Dixie Equipment, LLC and Dixie Turbine Services, LLC (“Appellants”) and Energia de Ramos, S.A.P.I de C.V.f/k/a Deacero Power S.A.P.I de C.V (“Respondent”) entered into two agreements in 2012 and 2013 dealing with the construction of a power plant in Mexico. Both of these contracts contained an arbitration clause. After the disputes arose between the parties, Respondent filed its notice of arbitration and the Appellants filed an answer and a counterclaim. For these proceedings, the parties agreed to use the rules of the International Center for Dispute Resolutions. After some months of proceedings, the Appellants notified that due to financial issues, they would not have an active role in the proceedings. They were finally ordered to pay 16,665,184.60$ to Respondent.
Appellants started annulment proceedings before the District court of Travis County. The judge confirmed the challenged arbitral award. Appellants then turned to the Court of Appeal of Austin, relying on two grounds.
First, Appellants claimed that “misbehavior” was attributable to the arbitrators as they conducted the hearing without making a record of the hearings. As developed by Appellants, this precluded them from seeking the annulment of the award by relying on case law which states that if a default judgment is not recorded, the post-answer default judgment could be reversed.
Second, Appellants argued that their right to due process was violated since they had not been able to pursue the counterclaim because of the financial difficulties, which precluded them from paying the pre-required deposit.
The Court of Appeal dismisses these arguments by stating that without proof that new evidence was introduced while Appellants were not present during the hearings, the arbitrators were not guilty of “misbehavior”. Since no evidence was introduced before the arbitral tribunal proving that Appellants had financial difficulties which barred them from presenting a counterclaim, this argument is also rejected by the Court of Appeal.