GE Transp. (Shenyang) Co. v. A-Power Energy Generation Sys., Ltd.,No. 15 Civ. 6194 (S.D.N.Y. June 22, 2016) [click for opinion]
The Petitioner, GE Transportation (Shenyang) Co., Ltd ("GET"), a Chinese company, sought confirmation and enforcement of an arbitration award in the amount of approximately $476 million (the "Award") against A-Power Energy Generation Systems, Ltd. ("A-Power"), a company incorporated in the British Virgin Islands. The Award was granted by a panel appointed by the Hong Kong International Arbitration Centre, and the Award had been enforced in the High Court of Hong Kong.
In addition to confirmation and enforcement of the Award, GET sought enforcement of the Award and entry of judgment jointly and severally against various entities related to A-Power under an alter ego theory of liability. GET also requested a permanent injunction freezing all assets belonging to A-Power and related entities. A-Power did not oppose the action and did not appear.
In confirming and enforcing the Award pursuant to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention"), the court confirmed that Article V of the New York Convention specifies seven exclusive grounds upon which courts may refuse to recognize an award. The reasons confirmed existing jurisprudence that "[g]iven the strong public policy in favor of international arbitration, review of arbitral awards under the New York Convention is very limited … in order to avoid undermining the twin goals of arbitration, namely, settling disputes efficiently and avoiding long and expensive litigation." The court found that the Award was properly entered against A-Power, and that it was unaware of any reason why any of the seven exclusive defenses under the New York Convention would apply.
The court declined, however, to enforce the Award as to the alleged alter egos of A-Power. First, the Petitioner did not serve any of the alter egos whom it sought to find liable, therefore the alleged alter egos were not parties to the action and the court could not enter judgment against them. Second, even if the alleged alter egos were parties, the determination of alter ego liability would not be appropriate in an action to confirm the Award. In short, the court held that an action for confirmation of the Award is not the proper time for a district court to pierce the corporate veil, as it would unduly complicate an action where the judge's powers are circumscribed and best exercised expeditiously. The court thus enforced the award against A-Power only.
The court also granted a permanent injunction freezing the assets of A-Power. It found that GET had established actual success on the merits against A-Power, that GET would be irreparably harmed if a permanent injunction was not granted, and that there was no adequate remedy at law because GET would not otherwise be able to collect on the judgment to be awarded against A-Power (as A-Power had made efforts to evade collection and hide assets). Finally, GET satisfied the court that the public interest would be served by enforcing the parties' rights under their contract and the awards and judgments of arbitration proceedings and the courts.