On April 13, 2023, the United States Court of Appeals for the Eleventh Circuit overturned decades of precedent in determining the grounds that can be asserted to vacate an arbitral award governed by the New York Convention (the “Convention”). The Eleventh Circuit in Corporación AIC v. Hidroelectrica Santa Rita, sitting en banc, held that in a case under the Convention where the United States is the governing jurisdiction, the grounds for vacatur of a domestic award are set out in domestic law, currently Chapter 1 of the Federal Arbitration Act (“FAA”). In doing so, the Eleventh Circuit overruled the two prior controlling cases on the issue and settled a circuit split, realigning their opinions with that of its sister circuits. This decision—which expands the grounds for challenging arbitration awards beyond those provided in the Convention—could have significant implications on parties choosing the Eleventh Circuit as the seat of arbitration moving forward.
Under the Convention and the FAA, an arbitration award is considered “nondomestic” when it is rendered in the United States, involves international actors or elements, and is not considered a domestic award in the State where the recognition and enforcement of such awards are sought. Chapter 2 of the FAA implements the Convention, providing that “Chapter 1 applies to actions and proceedings brought under [Chapter 2] to the extent that [Chapter 1] is not inconsistent with [Chapter 2] or the Convention as ratified by the United States.”
Before Corporación, two cases were generally understood to provide the Eleventh Circuit’s prevailing opinion regarding the grounds for vacating arbitration awards for cases governed by the Convention. Industrial Risk Insurers v. M.A.N. Gutehoffnungshutte GmbH, decided in 1998, held that when a party seeks vacatur of an arbitral award issued under the New York Convention, a district court can only consider the grounds set out in Article V of the Convention. In Industrial Risk, the Eleventh Circuit equated defenses to recognition and enforcement of arbitral awards enumerated under Article V of the Convention with grounds for vacatur of an award. Industrial Risk was later adhered to in 2019 as binding precedent by the Eleventh Circuit in Inversiones y Procedsadora Tropical INPROTSA, S.A. v. Del Monte International GmbH. These views contrasted interpretations of the Convention by the Second, Third, Fifth, and Seventh Circuits, all of which interpret the Convention as granting authority to domestic law—in this instance, Chapter 1 of the FAA—over grounds for vactur for nondomestic international arbitration awards.
Corporación arose from a dispute between two Guatemalan companies—Corporación AIC and Hidroelectrica—who signed a contract for the construction of a hydroelectric power plant in Guatemala. The dispute was eventually brought to the International Court of Arbitration, where Hidroelectrica attempted to recover advance payments it had made to Corporación AIC and Corporación counter-claimed for damages, costs, and other expenses. The arbitral panel ordered Corporación AIC to return some of the advanced payments but allowed it to keep what it had earned on the contract. Corporación AIC filed suit in federal court seeking to vacate the award under the grounds in 9 U.S.C. § 10(a)(4), a provision of Chapter 1 of the FAA. The district court ruled that such a challenge was unavailable because Industrial Risk and Inversiones limited the grounds for vacatur of an award to those set out in Article V of the Convention, after which a panel of the Eleventh Circuit affirmed that it was bound by precedent while noting that the cases were wrongly decided and should have been overruled by the full court. The Court of Appeals then vacated the panel opinion and ordered a rehearing en banc.
In its evaluation of grounds that could be asserted to vacate an arbitral award under the New York Convention, the Court of Appeals analyzed the language of Article V of the Convention, ultimately determining that Article V of the Convention set out the grounds for recognition and enforcement of an arbitral award, but did not purport to regulate the procedures or set out the grounds for vactur of an award in a primary jurisdiction. The Court recognized that Chapter 2 of the FAA, which implements the Convention, likewise focuses only on recognition and enforcement. As “neither Article V of the Convention nor § 207 of the FAA provides the grounds on which a court in the primary jurisdiction can vacate an arbitral award” and Article V was thus silent on the grounds for vacatur, the Court determined that there is no conflict if Chapter 1 of the FAA applied. The Court referenced the Supreme Court decision Outokumpu, which concluded that “the Convention requires courts to rely on domestic law to fill gaps; it does not set out a comprehensive regime that displaces domestic law.” Thus, the Court held that “in a New York Convention case where the arbitration is seated in the United States, or where United States law governs the conduct of the arbitration, Chapter 1 of the FAA provides the grounds for vacatur of an arbitral award.” This opinion settled the existing circuit split to align the Eleventh Circuit with its sister circuits who have decided the issue.
In its opinion in Corporación, the Court of Appeals acknowledged that Industrial Risk and Inversiones may have created certain reliance interests in parties who may be detrimentally affected by the decision, but dismissed those interests as “relatively minor.” Notable implications of the decision to allow Chapter 1 of the FAA to provide vacatur grounds for arbitration awards include opening the door to grounds that were previously unavailable to parties arbitrating claims in the Eleventh Circuit, such as the grounds alleged in the present case as to whether arbitrators exceeded their powers under § 10(a)(4) of the FAA, and potentially implied grounds for vacatur, such as grounds for “manifest disregard for the law” found by some federal circuits. Parties choosing the Eleventh Circuit as the seat of arbitration will thus need to consider these expanded grounds in future arbitration matters.
 See Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 4739
 Corporación AIC, SA v. Hidroelectrica Santa Rita S.A., 66 F.4th 876 (11th Cir. 2023) (hereinafter “Corporación”).
 See 9 U.S.C. §§ 201 et seq.
 9 U.S.C. § 208.
 Industrial Risk Insurers v. M.A.N. Gutehoffnungshutte GmbH, 141 F.3d 1434, 1446 (11th Cir. 1998)
 Inversiones y Procesadora Tropical INPROTSA, S.A. v. Del Monte International GmbH, 921 F.3d 1291, 1301–02 (11th Cir. 2019)
 See Corporación AIC, S.A. v. Hidroeléctrica Santa Rita, S.A., 34 F.4th 1290, 1292–93 (11th Cir. 2022).
 See id.
 See id. at 1293.
 See id. at 1292, 1301; id. at 1302 (Jordan, J., concurring).
 See Corporación, supra note 1, at 885.
 See id. at 886.
 See id.
 See id. (citing GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC, 140 S. Ct. 1637, 1645 (2020)).
 Id. at 890.
 See id. at 889.