1. Is the dispute subject to arbitration? a. is the subject-matter arbitratable? b. are the claims arbitratable? c.

are the parties subject to arbitration?

POLICY:
To be efficient but also honor the agreement between the parties and try to get consistent results.

RESOLUTION

OF

INTERNATIONAL DISPUTES
Intl jdmts need treaty to be enforced. In United States, if there were NO treaty, it is still possible to award foreign jdmt under NYs Article 53 or 302.

Rule: recognition of foreign substantive law Case: Sung Hwan v. Rite-Aid NY courts have pJD over foreign court decisions even if the cause of axn by the foreign court is NOT recognized in NY provided that the money judgment satisfies Article 53 or NYs Civil Practice Law Rules. i.e. a foreign countrys substantive law will still be enforced in NY. enforce foreign decision; authority to enforce foreign decision there is NO federal law to enforce foreign judgment this case is NOT about arbitrationthe NY Convention is about enforcing foreign arbitration this is a non-arbitration arena case

Law: Article 53 CPLR Scope limited to judgments of foreign states granting or denying recovery of a sum of money, other There are carve outs in 5304 where a foreign jdgmt will NOT be recognized CPLR has long arm statute to determine if its court has JD to see if Korean Ct. has jD May a Court recognize a foreign jdmt? Does the court of enforcement have jD (jD 1) to determine whether it has jD (jD 2) to decide if it can enforce foreign
Court identified 5 elements for predicating jD under 302(3): 1. D commits tort outside State 2. cause of axn arises from act 3. the act caused injury to person/property w/n State 4. D expected or should reasonably have expected the act to have consequences in the State 5. D derived substantial revenue from interstate or intl commerce [LaMarca v.

jdmt? Look under 5305(a) and if no jD, then look under CPLR 302(a)(3). Is there a K? [If P never interacted with D, there can be no K claim asserted. But under Sung Hwan v. Rite Aid, remember a tort claim was arbitrated. The jD from enforcing a tort judgmt comes from CPLR 302. Rule: forum selection clause; forum non conveniens Case: M/S Bremen and Unterweser v. Zapata For promoting global commerce and maintaining the desired certainty of commercial disputes, a party canNOT ignore the forum selection clause in its K even if it can recover more in the home state than the negotiated forum state. Policy: To eliminate uncertainty. A situation that is foreseeable at the time of K-ing may NOT be deemed an inconvenient. K was about towing from LA to Italy forum selection clauses are prima facie valid main points of this case: pro-business

A forum selection clause can only be enforced if the substantive law of the state that is being asked to enforced it has jD to do so i.e. enforcement of forum selection clause agreement is subject to law of the state. If a forum is inconvenient, it may be unreasonable and

FEDERAL LAW

AND

TREATY FRAMEWORK
PRE-EMPTIVE LAWSUIT use this towards a tactical advantage; seek a declaratory jdmt that other side has NO claim is this an arbitrability issue and/or a suit similar to inducement in the fraud since the hospital is trying to get

Rule: arbitration clause in K; preemptive law suit Case: Moses H. Cone v. Mercury [SCOTUS 1983] BACKGROUND: P[hospital] enter into a K with D [construction company Mercury] which says that demand for arbitration should be made w/n reasonable time and that a demand canNOT be made after SoL. Additionally all claims must first be submitted to an architect before the matter is appealed to an arbitrator. A conflict arises and instead of going through the agreed procedure, the hospital preemptively files a law suit seeking a declaratory judgment that there is NO right to

Suit 1: a stay initially granted for dj is lifted so matter is pending in court

Suit 2: Mercury seeks arB, hospital files and granted stay pending suit 1 [b/c same issue]. Mercury appealing

arbitrate b/c the time has passed based on the SoL agreed to by the parties. In other words, it is seeking to be indemnified by the courts from arbitration. ISSUE: Whether dt. ct. properly stayed axn that is still pending in st. court for an axn to arbitrate when there is a possibility that the time for bringing arbitration claim may have expired. HOLDING: No. Federal law from 2 FAA overns issues in either state or federal court and the act establishes that as a matter of federal law, any doubts concerning scope of arbitrable issues should be resolved in favor of arbitration. Policy of Arbitration Act requires liberal reading of arbitration agreement. Arbitration Act establishes that as a matter of federal law, any doubts concerning scope of arbitrable issues should be resolved in favor of arbitration, whether problem at hand is construction of K language itself or allegation of waiver, delay, or like defense to arbitrability. Even when an identical issue in state court is pending, an arbitration agrt will override the judicial proceeding. Rule: conflict b/w state and federal law, waiver of judicial proceeding Case: Southland Corp. v. Keating [SCOTUS, 1983] BKGD: Appellees are individual franchisees who signed agrt with clause requiring arB on any controversy or claim arising out or relating to the agreement or breach thereof. They file suit in Cali st. ct. alleging fraud, misrepresentation, breach, violation of disclosure requirements of Cali Franchise Investement Law (FiL). Southland files motion to arbitrate. Trial court found all causes of axn EXCEPT FiL arbitrable matter. Southland appeals. ISSUE: Whether a state law that voids a K provision requiring arbitration is superceded by a federal law that enforces arbitration.

WHERE

THERE IS

CONFLICT

BETWEEN

STATE LAW THAT VOIDS ARBITRATION AND FEDERAL LAW THAT PROMOTES ARBITRATION WINS UNDER SUPREMACY CLAUSE.

(2 FAA)

FEDERAL

 HOLDING: Yes, the federal law prevails under the Supremacy clause. Federal law prevails under the Supremacy Clause and arbitration is still enforced when a State law bars waiving judicial proceedings even in a freely negotiated K. FAA 2 is declared a national policy applicable equally in states as well as federal courts. RATIONALE: Congress has authority under Commerce Clause to create a body of federal substantive law (here its the FAA) Rule: Defenses Against Enforcement of Arbitration Award under UN Convention NYC, basic notions of morality Case: Parsons v. RAKTA Art. V(2)(b) which allows refusal of enforcement of award if it is contrary to public policy shall be narrowly construed. PUBLIC POLICY DEFENSE Arbitration enforcement may be denied only when forum states most basic notions of morality/justice are violated. Intl politics is NOT a public policy that justifies a refusal to enforce an arbitration award. Art. V(2)(a) authorizes a court to deny enforcement of a foreign arbitral award when the subject matter of the difference is NOT capable of settlement by arbitration under the law of that forum country, but the mere fact that an issue of national interest may incidentally figure into the resolution of a breach of k claim does NOT make the dispute NOT arbitratable (i.e. it is still arbitratable). NON-ARBITRABILITY DEFENSE Art V(1)(b) deny enforcement of an arbitral award if other party was NOT able to present his case, but an inability to produce a witness b/c witness had a prior teaching commitment is NOT a lack of due process that warrants notenforcement. DUE PROCESS DEFENSE; Inadequate opportunity to present defense

The public policy of the State thats relevant is the state where the enforcement of award is being sought.

Just b/c a state is somehow implicated in a case , it canNOT be concluded that the state is vitally interested in the outcome.

 Article V(1)(c) is a jurisdictional defense. It concerns an agreement to arbitrate or arbitrability. If the subject-matter is NOT w/n the arbitration agreement, the award does NOT have to be enforced. This defense requires that the challenging party rebut the presumption that the arbitral body is acting w/n its powers. 9 U.S.C. 10 nullifies an award if it is in manifest disregard of law. Do NOT rely on this case for understanding this doctrine.

