3. Issue Preclusion Limited by Fraud Accusations It is well settled that the doctrine of issue preclusion is applicable to issues resolved by a prior arbitration. However, the doctrine's application is not automatic and is constrained by principles of equity. Here, CBF claimed that it was denied a full and fair opportunity to litigate the fraud claims before the ICC Tribunal (a traditional requirement of issue preclusion) because the Appellees deliberately misled the Tribunal as to the extent of their fraud. Accordingly, the Second Circuit held that the grant of issue preclusion was inappropriate and that CBF should be afforded the opportunity to conduct discovery on its fraud claims.
Conclusion Although the case did not break any new legal ground, AMCI Holdings contains notable learning on two important questions in the field of international arbitration. First, drawing heavily from the draft Restatement, the Second Circuit set forth its preferred analytical framework for the enforcement of international arbitration awards. Award creditors contemplating enforcement actions in the New York federal courts would thus do well to appreciate the distinctions between domestic, nondomestic, and foreign arbitral awards. Second, the case illuminates an important limit on the application of issue preclusion to arbitration awards: due to principles of equity, the doctrine does not automatically apply where the prior award is alleged to be tainted by the invoking party's fraud.
Laurence Shore Partner
Conor Doyle Associate
About the authors
Laurence is an international arbitration specialist and a partner in the firm's New York City office.
The New York office comprises seasoned litigators, international arbitration specialists, and projects and infrastructure practitioners. The team's experience is broad-based and encompasses a variety of sectors, especially financial services, energy and consumer products. Our attorneys have a wealth of experience as trial and appellate advocates in courts throughout the US.