Late Confirming Your Award? No Problem!

The Middle District of North Carolina confirmed a Dutch arbitration award, rejecting the respondents' argument that the petition to confirm was untimely because it came more than three years after the award was issued. Although the Fourth Circuit never reached this questions before, the Court explained that the language in the Federal Arbitration Award (FAA) governing foreign arbitral awards is similar to that governing domestic awards, and the Fourth Circuit held that the three-year confirmation window governing domestic awards is permissive rather than mandatory. Sverdrup Corp. v. WHC Constructors, Inc., 989 F.2d 148, 156 (4th Cir. 1993).

The award arises from a dispute related to a Dutch court's 2017 order demanding the transfer of De Nederlandsche Bank N.V.'s shares in Conservatrix to Trier Holding B.V., a Dutch corporation, with Mr. Lindberg, through NIH and NIH Capital, being the ultimate shareholder of Trier. Under European regulation and the Dutch Financial Supervision Act, insurance companies are required to maintain a solvency capital ratio of at least 100%. In March 2019, respondents agreed to maintain Conservatrix's minimum solvency capital ratio at 135%. However, in August 2019, a financial report showed Conservatrix's solvency capital ratio had fallen below the minimum threshold.

In response, Conservatrix initiated summary arbitral proceedings against the respondents before the Netherlands Arbitration Institute, seeking provisional relief to replenish the solvency capital ratio. The arbitral tribunal issued a detailed ruling and arbitral award on January 31, 2020, ordering respondent Trier to replenish the shortfall in Conservatrix's solvency capital ratio to 135%, with core equity contributions, and ordering other respondents to procure Trier's compliance. If they did not comply within 60 days, the tribunal ordered payment of €150 million to Conservatrix. A Dutch court promptly granted leave to enforce the arbitration award in February 2020. Despite subsequent appeals by Trier, including an appeal to the Supreme Court of the Netherlands, the attempts to nullify the award were denied. As of the latest update in March 2022, there has been no action in the main proceeding, indicating a standstill in the legal proceedings. Petitioner filed a petition to confirm the award in the Middle District of North Carolina in October 2023.

Section 207 of the FAA outlines the procedure for confirming foreign arbitration awards, stating that within three years of the award being made, any party to the arbitration may apply to a court for an order confirming the award against any other party. Respondents argue that because the petitioners filed their petition more than three years after the arbitrator entered the award, the petition should be dismissed. However, the Fourth Circuit has interpreted similar language in Section 9 of the FAA differently, finding that the one-year limitation period for domestic arbitrations is permissive rather than mandatory, allowing for confirmation of awards beyond the one-year period to encourage dispute resolution outside of federal court.

Although the Fourth Circuit has not specifically interpreted the three-year language in Section 207, the language in both Section 9 and Section 207 is nearly identical, stating that "any party to the arbitration may apply" to confirm the award within a specified time. At least one other court in the circuit has concluded that the time limitation in Section 207 is also permissive, citing the Fourth Circuit's reasoning in a similar case. Therefore, despite the Petitioners filing their petition more than three years after the arbitrator entered the award, the permissive nature of the three-year period outlined in Section 207 means that it does not serve as a bar to confirming the award beyond the three-year timeframe. Consequently, the Court denied Respondents' motion to dismiss based on a time bar. This holding is similar to that in First Kuwaiti Gen. Trading & Contracting W.L.L. v. Kellogg Brown & Root Int'l, Inc., No. 1:23-MC-1, 2023 WL 6221771, at *4 (E.D. Va. Sept. 22, 2023).

The case is Van Andel et al. v. Lindberg et al., No. 1:23-CV-879, 2024 WL 1860385 (M.D.N.C. Apr. 29, 2024).