ARBITRABILITY SUBJECT MATTER

SCHERK V. ALBERTO-CULVER (1974)

INTERNATIONAL COMMERCIAL DISPUTE SHOULD

NOT

BE DIFFERENTIATED B/W DOMESTIC

[compare with Shearson which is for domestic arbitration]

AND INTL

NOT

GOOD ANALYSIS

Issue: IS an American party trying to take advantage of American law that brings a cause of axn against a foreign company that perhaps the foreign company did NOT know about still precluded from judicial proceedings in favor of arbitration? Holding: Yes. A provision to arbitrate may be invalid if the issue is that the inclusion of the arbitration clause in the contract was the product of fraud or coercion, but a dispute based on allegations of fraud is still arbitrable. A-C claims that it was defrauded by Scherk in violation of the Sec-Ex Act concerning the sale of trademarks. A-C wanted to rescind the K, but S refused so A-C brought suit in court concerning Ss fraudulent representations. S moves to stay the action pending arbitration. The SCOTUS here held that the arbitration clause is to be respected and enforced by federal courts under the FAA. The FAA 2 states that an arbitration agreement shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. The court found that an agrt to arbitrate is a specialized kind of forumselection clause that posits not only the site for suit but also the procedure to be used in resolving the dispute. RULE: Courts read this case for the holding that intl agrt to arbitrate should be enforced, even for anti-trust matters. RULE: The court enforced arbitration even when domestic law would preclude enforcement [Wilko was still good law at this time].

RULE: contemplation of arbitrable issue; defense to arbitration raise a statute designed to protect a class; arbitrability on certain agreed issues; statutory counterclaim POLICY: Court wants to enforce a provision that obviates the danger that a K dispute might
be submitted to a forum hostile to interests of one of the parties or unfamiliar with the problem are involved. POLICY: FAA is designed to allow parties to avoid the costliness and delays of litigation and to place arbitration agreements on same footing as other Ks. POLICY: SCOTUS does NOT want to demean justice by exalting US law.

MITSUBISHI MOTORS CORP V. SOLER CHRYSLER-PLYMOUTH SCOTUS [1985]

bringing up rights under statutory claims, international business
THIS CASE IS IMPORTANT IS BECAUSE IT ADDRESSES THE ISSUE OF WHAT TO DO WHEN AN ISSUE COMES UP THAT THE PARTIES DID

NOT

EXPLICITLY AGREE TO ARBITRATE BUT

ARISES

UNDER THE ARBITRATION AGREEMENT.

The arbitration agreement provides for arbitration in foreign country of all disputes, controversies, or differences which may arise b/w A and B out of or in relation to Articles 1-5 of Sales Agreement. o Finding: the court said that the exclusion of some areas of possible dispute from the scope of an arbitration clause does NOT serve to restrict the reach of an otherwise broad clause insofar as the allegations underlying the claims touch matters covered by the enumerated articles {the matter} is properly resolved in favor of arbitrability. A brings suit to US court under FAA and NYC to seek an order under FAA 4 and 201 to compel arbitration under Article 6 under Sales Agreement in foreign country. B [does NOT want to go to court] counterclaims in the US court under a US statute [Sherman Act] Issue: can an arbitration clause be read to encompass statutory claims NOT provided in the arbitration agreement? So what you have is a party, B, raising a uniquely American defense in American court even though the parties agreed to arbitrate in foreign country. The issue becomes should the American courts still enforce the arbitration agreement even though that defense or charge (here it is a counterclaim) is not a cause of axn under the arbitration agreement. o B argues that as a matter of law a court canNOT construe an arbitration agreement to encompass claims arising out of statues designed to protect the class in which B belongs

o Finding: court does NOT agree with party avoiding arbitration, B, because it finds NO reason to presume AGAINST arbitration in the FAA. The court cites 2 of FAA which states that an agreement is valid, irrevocable, and enforceable and Moses Cones which states the U.S. policy of favoring arbitration because its trying to enforce a private contract. o Finding: the court also finds NO reason to NOT enforce an arbitration agreement even when a party raises claims founded on statutory rights. By agreeing to arbitrate a statutory claim, a party does NOt forgo the substantive rights afforded by the statue; it only submits to their resolution in an arbitral rather than judicial forum. Issue: are anti-trust claims non-arbitrable even though a party has agreed to arbitrate them? this was raised as an issue because B was suggesting that there is a public policy reason that the anti-trust issue should be heard by the courts and NOT an arbitration agreement even though it was agreed that parties arbitrate this issue. o Finding: the court finds that out of concern for international comity, respect for the capacities of foreign and transnational tribunals and sensitivity to the need of the international commercial system for predictability in the resolution of disputes require ENFORCEMENT of the parties agreement even if the court assumes a contrary result would be forthcoming in a domestic context. This policy was explained in The Breman where the Scotus said it is NOT good for trade and commerce to have the parochial view that US laws should dominate. Again the policy is to enforce an agreed contract. The court also analogized to Scherk v. Alberto-Culver and suggested that the arbitration agreement is a specialized kind of forum-selection clause where the parties had specified in advance the forum in which disputes shall be litigated and the law applied. FACTS: A sales agrt provides for arbitration by Japan Commercial Arbitration of all disputes arising out certain articles of the agrt. Soler argues that it statutorily benefits from the federal and local antitrust laws (Sherman Act) though the abC does NOT mention these statute, so the statute canNOT be read to contemplate arbitration of these statutory claims. Policy: concerns of international comity, respect for the capacities of foreign and transnational tribunals, and sensitivity to the need of the intl commercial system for predictability in the resolution of disputes all require enforcement of the arbitration clause in question even if a contrary result would be forthcoming in a domestic context. [BREMAN DOCTRINE:
ENFORCE ARBITRATION FOR SAKE OF INTERNATIONAL AGRT]

 this case is an interpretation of FAA; if Congress does NOT expressly write that the subject matter is excluded, then its NOT excludedits a very liberal reading

SUBJECT

SHEARSON/AMERICAN EXPRESS V. MCMAHON [SCOTUS 1987] MATTER ARBITRABILITY OF DOMESTIC LITIGANTS; STATUTORY & CL OF AXN, OVERLAP BETWEEN CIVIL AND CRIMINAL PROVISIONS

CAUSES

ISSUE: Whether statutory prohibition against waiver of a civil/criminal cause

of action can override an agreement to arbitrate. Holding: No. The Duty to enforce arbitration agreement is NOT diminished when a party raises claims founded on statutory rights. The arbitration agreement with a customer agreement: any controversy arising out of or relating to transaction B filed complaint against A in US dt. ct for violating US statutory laws (Exchange Act and RICO). Here the statutory law (sL) declared itself to override any condition, stipulation or provision asking person to waive compliance with sL. A compels arbitration. o FAA 2 says arbitration shall be valid, irrevocable, and enforceable o FAA 3 says court must stay proceeding if the issue is arbitrable o FAA 4 authorizes fed dt. ct. to issue order compelling arbitration if there has been a failure, neglect, or refusal to comply with arbitration agreement o The duty to enforce arbitration is NOT diminished when a party bound by an agreement raises a claimed founded on statutory rights {Mitsubishi} o By agreeing to arbitrate a statutory claim, a party does NOT forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral rather than judicial forum. There was NO Congressional intent to limit or prohibit waiver of a judicial forum, it would be deducible from statutes text or legislative history or from an inherent conflict b/w arbitration and the statutes underlying purpose. o FINDING: There is NO irreconcilable conflict between the arbitration agreement and RICOs underlying purpose. B tried to argue that RICO was too complex but court said that potential complexity should NOT suffice to ward off arbitration. [Mitsubishi] o FINDING: A conduct that can result in both civil and criminal liability does NOT mean there is NOT a bona fide civil action.

