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Archive for the ‘New York Convention’ Category

Ninth Circuit Clarifies Arbitral Summons Jurisdiction and Venue under New York Convention

August 19th, 2022 Application to Enforce Arbitral Summons, Arbitral Subpoenas, Arbitration Law, Arbitration Practice and Procedure, Convention on the Recognition and Enforcement of Foreign Arbitral Awards, FAA Chapter 1, FAA Chapter 2, Federal Arbitration Act Enforcement Litigation Procedure, Federal Arbitration Act Section 201, Federal Arbitration Act Section 202, Federal Arbitration Act Section 203, Federal Arbitration Act Section 204, Federal Arbitration Act Section 7, Federal Courts, Federal Question, Federal Subject Matter Jurisdiction, International Arbitration, New York Convention, Nuts & Bolts, Nuts & Bolts: Arbitration, Petition to Enforce Arbitral Summons, Practice and Procedure, Pre-Award Federal Arbitration Act Litigation, Section 7, Statutory Interpretation and Construction, Subject Matter Jurisdiction, Subpoenas, United States Court of Appeals for the Ninth Circuit, United States Supreme Court, Venue No Comments »

Summons | Petition to EnforceThe United States Court of Appeals for the Ninth Circuit recently provided useful guidance on what might be described as the arcane of the arcane: arbitral summons or subpoena practice in cases governed by Chapter Two of the Federal Arbitration Act, which implements the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention” or the “New York Convention”). See 9 U.S.C. § 201, 202. We’ve discussed arbitral summons practice in domestic cases—itself an arcane subject— in posts published in 2020, here, here, and here.

In Jones Day v. Orrick, Herrington & Sutcliffe, LLP, No. 21-16642, slip op. (9th Cir. Aug. 1, 2022), the Court made important rulings concerning (a) federal court subject matter jurisdiction over a Chapter One arbitral summons in a case governed by Chapter Two of the FAA, and (b) proper venue for enforcing an arbitral summons in a case where the third-party witness is not subject to personal jurisdiction in the district embracing the seat of the arbitration.

Yes, these rulings may appear arcane, but they are highly relevant to those who arbitrate cases falling under the New York Convention, especially cases involving arbitrations sited in the U.S. where one or more parties are citizens of foreign states, or where the agreement or award arises out of a commercial, legal “relationship involving property located outside the U.S., envisages performance or enforcement abroad, or has some other reasonable relationship with one or more foreign states.” See 9 U.S.C. § 202.

Background

Jones Day arose out of an arbitration between a law firm (the “Firm”) and a former partner, a German national (the “Former Partner”), who was based in Paris, and left Jones Day to join another firm (the “Competitor Firm”). The arbitration agreement designated Washington, D.C. as the arbitration situs. The parties’ arbitration agreement fell under the Convention. See 9 U.S.C. § 202.

The Firm requested the arbitrator to issue a subpoena or summons to the Competitor Firm, requiring it to appear before the arbitrator in Washington, D.C. and produce documents.

When the Competitor Firm did not appear and produce documents, the Firm attempted to enforce the subpoena in the Superior Court for the District of Columbia, but the D.C. court dismissed the proceeding for lack of personal jurisdiction. The Competitor Firm had its principal place of business in San Francisco and was apparently not amenable to personal jurisdiction in the District of Columbia.

The Court also ruled that, under Section 7 of the Federal Arbitration Act, the Competitor Firm was required to enforce the arbitral summons in a United States Federal District Court.

The Firm then persuaded the Arbitrator to issue revised subpoenas requiring two of the Competitor Firm’s partners, who resided in the Northern District of California, to appear before the Arbitrator in San Jose, California, which is within the Northern District of California.

When the Competitor Firm refused to comply with the revised arbitral summons, the Firm commenced an action in the United States District Court for the Northern District of California against the Competitor Firm and the two summonsed partners.

The district court denied the application on the ground that it had no authority to enforce the summonses because under Section 7 of the FAA (a) the only court that can enforce an arbitral summons is the court in which the arbitrator sits; (b) Washington D.C. was the designated arbitration situs; and (c) the arbitrator can “sit” in one location only, here Washington, D.C. Having denied the application on improper venue grounds, the district court declined to decide whether it had federal subject matter jurisdiction over the application.

Ninth Circuit Determines the District Court had Subject Matter Jurisdiction to Enforce the Arbitral Summons

The Court engaged in a textual analysis of Chapter Two to determine whether there was subject matter jurisdiction over the petition. Section 203, the Court explained, confers on federal courts original subject matter jurisdiction, irrespective of the amount in controversy, over “[a]n action or proceeding falling under the Convention.” 9 U.S.C. § 203; Jones Day, slip op. at 6.

