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Parsons & Whittemore Overseas Co. v. Societe Generale de L'Industrie du Papier (RAKTA)

508 F.2d 969 (1974)

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Parsons & Whittemore Overseas Co. v. Societe Generale de L'Industrie du Papier (RAKTA)

United States Court of Appeals for the Second Circuit

508 F.2d 969 (1974)

Facts

In 1962, US corporation Parsons & Whittemore Overseas Co. (Overseas) (defendant) entered a contract with Societe Generale de L’Industrie du Papier (RAKTA) (plaintiff). Overseas agreed to construct, manage, and supervise a paperboard mill in Alexandria, Egypt. Overseas worked on the project until May 1967, when Americans on the Overseas work crew left Egypt. In this period preceding the Arab-Israeli Six Day War, tensions escalated between Israel and Egypt, and on June 6, 1967, the government of Egypt expelled all Americans from the country except those who qualified and applied for a special visa. The US Agency for International Development (AID) then notified Overseas and RAKTA that AID was withdrawing its funding for the project. Overseas notified RAKTA that it was discontinuing the project and that Overseas considered this abandonment of the project as excused by the contract’s force-majeure clause. RAKTA sued Overseas for breach of contract, and the matter went to arbitration. The tribunal awarded RAKTA damages, holding that Overseas’ force-majeure defense was valid only between May 28, 1967, and June 30, 1967, and that Overseas’ decision to discontinue the project was not valid. Overseas challenged the tribunal’s decision in the district court and the Second Circuit, raising several defenses under the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 Convention).

Rule of Law

Issue

Holding and Reasoning (Smith, J.)

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