FEDERAL DEPOSIT

INSURANCE
CORPORATION vs. IIG
CAPITAL, LLC
UNITED STATES COURT OF APPEALS
ELEVENTH CIRCUIT
No. 12-10686. D.C. Docket No. 1:11-cv-21784-UU
Facts

IIG Capital and Republic Federal Bank N.A. entered

into a written agreement (the “Agreement”), which
“contemplated performance by the parties in Ecuador
of the commercial relationship established thereby.”

Federal Deposit Insurance Corp. vs. IIG Capital

Facts (continued)

The Agreement contained an arbitration clause

whereby the parties agreed to resolve their disputes by
means of final, binding, and mandatory arbitration
according to the Rules of Arbitration of the ICC.

Federal Deposit Insurance Corp. vs. IIG Capital

Facts (continued)

On February 13, 2009, IIG commenced arbitration

proceedings with the ICC in Miami, Florida, and
claimed that it was “owed monies by Republic.”
Republic responded and counterclaimed, alleging,
inter alia, that IIG had breached the Agreement.

Federal Deposit Insurance Corp. vs. IIG Capital

Facts (continued)

A few weeks after Mr. Grigera Naon signed a

statement of independence in accordance with the ICC
Rules of Arbitration, the Secretariat of the ICC
informed the parties that Mr. Naon was designated as
the sole arbitrator in the arbitration.
A few months later, petitioner was appointed as
receiver of Republic Bank.
Federal Deposit Insurance Corp. vs. IIG Capital
Facts (continued)

In March 2010, Jose Astigarraga appeared in the

arbitration as additional counsel of Republic Bank.

No objections were made on this circumstance

during the arbitration proceedings.

Federal Deposit Insurance Corp. vs. IIG Capital

Facts (continued)

The Arbitrator rendered an Award in FDIC’s favor.

The Award granted Republic monetary damages in the
amount of $4,000,000, plus interest. The Award also
required that IIG pay Republic for it’s attorney’s fees
and costs and half of the cost of arbitration.

Federal Deposit Insurance Corp. vs. IIG Capital

Facts (continued)

IIG has not paid any portion of the Award. As a result,

Federal Deposit Insurance Corporation, as receiver,
filed its Petition to Confirm and Enforce International
Arbitral Award, seeking confirmation and enforcement
of the Award pursuant to the New York and Panama
Conventions and in accordance with Section 207 the
Federal Arbitration Act.

Federal Deposit Insurance Corp. vs. IIG Capital

Facts (continued)

IIG’s first affirmative defense.

IIG argues that the Award should not be enforced
because “the composition of the arbitral authority or
the arbitral procedure was not in accordance with the
Agreement” because the Arbitrator violated Article 7,
Section 3 of the ICC Rules of Arbitration when he
failed to disclose certain “facts and circumstances”
which were of such a nature as to call into question
Grigera Naon’s independence.
Facts (continued)

IIG’s second affirmative defense.

IIG claims enforcement of the Award should be denied
as contrary to public policy. In support of this
contention, IIG claims the arbitrator’s alleged failure
to disclose, “violated the due process right of IIG to be
heard with respect to Grigera Naon’s independence
and impartiality and, concomitantly, his right or
ability to continue as arbitrator.”
Issue

Whether the foregoing defenses of IIG are well-

founded in order to rule on the vacation of the
Award due to the alleged irregularities in the
arbitration procedure.

Federal Deposit Insurance Corp. vs. IIG Capital

Ruling

Federal Deposit Insurance Corp. vs. IIG Capital

Ruling (continued)
On the first defense

“These particulars reveal nothing beyond the kind of

professional interactions that one would expect of
successful lawyers active in the specialized area...”
(Midwest Generation EME v. Continuum Chem.
Corp., 768 F. Supp. 2d 939, 949)

Federal Deposit Insurance Corp. vs. IIG Capital

Ruling (continued)
On the second defense.
Arbitral awards are unenforceable on grounds that they
are violative of public policy only when the award violates
some explicit public policy that is well-defined and
dominant and is ascertained by reference to the laws and
legal precedents and not from general consideration of
supposed public interests. Such public-policy defense
should be construed narrowly and shall only apply where
enforcement of the award “would violate the forum state’s
most basic notions of morality and justice.
Ruling (continued)
The international arbitration community is a relatively
small, tight-knit community where it can only be
expected that prominent practitioners will, at some
point, cross paths in their day to day practice.

To disqualify an otherwise qualified arbitrator because

he and a party to the litigation share membership in a
professional association, would, in effect, disqualify
the majority of arbitrators practicing in the field of
international arbitration.
Ruling (continued)

Absent a showing of pecuniary interest on the part of

the arbitrator or some other fact to suggest bias, the
due process challenge that concurrent membership in
professional societies and educational endeavors is
indicative of partiality, fails both to establish arbitrator
impropriety and to overcome the strong public policy
preference for international arbitration.
Federal Deposit Insurance Corp. vs. IIG Capital