The parties did not dispute, and the Court held, that the application to enforce the summons was an “action or proceeding.” There was also no question that the parties’ arbitration agreement “fall[s] under the Convention” within the meaning of 9 U.S.C. § 202; slip op. at 6.

The question was whether the “action or proceeding” to enforce arbitral summons falls under the Convention. The Competitor urged that “because Congress ‘conspicuously’ did not include [in Chapter Two] a provision regarding petitions to enforce an arbitral summons, such a petition is not an action or a proceeding encompassed under § 203.” Slip op. at 7. To the contrary, said the Competitor Firm, Chapter Two expressly authorizes only three actions or proceedings: (a) “orders to compel arbitration, 9 U.S.C. § 206[; (b)] appointments of arbitrators in accordance with an arbitration agreement, id.[; and (c)]. . . orders confirming arbitration awards, 9 U.S.C. § 207.” Slip op. at 7.

The Competitor attempted to support its argument by arguing that “‘fall under’ means to be ‘listed or classified as’ or ‘included in’. . . .” Slip op. at 7 (quoting Webster’s New World Dictionary and MacMillan Contemporary Dictionary).

The Court, however, rejected that argument, explaining that “dictionaries from around 1970” (Chapter Two’s enactment date) “embrace a broader definition of ‘fall under’. . . .” Slip op. at 7 (quoting Compact Edition of the Oxford English Dictionary Vol. I 955 (1971) (the “Compact Edition”) and Oxford Dictionary of Current Idiomatic English Vol. I 102 (1975) (“Oxford Idiomatic”). Those dictionaries defined “fall under” as “‘[t]o be brought under the operation or scope of, be subject to’[,]” slip op. at 7 (quoting Compact Edition), and to “‘be classified as, be placed within a certain category[.]’” Slip op. at 7 (quoting Oxford Idiomatic).

The Court’s Arbitral Summons Subject Matter Jurisdiction Conclusion is Further Supported by the Convention’s and Chapter Two’s Structure 

 The Court found further support in the Convention’s and Chapter Two’s structure suggesting that to “fall under” the Convention, specific actions or proceedings need not be explicitly stated in the Convention or Chapter Two.

The Court relied heavily on the U.S. Supreme Court’s 2020 decision in G.E. Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC, 140 S. Ct. 1637 (2020), in which “the [U.S. Supreme] Court determined that the domestic doctrine of equitable estoppel, which permits the enforcement of arbitration agreements against nonsignatories, does not conflict with the Convention, and so is applicable in international arbitrations.” Slip op. at 8 (citations omitted).

Outokumpu concerned Article II(3) of the Convention, which provides that “courts of a contracting state ‘shall. . . refer the parties to arbitration.” Convention, Art. II(3). The arbitration challenger in Outokumpu argued that Article II(3) authorized Courts to refer only signatory “parties” to the arbitration, and did not permit courts to use the equitable estoppel doctrine to refer nonsignatories to arbitration.

Outokumpu reasoned that Convention “Article II(3) does not preclude application of the domestic doctrine of equitable estoppel because it ‘contains no exclusionary language; it does not state that arbitration agreements shall be enforced only in the identified circumstances.’” Jones Day, slip op. at 8 (quoting Outokumpu, 140 S. Ct. at 1645)  (emphasis in original). The Supreme Court, explained the Ninth Circuit, “viewed a counter interpretation inappropriate because ‘the provisions of Article II contemplate the use of domestic doctrines to fills gaps in the Convention.’” Slip op. at 8 (quoting Outokumpu, 140 S. Ct. at 1645). The Supreme Court therefore “did not ‘read the nonexclusive language of [Article II(3) of the Convention] to set a ceiling that tacitly precludes the use of domestic law to enforce arbitration agreements.’” Slip op. at 8-9 (quoting Outokumpu, 140 S. Ct. at 1645; bracketed material in original).

The Ninth Circuit said the Supreme Court’s analysis applied equally to the question whether the Convention or Chapter Two of the FAA contemplated a petition to enforce an arbitral summons. Slip op. at 9. “There is[,]” said the Ninth Circuit, “no language in [Chapter Two or the Convention]. . . that limits the tools that may be utilized in international arbitrations in ways domestic arbitrations are not so limited.” Slip op. at 9.

The Ninth Circuit concluded that the Competitor Firm’s “argument that the only permissible judicial actions or proceedings are those explicitly listed in Chapter Two . . . runs afoul of Chapter Two and the Convention’s plain language, structure, and objectives.” Slip op. at 9. The Court said the only limitation in the Convention or Chapter Two is 9 U.S.C. § 208, “which as the Supreme Court noted in [Outokumpu]. . . , disallows only those processes provided for in domestic arbitrations under Chapter One that conflict with Chapter Two of the Convention.” Slip op. at 9 (citations omitted). But enforcement of an arbitral summons does not conflict with Convention or Chapter Two—such enforcement “only aids in the arbitration process.” Slip op. at 9. 

