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Posts Tagged ‘California Law’

California Supreme Court Upholds Default Judgment Confirming $414,601,200 Default International Arbitration Award

April 20th, 2020 Arbitration Practice and Procedure, Award Confirmed, Awards, California Supreme Court, Confirmation of Awards, Default Award, FAA Chapter 1, FAA Chapter 2, Federal Arbitration Act Enforcement Litigation Procedure, Federal Arbitration Act Section 9, International Arbitration, Personal Jurisdiction, Practice and Procedure, Service of Process Comments Off on California Supreme Court Upholds Default Judgment Confirming $414,601,200 Default International Arbitration Award
default judgment award confirm

On April 2, 2020 the California Supreme Court rejected a service-of-process challenge to a default judgment confirming a $414,601,200 international arbitration award. The parties agreed that notice could be given, and service of process made, by Federal Express (“FedEx”), and the Court held that the petitioner was not required to make service under the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, November 15, 1965, 20 U.S.T. 361, T.I.A.S. No. 6638 (the “Hague Convention”).  

Facts and Procedural History

Party A, apparently headquartered in the U.S., and Party B, headquartered in China, entered into a memorandum of understanding (“MOU”), which contemplated the two companies forming another. But that didn’t happen and Party A demanded arbitration against Party B under the arbitration agreement in the MOU.

Party A served the arbitration agreement by FedEx, as agreed. Party B did not appear in the arbitration and the arbitrator, after hearing evidence, entered a default arbitration award. Service of the arbitration demand was made by FedEx, and Party B was given notice of each of the proceedings that comprised the arbitration.

The Arbitrator made a default award against B in the amount of $414,601,200. Party A commenced confirmation proceedings in a California state court, serving B by FedEx, as expressly agreed in the parties’ agreement.

But Party B did not appear at the confirmation proceedings, and the Court entered a default judgment confirming the award.

Party B then challenged the default judgment, contending that the Court lacked personal jurisdiction over it because service was made by FedEx, and not through the procedures prescribed by the Hague Convention.

The trial court rejected the challenge, the intermediate appellate court reversed, and the California Supreme Court, in a unanimous decision, reversed the intermediate appellate court.

The California Supreme Court’s Decision to Uphold the Default Judgment

The question before the California Supreme Court was whether the Hague Convention preempted the parties’ right to serve by their agreed method of service, FedEx. California’s highest court said the answer was “no.”

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2018-2019 Term SCOTUS Arbitration Cases: What About Lamps Plus?

June 20th, 2019 Appellate Jurisdiction, Appellate Practice, Arbitration as a Matter of Consent, Arbitration Practice and Procedure, Class Action Arbitration, Clause Construction Award, Consent to Class Arbitration, Contract Interpretation, Contract Interpretation Rules, Drafting Arbitration Agreements, FAA Preemption of State Law, Federal Policy in Favor of Arbitration, United States Court of Appeals for the Ninth Circuit, United States Supreme Court 2 Comments »
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U.S. Supreme Court

On April 24, 2019 in Lamps Plus Inc. v. Varela, 587 U.S. ___, No. 17-998 (April 24, 2019), the United States Supreme Court considered whether whether consent to class arbitration may be inferred from ambiguous contract language.

In a 5-4 opinion written by Chief Justice John G. Roberts Jr. the Court held that ambiguity in and of itself was not enough to infer party consent to class arbitration. Parties would have to clearly express their consent to class arbitration before courts could impose it on them under the Federal Arbitration Act.

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