Facts

In November 2015, Global Industrial Investment Limited ("GIIL") entered into a set of agreements with 1955 Capital Fund I GP LLC, and 1955 Capital China Fund GP LLC (together, the "GPs") regarding the governance, operation, and implementation of two Delaware limited partnership venture capital investment funds. The agreements contained arbitration provisions. Under the agreements, GIIL agreed to provide $200 million of venture capital to the funds in three installments over a two-year period. GIIL made an initial investment of $80 million. It did not, however, make the second or third installments based upon its assertions that the funds were not being operated in line with the parties' agreements. As a result, in July 2017, the GPs initiated arbitration against GIIL. GIIL counterclaimed after learning that the GPs had made material changes to the parties' agreements after GIIL agreed to them but before affixing both parties' signatures to a newer version of the contracts that included self-serving provisions. The arbitrator, Gerald W. Ghikas, Q.C., found that the GPs' post-closing changes to the agreements were in fact material and constituted a breach of fiduciary duties, but nonetheless found the agreements valid and enforceable, and that both parties had breached the agreements and their fiduciary duties. Arbitrator Ghikas awarded both parties nominal damages, but named the GPs as the prevailing parties and awarded them $9.3 million in fees and costs. After the first arbitration, GIIL filed a lawsuit against Andrew Chung, the managing member of the GPs, alleging he had breached or aided and abetted breaches of fiduciary duties against GIIL. Chung moved to dismiss the action, arguing that the claims were barred by res judicata due to the first arbitration, and the court granted his motion with prejudice.
In October 2019, GIIL initiated the new, current arbitration against the GPs based upon conduct occurring after the first arbitration. The arbitrator, Arif Hyder Ali, found that the GPs had again breached their fiduciary duties, ordered the funds (and thus, the obligation to fund the remaining $120 million dollars) dissolved, and awarded GIIL $9 million in costs, attorneys' fees, and arbitration expenses, as well as mandating that the GPs reimburse the funds for any amounts that they took from the funds to indemnify themselves in connection with the various disputes between the parties, all with interest. In 2021, GIIL and its parent company, China Fortune Land Development, petitioned the United States District Court for the Northern District of California to confirm the second arbitration award and, in response, the GPs cross-petitioned to vacate the second arbitration award.

PETITIONERS' CONTENTIONS: Petitioners (GIIL and China Fortune Land Development) contended that the second arbitration award should be confirmed because there is no statutory basis to vacate it. In response to the GPs' cross-petition for vacatur, GIIL and China Fortune Land Development argued that the GPs waived their res judicata argument in support of vacatur, that the second arbitration should be the proper forum to determine res judicata, and that the Arbitrator Ali had already found that there was no res judicata by the first arbitration. GIIL and China Fortune Land Development also argued that Arbitrator Ali found and had authority under the agreements to dissolve the funds, and there was no basis to disturb Arbitrator Ali's findings.

RESPONDENTS' CONTENTIONS: In support of vacating the second arbitration award, Respondents (the GPs) contended that the 2021 arbitration award was barred by res judicata because of the action against Chung, and that the arbitrator exceeded his authority under the investment agreements by dissolving the investment funds because none of the circumstances for dissolution as laid out in the agreements were applicable.

Result

The court granted the petition to confirm the final arbitration award, and it denied the cross-petition to vacate the award.