📖 Reading time: 5 minutes
There’s something curiously anticlimactic about watching a billion-dollar infrastructure dispute end in… deference.
But that, more or less, is what happened in Corporación AIC v. Hidroeléctrica Santa Rita, a case decided by the Eleventh Circuit in October 2024. It began with a dam—or, more precisely, a hydroelectric project in Guatemala—and ended with a reminder that U.S. courts will not, and cannot, lightly disturb an international arbitration award, even when thorny issues like corruption, performance bonds, and third-party joinder are on the table (Hidroeléctrica Santa Rita S.A. v. Corporación AIC, SA, 2024).
The decision underscores a kind of judicial humility—some might say rigidity—about the limits of court involvement in arbitral matters. And it casts Miami, yet again, in a starring role as a trusted seat for international arbitration, especially in Latin America-facing infrastructure disputes.
Let’s unpack the story.
A Deal, a Dispute, and a Dam Left Unbuilt
The roots of the conflict go back to 2012, when Hidroeléctrica Santa Rita S.A.—a Guatemalan company—hired another local firm, Corporación AIC, to build a hydroelectric plant. The project ran into immediate headwinds. Local resistance intensified. Eventually, Santa Rita pulled the plug, citing community unrest. But that wasn’t the end of it. Santa Rita had paid AIC a substantial advance—around $7 million—and it wanted the money back.
So the parties turned to arbitration, as the contract required. The seat was Miami. The institution was the ICC.
That, in itself, isn’t unusual. Latin American companies often choose Miami as neutral ground: close enough to feel familiar, far enough to feel safe. Arbitration commenced. Claims and counterclaims flew. And the arbitral tribunal—after a process both parties had agreed to—found largely in favor of Santa Rita. It ordered repayment of the advance and continuation of performance bonds.
But AIC was unsatisfied. They went to the U.S. District Court in the Southern District of Florida, asking it to vacate the award under Section 10 of the Federal Arbitration Act (FAA). When that failed, they appealed. The Eleventh Circuit’s answer? No. Again.
What Was the Fight Really About?
AIC’s grievances were not entirely frivolous—at least, not on their face.
First, they had wanted to join a subcontractor, Novacom, into the arbitration. The tribunal said no, citing a lack of contractual or procedural basis under ICC Rules. AIC saw this as a denial of justice. But the court disagreed. Joinder is not automatic; the tribunal had applied the rules it was empowered to apply. That was enough (SGR Insights, 2024).
Second, AIC argued that Santa Rita had violated the contract’s anti-corruption clause, which made reference to compliance with the U.S. Foreign Corrupt Practices Act (FCPA). Bribery, they alleged—though the evidence was, at best, thin. The tribunal acknowledged the clause but found no breach and, crucially, declined to enforce the FCPA, citing the statute’s lack of a private right of action.
AIC protested. But again, the tribunal had considered the issue. That, under Eleventh Circuit law, is enough. As long as arbitrators “even arguably” interpreted the contract, courts must not second-guess them (Hidroeléctrica Santa Rita S.A. v. Corporación AIC, SA, 2024).
Finally, AIC objected to the tribunal’s insistence on maintaining performance bonds—financial guarantees that had to stay in place even after the award. They claimed this exceeded the tribunal’s authority.
But here too, the court shrugged. Not unthinkingly, but firmly. The arbitrators had at least arguably based their order on the contract’s terms. That’s the threshold. Not perfection. Not correctness. Just arguable interpretation.
FAA, New York Convention, and the Narrow Road to Vacatur
The Eleventh Circuit leaned on established FAA doctrine, especially Section 10(a)(4): arbitrators exceed their powers only when they stray completely beyond the contract. The bar is high—intentionally so.
Even though the arbitration was international (and thus subject to the New York Convention), the court applied domestic vacatur standards. That’s been the Eleventh Circuit’s position since Industrial Risk Insurers v. M.A.N. Gutehoffnungshütte (1995). It’s consistent with other circuits, and it reinforces that choosing a U.S. seat brings both predictability and constraint.
In other words: the FAA governs vacatur for U.S.-seated awards, whether international or not. The Convention plays its role at the recognition and enforcement stage—not when a party seeks to unwind the result from within.
So, Why Does This Case Matter?
Admittedly, $7 million may not be headline-grabbing in the world of megaprojects. But the case still offers quiet, meaningful lessons.
- Joinder is not a given. If you want the ability to bring third parties into an arbitration, say so—clearly and contractually.
- Anti-corruption clauses need teeth. Referencing external statutes like the FCPA sounds compelling, but without enforcement language or evidence, those provisions won’t do much.
- Tribunals can shape post-award obligations. The requirement to maintain performance bonds suggests arbitrators can—and will—go beyond simple damage awards, so long as they link the relief to the contract.
- Miami means something. Parties pick the seat not just for the weather or proximity, but for the legal regime it brings with it. Here, that regime is deferential, consistent, and largely hands-off.
Miami, Again
It bears repeating: for parties doing business in Latin America—or anywhere facing legal uncertainty—Miami offers a compelling arbitration environment. The Eleventh Circuit understands the limits of its role. The local legal community is robust. The infrastructure is in place.
And critically, U.S. courts have signaled again and again that they will not upend awards simply because a party disagrees with the outcome. That stability is worth something. Often, it’s worth everything.
What Happens Next?
For Santa Rita, the next steps are clear: confirmation, collection, perhaps enforcement efforts abroad. For AIC, options are narrowing. They might try resisting enforcement in other jurisdictions, but the odds are against them.
And for practitioners, this is a moment to revisit arbitration clauses: tighten the joinder rules, clarify anti-bribery enforcement mechanisms, define the tribunal’s authority on bond and security matters.
Because when disputes hit—when projects stall or collapse—the strength of a contract often shows not in what it promises, but in what it prevents.
References
-
Hidroeléctrica Santa Rita S.A. v. Corporación AIC, SA (2024) 66 F.4th 876 (11th Cir. Oct. 16 2024). Available at: Justia (Accessed: 20 October 2024).
-
SGR Insights (2024) ‘Eleventh Circuit’s Latest Decision in Corporacion AIC Highlights Narrow Review of International Arbitration Awards’, SGR Law Client Alert, 23 October. Available at: SGR Law (Accessed: 20 October 2024).
-
Industrial Risk Insurers v. M.A.N. Gutehoffnungshütte GmbH (1995) 141 F.3d 1434 (11th Cir.) Available at: VLEX (Accessed: 20 October 2024).