GE Energy Power Conversion France SAS v. Outokumpu Stainless USA, LLC

ThyssenKrupp Stainless USA (later acquired by Outokumpu) contracted with F.L. Industries (later Fives) to build cold rolling mills in Alabama, with contracts containing clauses requiring arbitration in Germany under German law. Fives subcontracted with Converteam SAS (now GE Energy Power Conversion France) to supply nine motors. After the motors failed, Outokumpu and its insurers sued GE Energy in Alabama state court. GE Energy removed the case to federal court and moved to compel arbitration based on the Fives-Outokumpu contracts, despite not being a signatory. The district court granted the motion, but the Eleventh Circuit reversed, holding that the New York Convention only permits signatories to enforce arbitration agreements. The Supreme Court granted certiorari and unanimously reversed the Eleventh Circuit, holding that the New York Convention does not conflict with domestic equitable estoppel doctrines that allow non-signatories to enforce arbitration agreements.

The Supreme Court reversed the Eleventh Circuit's decision and remanded the case. In a unanimous opinion authored by Justice Thomas, the Court held that the New York Convention does not conflict with domestic equitable estoppel doctrines that permit the enforcement of arbitration agreements by non-signatories. Justice Sotomayor filed a concurring opinion. The Court did not decide whether GE Energy could actually enforce the arbitration clauses under equitable estoppel or which body of law governs that determination, leaving those questions for the lower court on remand.

Whether the New York Convention, as implemented by Chapter 2 of the Federal Arbitration Act, permits a non-signatory to an international arbitration agreement to invoke the doctrine of equitable estoppel to compel a signatory to arbitrate.

The decision aligned the United States with other major jurisdictions by allowing non-signatories to enforce arbitration agreements, potentially making the U.S. a more attractive forum for international arbitration. It clarified that domestic law principles apply to determine who may enforce arbitration agreements under the New York Convention, while leaving unresolved the question of whose domestic law governs. The ruling affects how businesses structure multi-tiered international contracts and assess their arbitration liabilities, though Justice Sotomayor's concurrence cautioned that the application of equitable estoppel may raise new legal issues on a case-by-case basis.