Chromalloy Aeroservices v The Arab Republic of Egypt

Chromalloy Aeroservices (“Chromalloy”), an American corporation, entered into a military procurement contract with the Air Force of the Arab Republic of Egypt (“Egypt”) to provide parts, maintenance, and repair for helicopters. A dispute arose and Chromalloy commenced arbitration proceedings on the basis of the arbitration clause in the contract. An arbitral tribunal found for Chromalloy. Egypt filed an appeal with the Cairo Court of Appeals, seeking nullification of the award, and filed a motion with the United States District Court for the District of Columbia to adjourn Chromalloy’s petition to enforce the award. The Cairo Court of Appeals suspended the award and Egypt filed a motion in the United States filed a motion in the District Court to dismiss Chromalloy’s petition to enforce the award. Subsequently, the Cairo Court of Appeals issued an order nullifying the award.

The District Court granted Chromalloy’s petition to enforce the arbitration award and rejected Egypt’s motion to dismiss. After satisfying itself that Chromalloy had complied with the formal requirements of Article IV NYC, the District Court noted that under Article V(1)(e) NYC it had discretion to decline to enforce the award that “has ... been set aside ... by a competent authority of the country in which, or under the law of which, that award was made”. It further noted that while Article V NYC provides a discretionary standard, Article VII(1) NYC requires that “the provisions of the present Convention shall not ... deprive any interested party of any right he may have to avail himself of an arbitral award in the manner and to the extent allowed by the law ... of the count[r]y where such award is sought to be relied upon”. The District Court thus concluded that it had to consider Chromalloy’s claims under the applicable U.S. law and found that the arbitral award was proper as a matter of U.S. law. It further found that the arbitration agreement between Egypt and Chromalloy precluded an appeal to the Egyptian courts. It concluded that the decision of the Cairo Court of Appeals nullifying the award did not have res judicata effect in the United States. Lastly, it found that recognizing the decision of the Egyptian court would violate United States public policy in favor of final and binding arbitration of commercial disputes.


Source: http://www.newyorkconvention1958.org/index.php?lvl=notice_display&id=1139