GE Energy Power Conversion Fr. SAS, Corp. v. Outokumpu Stainless USA, LLC – 140 S. Ct. 1637 (2020)

Facts of the case

The facts of the case are that Thyssen Krupp Stainless USA LC entered into contract with FL Industries Inc. The contracts were three and entered into for purposes if construction of cold rolling mills at the plaintiffs’ plant located in Alabama. In each of the three contracts there was a specific clause that specified arbitration would be applicable incase pf any disputes between the parties. The contract continued until the cold rolling mills allegedly failed and Outokompuu which had acquired the ownership of the plant together with its insurers sued GE Energy in the state court in Alabama. However, GE Energy removed the case and took it to the federal court named then moved to have the claim dismissed to compel the parties to resort to arbitration as outlined in the contractual clauses that they entered into. The District court in granting the motion as filed held that it was only parties that entered into contract that could enforce the arbitration agreement. Therefore, the fact that GE Energy was not a signatory to the agreement then they could not rely on the arbitration clause. Therefore, the state law applicable ion equitable estoppel would come in to restrict the enforcement of the arbitration agreement because it would be contrary to the signatory requirement under the united Nations Convention on the enforcement of Foreign Arbitral awards.


The issue that was in dispute was whether the Convection on the Recognition and Enforcement of Foreign Arbitral Awards that came into force ion the year 1958 conflicted with the domestic equitable doctrine that allow for the enforcement of arbitral awards by non-signatories. The answer to the question was no since nothing in the text pf the United Nations Convention as implemented by 9U.S.C. S s 201-208 was in any way conflicting with the application of domestic equitable estoppel doctrine. The convention was silent as to enforcement by a paretic that is not a signatory.

Analysis of facts and law

The United States Supreme Court in its advisory opinion held that the New York Convention on the recognition and Enforcement of Foreign Awards does not in any preclude the contracting state from relying on the doctrine of domestic law and the principles of equitable estoppel to enable the enforcement of the arbitration award by a non-signatory party. Despite the fact that the decision of the court does not in any way mention international law it purports to apply an international treaty to the case.

The decision is important because it applies the doctrine of public international law that is referred to as the lotus principle. The principle outlines that a state is free to engage in certain conduct unless it is expressly shown that international law does not allow such conduct through prohibition. Therefore, international law does not have to affirmatively permit certain conduct for it to be legal. Therefore, it is enough by the mere fact that international law does not permit.

The lotus principle emanates from a 1927 decision of the Permanent International Justice Court on a matter relating to France and Turkey. The dispute in question arose when the state pf Turkey arrested, imprisoned and then went ahead top convict a captain from Turkey for causing a fatal collision on the high seas. France on its part argued that the exercise of criminal jurisdiction by Turkey on its territory under the circumstances was in violation of international laws. On its part, Turkey defended its actions by arguing that it was right to exercise such jurisdiction unless France could prove in any way that such exercise was strictly prohibited under international laws. Therefore, under international law, the state is free to engage in conduct unless it can be clearly shown that the said conduct is prohibited.

In looking at the issue in dispute what was the heart of the case in GE Energy v Outokumpuu it is clear that it is some pf international law.GE Energy in its framing of the issue described the question presented before court is whether the New York State Convention allows for a non-signatory to an agreement binding the parties to arbitration to compel arbitration accordance with the doctrine of equitable estoppel. On its part GE Energy framed that the question that was in dispute was whether the New York Convention allows for a non-signatory party to an arbitration agreement to enforce arbitration premised on the principal of equitable estoppel. However, the New York Convention allows for the obligation of contracting states and their courts which makes it evidence that the New York Convention should affirmatively allow for the permit of specific conduct by allowing such conduct to be applicable. The lotus principle to the contrary places the relevant inquiry as being whether the Convention specifically prohibits specific actions by the contracting state.

Traditionally the application of the principle of equitable estoppel was a defense that was mostly used to prevent a part from taking on an unfair advantage of another person by making false presentations that the other party could have relied upon to their detriment. The continued use of the doctrine in both the federal and state courts is therefore inconsistent with the common practice necessitating the need to explain the situation more clearly. The invocation of federal policy cannot in any way support the arbitration of international disputes and would now come in to justify expansion of the Convention beyond the terms allowed. The expansion of the principle of equitable estoppel principle into the Convention threatens to force parties to resolve their disputes under foreign tribunals where there is an explicit consent to do so. Therefore, at the end of the day the case was about the forum shopping and enables the party to have a forum in case there is a dispute in place.

Justice Thomas of the supreme court framed the issue to be decided as to whether the New York Convention is in direct conflict with the domestic equitable estoppel doctrine that permits the enforcement of the arbitration by parties that are non-signatories. Therefore, the question as framed by the Supreme court does not recognize the fact that the relevant conduct herein is that of a state party to an international treaty. Therefore, the analysis evidences that the decision by the Supreme Court is consistent with the lotus principle even though the principle nor international law was expressly mentioned in the decision. The New York Convention ns observed by the Supreme court fails to address the issue and is silent on enforcement   of non-signatory agreement. Therefore, the silent was taken to be positive because nothing in the text of the Convention could in any way be read as prohibiting the application of the doctrine of equitable estoppel.

Furthermore, Article 11(3) of the Convention requires the contracting state to enforce arbitration agreement in specific circumstances and does not in any way outline that arbitration agreements shall in any way be enforced only be in the circumstances identifiable. Therefore, according to Justice Thomas the main issue was whether the New York Convention permitted the contracting states to engage in any conduct that would be termed as allowing the enforcement of non-signatories when it comes to arbitration agreements. Therefore, as analyzed the Convention did not in any way contain such a prohibition. Therefore, it means that the contracting party remains free to apply domestic law doctrines that allow the enforcement of arbitration agreement by parties that re not signatories.


Therefore, the case of GE Energy Power v Outokumpu Stainless USA is important because it allows for the identification of intern national laws issues before the courts and that litigants might face. The application of the Lotus Principle ensures that unless a prohibition could b shown in a treaty or customary international law, then states would be termed as being free to apply and adopt policies that are hospitable in relation to international arbitration.

Subject: Write a case comment on GE Energy v. Outukumpu, US Supreme Court, 1 June 2020 from the perspective of the New York Convention.

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