An arbitration award required respondent to pay a series of royalty payments, audit costs and interest, but did not address either party’s tax obligations. Respondent made several payments to petitioner, but withheld 20% from some of the payments citing its obligation under Taiwanese tax laws and regulations. The arbitration panel declined to amend the award in regards to the tax law issue, stating it was without power or jurisdiction, and further, no claims regarding these deductions was ever made or determined in the arbitration.

Respondent argued against enforcement of the final award for three reasons. The first reason, that enforcement of the award would violate Taiwanese tax law and therefore public policy, was rejected because the award said nothing about obligations to pay taxes, and thus did not prevent respondent from paying taxes directly rather than withholding taxes from its payment of the award. The second reason, that due process was violated under the New York Convention, was rejected, as respondent never “attempted to make a ‘case’ regarding tax withholding, much less that it was ‘unable to present’ one” during the arbitration. The third reason, that respondent had satisfied its obligation through prior payments net of tax withholding, was also rejected because respondent “provided no basis from which to infer that the tribunal implicitly authorized [respondent[ to deduct taxes,” as expressly stated by the arbitration panel when asked to amend the award. The Court confirmed the award.

Mondis Technology Ltd. v. Wistron Corp., No. 15-CV-02340 (USDC SDNY Nov. 3, 2016)