The Court’s Arbitral Summons Subject Matter Jurisdiction Conclusion is Further Supported by Section 205, Chapter Two’s Removal Jurisdiction Provision

The Court found further support for its subject matter jurisdiction conclusion in Section 205 of the FAA, which concerns the removal jurisdiction of federal court in Chapter Two cases.

Section 205 states that “[w]here the subject matter of an action or proceeding pending in a State court relates to an arbitration agreement or award falling under the Convention, the defendant or the defendants may, at any time before the trial thereof, remove such action or proceeding to the district court of the United States for the district and division embracing the place where the action or proceeding is pending.” 9 U.S.C. § 205. Significantly, a district court’s removal jurisdiction is triggered when the subject matter of the state court action or proceeding “relates toan “agreement or award falling under the Convention.” 9 U.S.C. § 205 (emphasis added). See Jones Day, slip op. at 9-10.

As the Ninth Circuit astutely observed, “[i]f ‘falling under’ in § 203 is not deemed at least as coextensive with ‘relates to’ in § 205, then that would mean Congress intended the district courts to have a narrower scope of original jurisdiction than removal jurisdiction in enforcing international arbitration awards.” Slip op. at 10 (quoting 9 U.S.C. § 205). But, said the Court, inferring such an intent would contravene “the very purpose of the Convention and the Chapter Two implementing procedures[,]” which “is to encourage arbitration and to authorize district courts to take actions necessary to ensure that the parties’ underlying controversy is successfully resolved through arbitration.” See slip op. at 10 (citation and quotation omitted).

As the Ninth Circuit explained, imputing such an intent would lead to strange results: “The irony of [the Competitor Firm’s]. . . contrary position is that, in this very case where it asserts the Northern District of California lacks original jurisdiction, the same court would have had removal jurisdiction under FAA § 205 had Jones  Day filed its petition to enforce the summons in San Francisco Superior Court.” Slip op. at 10.

The Competitor Firm could, said the Court, in this case have removed the case to federal court for purpose of “opposing enforcement” of the arbitrator’s summons. Slip op. at 10. The Ninth Circuit said “[t]his would be an absurd result, especially in light of congressional policy to enforce arbitration-not resist it-and the proceedings that further arbitration of international disputes.” Slip op. at 10 (citing 9 U.S.C. §§ 206, 207).

The Court then exhaustively discussed cases from the Fifth, Second, and Eleventh Circuit that supported its conclusion that “falling under” in Section 203 and “relate to” in Section 205 have “the same meaning for purposes of articulating the federal courts’ original jurisdiction in § 203.” Slip op. at 11 & 9-13; see Stemcor USA Inc. v. CIA Siderurgica do Para Cosipar, 927 F.3d 906 (5th Cir. 2019); Scandinavian Reinsurance Co. v. Saint Paul Fire & Marine Ins. Co., 668 F.3d 60 (2d Cir. 2012); Inversiones y Procesadora Tropical INPROTSA, S.A. v. Del Monte Int’l GmbH, 921 F.3d 1291, 1299 (11th Cir. 2019). These cases “expansive[ly]” construed Section 203, and the Court formulated from them a two-part test for determining if under the Convention and Chapter Two a federal court has original jurisdiction over an action or proceeding.

The Ninth Circuit’s Test for Whether a Federal District Court has Original Jurisdiction under Section 203 over an Action or Proceeding to Enforce an Arbitral Summons

Drawing from its interpretation of Section 203 and 205, and cases construing those provisions, the Court held “that a federal court has original jurisdiction over an action or proceeding if two requirements are met: (1) there is an underlying arbitration agreement or award that falls under the Convention, and (2) the action or proceeding relates to that arbitration agreement or award.” Slip op. at 13. The Court further explained that, “for purposes of the second requirement, we adopt the meaning of ‘relates to,’ which we previously defined for purposes of § 205, as whether the proceeding ‘could conceivably affect the outcome of the plaintiff’s case.” Slip op. at 13 (quoting Infuturia Global Ltd. v. Sequus Pharms., Inc., 631 F.3d 1133, 1138 (9th Cir. 2011) (emphasis in original; internal citation omitted)).

The Ninth Circuit Concludes that the District Court had Subject Matter Jurisdiction over the Arbitral Summons Enforcement Petition 

The Ninth Circuit had no difficulty finding that the district court had subject matter jurisdiction. First, the case unquestionably involved an arbitration agreement “falling under” the Convention because it involved an “arbitration agreement between [the Firm], an international law firm residing for jurisdictional purposes in Washington D.C., and its former non-U.S. citizen partner. . . .” Slip op. at 14; see 9 U.S.C. § 202 (defining agreements and awards falling under the Convention).

