The dispute in GE Power arose out of allegations by Outokumpu Stainless USA, LLC (Outokumpu) that GE Energy Power Conversion France SAS Corp. (GE Energy), which was a subcontractor to F.L. Industries, had manufactured faulty motors.
In 2007, F.L. Industries entered into three contracts with Outokumpu’s legal predecessor to manufacture a steel rolling plant (Manufacturing Contract) in the U.S. state of Alabama. The Manufacturing Contract contained an arbitration clause.
F.L. Industries later subcontracted with GE Energy to design and build motors for the plant. GE Energy did not, however, execute the Manufacturing Contract in its subcontractor role.
Outokumpu and its insurers later sued GE Energy in state court, alleging that the motors that GE Energy had designed and installed in the plant had failed. GE Energy responded to that lawsuit by removing the case to federal district court and then invoking the arbitration clause in the Manufacturing Contract. GE moved to compel arbitration of Outokumpu’s claims on grounds that Outokumpu was invoking the terms of the Manufacturing Contract against GE Energy, and was therefore estopped from avoiding that contract’s arbitration obligations.2
The district court granted GE Energy’s motion to compel on grounds that GE Energy could employ equitable estoppel to require Outokumpu to arbitrate its claims. The Eleventh Circuit Court of Appeals reversed that decision, however, on grounds that GE Energy was not a signatory to the arbitration clause found in the Manufacturing Contract within the meaning of Article II of the New York Convention and could not rely on the equitable estoppel doctrine to invoke that arbitration clause.