RODRIGUEZ V. SHEARSON/AMEX [SCOTUS 1989]

overrules Wilko; predispute dispute limited to judicial forum Issue: Whether a federal statute that calls for exclusive jurisdiction in a specific forum precludes enforcement of arbitration agreement. This is slightly different from Shearson in that in Shearson the issue was over waiver of substantive rights whereas here the issue is restriction on forum. A signed standard customer agreement with B. The arbitration agreement read that parties agree to settle any controversies relating to the accounts through binding arbitration that complies with specified procedures. A charged B with violating federal statute. The statute at issue specifically provided for jurisdiction in either state or federal courts. o Finding: 2 of FAA declares it a matter of federal law that arbitration agreements shall be valid, irrevocable, and enforceable. Under this section, the party opposing arbitration carries the burden of showing tht Congress intended in a separate statute to preclude a waiver of judicial remedies or that such a waiver conflicts with the underlying purposes of that other statute. Rules Default: According to FAA 2, an issue/dispute (a) must go to ARBITRATION. It is irrelevant if a contract as a whole is being challenged based on state law or federal law because FAA preempts. In summary, FAA determines the issue (x) and enforces separability. A challenge to the VALIDITY of the K as a whole (k), and not specifically the arbitration clause (ac) must go to the arbitrator. It is important to note that a VALIDITY is NOT the same thing as EXISTENCE of the contract.

ARBITRABILITY ARE ARBITRATION?

THE

PARTIES/CLAIMS SUBJECT

TO

issues to know: what happens if a party to the arbitration agreement is a subsidiary of Y and Y has all the assets can Y be brought to arbitrate? issues to know: to whom can a party bring a claim? issues to know: when can/cant a non-signatory be brought? how can you make a 3rd party subject to arbitration? General Answer: use traditional principles of CONTRACT LAW such as agency, piercing the corporate veil, estoppel Definition [Piercing the Corporate Veil]: Piercing the corporate veil
describes a legal decision to treat the rights or duties of a corporation as the rights or liabilities of its shareholders or directors. Usually a corporation is treated as a separate legal person, which is solely responsible for the debts it

incurs and the sole beneficiary of the credit it is owed. Common law countries usually uphold this principle of separate personhood, but in exceptional situations may "pierce" or "lift" the corporate veil. A simple example would be where a businessman has left his job as a director and has signed a contract to not compete with the company he has just left for a period of time. If he set up a company which competed with his former company, technically it would be the company and not the person competing. But it is likely a court would say that the new company was just a "sham", a "fraud" or some other phrase, and would still allow the old company to sue the man for breach of contract. A court would look beyond the "legal fiction" to the reality of the situation.

Collins and Aikman v. Building Systems {2nd Circuit, 1995}

leading case on how to determine scope of arbitration arbitrability of claims ISSUE: Whether a claim/allegation that pleads conduct that arises out of or is related to a K with an arbitration clause is arbitrable even when the conduct arises out of another K. In other words, what is the scope of the arbitration clause? A and B sign a K1 with arbitration agreement. Later they sign K2 (confidentiality agreement) that does NOT have an arbitration agreement NOR does it refer to K1. After K2 terminated in accordance with its own terms, A gave proper notice to terminate K1 and so it was terminated. Later, B seeks arbitration and claims K2 was a ruse. Other claims of axn include: o Fraud in obtain information through K2 o Fraud in the inducement of K2 Analysis: 2 FAA: a written provision arising out of K is valid, irrevocable, and enforceable Moses Cone: any doubt concerning the scope of arbitrable issue should be resolved in favor of arbitration. is the arbitration clause broad or narrow? TEST o Arising out of/relating to is BROAD the presumption is that the claims are arbitrable. Finding: the claims even though they are pleaded through K2 are related to K1 Approach: Look at the conduct/allegation of the action, NOT the label of the legal cause of action. If the allegations that are made touch matter then they are arbitrable. In determining whether a particular claim falls within the scope of the parties arbitration agreement, the court

focuses on the allegation in the complaint rather than the legal causes of actions asserted Note: It is NOT clear what touch means so this can be an argument in defense of NOT arbitrating. o Claims may be bifurcated even if they arise from the same set of facts.

THOMSON-CSF V. AMERICAN ARBITRATION ASSOCIATION

[2 CIRCUIT,
ND

1995] parent/subsidiary assuming obligation, agency, NONSIGNATORY [leading case] Issue: Whether a nonsignatory party that has absorbed a signatory party that was bound to arbitrate is now also bound to arbitration. HOLDING: despite ordinary principles of K and agency law, the new parent company did NOT voluntarily submit to arbitrate its disputes and therefore is NOT subject to arbitration. A enters into agreement w/ B in which B agrees to only supply equipment to A. A was bought by another company, C, who sold it to D. Now A is a division of D. B told D of agrt that D MUST buy from B based on Bs original contract with A. D refused to acknowledge agrt b/w A and did NOT consider itself bound. o To summarize: a SIGNATORY party is trying to compel arbitration of a NONSIGNATORY since the NONSIGNATORY is now the parent of the OTHER SIGNATORY to the original agreement. Arbitration agreement said all disputes b/w the parties to the agreement; parties includes affiliates Rule: a nonsignatory may NOT be bound to arbitrate except as dictated by some accepted theory under agency or contract law (incorporation by reference, assumption, agency, veil piercing, estoppel) [2 CIRCUIT, 2004] non-signatory compelling signatory, arbitrability of adhesion K, scope of arbitration agreement
ND

JLM V. STOLT-NIELSEN

arbitration agreement says any and all differences of whatsoever arising out of this Charter shall be put to arbitration in NYC or London. Issue: Does the arbitration clause cover claims under the Sherman Act? [scope] Holding: Any and all is a broad arbitration agreement and therefore collateral clauses are arbitrable. o Inquiry: does the dispute arise beyond core issues?

o The court here found that the Sherman Act claims are w/n the collateral matters encompassed by the broad arbitration clause. Issue: Whether a non-signatory parent or subsidiary company of a signatory company is covered by an arbitration agreement. Holding: a non-signatory may compel a signatory to the arbitration agreement where a careful review of the relationship among the parties, the Ks they signed, and the issues raised - factually specific inquiry are intertwined with the agreement .

TRACER V. NATIONAL ENVIRONMENTAL SERVICES COMPANY

[9 CIRCUIT,
TH

1994] only case that says arising out of is a NARROW clause; dissolvation of preliminary injunction X [Tracer] sues Y [NESC], seeking damages and injunctive relief. X then moves for preliminary judgment. X and Y had a licensing agreement and pursuant to the clause, Y moves for arbitration. The dt. ct. grants X the preliminary injunction AND grants Y the motion to compel arbitration. Arbitrators do NOT find a reason to continue injxn against Y and dismiss the claim for which the district court granted injxn. Therefore, Y moves to dt. ct. to remove preliminary injxn. Dt.ct. removes injxn BASED ON THE ARBITRATORS FINDINGS. So X appeals for the removal arguing that the arbitrators did NOT have jD to dissolve the injunction. why would x appeal removal of preliminary injxn if arbitrator concluded it was NOT warranted? ARBITRABILITY!!! the party is arguing that arbitrator did NOT have jD to issue/review/dissolve [preliminary, permanent] injunction. ANALYSIS: THE ISSUE IS WHETHER ARBITRATOR HAS JD TO REVIEW/ISSUE/DISSOLVE INJUNCTION. 1. Acknowledgement that FAA requires piecemeal resolution when necessary to give effect to an arbitration agreement. [Moses Cone] 2. Determination whether the arbitration agreement is broad/narrow. a. Here the arbitration agreement reads: in the event of any controversy or claim arising out of this agreement such controversy shall be settled by arbitration. b. Precedent is that arising under is a narrow clause. Arising under is the same as arising out of. Therefore, this too is a narrow arbitration agreement. 3. Determination whether this a claim that arises under this contract. a. The contention/claim against the party here it is trade secret does NOT relate to the interpretation or performance of the contract.

b. The claim here is actually a tort claim. It is NOT determinative that but for this licensing agreement, there would be NO tort claim. c. Therefore this is an independent wrong from the breach of the licensing agreement. Therefore, this cause of axn does NOT require the interpretation of a contract and therefore it is NOT arbitrable. d. Therefore, arbitrator did NOT have jD to dissolve the injxn because the injunction arises out of a right, a right which is NOT arbitrable. TEST [AT LEAST THIS COURTS TEST ON WHETHER A MATTER IS ARBITRABLE OR NOT]: 1. is the issue broad or narrow? 2. does the issue involve an interpretation of the contractual relationship b/w the parties? This inquiry asks whether the matter occurred but for the contract. LITIGATION STRATEGY: Whether party goes to arbitration or not, can still at least ask for preliminary injunction. LITIGATION STRATEGY: When a party seeks injxn or removal of injxn, the issue is whether this matter is arbitrable.

