MGM Productions Group, Inc. v. Aeroflot Russian Airlines

In MGM Productions Group, Inc. v. Aeroflot Russian Airlines (S.D.N.Y. May 14, 2003) WL 2108367, petitioner's assignor, a United States citizen, rendered consulting services to the Russian airline company, Aeroflot, in connection with leasing aircraft equipment to Iran Air--an Iranian governmental entity. Aeroflot refused to pay for the services and, pursuant to the agreement with petitioner's assignor, commenced an arbitration in Stockholm, Sweden under the laws of the State of New York and Russia. Aeroflot argued, inter alia, that it need not pay anything because the contract was illegal. The arbitration panel held that the transaction did not violate the Orders or Regulations. Plaintiff successfully sought to confirm the award in a United States District Court pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958, title 9 United States Code section 201 et seq. (the New York Convention). The court agreed with the arbitral panel that the agreement did not violate the Orders or Regulations. The arbitral panel had concluded that the services in question were to Aeroflot and not to any entity in Iran. The court said that even if the agreement did violate the Orders and Regulations, that would not be grounds under the New York Convention for a refusing to confirm an award because the public policy defense under the New York Convention to enforcement of an arbitral award applies "only where enforcement would violate the forum's state's 'most basic notions of morality and justice.' "