Court Opinion

ID: 6800660
Source: CourtListenerOpinion
Date Created: 2022-07-22 13:00:27.373472+00
Date Added: 2024-06-11T16:03:11.845438
License: Public Domain

USCA11 Case: 21-13776     Date Filed: 07/22/2022   Page: 1 of 15

                                                   [PUBLISH]
                            In the
         United States Court of Appeals
                 For the Eleventh Circuit

                   ____________________

                         No. 21-13776
                   ____________________

TECNICAS REUNIDAS DE TALARA S.A.C.,
a Peruvian corporation,
                                           Petitioner-Appellant,
versus
SSK INGENIERIA Y CONSTRUCCION S.A.C.,
a Peruvian corporation,

                                     Respondent-Appellee.
                   ____________________

          Appeal from the United States District Court
              for the Southern District of Florida
             D.C. Docket No. 1:21-cv-22206-CMA
                   ____________________
USCA11 Case: 21-13776          Date Filed: 07/22/2022        Page: 2 of 15

2                        Opinion of the Court                    21-13776

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 ar-
bitration 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 re-
ceived an adverse award more than a year later, Técnicas waived
its right to complain. We affirm the judgment confirming the arbi-
tral 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 electromechani-
cal work on the refinery project. The contract was governed by
Spanish law and required any disputes to be submitted to the Inter-
national Chamber of Commerce International Court of

* The Honorable Terry F. Moorer, United States District Judge for the South-
ern District of Alabama, sitting by designation.
USCA11 Case: 21-13776       Date Filed: 07/22/2022     Page: 3 of 15

21-13776               Opinion of the Court                        3

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 Cos-
tea, an attorney at the Cuatrecasas law firm. Técnicas was repre-
sented for a portion of the arbitration by Cristián Conejero and
Ramiro Portocarrero, attorneys at the Philippi Prietocarrizosa Fer-
rero DU & Uria law firm. An associate of that firm, Gianfranco Lo-
tito, also represented Técnicas.
       In early March 2020, Conejero participated in the final arbi-
tration hearing, which was held in Spain by agreement of the par-
ties. 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.
USCA11 Case: 21-13776       Date Filed: 07/22/2022     Page: 4 of 15

4                      Opinion of the Court                21-13776

        The next business day, April 13, Conejero informed the ar-
bitral panel and the lead counsels, Portocarrero and Costea, that he
and his associate Lotito were leaving Ferrero DU to join Cuatre-
casas. In his letter, he asked for this information to be kept confi-
dential. And he explained that both he and Lotito would “maintain
continued and absolute confidentiality on the matters we have dis-
cussed in the framework of the privileged attorney-client relation-
ship.”
       On April 14, the parties requested an extension to file post-
hearing 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, Téc-
nicas 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 ar-
bitral award in federal court alleging that Conejero and Lotito’s
move to Cuatrecasas created “a direct, material, adverse, and non-
waivable conflict of interest.” Técnicas argued that under the New
York Convention, see Convention on the Recognition and En-
forcement 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
USCA11 Case: 21-13776        Date Filed: 07/22/2022     Page: 5 of 15

21-13776               Opinion of the Court                         5

is an explicit, well-defined and dominant [United States] policy
which the award contravenes or violates.” Técnicas alleged that at-
torney 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 mone-
tary sanctions against Técnicas and argued that the award should
be confirmed. It argued that Técnicas’s petition was deficient be-
cause the New York “Convention does not provide a cause of ac-
tion 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 Téc-
nicas 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 ar-
bitration, the Florida Rules of Professional Conduct applied and
that it was irrelevant that Conejero and Lotito were never physi-
cally present in Florida. Técnicas also argued that it did not waive
USCA11 Case: 21-13776       Date Filed: 07/22/2022     Page: 6 of 15

6                      Opinion of the Court                21-13776

its objection to the side-switching because “Conejero and Lotito
never informed [Técnicas] of its legal rights and did not seek or ob-
tain [Técnicas]’s written, signed waiver of, or informed consent to,
the conflict of interest before agreeing to join Cuatrecasas.” Téc-
nicas 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 contra-
venes 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 corpo-
rations 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 ar-
guments 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
USCA11 Case: 21-13776         Date Filed: 07/22/2022     Page: 7 of 15

