Gulfstream Aerospace Corporation v. Oceltip Aviation 1 PTY LTD

31 F.4th 1323
CourtCourt of Appeals for the Eleventh Circuit
DecidedApril 18, 2022
Docket20-11080
StatusPublished
Cited by2 cases

This text of 31 F.4th 1323 (Gulfstream Aerospace Corporation v. Oceltip Aviation 1 PTY LTD) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gulfstream Aerospace Corporation v. Oceltip Aviation 1 PTY LTD, 31 F.4th 1323 (11th Cir. 2022).

Opinion

USCA11 Case: 20-11080 Date Filed: 04/18/2022 Page: 1 of 18

[PUBLISH] In the United States Court of Appeals For the Eleventh Circuit

____________________

No. 20-11080 ____________________

GULFSTREAM AEROSPACE CORPORATION, Plaintiff-Appellee, versus OCELTIP AVIATION 1 PTY LTD, Defendant-Appellant.

Appeal from the United States District Court for the Southern District of Georgia D.C. Docket No. 4:16-cv-00127-WTM-CLR ____________________

Before WILSON, ROSENBAUM, and ED CARNES, Circuit Judges. USCA11 Case: 20-11080 Date Filed: 04/18/2022 Page: 2 of 18

2 Opinion of the Court 20-11080

PER CURIAM: Long story, short: if you want certain rules to apply to the handling of your arbitration, the contract must say so clearly and unmistakably. Otherwise, the Federal Arbitration Act (“FAA”) will apply. The parties here did not do that. So the FAA’s arbitral-award standards for review govern. And because Defendant-Appellant Oceltip Aviation 1 Pty Ltd. waived any argument under the FAA’s arbitral-award standards that the arbitral award here should be va- cated, the district court properly denied Oceltip’s application to va- cate the award and granted Plaintiff-Appellee Gulfstream Aero- space Corporation’s application to confirm the award. We there- fore affirm the judgment of the district court. I. Gulfstream is a Georgia corporation based in Savannah, and Oceltip is an Australian limited liability company. They entered into a sales agreement (“Agreement”). Under that Agreement, Gulfstream was to manufacture and sell a new G550 business jet aircraft to Tinkler Gulfstream 650 Pty Ltd, Oceltip’s former name. The Agreement, as amended, required Oceltip to pay $27.15 mil- lion by January 15, 2013.

Though Oceltip paid Gulfstream about $7 million, it failed to make the full $27.15 million payment on time. Nor did it pay the required amount within the ten-day cure period allowed under the Agreement. So Gulfstream terminated the Agreement. USCA11 Case: 20-11080 Date Filed: 04/18/2022 Page: 3 of 18

20-11080 Opinion of the Court 3

Not pleased with this result, Oceltip considered its options under the Agreement. Within that contract, under the subheading “Arbitration,” two clauses relevant to this appeal appear. The first—Section 4.3.1—requires arbitration “by the American Arbi- tration Association (“AAA”) in accordance with the provisions of its Commercial Arbitration Rules . . . .” and specifies that “judg- ment on the award rendered by the arbitrator(s) may be entered by any court having jurisdiction thereof.” The second—Section 4.3.3—directs that the contract “shall be governed by the laws of the State of Georgia, and the U.N. Convention on Contracts for the International Sale of Goods . . . shall not apply, without reference to rules regarding conflicts of law.”

In accordance with Section 4.3.1, Oceltip submitted a de- mand for arbitration to the AAA. It sought a finding that Gulf- stream had anticipatorily repudiated the Agreement, and that this conduct suspended Oceltip’s duties, allowed Oceltip to recoup the $7 million it had paid, and entitled Oceltip to damages. Oceltip also sought a finding that the contract’s liquidated-damages provision— Section 3.3.2—was a penalty and therefore unenforceable.