PREMIUM NAFTA V. FILI

SHIPPING

[HOUSE

OF

LORDS, 2007]

British concept of severability of arbitration agreement from principal contract; rescinding of K Issue: Whether a contract may be rescinded because it was originally formed through bribery of an agent who entered into the agreement representing a party? Holding: No. Under the separability doctrine, the arbitration agreement is a separate contract from the main K and since the parties had the intention of resolving ALL disputes arising under or related to the K, bribery does NOT make the contract voidable.

ARBITRABILITY WHO DECIDES?

Arbitrabiity is (1) the ability to be arbitrated or (2) the state of being arbitrable [SCOTUS, 1967] doctrine of severability; fraudulent inducement of K; rescission
AND

PRIMA PAINT V. FLOOD

CONKLIN

BACKGROUND:

Arbitration agreement embodies entire understanding of the parties on the subject matter. Any controversy or claim arising out of or related to settled by arbitration in NYC according to rules of AAA. F&C serves a notice of intention to arbitrate, so P files suit in Dt. Ct. seeking rescission to the K b/c of fraudulent inducement. ANALYSIS: 1. FAA 2 says an arbitration award is valid, irrevocable, and enforceable. 2. FAA 3 says once court is satisfied that the issue is arbitrable, if parties agreed to refer matter to arbitration, then court must stay proceedings. 3. FAA 4 says federal remedy for failure, neglect, refusal to arbitrate under written agrt. This sections says that should a party fail to arbitrate it has right under this provision to go to court to order arbitration.

AWUAH????

[2 CIRCUIT, 2004] arbitrability of adhesion K

ND

Issue: Whether use of a standard form of K which includes an arbitration clause amounts to an adhesion k when the other party had no choice as to whether to accept the K or NOT. Holding: If the claim is fraud in the inducement of the K, then the claim is subject to arbitration. If the claim is fraud in the inducement of the arbitration agreement an issue that goes to the making of the agreement to arbitrate, the federal courts may proceed to adjudicate it. Who Decides whether a matter (a) is arbitrable x? Who has primary power to decide arbitrability (y)? Did the parties agree to arbitrate matter (a) (x)? if parties did NOT agree to submit the question of who decides whether they agreed on a matter or not, then the court should decide just as if the court would decide any other question not submitted to arbitration. As to whether the parties agreed to arbitrate the matter (x) of who decides (y) whether parties agreed on (a) or not in deciding whether parties agreed to arbitrate a certain matter (x, xy), courts should generally apply ordinary state-law principles that govern the formation of Ks.

o Court should NOT assume that parties agreed to arbitrate arbitrability (xy) unless there is clear and unmistakable evidence that they did so. Test: whether a claim ancillary to breach of K is arbitrable: 1. is arbitration clause broad or narrow a. if narrow, a collateral matter will generally be outside its purview b. if broad, there is a presumption of arbitrability PRIMA PAINT: This case introduces the doctrine of severability/separability. It holds that an arbitration agreement is a separate contract based o its interpretation of the 2 of FAA. BUCKEYE CHECK CASHING: A challenge to the validity of the contract is subject to arbitration. Here a party alleges that the K has a provision that allows for charging usurious interest rates. Even though the K allows it, charging usurious interest rates is illegal (at least here in Florida). Therefore, P argues that the contract is void from the beginning, ab initio. SCOTUS says it does NOT matter that under Florida law, the contract is void or voidable. Under the doctrine of severability, the arbitration agreement was made validly regardless of whether a certain provision of the contract might render the entire contract void. The court says in FN1, that the issue of a contracts validity is different from the issue whether any agreement between the alleged obligor and oblige was every concluded. Applying the TEST 1. is the arbitration clause broad or narrow? a. the court finds that the arbitration clause is broad. If it werent, then there would be NO issue of arbitrability. JLM V. STOLT-NIELSEN The issue of non-signatory is for the courts to decide unless the parties agree to submit this issue to arbitration.

CHOICE

OF

LAW: STATE V. FEDERAL

State law can trump federal law in cases of arbitration if the parties agreed to abide by the state law [Volt v. Stanford]. The state law is what the parties agreed to, so the state law should be enforced. But what happens if the state law limits

INTERIM MEASURES:
These are temporary actions taken before final awards. they are needed to prevent irreparable harm [harm that canNOT be compensated by money]. It is noteworthy that all three sets of rules, AAA, ICC, UNITRAL permit interim measures. The major inquiries in this section are o what can should the courts do when a party comes to court to seek an interim measure? ANALYSIS: Is this a a NYC case? If Yes Article V of NYC If NO FAA 10

IRAN V. US [ARBITRATION 1984] interim measure, specificity, maintenance of status quo

Here the court awarded interim measure to Iran. This allowed Iran to enjoin US from selling its property. The reasons why interim measures were awarded is because (1) the property that would be lost would be irreplaceable (2) Iran was very specific about its requests. What the tribunal was trying to do was maintain the status quo before a final award is determined.

SPERRY V. GOVERNMENT

OF

ISRAEL [S.D.N.Y. 1982]

interim measure preliminary injunction, differences between what arbitrator/judiciary can do, refuse enforcement of award, manifest disregard, Foreign Sovereign Immunities Act BACKGROUND: Israel and Sperry enter into a K to design a communication system. This is a lot of money so the transaxn is conducted via a letter of credit. A dispute occurs, so the tribunal puts the letter of credit in escrow until final judgment. It is this order that Sperry wants to confirm but Israel wants to vacate. So an interim award has been ordered; the inquiry becomes what to do with this order. Israel argues that this award is preliminary injunction that the CoA had previously decided is NOT consistent with US law. 1. How is an award confirmed? FAA 9 provides that a court must grant an order confirming an award unless the award is vacated, modified, or corrected as prescribed in 10,11. 2. On what statutory grounds may an award be vacated? FAA 10,11 lists reasons why an award may be vacated. The court says it is a well-

settled proposition that judicial review of an arbitration award should be narrowly limited. Here, Israel is arguing that FAA 10(a)(4) allows Israel to vacate the award if the arbitrators exceeded their powers. This is NOT a provision in the FAA anymore. Can a court vacate an award because the arbitrator has exceeded the power the court would have? No. The court recognizes that arbitration is a different forum than the court of law. 3. What types of awards can a court review? Firstly, note that a tribunal can issue many types of awards: jurisdictional award, interim measures, damages. These are all types of awards. However, the rule is that only awards that are final are subject to judicial review. Disposition of an issue that is severable from other issues still before the arbitrators may be deemed final and subject to confirmation. 4. Did the arbitrators exceed their powers under FAA 10(a)(4)? Israel argues that the tribunal exceeded its powers by ignoring the doctrines of res judicata and collateral estoppel since the matter was already decided in CoA. This court says no, that a different matters were presented to the courts so the matters that the tribunal heard were NOT judicially settled. Therefore, the arbitrators did NOT exceed their powers. a. LITIGATION STRATEGY: AN EXAMPLE OF AN ARBITRATOR EXCEEDING ITS POWERS IT RES JUDICATA AND
COLLATERAL ESTOPPEL.

