I. INTRODUCTION[I]
On Monday, June 1, 2020, the Supreme Court of the United States addressed the scope of enforceability by non-signatories of arbitration agreements under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention).[ii] In a 9–0 decision, the court held that the New York Convention does not conflict with domestic equitable estoppel doctrines permitting the enforcement of arbitration agreements by non-signatories, resolving a split amongst the Courts of Appeals, and significantly expanding the scope of non-signatory enforcement under U.S. law.
II. BACKGROUND
In 2007, ThyssenKrupp Stainless USA, LLC contracted with F.L. Industries, Inc. for the construction of cold rolling mills at ThyssenKrupp’s steel manufacturing plant in Alabama. F.L. Industries then subcontracted the supply of motors to power the mills to Petitioner GE Energy.[iii] After the motors allegedly failed, Respondent Outokumpu Stainless USA, LLC, which had acquired the plant from ThyssenKrupp in 2012, brought claims against GE Energy in Alabama state court. GE Energy removed the case to federal court and moved to compel arbitration on the grounds that the contracts between ThyssenKrupp and F.L. Industries contained arbitration clauses requiring that disputes be resolved by arbitration in Germany under German law.
The United States District Court for the Southern District of Alabama granted GE Energy’s motion to compel, concluding that both Outokumpu and GE Energy were parties to the arbitration agreement.[iv] On appeal, the Eleventh Circuit reversed, holding that GE Energy, as a non-signatory to the contracts between Outokumpu and F.L. Industries, could not compel arbitration because “the [New York] Convention requires that the arbitration agreement be signed by the parties before the Court or their privities.”[v] The Eleventh Circuit’s decision thus enlarged the “circuit split” on the issue of the scope of non-party enforcement of international arbitration agreements under the New York Convention.[vi]
III. THE SUPREME COURT’S DECISION
The Supreme Court unanimously reversed, holding that “[t]he New York Convention does not conflict with domestic equitable estoppel doctrines that permit the enforcement of arbitration agreements by non-signatories,”[vii] and remanded to the Eleventh Circuit to determine: (i) whether GE Energy could enforce the arbitration clauses under equitable estoppel principles; and (ii) what body of law governs that determination.[viii]
Writing for the court, Justice Thomas began by examining Chapter 1 of the Federal Arbitration Act (FAA), which governs domestic arbitration and permits a non-signatory to invoke state-law doctrines — including assumption, veil-piercing, alter ego, incorporation by reference, third-party beneficiary theories, waiver, and estoppel — to enforce an arbitration agreement.[ix] Turning to the text of the New York Convention, the court determined that only one article of the treaty, Article II, addresses arbitration agreements, and only Article II(3) refers to the enforcement of such agreements.[x] The Court found the New York Convention’s silence to be dispositive, holding that “nothing in the text of the Convention could be read to otherwise prohibit the application of domestic equitable estoppel doctrines.”[xi] The Court further explained that such interpretation is consistent with the text of Article II, which contemplates the “gap-filling” role of domestic doctrines by declining to...