21-13776                Opinion of the Court                          7

such that enforcement would be fundamentally unfair.” (Altera-
tions 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 pre-
sumed in a motion-to-disqualify context, when parties proceed to
final judgment “a showing of prejudice is required in order to re-
verse the final judgment,” and Técnicas “ha[d] offered no evidence
of actual prejudice.” (Internal quotation marks omitted.) It ex-
plained 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 ob-
ject with reasonable promptness after a party discovers the facts
underlying a purported conflict.” (Internal quotation marks omit-
ted.) The district court reasoned that to hold otherwise would al-
low Técnicas to “keep a proverbial ace up its sleeve” by “wait[ing]
until it received a final adverse ruling to state its concerns.” (Inter-
nal 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);
USCA11 Case: 21-13776         Date Filed: 07/22/2022     Page: 8 of 15

8                       Opinion of the Court                  21-13776

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 district court for
clear error. Hidroelectrica Santa Rita, 34 F.4th at 1293. It is a famil-
iar “general rule . . . [that] our review of an arbitration decision
. . . is extremely limited” and is “‘among the narrowest known to
the law.’” Id. (quoting AIG Baker Sterling Heights, LLC v. Am.
Multi-Cinema, Inc., 508 F.3d 995, 1001 (11th Cir. 2007)).
                          III. DISCUSSION
        Federal review of an international arbitration is often gov-
erned by either the New York Convention or the Panama Conven-
tion. 9 U.S.C. §§ 202, 305. Where “the requirements for application
of both” the New York Convention and the Panama Convention
“are met,” we apply the Panama Convention “[i]f a majority of the
parties to the arbitration agreement are citizens of a State or States
that have ratified or acceded to the [Panama Convention] and are
member States of the Organization of American States.” Id. § 305.
       We apply the Panama Convention here. The parties are
both citizens of Peru, a foreign state. See Indus. Risk Insurers, 141
F.3d at 1441 (explaining that an arbitration not entirely between
citizens of the United States is reviewed under section 202 of the
Arbitration Act); 9 U.S.C. § 302 (incorporating sections 202, 203,
204, 205, and 207 of the Arbitration Act to apply to arbitrations
USCA11 Case: 21-13776        Date Filed: 07/22/2022     Page: 9 of 15

21-13776               Opinion of the Court                         9

governed by the Panama Convention). And Peru has ratified that
convention and is a member of the Organization of American
States. See Inter-American Convention on International Commer-
cial Arbitration, Jan. 30, 1975, S. Treaty Doc. No. 97-12 (1981) (Pan-
ama Convention), 1438 U.N.T.S. 245 (ratification by Peru effective
June 21, 1989, 1761 U.N.T.S. 321); Charter of the Organization of
American States, Apr. 30, 1948, 2 U.S.T. 2394, 119 U.N.T.S. 3 (rati-
fication by Peru effective February 12, 1954, 186 U.N.T.S. 322). The
Panama Convention lists seven defenses, which provide the exclu-
sive grounds for vacatur. Panama Convention, 1438 U.N.T.S. at
250; Hidroelectrica Santa Rita, 34 F.4th at 1298.
       The parties dispute only whether the arbitral award should
be vacated or confirmed under the public-policy defense. That de-
fense succeeds if “the recognition or execution of the [arbitral] de-
cision would be contrary to the public policy (ordre public) of” the
United States. Panama Convention, 1438 U.N.T.S. at 250. And it is
well-settled that where the New York and Panama Conventions
are substantively the same, as they are in the context of the public-
policy defense, decisions under the New York Convention apply
with equal force to cases under the Panama Convention. 9 U.S.C.
§ 302; see, e.g., Pemex-Exploración Y Producción, 832 F.3d at 105;
Goldgroup Res., Inc., v. DynaResource de Mexico, S.A. de C.V.,
994 F.3d 1181, 1188 n.4 (10th Cir. 2021).
       The public-policy defense is exceedingly narrow and rarely
successful. See Cvoro v. Carnival Corp., 941 F.3d 487, 496 (11th Cir.
2019). We must confirm the award unless Técnicas “successfully
USCA11 Case: 21-13776        Date Filed: 07/22/2022      Page: 10 of 15