MAKE

SURE THAT IF YOU USE THIS STRATEGY, THE

SAME

MATTER HAD

BEEN ADJUDICATED ALREADY, AND

NOT

A DIFFERENT VERSION OF IT.

b. GO OVER WITH ADAM:

TO

WHY DID THE COURT

COURT THINK IT MADE SENSE TO KEEP THE AWARD?

NOT REMOVE ANOTHER

THE INTERIM MEASURE? QUESTION: AND

WHY DID THE OR CAN IT

ISNT THIS AWARD SUBJECT

NYC? DOES

THIS MEAN THAT THE AWARD CAN ONLY BE VACATED UNDER

ALSO BE VACATED UNDER AWARDS?

10

AND

11

GROUNDS?

ARE 10

11

ART 5

ONLY FOR DOMESTIC

5. On what non-statutory grounds may an award be vacated? The second ground is non-statutory but where manifest disregard by arbitrators is evident, the US courts may refuse to enforce the award. This doctrine was NOT fully explored in this case.

The following cases illustrate what is to be done if parties have an agreement to arbitrate and one party seeks interim measure in court b/c tribunal is NOT in effect or the court canNOT grant the interim measure (for example b/c a party is seeking an attachment order to a third party and the court canNOT issue the order because the 3rd party is NOT a signatory to the K]. DEFINITION: FOREIGN ATTACHMENT is property awarded to 3rd parties to secure a judgment or to be sold in satisfaction of a judgment.

MCCREARY TIRE V. CEAT [3rd Circuit, 1974]

foreign attachment, prejudgment attachment, when can a US court grant interim measure *contrast this with Carolina Power, has opposite holding 1. What agreements are governed by NYC? To find out, must look at 202 of FAA. This section says that a legal commercial relationship as described in 2 of FAA falls under NYC. Also, at least one of the litigants MUST be foreign. 2. Where in NYC does it say how to deal with interim measures? It doesnt. Since NYC does NOT address interim measures, 3 of FAA says that if any suit or proceeding is brought to US court for any issue that is arbitrable, the court will stay the trial. Therefore, the US court is powerless to do anything about an interim measure because it is considered interlocutory. Since it is interlocutory, the arbitration has not been completed yet. This means that if any party brings a proceeding to US courts to argue an interlocutory proceeding, US courts are compelled by FAA 3 to stay the trial until arbitration is complete. 3. Conclusion: Here the foreign attachment award is considered a prejudgment award, but since it is interlocutory, the measure canNOT be appealed. The court does NOT involve itself in the interim measure a prejudgment arbitration.

CAROLINA POWER AND LIGHT V. URANEX [N.D. CAL. 1977] using 3rd party to bring signatory to arbitration; prejudgment attachments * contrast this with McCreary, which has opposite holding
BACKGROUND: To bring Uranex, a signatory to an arbitration agreement, within the proper jurisdiction, Carolina attaches a debt to a 3rd party, Homestake. What Carolina is doing is transferring the debt that Uranex owns by Homestake, a party in California with the hopes of bringing Uranex within California jD under quasi in rem. Uranex eventually goes to arbitration but Carolina wants to maintain the attachment in order to protect any award that Carolina might receive in arbitration. Uranex files a motion to dismiss attachment. ANALYSIS: 1. Is this an NYC case? Yes because Uranex is a French company, so with a foreign litigant, this qualifies as NYC case even if the award is NOT a foreign award. 2. What does NYC say about prejudgement attachments? Nothing. So the issue becomes whether a prejudgement attachment is inconsistent with NYC. The court does NOT follow McCreary and finds that nothing in NYC preclude a prejudgment attachment. There is nothing to prevent the P from commencing the axn by attachment if such procedure is

available under the applicable law. Section 4 of the FAA grants dt. courts the power to actually order the parties to arbitration, but this provision has NOt been interpreted to deprive the courts of continuing jD over the axn.. Conclusion: NYC does NOT bar attachment pending arbitration [unlike McCreary which ruled that an proceeding must be stayed until arbitration is complete]. 3. So what is the conclusion: Prejudgment is allowed because there is NOTHING in the convention that disallows it. 4. LITIGATION STRATEGY: DOES THIS MEAN THAT ANY INTERIM MEASURE AXN THAT IS NOT MENTIONED IN
NYC
IS ALLOWED?

COOPER V. ATELIERS

DE LA MOTOBECANE [NY CoA, 1982] notice of attachment of debt

BACKGROUND: The issue here is whether an order of attachment is valid. During pendency of an action to seek permanent stay of arbitration in court, P commences action for money judgment and obtains an ex parte attachment of a debt owned by a New York corporation to D. P then seeks to confirm the attachment and was opposed by D, who moved to dismiss the complaint and vacate the attachment. The court confirms the attachment and grants a stay of arbitration. Is the courts confirmation of an interim measure permissible? ANALYSIS: 1. How does the court frame an attachment? The provisional remedy of attachment is in part a device to secure payment of money judgment. 2. So will the court grant an order of attachment? No. The order here is vacated since the underlying dispute between the parties involves their obligations under a contract which provides that disputes are to be resolved by arbitration and prearbitration judicial action in such cases should be restricted to determining whether arbitration may be compelled. Essentially, this is a blanket endorsement of McCreary, which directs parties to arbitration and does NOT interfere with any arbitral proceedings. 3. Conclusion: the court will NOT endorse an interim measure/provisional remedy because the underlying dispute is subject to arbitration.

dissolution of joint venture before arbitration begins BACKGROUND: Toyo and Continental used to be joint venture partners until a dispute arised. Both go to arbitration but before arbitration Continental wants to dissolve the venture and distribute the assets. Toyo in judicial court moves to StOP the dissolution. Dt.Ct. denies the motion to stop [i.e. allows the dissolution to

TOYO TIRE V. CONTINENTAL TIRE [9 CIRCUIT 2010]

TH

continue] because it believes it lacks authority to stop the dissolution. Toyo appeals dt. ct. decision. ISSUE: Can a court grant an interim measure to dissolve a joint venture? HOLDING: No. A court DOES have authority to issue injunctive relief and stop Continental from dissolving the business. This authority comes from ICC rules, which the parties agreed to which allows judicially imposed interim relief including injunctive relief. But since Toyo is seeking an interim measure to maintain status quo AND the meaninfulness of the arbitration process, the court will grant interim measure to stay [i.e. suspend] the dissolvation of the business. Rule: Emergency relief must be awarded or else arbitration process becomes nullified.

Judicial Enforcement/Scope of New York Convention

BERGESEN V. JOSEPHN MULLER [2D CIRCUIT 1983] what is NOT domestic case; 1st case to show arbitration in US is NOT domestic; reservation to NYC
BACKGROUND: Bergensen is a Norwegian owner and Muller is a Swiss charter. Therefore, both parties are foreign entities. There was arbitration which ruled in favor of Norway. Norway tried to enforce the award in NY and Muller appeal. ISSUE: DOES THE NYC APPLY TO COMMERCIAL ARBITRATION AWARD RENDERED IN THE US? HOLDING: YES. NYC IS APPLICABLE TO AN AWARD ARISING FROM ARBITRATION HELD IN NY BETWEEN TWO FOREIGN ENTITIES. [NYC ARTICLE I, FCC 201]. ANALYSIS: 1. Is this a NYC agreement? Yes because both parties are foreign and/or the awards were made within the legal framework of another country e.g. they were pronounced in accordance with foreign law o involved parties domiciled or having their principal place of business outside the enforcing jD. 2. What is the policy behind this broad construction? The courts believe this broader construction is more in line with the intended purpose of the treaty which was entered into to encourage the recognition and enforcement of intl arbitration awards.

