Resisting enforcement of foreign arbitral awards: issue estoppel, procedural unfairness and scope of terms of reference (VRG v MP Funds)

Article summary

Arbitration analysis: VRG attempted to enforce a Brazilian arbitral award against the MP Funds in the Cayman Islands. The MP Funds resisted enforcement, contending: (1) that they were not a party to the arbitration agreement and were not estopped by reason of the decision of the Brazilian courts from disputing the arbitrators’ jurisdiction; (2) the arbitration was procedurally unfair because the arbitral award was made on a legal foundation (ie Article 148 of the Brazilian Civil Code (BCC)) that the parties had not contended for; and (3) the dispute was outside of the terms of reference of the arbitration agreement on the grounds that it contemplated liability only pursuant to the contract between the parties, and not pursuant to Article 148 of the BCC. VRG sought to enforce the Brazilian arbitral award in the Cayman Islands. At first instance, the Grand Court refused enforcement. The Cayman Islands Court of Appeal allowed VRG’s...