10                      Opinion of the Court                   21-13776

asserts” the defense. Id. at 495 (alteration adopted) (internal quota-
tion marks omitted). The party opposing confirmation of the
award “has the burden of proving” the public-policy defense. Id.
        “The public-policy defense under the Convention is very
narrow and is likewise to be construed narrowly in [the] light of the
presumption favoring enforcement of international arbitral
awards.” Id. at 496 (alteration adopted) (internal quotation marks
omitted). The defense applies only to “violations of an explicit pub-
lic policy that is well-defined and dominant and is ascertained by
reference to the laws and legal precedents and not from general
considerations of supposed public interests.” Id. (internal quotation
marks omitted); see also W.R. Grace & Co. v. Loc. Union 759, Int’l
Union of United Rubber, Cork, Linoleum & Plastic Workers of
Am., 461 U.S. 757, 766 (1983). Put another way, the defense “ap-
plies only when confirmation or enforcement of a foreign arbitra-
tion award would violate the forum state’s most basic notions of
morality and justice.” Inversiones y Procesadora Tropical
INPROTSA, S.A., v. Del Monte Int’l GmbH, 921 F.3d 1291, 1306
(11th Cir. 2019) (internal quotation marks omitted). This defense is
“frequently raised,” but it is “rarely . . . successful.” Cvoro, 941 F.3d
at 496 (internal quotation marks omitted). Even where a legitimate
public policy is identified by the party opposing the confirmation
of an award, we “must consider that the United States has a federal
policy in favor of arbitral dispute resolution which applies with spe-
cial force in the field of international commerce.” Id. at 499 (inter-
nal quotation marks omitted).
USCA11 Case: 21-13776       Date Filed: 07/22/2022     Page: 11 of 15

21-13776               Opinion of the Court                        11

       A party can also waive challenges based on the public-policy
defense. See RESTATEMENT U.S. L. OF INT’L COM. & INVESTOR-
STATE ARB. § 4.16 cmt. g (AM. L. INST., Proposed Final Draft 2019).
“Waiver may be the result of either express consent or a failure to
raise an objection in a clear and timely manner.” Id. § 4.23(c); see
also id. § 4.23 cmt. a (“In order to preserve its objections to proce-
dural aspects of the arbitration, a party must make its objection
known to the arbitral tribunal in a clear and timely manner so as to
permit correction or remediation of defects.”). “Any other rule
would undermine the efficiency and fairness of arbitral proceedings
by leaving awards subject to undisclosed objections that might
have been remedied if properly raised.” Id. § 4.23 cmt. a. “The
timeliness of an objection depends on several factors,” the most
important of which are “when the information upon which the ob-
jection is based first became known, or should have become
known, to the complaining party and what has occurred in the in-
terval between the time a party learned the relevant information
and the time it asserted its objection.” Id. § 4.23 n. b. And when “a
party has knowledge of facts possibly indicating [an ethical problem
tainting the arbitration proceedings] he cannot remain silent and
later object to the award of the arbitrators on that ground. His si-
lence constitutes a waiver of the objection.” See AAOT Foreign
Econ. Ass’n (VO) Technostroyexport v. Int’l Dev. & Trade Servs.,
Inc., 139 F.3d 980, 982 (2d Cir. 1998) (internal quotation marks
omitted).
USCA11 Case: 21-13776       Date Filed: 07/22/2022     Page: 12 of 15

12                     Opinion of the Court                 21-13776

       Técnicas argues that attorney side-switching violates the
public policy of the United States and Florida and that vacatur is
warranted, but we disagree. Técnicas knew of the side-switching
and failed to timely object, so it waived its objection. And that
waiver resolves this appeal, even if the attorney side-switching vi-
olated the public policy of the United States—a question about
which we express no opinion.
       To be sure, this Court has held that waiver can occur only
when a party has “full knowledge of the facts.” See Middlesex Mut.
Ins. Co. v. Levine, 675 F.2d 1197, 1204 (11th Cir. 1982). But Téc-
nicas knew all the relevant facts about the side-switching during
the arbitration. And it waited for more than one year—and for the
arbitral panel to issue SSK a $40 million award—to complain. By
waiting for the arbitral award to be issued with full knowledge of
the facts on which it bases its objection, Técnicas waived its objec-
tion. RESTATEMENT, supra, § 4.23 n. b (explaining that the time the
party knew the facts underlying its objection is relevant as well as
at what stage the party raised the objection).
       Técnicas raises three arguments for why it did not waive the
public-policy violation, and all three arguments fail. First, Técnicas
argues that challenges based on the public-policy defense are not
waivable and that a decision of one of our sister circuits supports
that argument. See Enron Nigeria Power Holding, Ltd. v. Fed. Re-
public of Nigeria, 844 F.3d 281, 287–88 (D.C. Cir. 2016). But that
decision is inapposite. There, the parties’ contract “expressly
waive[d] . . . any right to challenge an award by the arbitrators
USCA11 Case: 21-13776        Date Filed: 07/22/2022      Page: 13 of 15