3. Does NYC apply? Need to look at US Reservations when it ratified the treaty. They are set forth in Article I(3): the first provides that any nation may on the basis of reciprocity declare that it will apply the NYC only to those awards made in the territory of another contracting state. the second states that the NYC will apply only to differences arising out of legal relationships considered as commercial under the national law of the state declaring such a reservation.

INTERNATIONAL STANDARD ELECTRIC V. BRIDAS [S.D.N.Y. 1990]

jD over foreign award; vacancy, enforcement ISSUE: WHERE
CAN A PARTY GO TO VACATE OR SET ASIDE AN AWARD? WHO HAS THE AUTHORITY TO VACATE/SET ASIDE AWARD? ASIDE AWARD DETERMINED?

UNDER

WHICH LAW IS A MOTION TO VACATE OR SET

HOLDING: Vacancy is determined where the procedural law permits. BACKGROUND: ISE is a US company that arbitrates with Bridas, an Argentinean company. ISE and Bridas enter a shareholders agreement, but ISEA reneges. Bridas goes to arbitration as per their agreement for breach of fiduciary responsibility and breach of K. An award is granted to Bridas. ISE files petition to vacate while Bridas files petition to enforce. Note that here, the site for arbitration is Mexico, but the choice of law is US law. ANALYSIS: 1. Where is there statutory ground for vacating or setting aside an award? NYC Art. V(1)(e) provides that an application for setting aside or suspension of the award can be made only to courts of the competent authority of the country in which or under the law of which that award was made. The under the law refers exclusively to procedural and NOT substantive law, UNLESS there is an agreement b/w parties that award is to be governed by arbitration law different from arbitration law of country in which award was made. The arbitral procedural law under which the arbitration was conducted is the law used to determine subject matter jD to vacate a foreign arbitral award. In this case, the parties subjected themselves to procedural law of Mexico. Therefore, only the Mexican courts have jurisdiction under NYC to vacate the award. 2. WHAT ARE SOME DEFENSES THAT A PARTY CAN RAISE TO NOT VACATE AN AWARD? The defenses that can be raised are (1) Article V(1)(b). This is a due process /Inability to present its case defense. (2) Article V(1)(c). This is arguing that the arbitrator went beyond the scope of its powers. (3) Article V(2) (b), public policy defense. a. ARTICLE V(1)(B): Inability to present case defense. ISC says it could NOT present its case b/c the parties were NOT given the court experts identity nor a meaningful response to rebut that opinion.

The court ruled considering that ISC has NOT demonstrated an inability by NOT having raised an objection and it even paid for its fee for arbitration. Rule: When a party has the chance to raise an objection for a procedural proceeding but chose not to, this is NOT a ground for dismissing a vacantur ruling. b. ARTICLE V(1)(C): Arbitrator exceeded scope of submission. ISC argues that arbitrals decion was based on matters beyond the scope of submission to its because the damages were based on equitable norms rather than on the law. The court finds this argument not persuasive because the arbitration agreement has an amiable compositeurs provision, a provision that permits the arbitrators to decide the dispute according to the legal principles that they believe to be just without being limited to any particular national law and to disregard legal technicalities and strict constructions which would be required to arbitration agreement without this provision. c. ARTICLE V(2)(B): Public Policy Defense. ISC says enforcement of the law would be contrary to public policy. However, the court says that manifest disregard is a judicial creation that is NOT the same thing as a contravening public policy. Therefore, this defense is invalid. Judicial Enforcement/Enforcing Arbitration Agreement 1. NYC makes Arbitration Agreement Enforceable. 2. FAA actually enforces Arbitration Agreement.

MARCHETTO V. DEKALB GENETICS CORP [N.D. IL 1989]

enforcement of arbitration agreement outside US BACKGROUND: The arbitration agreement says all disputes will be settled in Italy. P brings suit in United States but D wants to move to dismiss, claiming that the suit should be brought to Italy. Issue: So how do you try to enforce an arbitration agreement in a forum outside the US? Analysis: 1. The issue becomes under what law does a court decide whether to stay or compel arbitration? Is it the law of the country as designated by the arbitration agreement? Or is it US law, since the suit was filed in US and a signatory to the arbitration agreement wants to compel arbitration where the parties agreed.

2. 3. 4.

5. 6.

7.

8.

a. This is US federal law because 203 says an action or proceeding falling under NYC shall be deemed to arise under the laws and treaties of the US. b. This means that it is the US courts who get to decide if the arbitration agreement is valid or not. If it is, then the US courts are bound to the NYC because of the FAA, so they must enforce arbitration. FAA governs enforcement, interpretation, and validity of the arbitration clauses in commercial Ks. Moses Cone. There is a presumption in favor of arbitration. Mitsubishi. FAA 201 enables NYC into US law. NYC is designed to encourage arbitration of international commercial disputes and unify the standards. Therefore, 201 allows US courts to enforce arbitration agreements that provide for arbitration in a foreign forum. a. However, there are limitations: USs reservations to the NYC. FAA 203, 206 confer the power to compel arbitration anywhere in the world where the parties have agreed. However, they are limited by reservations made by the U.S. Before the US courts compel arbitration in a foreign forum, certain elements must be satisfied. These elements are from Article II of the NYC. If these factors are met, then arbitration is mandatory. They are: a. is there a written arbitration agreement? b. does the agreement provide for arbitration in a signatory country? c. does the agreement arise out a commercial legal relationship? d. does the commercial transaction have a reasonable relationship to the foreign state? For the party that does NOT want to enforce arbitration agreement, there is a limitation in Art. II 3, where it says that a court does NOT have to compel arbitration if it finds that the said agreement is null and void, inoperative, or incapable of being performed. Rule: The stay or enforcement of an arbitration agreement is US Federal law even though US law may have nothing to do with the arbitration agreement because the US is bound to NYC as it is implement by Chapter 2 of the FAA.

REPUBLIC

OF

NICARAGUA V. STANDARD FRUIT CO. [9 CIR. 1991]

TH

enforceability of a K;; implementing K was NEVER signed; arbitrability Issue: Whether the arbitration agreement can still be enforced if there is a question about the enforceability of the contract as a whole. Analysis: 1. It is the courts responsibility to determine the threshold question of arbitrability.

2. Based on the severability doctrine implicit in FAA and NYC, both these bodies of law say that if there is an arbitration agreement, it should be enforced. 3. Here there is NO dispute whether theres an agreement. As a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration. Moses Cone 4. Rule: When determining whether to enforce an arbitration agreement, the courts should look at the validity of the arbitration agreement and NOT the contract as a whole. In other words, arbitrability is determined by reference to arbitration clause. 5. Rule: if you have an enforceable arbitration agreement, the dispute is for arbitration a. Compare this with Three Valleys

National Iranian Oil v. Ashland Oil [5 CIRCUIT 1987]

TH

refusal to comply with forum selection clause in a location that is a nonsignatory-to-NYC state {Iran} FRAMEWORK: A party to the arbitration agreement tries to enforce arbitration agreement/compel arbitration at a place other than where they had agreed to arbitrate. BACKGROUND: Ashland, a party to an arbitration agreement, refuses to abide by the forum selection clause in the arbitration agreement because it is dangerous nor has it agreed it arbitrate anywhere else. Iran tries to compel arbitration in Mississippi as opposed to Iran claiming that it has waived its forum selection clause and because it is impossible to render performance. 1. Argue that there is a strong federal policy favoring the private resolution of contract disputes. a. However, the court does NOT exercise the severability doctrine here probably because Iran is the enemy of the US. 2. 4 says a party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any US dist. ct. for an order directing that such arbitration proceed in the manner provided for in the agreement.the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement. The hearing and proceedings under such agreement shall be within the district in which the petition for an order direct such arbitration is filed. a. Therefore 4 mandates two conditions: i. that the arbitration be held in the st. in which the court sits ii. AND the arbitration be held in accordance with the agreement of the parties.

