Ninth Circuit Finds Arbitration Award Is ‘Irrational’ Because It Disregards the Contract’s Plain Text Simply to Reach a Just Result

Aspic Eng’g & Constr. Co. v. ECC Centcom Constructors LLC, No. 17-16510, 2019 BL 26363 (9th Cir. Jan. 28, 2019)

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Ryan R. Deroo

Aspic Engineering and Construction Company (“Aspic”), a local Afghan subcontractor, entered into multiple subcontracts with ECC Centcom Constructors and ECC International (“ECC”), the prime contractor, to construct buildings and facilities in Afghanistan.  The subcontracts contained terms and conditions “applicable to all U.S. Government subcontracts,” and mandated that Aspic owed ECC the same obligations that ECC owed to the federal government.  The subcontracts also incorporated multiple Federal Acquisition Regulation (“FAR”) clauses, including FAR 49.2 through 49.6, which govern the recovery of expenses in the event a contractor is terminated for convenience, i.e. required documentation and procedures.

Continue reading “Ninth Circuit Finds Arbitration Award Is ‘Irrational’ Because It Disregards the Contract’s Plain Text Simply to Reach a Just Result”

Arbitration Award Ruling That, Because of Cultural Differences, a Local Afghan Subcontractor Is Not Bound by the F.A.R. Provisions Incorporated Into the Subcontracts Is Vacated as Contrary to the Subcontract Terms

Aspic Eng’g & Constr. Co. v. ECC Centcom Constructors, LLC, No. 17-cv-00224-YGR, 2017 U.S. Dist. LEXIS 111767, at *10-12 (N.D. Cal. July 18, 2017)

This matter came before the Court on a motion to vacate a final arbitration award (the “Arbitration Award”) entered in favor of Aspic Engineering and Construction Company “Aspic”) and against ECC International, LLC and ECC CENTCOM Constructors, LLC (collectively, “ECC”).  ECC entered into two prime contracts with the U.S. Army Corp of Engineers (“USACE”) in connection with two reconstruction projects for police training facilities in Afghanistan (the “Projects”).  These prime contracts incorporated, among other things, Federal Acquisition Regulations (“FAR”) Sections 49.206 and 52.249-2, which allowed USACE to terminate the Projects for convenience.  ECC subcontracted portions of the work on the Projects to Aspic.  The subcontracts between ECC and Aspic likewise incorporated several FAR sections.  Although Aspic is an Afghan engineering and contracting firm, it had experience in contracting with the U.S. government and a familiarity with the U.S. Government contract requirements, including FAR clauses.  After ECC and Aspic had partially performed work on the Projects, USACE issued a notice of termination for convenience, which ended the Projects in their entirety.

Aspic filed a demand for arbitration, seeking to recover its lost profits on the Projects.  Continue reading “Arbitration Award Ruling That, Because of Cultural Differences, a Local Afghan Subcontractor Is Not Bound by the F.A.R. Provisions Incorporated Into the Subcontracts Is Vacated as Contrary to the Subcontract Terms”