Gulf LNG Energy LLC et al v ENI USA Gas Marketing LLC - The Court of Chancery of the State of Delaware - CA No 2019-0460-AGB - Memorandum Opinion - 30 December 2019
In February 2019, this court entered an order and final judgment confirming an arbitration award in favor of Gulf LNG Energy, LLC and Gulf LNG Pipeline, LLC and against Eni USA Gas Marketing LLC for approximately $371.5 million. The judgment was the culmination of an arbitration proceeding that also resulted in the termination of a contract among the parties concerning Eni's use of a liquefied natural gas terminal in Mississippi that the Gulf entities constructed and own. Entry of the judgment, however, did not end the parties' legal entanglements.
In September 2018, the Gulf entities sued Eni's parent company in New York state court to enforce a payment guarantee. In June 2019, Eni began a second arbitration against the Gulf entities asserting two discrete claims for negligent misrepresentation and breach of contract. The filing of the second arbitration prompted this lawsuit, in which the Gulf entities seek entry of a permanent injunction to enjoin Eni from pursuing the second arbitration.
Pending before the court is the Gulf entities' motion for judgment on the pleadings. The motion brings to center stage two different lines of authority concerning the arbitration of disputes under the Federal Arbitration Act--one that allows courts to intervene to prevent collateral attacks on arbitration awards; the other that enforces the contractual intent of parties on questions of arbitrability. For the reasons explained below, the court reaches different conclusions as to Eni's two new claims in resolving the pending motion based on these two lines of authority.
First, the court finds that Eni's negligent misrepresentation claim in the second arbitration constitutes an impermissible collateral attack that seeks to undo the damages award from the first arbitration. Accordingly, as to that claim, the court grants the Gulf entities' motion and will enter a permanent injunction to enjoin Eni from pursuing the negligent misrepresentation claim in the second arbitration.
Second, the court finds that Eni's contract claim, which was pled but never decided in the first arbitration, does not amount to a collateral attack of the first arbitration award. Accordingly, as to that claim, the court denies the Gulf entities' motion and, in view of the broad arbitration clause in the parties' contract, leaves it to the tribunal in the second arbitration to determine whether that claim is arbitrable and, if so, whether the claim would be precluded based on the first arbitration.