Second, the arbitral summons petition ” relates to the underlying arbitration agreement, as the arbitrator determined that evidence [to be] adduced. . . may be material to resolving the dispute.” Slip op. at 14.

As respects the “relates to” requirement, the Court went a step further and declared that the Section 7 arbitral summons enforcement proceedings were “[n]ot only. . . ‘related to’ an arbitration agreement falling under the Convention[]” but were “necessary ancillary proceedings that ensure the proper functioning of the underlying arbitration.” Slip op. 14. They present to the Court an “aspect of enforcing the parties’ agreement to arbitrate. . .”—“the enjoyment of a key procedural attribute of the arbitration the parties bargained for.” Slip op. at 15 (quotation and citation omitted). “Recognizing and enforcing arbitration agreements includes[,]” said the Ninth Circuit, “facilitating the arbitration process and providing arbitrators—in both domestic and international arbitrations—with access to the ancillary actions and proceedings necessary to arrive at an arbitration award.” Slip op. at 15-16. And that “includes arbitral subpoenas and their enforcement.” Slip op. at 15-16.

Venue was Proper in the Northern District of California

Section 204 of the FAA did not authorize venue in the Northern District of California and therefore the question was whether Section 204 was exclusive or permissive. If exclusive, venue would be improper. If permissive, venue would be proper if authorized by the General Venue Statute, 28 U.S.C. § 1391.

The Court held that Section 204 was permissive and venue was proper under the General Venue Statute. The district court held that venue did not lie in the Northern District of California because (a) [Chapter One,] Section 7 of the FAA “provides for enforcement of an arbitral summons in the ‘district in which such arbitrators, or a majority of them are sitting[,]” slip op. at 19 (quoting 9 U.S.C. § 7); (b) “Washington D.C. [, rather than a place within the Northern District of California,] is the ‘seat of the underlying arbitration,’” and, accordingly, (c) “[the district court]. . . lacked jurisdiction to enforce the summons.” Slip op. at 19.

But putting aside the parties’ dispute about whether Section 7 provides for venue, and if so where, FAA Section 204 provides for venue in actions and proceedings falling under the Convention. The district court did not consider that provision, including whether Section 204 is exclusive or permissive. See slip op. at 19 & n.4.

Convention Venue Statute: FAA Section 204

Section 204, entitled “Venue,” states that “[a]n action or proceeding over which the district courts have jurisdiction pursuant to section 203 of this title may be brought in any such court in which save for the arbitration agreement an action or proceeding with respect to the controversy between the parties could be brought, or in such court for the district and division which embraces the place designated in the agreement as the place of arbitration if such place is within the United States.” 9 U.S.C. § 204.

Although the Court did not discuss them, there are two reasons why Section 204 did not authorize venue over the proceeding. First, an “action or proceeding with respect to the controversy between the parties” to the arbitration agreement—i.e., between the Firm and the Former Partner—would not have been properly venued in the Northern District of California. The Court did not consider whether Section 204 might be interpreted to authorize venue based on the arbitral summons enforcement controversy between the Firm and the Competitor Firm.

Second, even though the Firm followed the usual procedure of having the arbitrator convene a hearing in a district in which the witness would be within the enforcing court’s subpoena power, Section 204 provides for venue based on where the arbitrators are sitting only in cases where the arbitrators are sitting “in the place designated in the agreement as the place of arbitration. . . .” 9 U.S.C. § 204. Washington, D.C. was the place designated in the parties’ agreement as the arbitration situs, and obviously Washington, D.C. is not in the Northern District of California.

Whether Section 204 is a Mandatory or Permissive Venue Statute

Because Section 204 did not provide for venue, the issue boiled down to whether Section 204 is a mandatory venue provision or a permissive one. The Court held that Section 204 was permissive, and that venue was therefore proper under the General Venue Statute, 28 U.S.C. § 1391, because the Competitor Firm’s principal place of business was within the Northern District of California. See slip op. at 20.

First, the Court discussed how Section 1391 was intended to ensure that, if there was personal jurisdiction over a defendant, venue would always be proper in some district. Absent evidence that Congress intended to restrict the broad scope of venue provided by Section 1391, another federal statute providing for venue will be construed to be permissive, not mandatory. Slip op. at 16-17.

Second, the Court found that “[n]othing in the text of § 204 indicates that Congress intended. . . [Section 204] to be exclusive or restrictively applied.” Slip op. 17. Section 204, the sole venue provision in FAA Chapter Two, is  silent about the General Venue Statute, and uses the permissive language “‘may be brought’ to describe the additional authorized venues.” Slip op. at 17 (quoting 9 U.S.C. § 204).