1. Since the arbitration agreement said that arbitration shall be held in Iran, the court held that it did NOT have the power under 4 to compel arbitration elsewhere. 2. Rule: Location of arbitration agreement must be enforced unless a party raises an Article V defense. 3. Also, Iran is NOT a signatory to NYC. 206 grants US courts the power to compel arbitration only in signatory countries. 4. National Oil next raises an impossibility defense, saying that it canNOT possibly bring Ashland to arbitration in Iran. a. Rule: In order to override the venue designation in an arbitration agreement, the party must show that the venue provision is severable from the rest of the arbitration agreement. This determination rests on whether the parties INTENDED to separate the venue provision from the rest of the arbitration agreement. i. Here, the choice of law provision and other duties pertaining to arbitration are assigned to Iran. Therefore, the court finds that there was NO intent to separate the venue provision from the arbitration agreement. 5. Rule: the courts will NOT rewrite arbitration agreement because arbitration is a creature of contract.

INTERGEN V. GRINA [1st Circuit 2003]

enforcing arbitration agreement; P is a non-signatory but D wants arbitration so presents theories FRAMEWORK: A foreign company (D) and its American agent want to compel arbitration against another foreign company. However, P AND D are both NOT a signatories to the arbitration agreement. FINDING: P, Intergen, is NOT bound by the arbitration agreement, so D, Alstorm canNOT compel arbitration. ANALYSIS: 1. To enforce the arbitration agreement, the court makes the initial query: Arbitrability Inquiry a. is there a valid agreement to arbitrate? b. is the movant entitled to invoke the arbitration clause? c. is the other party bound by that clause? d. does the claim asserted come within the clauses scope? 2. What law governs? a. FAA governs because it is through the FAA that the US courts can recognize and enforce a foreign arbitration award.

3. Theory for supporting notion that non-signatories can be bound by arbitration provision: Judicial Estoppel a. this doctrine prevents the litigant from presenting a claim that it had presented in an earlier/previous claim b. this doctrine is invoked with a party has adopted on position, secured a favorable decision, and then taken a contradictory position in search of legal advantage. i. This is position a party would be taking in a revised pleading c. Rule: An amendment to a its complain prior to the issuance of any substantive ruling addressed to the original compliant does NOT confer an advantage to the amending party. Therefore, this doctrine canNOT be employed. 4. Theory for supporting notion that non-signatories can be bound by arbitration provision: Equitable Estoppel a. this doctrine applies to stop a party from enjoying rights and benefits under a contract while at the same time avoiding its burdens and obligations; this doctrine is used to prevent a party from benefiting without sacrificing anything. 5. Theory for supporting notion that non-signatories can be bound by arbitration provision: Third Party Beneficiary a. To use this doctrine, there must be evidence that a contracting party intended to confer a benefit on a third party. i. There must be a clear intention on the part of the contracting party. ii. Rule: Just because a parent company benefited does NOT mean it is a third party beneficiary. 6. Theory for supporting notion that non-signatories can be bound by arbitration provision: Agency a. To use this doctrine, the following elements must exist: i. an agency arrangement must exist ii. the arrangement must be relevant to the legal obligation in dispute 7. Theory for supporting notion that non-signatories can be bound by arbitration provision: Alter Ego a. Under federal common law, there is NO precise litmus test for determining when the corporate form should be ignored. b. The overreaching principles is that corporate form may be disregarded only if considerations of fairness or public necessity warrant such a step. c. The test that court uses is: i. whether the entities in question have ignored the independence of their separate operations ii. whether the defendant employed the multiplicity of entities as part of an artifice or scheme to defraud iii. whether holding the corporate form inviolate would lead to substantial injustice or inequity

d. HOWEVER, the court cautions against invoking this doctrine because common ownership and common management without more are insufficient to override corporate separateness. e. Another reason why the courts do NOT want use this doctrine is because it is designed more to help third party; it is an equitable doctrine.

ARTHUR ANDERSEN V. CARLISLE [SCOTUS 2009]

enforcing arbitration agreement; appealing under 16(a) Rules: If a court denies a motion to arbitrate, this decision is arbitrable. If a court grants arbitration, this is NOT appealable b/c it is NOT considered a final order 16(3) Here D asserts arbitration [3] and it wants to stay litigation but the court denies this action. Therefore, D invokes 16(a) and appeals. 6th Circuit rejects this because D is NOT a signatory to the arbitration agreement, so it canNOT invoke 16(a) because there is no agreement to arbitrate. However, a non-signatory can motion to stay proceedings and compel arbitration if state contract law allows him to enforce the arbitration agreement.

ENFORCING AWARDS:
enforcing awards; declaratory judgment; no show to arbitration Rules: 207 provides that within 3 years a party to arbitration can confirm an award in any court that has jurisdiction against any other party to the arbitration. The court shall confirm the award unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention. Therefore, the default rule is that awards are enforceable unless there is an Article V defense. The burden is on the party opposing the enforcement. Holding:

BIOTRONIK V. MEDFORD MEDICAL INSTRUMENT [D.NJ 1976]

There is NO fraud when the winning party did NOT raise issues favorable to party that did NOT show up for arbitration and the other party had an opportunity to be heard.

NORTHROP CORP. V. TRIAD INTL MARKETING [9 CIRCUIT 1987]

TH

enforcing award; change in foreign nations laws make compliance with AA illegal; choice of law; law keeps performance from happening ISSUE: How do you regard a contractual relationship when a transaction outside the US is made illegal when the foreign government changes its laws. Holding: This turns on the choice of law in the contract. Background: N supposed to pay T commission on sales of aircraft they paid at some point but then in 1975 Saudi Arabia issued a decree that barred paying commissions so N stopped paying the commissions. T claims in arbitration that N breached for NOT paying commissions; N defends on the grounds that Saudi Law makes it illegal to pay the commissions. Arbitration occurs and an award is rendered in favor of T. Analysis: This becomes a contract interpretation issue. This is an agreement governed by the laws of Cali so Cali laws should determine the effect of the decree on Ns obligation of the K. The Saudi Law is NOT determinative. o But under Cali law, what is the effect of the Saudi decree on the parties? The court does NOT use Saudi law because it is NOT the governing law of the contract o Court found that even though Saudi issued a decree, N could still pay commission and T could still perform its obligations. The decree is NOT preventative. o Court next looks at public policy: is enforcing this award contrary to US public policy? Court finds that just because it is illegal in Saudi does NOT mean it is illegal in Cali. o LITIGATION STRATEGY: Think about how you would protect yourself fro unexpected changes. Could you have foreseen the changes coming?

