U.S. District Courts Rule Consent Awards Fall Within New York Convention
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The importance of memorializing a settlement agreement into a consent award was recently highlighted in Transocean Offshore Gulf of Guinea Vii v. Erin Energy Corp., Case No. H-17-2623 (S.D. Tex. March 12, 2018). There, a Texas district court addressed whether a consent award is subject to confirmation in the United States pursuant to the New York Convention, as codified in the Federal Arbitration Act. The underlying case involved a contract dispute over drilling equipment and services located in waters off the Nigerian coast culminating in an arbitration before the London Court of International Arbitration.
The parties ultimately agreed to resolve their dispute prior to final hearing and asked the arbitrator to enter a consent award (as well as a partial award on costs that was not challenged). After the respondent failed to pay pursuant the terms of the award, the claimants sought to confirm the award in the Houston district court. The respondent moved to dismiss for lack of subject matter jurisdiction based on the contention that consent awards are not subject to New York Convention because the Convention is silent on the treatment of settlement awards. The respondent cited to a 2016 United Nations Commission on International Trade Law Secretariat Guide on the Convention which noted the silence of the New York Convention as well as the absence of any treatment in case law. The respondent also argued that the LCIA rules, absent other agreement of the parties, require the issuance of a reasoned award. Because the consent award lacked reasons, the respondent contended that it did not constitute an “award.”
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