The liquidated-damages provision states that “[i]n the Event of Default by [Oceltip], Gulfstream shall be entitled to [as relevant here] . . . retain or collect, as liquidated damages and not as a pen- alty,” $8 million. The amended Agreement reaffirms this under- standing, specifying that “Gulfstream’s damages in the Event of Default by Buyer will be difficult to ascertain, that the amounts USCA11 Case: 20-11080 Date Filed: 04/18/2022 Page: 4 of 18

4 Opinion of the Court 20-11080

agreed to as liquidated damages are a reasonable pre-estimate of the probable loss, and that the Parties intend to provide for reason- able liquidated damages and not a penalty.”

For its part, Gulfstream sought $8 million in liquidated dam- ages under that provision, plus attorney’s fees and costs, from the arbitration.

The arbitration hearing occurred in Savannah, Georgia. Fol- lowing it, the three-member arbitration tribunal awarded Gulf- stream liquidated damages totaling $8 million, plus attorney’s fees, costs, and unreimbursed arbitration expenses. The panel denied relief to Oceltip.

Gulfstream applied in the United States District Court for the Southern District of Georgia to confirm the arbitration award. Meanwhile, in the Superior Court of Chatham County, Georgia, Oceltip sought to vacate the arbitration award.

Gulfstream removed Oceltip’s state-court proceeding to the Southern District of Georgia. On Gulfstream’s motion, the district court ordered the two cases consolidated.

Oceltip moved to remand, challenging the district court’s subject-matter jurisdiction. It argued that, based on the choice-of- law clause in Section 4.3.3, the Agreement incorporated the Geor- gia Arbitration Code, and that provided for exclusive jurisdiction USCA11 Case: 20-11080 Date Filed: 04/18/2022 Page: 5 of 18

20-11080 Opinion of the Court 5

in the Georgia state courts. In opposition, Gulfstream contended that the FAA authorized federal jurisdiction.

The parties also briefed their respective applications to con- firm and vacate the arbitration award. In their briefing, the parties disputed whether federal law (the FAA) or state law (the Georgia Arbitration Code) supplied the standards governing whether the arbitrators’ decision should be vacated or confirmed. And if the Georgia Arbitration Code governed the standards, the parties disa- greed over whether the arbitrators had manifestly disregarded the law.

The district court denied Oceltip’s motion to remand, granted Gulfstream’s application to confirm the arbitration award, and denied Oceltip’s application to vacate it. After holding that it had jurisdiction over the dispute, the court determined that the FAA’s standards for vacatur applied to its decision. But even as- suming the Georgia Arbitration Code’s standards applied, the court concluded, Oceltip had not shown that the arbitrators manifestly disregarded the law.

Oceltip timely appealed. 1 On appeal, Oceltip again asserts that federal jurisdiction is lacking. It also argues that the district court erred in confirming the arbitration award and denying

1 Although this case was originally scheduled for oral argument, Oceltip moved to submit it on the briefs, and Gulfstream did not oppose. We granted that motion. USCA11 Case: 20-11080 Date Filed: 04/18/2022 Page: 6 of 18

6 Opinion of the Court 20-11080

vacatur because, in Oceltip’s view, the Georgia Arbitration Code’s standards for vacatur—not the FAA’s—govern, and the arbitrators manifestly disregarded the law.

II.

We begin with jurisdiction—because if we lack that, of course, we cannot consider the merits and must dismiss the appeal. We review our subject-matter jurisdiction de novo. Inversiones y Procesadora Tropical INPROTSA, S.A. v. Del Monte Int’l GmbH, 921 F.3d 1291, 1298 n.8 (11th Cir. 2019).

On appeal, Oceltip does not suggest that this matter does not satisfy the requirements for federal-court jurisdiction. Nor could it do so successfully. As we describe below, we have juris- diction under Chapter 2 of the FAA.

To explain our jurisdiction, we start with a little back- ground. In 1970, the United States acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also called the “New York Convention.” Indus. Risk Insurers v. M.A.N. Gutehoffnungshutte GmbH, 141 F.3d 1434, 1440 (11th Cir. 1998).

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31 F.4th 1323, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gulfstream-aerospace-corporation-v-oceltip-aviation-1-pty-ltd-ca11-2022.