Under existing precedent in the 11th Circuit, which includes Florida, federal courts cannot overturn international arbitration awards on the ground that the arbitrators “exceeded their powers,” a frequently invoked ground for overturning domestic arbitrations. But, in Corporacion AIC, SA v. Hidroelectrica Santa Rita S.A., 34 F.4th 1290 (11th Cir. 2022), a three-judge panel of the 11th Circuit ruled that the existing precedent is incorrect and conflicts with Supreme Court precedent and precedent in other Circuits. While the panel was required to apply existing precedent to decide the appeal in Corporacion AIC, the panel took the unusual step of explaining why existing precedent was wrong and called upon the full court to rehear the appeal en banc so that the existing precedent could be overturned. The court granted rehearing and scheduled oral argument on the issue in February 2023.
Corporacion AIC involves a dispute between two Guatemalan companies arising out of the construction of a hydroelectric power plant in Guatemala. Pursuant to the parties’ contract, the dispute was arbitrated in the International Court of Arbitration, before a three-member arbitration panel in Miami, Florida. Dissatisfied with the arbitration panel’s decision, Corporacion AIC, initiated a case in the U.S. District Court for the Southern District of Florida to vacate the award on the basis that the arbitration panel exceeded its powers. The District Court denied the petition, ruling that 11th Circuit precedent foreclosed a party to a New York Convention international arbitration from challenging an arbitration panel’s award on the “exceeding powers” ground that is available under the FAA for domestic arbitrations, citing Inversiones y Procesadora Tropical INPROTSA, S.A. v. Del Monte International GmbH, 921 F3d 1291 (11th Cir. 2019) and Industrial Risk Insurers v. M.A.N. Guterhoffnungshutte GmbH, 141 F.3d 1434 (11th Cir. 1998). On appeal, a three-member 11th Circuit panel agreed that those cases barred an “exceeding powers” challenge, but concluded that the cases had been wrongly decided and did not properly distinguish between an international arbitration case in which a U.S. court has primary jurisdiction—that is, when the seat of the arbitration is in the U.S. or U.S. law is the decisional law—and where the court has only secondary jurisdiction (when the U.S. court is being asked to enforce an award that was decided outside the U.S. involving foreign law. The panel concluded that existing precedent is at odds with decisions in the 2nd, 3rd, and 10th Circuits, as well as with the U.S. Supreme Court’s opinion in BG Group, PLC v. Republic of Argentina, 572 U.S. 25 (2014). Only the 11th Circuit sitting en banc, however, can overturn the Court’s prior precedent, which it now appears poised to do.