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Werner Schneider, Acting In His Capacity As Insolvency Administrator v. the Kingdom of Thailand

August 8, 2012


The opinion of the court was delivered by: Wallace, Circuit Judge:


Schneider v. The Kingdom of Thailand

Argued: May 22, 2012;

BEFORE: PARKER, HALL, and WALLACE*fn1 , Circuit Judges.

The Kingdom of Thailand appeals from a judgment of the United States District Court for the Southern District of New York (Batts, J.) confirming an arbitration award in favor of appellee Schneider, the insolvency administrator of Walter Bau AG. We conclude that the district court, before performing a deferential review of the arbitration award, should have determined whether there was clear and unmistakable evidence that the parties agreed that the scope of the arbitration agreement would be decided by the arbitrators. Nevertheless, we conclude that such clear and unmistakable evidence exists in the record. AFFIRMED.

Schneider, as the insolvency administrator of the German company Walter Bau AG (Walter Bau), successfully petitioned the district court to confirm an arbitration award against the Kingdom of Thailand. Thailand appeals, contending that the district court should have independently adjudicated the arbitral tribunal's jurisdiction instead of performing only a deferential review of the tribunal's decision. We have jurisdiction under 28 U.S.C. § 1291. We affirm.


In 2002, Germany and Thailand signed the Treaty between the Kingdom of Thailand and the Federal Republic of Germany concerning the Encouragement and Reciprocal Protection of Investments (2002 Treaty). This bilateral investment treaty provides that disputes concerning investments between a Contracting Party (i.e., Germany and Thailand) and an investor of the other Contracting Party may be resolved by arbitration at the request of either party. 2002 Treaty art. 10, para. 2. The 2002 Treaty applies to "approved investments made prior to [the Treaty's] entry into force by investors of either Contracting Party in the territory of the other Contracting Party consistent with the latter's laws and regulations." Id. art. 8. In 2005, Walter Bau initiated arbitration against Thailand. Walter Bau claimed that Thailand had unlawfully interfered with investments made by its predecessor in interest between 1989 and 1997 in a tollway project in Thailand. A three-member arbitration tribunal was convened in accordance with the agreed Terms of Reference, signed by representatives of both Walter Bau and Thailand. The Terms of Reference empowered the tribunal to "consider . . . objections to jurisdiction" and provided that the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules were to be the applicable procedural rules.

Thailand objected to the tribunal's jurisdiction on the ground that Walter Bau's investments were not "approved investments" that enabled arbitration because Walter Bau never obtained a "Certificate of Admission" from Thailand's Ministry of Foreign Affairs. Walter Bau responded that the tollway project was comprised of "approved investments" because Walter Bau was invited to make the investments by the Thai Council of Ministers, which approved the project at various stages, and because the Thai Board of Investment issued two certificates of investment for the project. The arbitration tribunal reviewed the parties' written submissions, conducted a two-day hearing including expert testimony from both parties, and issued a 43-page opinion unanimously concluding that it had jurisdiction because the dispute concerned "approved investments" within the meaning of Article 8 of the 2002 Treaty.

In 2009, the tribunal held an 11-day hearing on the merits of Walter Bau's claim. The tribunal then awarded Walter Bau over 30 million euros in damages, costs, and expenses.

In 2010, Walter Bau petitioned to confirm the arbitration award in the district court under 9 U.S.C. § 201 et seq., which implements the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention). Thailand cross-moved to dismiss Walter Bau's petition under 9 U.S.C. § 207, arguing that the tribunal lacked jurisdiction to render the award because Walter Bau did not make an "approved investment." Thailand also moved to dismiss on the ground of forum non conveniens. Thailand does not, however, appeal the district court's rejection of its forum non conveniens defense.

The district court concluded that it did not need to conduct a de novo review of the arbitration award because the issue of whether the tollway project involved "approved investments" was an issue of arbitration agreement scope and did not "concern a question of agreement formation." The district court then performed a deferential review of the tribunal's jurisdictional determination and held that the arbitration award met the "light burden imposed by Section 10(a) [of the Federal Arbitration Act] and the 'Manifest Disregard Standard.'" The district court then entered judgment confirming the arbitration award.

We review de novo whether the district court was required to make an independent determination of the arbitrability of the tollway dispute. Contec Corp. v. Remote ...

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