Centroamericanos, SA v. Refinadora Costarricense de Petroleos, SA

1989 U.S. Dist. LEXIS 5429 (1989)

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Centroamericanos, SA v. Refinadora Costarricense de Petroleos, SA

United States District Court for the Southern District of New York
1989 U.S. Dist. LEXIS 5429 (1989)

Facts

Two Costa Rican corporations, Buques Centroamericanos, SA (Bucesa) (plaintiff) and Refinadora Costarricense de Petroleos, SA (Recope) (defendant), entered an affreightment agreement for the transportation of crude oil from the Caribbean to Costa Rica. An arbitration clause contained in the agreement provided that the parties would submit any and all disputes arising out of the agreement to an arbitral tribunal in New York City or in London. A dispute arose between the parties, and Bucesa initiated an arbitration proceeding. Recope participated in three hearings before the arbitral tribunal, arguing the arbitration agreement was invalid. Recope asserted before the arbitral tribunal that, as a corporation wholly owned by the government of Costa Rica, it could not enter any arbitration agreement without the agreement of the Costa Rican legislature. Recope argued the agreement with Bucesa was null and void as the Costa Rican legislature did not approve the agreement. The arbitral tribunal rejected Recope’s arguments and awarded Bucesa damages. Bucesa filed a petition, asking the United States District Court for the Southern District of New York to confirm the arbitration award under the Federal Arbitration Act and the New York Convention. Recope noted its opposition to the petition filed by Bucesa, citing Article V(1)(a) of the New York Convention. Recope reiterated the arguments it made to the arbitration panel, arguing that the laws of Costa Rica rendered Recope incapable of agreeing to the arbitration agreement. Recope also reasserted that the arbitration agreement was invalid, rendering the damages award invalid.

Rule of Law

Issue

Holding and Reasoning (Edelstein, J.)

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