Third, the Court explained that Cortez Byrd Chips, Inc. v. Bill Harbert Constr. Co., 529 U.S. 193 (2000) “inform[ed]” its “reading of § 204.” Slip op. at 17. Cortez Byrd addressed whether the venue provisions of Sections 9, 10, and 11 of FAA Chapter One—which authorize venue for post-award litigation in the district where the award was made—were mandatory or permissive. Slip op. at 17-18.

Cortez Byrd held that the venue provisions of FAA Sections 9, 10, and 11 were permissive and that the venue for post-award litigation was proper as long as it was proper under those sections or under the General Venue Statute. Slip op. at 17-18 (citing Cortez Byrd, 529 U.S. at 199-200, 204). When the FAA was enacted in 1925 the General Venue Statute had a more limited scope, providing for venue only in the district where the defendant resided. Slip op. at 18.

The venue provisions in FAA Sections 9, 10, and 11 expanded the scope of the then-in-effect General Venue Statute, authorizing venue in the district where the award was made. The U.S. Supreme Court reasoned that “‘[t]he enactment of the special venue provisions in the FAA thus had an obviously liberalizing effect, undiminished by any suggestion, textual or otherwise, that Congress meant simultaneously to foreclose a suit where the defendant resided.’” Slip op. at 17-18 (quoting Cortez Byrd, 529 U.S. at 200).

Fourth, the Court explained that in Textile Unlimited, Inc. v. A. BMH & Co., Inc., 240 F.3d 781 (9th Cir. 2001) it had “expanded” the Cortez Byrd rationale by holding that “the FAA venue provision in 9 U.S.C. § 4, governing actions to compel arbitration, is likewise permissive rather than exclusive.” Slip op. at 18. “We understood Cortez Byrd[,]” said the Court, “to instruct us to ‘weave the various venue strands of the [Federal Arbitration] Act together into a seamless fabric which does not clash with other federal venue statutes.’” Slip op. at 18 (quoting Textile Unlimited, 240 F.3d at 784).

Fifth, the Court rejected the Competitor Firm’s argument that FAA Section 201 transformed Section 204 into a mandatory venue provision. Slip op. at 19-20. Section 201 states the “Convention. . .  shall be enforced in the United States courts in accordance with this chapter.” 9 U.S.C. § 201.

The Competitor Firm argued that the term “shall” in Section 201 rendered Section 204’s venue provision mandatory. The Competitor Firm relied on Johnson v. Payless Drug Stores Nw., Inc., 950 F.2d 586 (9th Cir. 1991), which held in a Title VII case that 42 U.S.C. § 2000e-5(f) was a mandatory venue provision that superseded the General Venue Statute. But the Court explained that “Title VII. . . expressly provided that the venue ‘provisions of section 2000e-5(f) . . . shall govern’ employment discrimination actions.” ” Slip op. at 19-20 (quoting Johnson, 950 F.2d at 587). Johnson therefore concluded that the “language [of 42 U.S.C. § 2000-e-16(d)] ‘is mandatory.’” Slip op. at 19-20 (quoting Johnson, 950 F.2d at 587).

The Ninth Circuit distinguished the explicit statutory command of 42 U.S.C. § 2000e-16(d) from Section 204’s language, which it deemed not to be mandatory. Slip op. at 20.

Because the Court had subject matter jurisdiction, the parties did not dispute that venue was proper under the General Venue Statute, and because there were no other challenges to the petitions, the Ninth Circuit reversed the district court and remanded “with instructions to enforce . . . [the Firm’s] petitions to compel [the Competitor Firm] and its partners to comply with the arbitral summonses.” Slip op. at 20-21.

Contacting the Author

If you have any questions about this article, arbitration, arbitration-law, arbitration-related litigation, or the services that the Loree Law Firm offers, then please contact the author, Philip Loree Jr., at (516) 941-6094 or at PJL1@LoreeLawFirm.com.

Philip J. Loree Jr. has more than 30 years of experience handling matters arising under the Federal Arbitration Act and in representing a wide variety of clients in arbitration, litigation, and arbitration-related litigation. He is licensed to practice law in New York and before various federal district and federal appellate courts.

ATTORNEY ADVERTISING NOTICE: Prior results do not guarantee a similar outcome.

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Foreign Awards | Post-Award Federal Arbitration Act Enforcement Litigation | Businessperson’s Federal Arbitration Act FAQ Guide

July 23rd, 2020 Arbitration Law, Arbitration Practice and Procedure, Awards, Confirmation of Awards, Convention on the Recognition and Enforcement of Foreign Arbitral Awards, FAA Chapter 1, FAA Chapter 2, FAA Chapter 3, Federal Arbitration Act 202, Federal Arbitration Act Enforcement Litigation Procedure, Federal Arbitration Act Section 1, Federal Arbitration Act Section 10, Federal Arbitration Act Section 11, Federal Arbitration Act Section 2, Federal Arbitration Act Section 207, Federal Arbitration Act Section 9, Foreign Arbitration Awards, Inter-American Convention on International Commercial Arbitration, International Arbitration, New York Convention, Nuts & Bolts, Nuts & Bolts: Arbitration, Panama Convention, Post-Award Federal Arbitration Act Litigation, Practice and Procedure, Section 9, Small Business B-2-B Arbitration 1 Comment »
foreign awards

In previous segments (here, here, here, and here) we discussed the confirmation of Chapter One Domestic Awards and Chapter Two Domestic Awards. This segment addresses foreign awards.

