The US Supreme Court recently ruled in Outokumpu Stainless Steel USA, LLC v Coverteam SAS that the New York Convention does not prevent non-signatories from enforcing arbitration agreements under principles of equitable estoppel.
The case now goes back to the 11th Circuit to determine governing law and whether Coverteam SAS (known as GE Energy Power Conversion France) can compel arbitration under such law's application of the doctrine of equitable estoppel.
Because each state's law may vary in its application of equitable estoppel, it is now even more important that parties to an arbitration agreement understand the implications of such agreement and its potential impact even on non-signatories.
Justice Thomas wrote that the part of the New York Convention that deals with arbitration agreements – article 2 – is silent on the issue of non-signatory enforcement. However, he said that silence in this instance is “dispositive”; as nothing in the text of the Convention “could be read to otherwise prohibit the application of domestic equitable estoppel doctrines.” Given that the Convention was drafted against the backdrop of domestic law, it would be “unnatural” to read article 2 to displace domestic doctrines in the absence of exclusionary language.