American Construction Machinery & Equipment Corp. Ltd. v. Mechanised Construction of Pakistan, Ltd.

American Construction Machinery & Equipment Corporation, Ltd. (ACME) (plaintiff) contracted with Mechanised Construction of Pakistan Ltd. (MCP) to supply MCP with certain goods and services related to a construction project. The contract contained an arbitration clause calling for arbitration before the International Chamber of Commerce (ICC) in Paris or Geneva, but it was otherwise silent on governing law. The parties then entered into a supplementary agreement stating that the governing law would be that of Pakistan. A dispute arose, and ACME filed a claim with the ICC. MCP initially participated and filed a counterclaim against ACME. The ICC Court of Arbitration selected Geneva as the site for the arbitration and appointed a sole arbitrator. The parties signed the Terms of Reference, which were rules for arbitration, and agreed to arbitrate the issue of whether the supplementary agreement affected the original agreement. However, MCP did not attend the arbitration hearing. MCP then petitioned a court in Pakistan for a declaration invalidating both the arbitration and the arbitration clause. The Pakistani court ruled in MCP’s favor. Meanwhile. the arbitrator reached his decision, determined that the supplemental agreement was invalid under both Pakistani and New York law, and ruled in favor of ACME on its claim and against MCP on its counterclaim. ACME filed a petition in federal district court to confirm the arbitral award pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention). Seeking to avoid enforcement, MCP raised several of the defenses set forth in Article V of the New York Convention, including that the arbitration agreement was not valid under Pakistani law, the award contained decisions on matters beyond the scope of the arbitration agreement, and the arbitration procedure was not in accordance with the agreement of the parties.