There are two types of foreign awards that are or may be governed by the Federal Arbitration Act: (a) awards made in the territory of a country that is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention” or “Convention”), the Inter-American Convention on International Commercial Arbitration (the “Panama Convention”), or both, which we refer to as Chapter Two Foreign Awards; and (b) awards that are made outside the United States in a country that is not a signatory to the New York or Panama Conventions, which we refer to as Chapter One Foreign Awards.

What are Chapter Two Foreign Awards?

Chapter Two Foreign Awards are awards that are made in the territory of a foreign state that is a signatory to the New York or Panama Conventions, and which otherwise falls under one or both of those Conventions.

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Chapter Two Domestic Awards | Post-Award Federal Arbitration Act Enforcement Litigation | Businessperson’s Federal Arbitration Act FAQ Guide

July 17th, 2020 Awards, Businessperson's FAQ Guide to the Federal Arbitration Act, Confirmation of Awards, Consent to Confirmation, Convention on the Recognition and Enforcement of Foreign Arbitral Awards, FAA Chapter 1, FAA Chapter 2, FAA Chapter 3, Federal Arbitration Act 202, Federal Arbitration Act Enforcement Litigation Procedure, Federal Arbitration Act Section 2, Federal Arbitration Act Section 207, Federal Arbitration Act Section 9, Inter-American Convention on International Commercial Arbitration, International Arbitration, New York Convention, Nuts & Bolts, Nuts & Bolts: Arbitration, Petition or Application to Confirm Award, Practice and Procedure, Rights and Obligations of Nonsignatories, Section 9, Small Business B-2-B Arbitration 1 Comment »
confirm award chapter two

The last three segments of the Businessperson’s Federal Arbitration Act FAQ Guide discussed the substantive and procedural requirements for confirming a Chapter One Domestic Award, and answered additional FAQs concerning the confirmation of such awards. (See here, here, and here.) This segment focuses on how confirming Chapter Two Domestic Awards—i.e., domestic awards that fall under the Convention on the Recognition of Foreign Arbitral Awards (the “Convention”)—differs from confirming Chapter One Domestic Awards—i.e., domestic awards that fall under Chapter One of the Federal Arbitration Act only and not under Chapters Two or Three.

This FAQ guide distinguishes between “Chapter One Domestic Awards” and “Chapter Two Domestic Awards.” For our purposes, an award is “domestic” when it is made in the United States, that is, by an arbitrator or panel of arbitrators sitting in the territorial jurisdiction of the United States.

An award made in the United is a “Chapter One Domestic Award” when it falls under Chapter One of the Federal Arbitration Act, but not under Chapters Two or Three, which implement the Convention and the Inter-American Convention on International Commercial Arbitration (the “Panama Convention”).

What is a Chapter Two Domestic Award?

An award is a “Chapter Two Domestic Award” when it is made in the United States, but, for purposes of Section 202 of the Federal Arbitration Act, and Art. I(1) of the Convention, is “not considered” to be a “domestic award.” See Convention, Art. I(1). Such awards ordinarily fall under both the Convention and Section 2 of the Federal Arbitration Award, and thus under Chapters One and Two of the Federal Arbitration Act.

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How Much Time do I have to Serve and File a Motion to Confirm a U.S.-Made Arbitration Award under the Federal Arbitration Act?

March 24th, 2020 Applicability of Federal Arbitration Act, Arbitration Agreements, Arbitration and Mediation FAQs, Arbitration Law, Arbitration Practice and Procedure, Awards, Confirmation of Awards, FAA Chapter 1, FAA Chapter 2, Federal Arbitration Act 202, Federal Arbitration Act Enforcement Litigation Procedure, Federal Arbitration Act Section 1, Federal Arbitration Act Section 2, Federal Arbitration Act Section 207, Federal Arbitration Act Section 9, New York Convention 1 Comment »
Statute of Limitations, Confirm

Chapter One of the Federal Arbitration Act authorizes courts to confirm arbitration awards falling within the scope of the Act, if the parties implicitly or expressly agree that a judgment may be entered on the award.

To confirm an award is to reduce it to a judgment of the court, which can be enforced like any other judgment. For some detailed information on confirming arbitration awards, see here.

