Transocean Offshore Gulf of Guinea VII Ltd. v. Erin Energy Corp., No. H-17-2623 (S.D. Tex. Mar. 12, 2018) [click for opinion]

Petitioners, Transocean Offshore Gulf of Guinea VII Ltd and Indigo Drilling Ltd, participated in an arbitration against Respondent, Erin Energy Corp., before the London Court of International Arbitration (the “LCIA”) arising from a contract providing for drilling off the coast of Nigeria. Before the arbitration hearings took place and any decisions made by the arbitrators, the parties agreed to have the tribunal issue consent awards. The tribunal subsequently issued two awards, a partial final award by consent, without reasons, and a partial final award on legal costs. When Respondent refused to pay, Petitioners commenced this suit for enforcement under the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention“).

Respondent objected to enforcement. It argued that consent awards were “fundamentally different” from other awards and not subject to the Convention. It cited no case law to support this position, instead relying on guidance published by the United Nations in 2016, stating that this issue had not been addressed within any reported case law. However, as the district court noted, that was no longer the case. It referred to a 2017 Southern District of New York decision, Albtelecom, that held that a consent award was covered by and subject to the Convention. The court described the analysis in that case as “thorough and persuasive” and adopted it accordingly.

The district court said that Albtelecom had analogous facts and legal issues. In holding that a consent award was subject to the Convention, it first pointed out that parties could have simply dismissed the arbitration and pursued a private settlement, but instead they “affirmatively asked” for an arbitral award. Second, as in this case, respondent there had cited no case law to support its position that a consent award was not subject to the Convention. Finally, the Albtelecom court affirmatively concluded that there was no good reason for such an exception: “On the contrary, the opposite rule would discourage resolution of disputes in mid-arbitration.”

Respondent’s other argument centered on the LCIA rules. It argued that the LCIA rules required all awards to have reasons in support, which the consent order did not have. The court dealt swiftly with this assertion, noting that the LCIA rules in fact “hurt, not help,” Respondent’s argument, as they specifically provided in Rule 26.9 that consent awards “need not contain reasons.”

The Court therefore concluded that, as the LCIA consent awards were subject to the Convention, the Court had subject-matter under 9 U.S.C. § 203 to confirm the awards. Finding that there were no other reasons not to confirm them, the Court held that the awards must be confirmed.