21-13776                Opinion of the Court                         13

anywhere outside the place of arbitration.” Id. at 287. Our sister
circuit explained that parties cannot contractually waive a public-
policy defense. Id. at 288. But this appeal does not involve ex ante
contractual waiver. Here, we conclude only that a party can waive
a public-policy defense by failing to raise its objection in a timely
manner. RESTATEMENT, supra, §§ 4.16 cmt. g, 4.23(c).
        Second, Técnicas erroneously argues that it could not have
waived its objection because there was no avenue to challenge the
side-switching during the arbitral proceedings. An arbitral tribunal
may “order any interim or conservatory measure it deems appro-
priate” at the request of a party, ICC ARB. RULES, art. 28 (2021), and
“[c]ourts generally refer to the arbitral tribunal issues regarding dis-
qualification of counsel,” RESTATEMENT, supra, § 3.9(d). And arbi-
tral tribunals have the power to disqualify conflicted attorneys. See
id. § 3.9 cmt. c.
        Third, Técnicas argues that challenges based on the public-
policy defense can be raised only at the award-enforcement stage.
To be sure, the public-policy defense against enforcement of an ar-
bitral award applies only in enforcement proceedings. Panama
Convention, 1438 U.N.T.S. at 250. But the question here is whether
a failure to object to the underlying legal error waives a future chal-
lenge at the enforcement stage. Here, we know that issues about
attorneys’ conflicts of interest can be raised during arbitral proceed-
ings. RESTATEMENT, supra, § 3.9 cmt. c. And we know that chal-
lenges based on the public-policy defense can be waived if the ob-
jection was not timely raised. Id. §§ 4.16 cmt. g, 4.23(c). Técnicas
USCA11 Case: 21-13776        Date Filed: 07/22/2022      Page: 14 of 15

14                      Opinion of the Court                  21-13776

both knew about the side-switching and could have objected dur-
ing the arbitral proceedings. Because Técnicas failed to raise a
timely objection to the side-switching—or any objection, until the
enforcement stage—it waived a public-policy defense based on the
side-switching.
        Our decision in University Commons-Urbana, Ltd. v. Uni-
versal Constructors Inc., 304 F.3d 1331 (11th Cir. 2002), is not to
the contrary. In that decision, we vacated the confirmation of an
arbitral award under the Arbitration Act and remanded to the dis-
trict court for an evidentiary hearing regarding an arbitrator’s dis-
closure of potential conflicts. Id. at 1345. We held that the party
seeking to vacate the award did not waive its objection to the arbi-
trator’s potential bias because the party did not have full
knowledge of the facts underlying its objection. Id. at 1340–41. And
we explained that, although the arbitrator disclosed some infor-
mation about the purported conflicts, the arbitrator needed to dis-
close enough information about the conflicts such that “a reasona-
ble person” would “realize that a potential conflict existed” and
would be able to object. Id. at 1341. In Universal Constructors, the
arbitrator’s disclosure left out crucial details about the conflicting
relationships. For example, the arbitrator explained that he knew
and had practiced with the attorney for one of the parties, but he
did not disclose that he was currently co-counsel with that attorney
in a state court action. Id. at 1339–42. Here, by contrast, it is undis-
puted that all the underlying facts giving rise to the conflict—that
USCA11 Case: 21-13776       Date Filed: 07/22/2022     Page: 15 of 15

21-13776               Opinion of the Court                        15

the attorneys went to work at a firm representing SSK—were
known more than a year before the arbitral panel issued its award.
       Our conclusion is consistent with the “well settled” principle
in the United States “that a party may not sit idle through an arbi-
tration procedure and then collaterally attack that procedure on
grounds not raised . . . when the result turns out to be adverse.”
Marino v. Writers Guild of Am., E., Inc., 992 F.2d 1480, 1484 (9th
Cir. 1993); accord Brook v. Peak Int’l, Ltd., 294 F.3d 668, 674 (5th
Cir. 2002); United Food & Com. Workers, Loc. 400 v. Marval Poul-
try Co., 876 F.2d 346, 352 (4th Cir. 1989). The district court cor-
rectly explained that to conclude otherwise would allow Técnicas
to “keep a proverbial ace up its sleeve” by “wait[ing] until it re-
ceived a final adverse ruling to state its concerns.” (Internal quota-
tion marks omitted.) “Any other rule would undermine the effi-
ciency and fairness of arbitral proceedings,” RESTATEMENT, supra,
§ 4.23 cmt. a, and would be contrary to our federal policy of enforc-
ing arbitral awards, Cvoro, 941 F.3d at 499.
                        IV. CONCLUSION
       We AFFIRM the judgment in favor of SSK.