But how much time do you or your business have to confirm an arbitration award that is made in the United States? The answer depends on whether your arbitration award falls under Chapter One of the Federal Arbitration Act or also under Chapter Two of the Federal Arbitration Act, which implements the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention”). Because some arbitration awards made in the United States are completely domestic, while others are not, and different limitation periods apply to applications to confirm them.

If the award falls under Chapter One of the Federal Arbitration Act, but not Chapter Two, then your application to confirm must be made within one-year of the date on which the “award was made.” 9 U.S.C. § 9. But if your domestic award falls under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, then your application to confirm must be made “[w]ithin three years after. . . [the]. . . award. . . is made.” 9 U.S.C. § 207.

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Businessperson’s Federal Arbitration Act FAQ Guide II: Three Threshold Questions about the Federal Arbitration Act

January 21st, 2020 Arbitration Practice and Procedure, Businessperson's FAQ Guide to the Federal Arbitration Act, Convention on the Recognition and Enforcement of Foreign Arbitral Awards, FAA Chapter 1, FAA Chapter 2, FAA Chapter 3, FAA Preemption of State Law, Federal Arbitration Act Enforcement Litigation Procedure, Federal Arbitration Act Section 1, Federal Arbitration Act Section 2, Federal Arbitration Act Section 4, Federal Courts, Federal Question, Inter-American Convention on International Commercial Arbitration, New York Arbitration Law (CPLR Article 75), New York Convention, Nuts & Bolts: Arbitration, Panama Convention, Practice and Procedure, Rights and Obligations of Nonsignatories, Small Business B-2-B Arbitration, State Arbitration Law, State Arbitration Statutes, State Courts, United States Court of Appeals for the Second Circuit, United States Supreme Court 1 Comment »
Federal Arbitration Act | Arbitrator

This second instalment of the Businessperson’s Federal Arbitration Act FAQ Guide addresses three threshold questions pertinent to the Federal Arbitration Act (the “FAA” or “Federal Arbitration Act”):

1. Does Chapter 1 of the FAA apply to my arbitration agreement?

2. Assuming it does, will a federal district court have subject matter jurisdiction over FAA litigation concerning the agreement or any awards made under it?

3. Does the Federal Arbitration Act apply in state court?

Does Chapter 1 of the FAA Apply to My Arbitration Agreement?

If your written arbitration agreement is contained in a maritime contract or a contract affecting commerce, or concerns a dispute arising out of such a contract, then it falls under Chapter 1 of the Federal Arbitration Act, unless it falls within Section 1’s exemption for contracts of employment of transportation workers engaged in interstate commerce. (See here.) It may also fall under Chapters 2 or 3 of the FAA, which implement the New York and Panama Conventions.

In our first instalment of this FAQ guide (here) we explained that Federal Arbitration Act Section 2, as interpreted by the U.S. Supreme Court, applies to written, pre-dispute arbitration agreements in: (a) “maritime contract[s]” (“Maritime Contracts”); or (b) “contract[s] evidencing a transaction involving commerce. . . .” (“Contracts Affecting Commerce”). It also applies to written post-dispute arbitration agreements “to settle by arbitration a controversy thereafter arising out of such [Maritime Contracts or Contracts Affecting Commerce], or the refusal to perform the whole or any part thereof. . . .” 9 U.S.C. § 2; see Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 273-282 (1995)Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 55-58 (2003).

Section 2’s requirement that an arbitration agreement be “written” seems simple enough, and, for the most part, it is, at least in wholly domestic arbitrations to which Chapters 2 or 3 of the FAA do not concurrently apply. But there are some caveats.

First, just because a contract is required to be “written” doesn’t necessarily mean the arbitration agreement must be signed. The arbitration agreement between the parties need only be in writing, although the arbitration-agreement proponent would need to show that the parties assented to the writing.

For example, suppose A agrees to provide services for B and further agrees that any disputes arising out of or relating to their agreement will be submitted to arbitration. A and B proceed to memorialize their agreement in a writing, including the agreement to arbitrate, spelling out the essential terms of their agreement. While the writing is not signed or initialed, both parties agree that it reflects the essential terms of the parties’ bargain. The written memorialization of the agreement is sufficient to establish a “written” agreement, even though it is not signed by the party opposing its enforcement. 

Second, provided there is a written agreement between at least two parties,  persons who are not parties to that agreement (“nonparties”) may, in appropriate circumstances, enforce the agreement or be bound by it if general principles of state law permit that result. Such general principles include “‘assumption, piercing the corporate veil, alter ego, incorporation by reference, third-party beneficiary theories, waiver and estoppel[.] . . .’” . Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631 (2009) (citations omitted). This Term the United States Supreme Court is to determine whether such principles apply in cases governed by Chapter 2.

