The Ministry of Defense and Support for the Armed Forces of the Islamic Republic of Iran v. Cubic Defense Systems, Inc., No. 99-56380, 56444 (9th Cir. 2011), decided two issues of note in the context of international practice and dispute resolution: confirmation of an arbitral award in the face of a public policy objection, and the existence of jurisdiction in federal district courts to award post-award, prejudgment interest and attorneys’ fees.
Cubic contracted with the Iran Ministry of Defense, failed to get the Iran-U.S. Claims Tribunal to hear its case, and succeeded in getting the matter arbitrated before the ICC. It lost the arbitration and owed the Ministry of Defense approximately $2.8 million. When Cubic didn’t pay, the Ministry sought to enforce the award under 9 U.S.C. sec. 207.
The public policy issue was based on Cubic’s assertion that the ICC award “is contrary to a fundamental public policy of the United States against trade and financial transactions with the Islamic Republic of Iran”. The Court of Appeals rejected the argument, finding that it gave “too little weight to this country’s strong public policy in support of the recognition of foreign arbitration awards”. Of interest is the Circuit’s distinction between payment and confirmation. Said the Court of Appeals, “Confirmation, standing alone, transfers no wealth to Iran”.
After dispatching a finality defense, the Court of Appeals also ruled that, in order for a judgment to be one for money damages on which interest would accrue, the governing statute for interest, 28 U.S.C. sec. 1961(a) required only that a judgment contain an identification of the parties for and against whom judgment is being entered and a definite and certain designation of the amount which plaintiff is owed by defendant. Although the court judgment here was silent, the arbitral award was not, and that was enough for the Court of Appeals.
The Circuit also reversed the District Court’s ruling that it lacked jurisdiction to award even post-award, prejudgment interest and attorneys’ fees. Here the Court agreed with the Second and Eleventh Cirtcuits, holding that post-award, prejudgment interest could be awarded. It came out the same way on the question whether the District Court had jurisdiction to award attorneys’ fees.