New York Convention Enforcement: FAR/DOSAR Non-Application Does Not Trigger the Public-Policy Exception; Tribunal “Expert” Selection Reviewed for Reasonable Construction of Rules

1. Introduction

In Adserballe & Knudsen A/S v. Facilities Development Corporation (4th Cir. Apr. 10, 2026) (unpublished), the Fourth Circuit affirmed confirmation of a Danish arbitral award under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), rejecting two defenses raised by the U.S. award debtor.

Facilities Development Corporation (“Facilities”), a Virginia prime contractor on a U.S. State Department embassy renovation project in Copenhagen, subcontracted Danish construction work to Adserballe & Knudsen A/S (“A&K”). Their agreement incorporated Danish industry terms (AB 92) and required disputes to be arbitrated before the Danish construction arbitration court in Copenhagen. A dispute arose over whether U.S. procurement regulations—Federal Acquisition Regulations and Department of State Acquisition Regulations (“FAR/DOSAR”)— applied to the subcontract. The Danish tribunal held Danish rules governed, found Facilities in breach, and awarded A&K damages and costs. A&K sought enforcement in the Eastern District of Virginia; Facilities opposed enforcement under two New York Convention exceptions: (1) the “public policy” exception; and (2) the “improperly composed tribunal” exception.

2. Summary of the Opinion

The Fourth Circuit affirmed enforcement. It held that Facilities failed to meet the exceptionally high bar for the New York Convention’s public-policy defense because enforcing an award that applied Danish contracting rules to work performed in Denmark by a Danish subcontractor was not “repugnant to fundamental notions of what is decent and just in the United States.” It also rejected Facilities’ tribunal-composition challenge, concluding the Danish arbitration court acted within the discretion provided by AB 92 when selecting “experts” suited to the dispute as the tribunal understood it (Danish-law expertise rather than FAR/DOSAR expertise). The court characterized Facilities’ objections as largely an impermissible attempt to relitigate the merits.

3. Analysis

3.1. Precedents Cited

AO Techsnabexport v. Globe Nuclear Servs. & Supply GNSS, Ltd.

Cited for the standard of review: de novo review of confirmation of a foreign arbitral award and clear-error review of factual findings. The case serves as the Fourth Circuit’s procedural baseline for reviewing New York Convention confirmations.

Raymond James Fin. Servs., Inc. v. Bishop

Cited (via AO Techsnabexport) as part of the standard-of-review lineage. Although not a New York Convention case, it is used to anchor the general appellate framework applied to arbitration-related rulings.

Est. of Ke v. Yu

This was the opinion’s central Fourth Circuit authority on New York Convention policy and defenses. The court relied on Est. of Ke for three key propositions:

  • Finality in enforcement proceedings: once an award is taken to another country for confirmation/enforcement, the dispute and relief are “treated as fully resolved.”
  • Pro-enforcement purpose: the Convention is intended to “encourage the recognition and enforcement of commercial arbitration agreements.”
  • Public-policy defense is extraordinary: it is “construed extremely narrowly,” with a “heavy burden” requiring a showing that enforcement would be “repugnant to fundamental notions of what is decent and just in the United States,” implicating the “most basic notions of morality and justice.”

By importing this stringent formulation, the court effectively foreclosed efforts to repackage alleged legal error (choice-of-law or contract interpretation) as “public policy.”

Grupo Unidos por el Canal, S.A. v. Autoridad del Canal de Panama

Used to frame the tribunal-composition inquiry under Article V(1)(d): courts ask whether the arbitral authority “reasonably construed its own rules” in appointing arbitrators. That standard supported deference to the Danish arbitration court’s interpretation and administration of AB 92’s expert-selection mechanism, rather than a U.S.-style review of the arbitrators’ substantive qualifications.

Tolliver Group, Inc. v. United States

Facilities cited this as support for the importance of FAR/DOSAR in government construction contracting. The Fourth Circuit distinguished it as a contract-interpretation decision not involving arbitration or the New York Convention. Critically, it did not establish that non-application of FAR/DOSAR to a subcontract is a public-policy violation, let alone one meeting the “morality and justice” threshold.

K-Con, Inc. v. Secretary of Army

Like Tolliver Group, this was treated as inapposite: a prime-contract construction dispute applying interpretive doctrines about incorporation of certain FAR/DOSAR requirements. The court used the distinction to underscore that even if FAR/DOSAR issues can matter in prime-contract interpretation, that does not convert a subcontract choice-of-law or scope dispute into a New York Convention public-policy bar.

3.2. Legal Reasoning

(a) The New York Convention’s enforcement structure and limited defenses

The court anchored its analysis in the Convention’s pro-enforcement design (implemented at 9 U.S.C. § 201 et seq., with confirmation under 9 U.S.C. § 207): a U.S. court “shall” confirm unless a specified Convention ground for refusal is proven. That structure narrows review and prevents enforcement proceedings from becoming de facto appeals on the merits.

