude that Consorcio did not previously raise the issue at all. Therefore, we decline to address it for the first time on appeal. 31