As respects whether a “contract” “evidenc[es] a transaction involving commerce,” the U.S. Supreme Court has interpreted Section 2 broadly to mean the Federal Arbitration Act applies to arbitration agreements in contracts or transactions that “affect” commerce, that is, to any contract or transaction that Congress could regulate in the full exercise of its Commerce Clause powers. See Allied-Bruce, 513 U.S. at 281-82; U.S. Const. Art. I, § 8, Cl. 3 (giving Congress power “to regulate commerce with foreign nations, and among the several states, and with the Indian tribes”).

Whether a contract “affects” commerce depends on the facts concerning, among other things, the parties, the contract’s subject matter, and the actual or contemplated transactions constituting the contract’s performance or contemplated performance. See Alafabco, 539 U.S. at 56-57. A party does not have to demonstrate that the contract has a “specific” or “substantial” “effect upon interstate commerce if in the aggregate the economic activity in question would represent a general practice subject to federal control.” Id. (citations and quotations omitted).  The question is whether the “aggregate economic activity in question” “bear[s] on interstate commerce in a substantial way.” Id. at 57.

Assuming that Chapter 1 of the FAA Applies to my Arbitration Agreement, Will a Federal District Court have Subject Matter jurisdiction over FAA Litigation Concerning the Agreement or any Awards Made under it?

Not necessarily. Unless an arbitration agreement also falls under Chapters 2 or 3 of the FAA, then there must be an independent basis for federal subject matter jurisdiction.

Continue Reading »

What Standards Apply to Lance Armstrong’s Putative Challenge to the $10,000,000.00 Arbitration Award?

March 1st, 2015 Arbitrability, Arbitration Agreements, Arbitration Practice and Procedure, Authority of Arbitrators, Choice-of-Law Provisions, Contract Interpretation, Convention on the Recognition and Enforcement of Foreign Arbitral Awards, FAA Preemption of State Law, Judicial Review of Arbitration Awards, New York Convention, Practice and Procedure, State Courts, Texas Supreme Court, United States Supreme Court Comments Off on What Standards Apply to Lance Armstrong’s Putative Challenge to the $10,000,000.00 Arbitration Award?

SCA v. Armstrong:

Anatomy of an Arbitration Award—Part II

What Standards Apply to Lance Armstrong’s Putative Challenge to the Arbitrators’ $10,000,000.00 Sanctions Award?

 

yay-10447276-digitalAs discussed in Part I, if Lance Armstrong (“Armstrong”) and Tailwind Sports Corp. (“Tailwind”) (collectively, the “Armstrong Parties”) challenge the Armstrong Arbitration Award, that challenge will be based on the Panel allegedly exceeding its powers. To meaningfully assess whether the Panel exceeded its powers we need to consider what law applies. Continue Reading »

Pine Top Receivables, LLC v. Banco De Seguros Del Estado:  The Seventh Circuit Exorcises some Ghosts of Reinsurance Past, but has it Summoned an Erie Ghost of Reinsurance Future?

November 22nd, 2014 Appellate Jurisdiction, Appellate Practice, Arbitrability, Arbitration Agreements, Arbitration Practice and Procedure, Collateral Requirements for Unauthorized Reinsurance, Contract Interpretation, Convention on the Recognition and Enforcement of Foreign Arbitral Awards, FAA Chapter 3, Federal Courts, Foreign Sovereign Immunities Act, Insolvency Proceedings, Inter-American Convention on International Commercial Arbitration, McCarran-Ferguson Act, New York Convention, Panama Convention, Pre-Answer Security, Reinsurance Arbitration, Reinsurance Claims, Reinsurance Litigation, Security Requirements, Unauthorized Reinsurance, United States Court of Appeals for the Second Circuit, United States Court of Appeals for the Seventh Circuit, United States Supreme Court Comments Off on Pine Top Receivables, LLC v. Banco De Seguros Del Estado:  The Seventh Circuit Exorcises some Ghosts of Reinsurance Past, but has it Summoned an Erie Ghost of Reinsurance Future?

Part II: What Transpired in Pine Top?

 

In our last post on  Pine Top Receivables, LLC v. Banco De Seguros Del Estado, ___ F.3d ___, Nos. 13-1364/2331, slip op. (7th Cir. Nov. 7, 2014) (per curiam) (here), we offered our take on the case and what it might mean, particularly as respects the Court’s suggestion that state pre-answer security statutes may be procedural under the Erie doctrine, possibly inconsistent with federal procedural law and thus inapplicable in diversity cases. Now let’s take a closer look at what transpired in Pine Top, for even apart from the Court’s allusion to a possible Erie doctrine issue (our Erie ghost of reinsurance future), it involved a number of classic reinsurance issues (our ghosts of reinsurance past), as well as a notable appellate jurisdiction issue and the question whether the assignee of the insolvent ceding company acquired the right to demand arbitration against the reinsurer.  Continue Reading »