(b) Public policy: FAR/DOSAR non-application is not “repugnant” to U.S. justice

Facilities’ theory was that FAR/DOSAR reflects a “well-defined and dominant” U.S. public policy and that enforcing an award that did not apply FAR/DOSAR would violate that policy. The Fourth Circuit rejected this for two related reasons:

  • Mismatch with the governing standard: Facilities “never reckons with” the exceptionally high bar described in Est. of Ke v. Yu. The public-policy defense is not triggered by alleged legal error; it is reserved for outcomes that offend fundamental U.S. morality/justice.
  • Context makes the claimed policy conflict implausible: the subcontract work was performed in Denmark by a Danish company under Danish industry terms. Enforcing an award applying Danish rules in that setting is not obviously offensive to U.S. fundamental norms.

The opinion also highlighted (via a Congressional Research Service statement cited by A&K) a practical point: subcontracts are typically not subject to FAR unless the contract so specifies—further undercutting the claim that non-application of FAR/DOSAR to this subcontract is inherently contrary to U.S. public policy.

(c) Tribunal composition: deference where the appointing authority reasonably applied agreed rules

Facilities invoked Article V(1)(d), claiming AB 92 required “experts” and that the appointees were not qualified because they lacked FAR/DOSAR proficiency. The court rejected the argument by focusing on what the parties’ adopted rules actually provided: AB 92 § 47(4) authorized appointment of experts “on a case-by-case basis, depending upon the nature of the dispute.” Given the tribunal’s threshold determination that Danish contracting regulations governed, it was reasonable to staff the tribunal with Danish-law expertise. Under Grupo Unidos por el Canal, S.A. v. Autoridad del Canal de Panama, that is enough to defeat an Article V(1)(d) challenge.

The court treated Facilities’ position as an attempt to bootstrap disagreement with the tribunal’s governing-law conclusion into a structural attack on the tribunal itself. That move fails because Article V(1)(d) addresses conformity with the parties’ agreed appointment mechanism, not whether the tribunal picked the “right” experts given a losing party’s preferred merits framing.

3.3. Impact

  • Reinforcement of the “exceptional” nature of Article V(2)(b): Parties resisting enforcement in the Fourth Circuit face a steep climb when invoking “public policy,” especially where the objection is essentially that the tribunal applied the “wrong” law.
  • Government-contracting arguments will not easily defeat foreign awards: The decision signals skepticism toward efforts to treat FAR/DOSAR concerns as automatically elevating a dispute into a fundamental U.S. public-policy matter—particularly in subcontract and cross-border performance settings.
  • Deference to arbitral appointment decisions under party rules: By adopting the “reasonably construed its own rules” framing for Article V(1)(d), the court reduces the likelihood that U.S. enforcement courts will second-guess qualifications determinations made by foreign arbitral institutions acting under agreed procedures.
  • Practical drafting implication: If a prime contractor intends FAR/DOSAR obligations (or FAR/DOSAR-qualified arbitrators) to apply down the chain, this case underscores the importance of explicit subcontract language and arbitration-appointment specifications.

Although unpublished and therefore “not binding precedent in this circuit,” the opinion is still likely to be cited for its application of Est. of Ke v. Yu and its alignment with the Convention’s pro-enforcement approach.

4. Complex Concepts Simplified

  • New York Convention (what it does): A treaty requiring courts in member countries (with limited exceptions) to recognize and enforce foreign arbitral awards, reducing the ability of losing parties to re-litigate disputes across borders.
  • Confirmation/enforcement vs. merits review: Enforcement proceedings are not appeals. Courts generally do not re-examine whether the arbitrators interpreted the contract correctly; they only check limited defenses listed in the Convention.
  • Public policy exception (Article V(2)(b)): A narrow safety valve used only when enforcement would seriously offend a country’s fundamental moral or justice principles—not merely when the award arguably conflicts with domestic regulatory preferences.
  • Improper composition exception (Article V(1)(d)): A defense focused on whether the tribunal was appointed as the parties agreed (e.g., number of arbitrators, selection method), not whether the arbitrators made correct legal choices.
  • FAR/DOSAR: U.S. federal procurement regulations primarily governing federal contracting; their automatic application to subcontracts is not assumed unless flowed down by contract.

5. Conclusion

The Fourth Circuit’s decision affirms a rigorous, pro-enforcement application of the New York Convention. It clarifies that (1) alleged non-application of FAR/DOSAR to a foreign-performed subcontract does not approach the Convention’s “fundamental morality and justice” public-policy threshold, and (2) tribunal-composition challenges fail where the arbitral institution reasonably applied the parties’ agreed appointment rules to the dispute as framed by the tribunal’s own governing-law determination. The opinion’s central message is structural: New York Convention defenses are narrow, and U.S. courts will not allow them to become vehicles for relitigating the merits of foreign arbitrations.