Nationalist International Commercial Arbitration?: The Supreme Court and State Law Equitable Estoppel in GE v/ Outokumpu

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A unanimous Supreme Court decided on June 1, 2020 in an opinion written by Justice Clarence Thomas the question of whether the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958 (hereinafter the “New York Convention”) conflicts with domestic equitable estoppel doctrines that permit the enforcement of arbitration agreements by nonsignatories concluding that it does not. As the 11th Circuit Court of Appeals concluded that the New York Convention prohibits enforcement by nonsignatories, the Court reversed the 11th Circuit Court of Appeals and remanded the case for further proceedings. In that regard the questions of whether GE could enforce the arbitration clauses under principles of equitable estoppel or which body of law governs that determination were left to the 11th Circuit to decide in the remand. In a concurrence Justice Sonia Sotomayor - while agreeing with the court that the New York Convention does not categorically prohibit the application of domestic doctrines, such as equitable estoppel, that may permit nonsignatories to enforce arbitration agreements - noted that the application of such domestic doctrines is subject to an important limitation: any applicable domestic doctrines must be rooted in the principle of consent to arbitrate. From the point of view of separability doctrine, contract interpretation, treaty law it possibly brings into the arena of international commercial arbitration a particularly nationalist form of American approach to international trade. If that is the case, the New York Convention may be so twisted by domestic FAA Chapter 1 jurisprudence, that its efficacy for international contracts with American parties may be compromised. So we may have to again open the door to another international commercial arbitration convention being prepared.