IRAN AIRCRAFT INDUSTRIES V. AVCO [2 CIRCUIT 1992]

ND

Due process under Article V(1)(b); evidentiary hearing; inability to present to present case

defense rejected BACKGROUND: Avco argues that the district court properly denied enforcement of the Award pursuant to Article V(1)(b) of the New York Convention because it was unable to present its case to the Tribunal. RULES: giving proper notice of arbitration proceedings is essential and a party should be given the opportunity to respond. Mathews v. Eldridge

ENCYCLOPAEDIA UNIVERSALES V. ENCYCLOPADEIA BRITANNICA [2 CIRCUIT 2005]

ND

arbitrators exceeding their powers; courts do NOT enforce arbitration b/c of agreed upon arbitral procedures Background: Arbitration tribunal selected third member without proper adherence to the arbitration agreement. This is a grounds for refusing to enforce an award under Article V(1)(d). This reads: The composition of the arbitral authority or procedure is NOT in accordance with the agreement of the parties or NOT in accordance with the law of the country where the arbitration took place. BoP: The party opposing the enforcement of an arbitral award has the burden to prove that one of the NYC Article 5 defenses applies. Finding: The arbitral award was improperly composed under Article 5(1)(d). Because it was improperly composed, it had NO power to bind the parties. The appointment of the third arbitrator was premature and therefore the composition of the arbitral authority was NOT in accordance with the parties agreement. The process and procedure is NOT in accordance with what the parties agreed. Rule/Lesson: There is a strong public policy in favor of arbitration but courts should NOT overlook agreed upon arbitral procedures in deference to that policy.

CHINA MINMETALS V. CHI MEI [3 CIRCUIT 2003]

RD

absence of agreement can avoid enforcing award; opposing jD or challenging jD BACKGROUND: A party appeared in arbitration even though it was challenging jD.

Finding: The courts will NOT enforce an arbitration agreement if there is NO arbitration agreement; If the courts did, then anyone can be bought.

COMMERCIAL UNION V. LINES [2 CIRCUIT 2004]

ND

party had deceived for the specific intent to avoid regulations Background: E re-domesticates itself to Bermuda to take advantage of another countrys bankruptcy laws. Com agrees to arbitrate the fraud issue and seeks rescission of K. Arbitrators issued an award to E even though it unanimously acknowledged that E re-domesticated by receipt. Aribitrators said that the arbitration panel is the final adjudicator and that commercial union is NO worse off in Bemurda than in Massachusetts. They feel that when the arbitration is completed, Comm end up in the same position as it would have been had there bee NO re-domestication. Comm moves to vacate while E moves to confirm. Dt. Ct. denied Comms motions and affirmed the award. Comm appeals. Issue: Since Emlico used deceit, any advantage it gained should be denied. Finding: This is a public policy issue because the court has to balance the public policy favoring arbitration with NOT allowing a wrongdoer to benefit/profit through his wrongdoing. The court decides to vacate. Principle: courts should NOT enforce fraudulent conduct.

SARHANK V. ORACLE [2 CIRCUIT 2005]

ND

joint and several liability; jD; non-signatory PARENT Background: Here there is an American parent company, Oracle, with a Foreign subsidiary. Dt. Ct. confirms an arbitration award against foreign subsidiary but PARENT appeals. The award was rendered j/s against Oracle and its subsidiary in Egypt. The agreement was between Sarhank and the subsidiary jD: 203 gives dt. ct. s-m jD over cases brought to enforce arbitration agreements under NYC. To invoke sm-JD 1. claim a cause of action under NYC 2. describe a written agreement b/w Systems and Sarhank

3. show legal relationship b/w Oracle and Sarhank because Systems was a shell company 4. describe arbitral award a. Therefore, Sarhank has pleaded an award under NYC therefore there is s-m jD. Defense: Oracle argues that under Article V(2)(b) US courts are NOT required to enforce an agreement if its s-j is NOT capable of arbitration in US or if arbitral award is against public policy. 1. under US law, whether a party has consented to arbitrate an issue to be decided by court in which enforcement of award is sought. The court uses domestic K law to determine whether the parties agreed to submit the issue of arbitrability to arbitrators [First Options]. In other words, courts should have primary responsibility absent parties agreement to determine arbitrability. 2. What law should US apply to see if award is enforceable? a. American contract law because there was NO agreement b/w Oracle and Sarhank

VACATING AWARDS:
MOBIL OIL INDONESIA V. ASAMERA OIL (INDONESIA) S.D.N.Y 1980
arbitrators exceeding their powers 10(a)(4) How do you argue that arbitrators exceeded their powers? argue that arbitrators made a mistake in applying the choice-of-law power o This provision is given the narrowest of readings o Here there is NO challenge to arbitrators b/c they did what they were supposed to do as long as it is barely colorable, the award is valid

COMMONWEALTH COATINGS V. CONTINENTAL CASUALTY CO. SCOTUS 1968

arbitrator bias FAA section 10 allows awards to be vacated where it was procured by corruption, fraud, or undue means or where there was evident partiality i. These provisions show Congress provided for an impartial arb ii. Even if there was no finding of arbitrator being guilty of fraud or bias in deciding, and it is true that arbitrators cannot be severed from all their ties w/ the business world, however, with an inkling of pecuniary interest, theres a simple req of disclosure to the parties of any dealings that might create an impression of bias (AAA rules section 18)

iii. However concurrence states that non-disclosure only creates a presumption of bias and where non-disclosure is not calculated, presumption can be overcome

POSITIVE SOFTWARE V.

NEW

CENTURY MORTGAGE (5 CIRCUIT 2007)

TH

arbitrator bias arbitrators mere non-disclosure of prior connections w/ one of parties to arb is insufficient, standing alone. Arbitrator who claimed he had nothing to disclose had been member of another firm Other firm together with firm that was one of the parties in this arbitration, had been counsel for party in a patent litigation (about 7 years or more in the past) i. Failure to disclose must involve significant compromising connection to one of parties ii. Evident partiality evident means clear to the vision or understanding (synonymous w/ manifest, obvious, and apparent) partiality means bias iii. Award may not be vacated bc of trivial or insubstantial prior relationship b/w arbitrator and the parties iv. Reasonable impression of bias standard is interpreted practically rather than w/ utmost rigor v. In this case, previous representation by two of the 34 attorneys in unrelated litigation at least 7 years ago was not enough to be evident partiality HYPO: What happens if you have an international arbitration award? A real one (this one is domestic) but the award is rendered outside US and in that case, the losing party discovers that arbitrator failed to disclose that his cousin was lawyer who won case for that party but losing party finds it astonishing and wants to do something about it. What can it do? 1) If its so wrong, it can always seek to have award vacated but only at the place where award was rendered 2) If the winning party tried to enforce award in US, losing party would defend is there a provision in Article V of NY Convention that matches? V(1)(d) deals with whether proceeding is in accordance with parties agreement a. How would you take this provision and argue thats a basis for not holding award? i. Require independence and impartiality and disclosure so if you argue there is failure to disclose, there was lack of independence then its probable that arbitrators violated rules this would help its critical if somehow arbitration

hasnt proceeded in accordance with those requirements, its not in accordance with arbitration clause ii. Understanding what the rules are and how they can be used, is often key to how to vacate an award

HALL STREET V. MATTEL (SCOTUS 2008)

request to deviate, scope of judicial review NOT jD by private K [FN2]; manifest disregard of law; review for error of law; standard of review Issue: Can parties contract to have matters reviewed by court for vacatur and modification that are beyond what is provided in FAA 10, 11? Holding: No. The reasons provided for in 10,11 are exclusive. Hall Argues the Following: 1. in Wilko the court was saying that manifest disregard of the law is a ground for which courts can overrule arbitration award. Hall extends this argument by saying that if courts have leeway to expand grounds for vacancy, contracting parties should also. a. NO!!!!! The court does NOT buy this argument for the following reasons: i. court does NOT like the leap from judicial expansion into private expansion ii. what exactly does manifest disregard mean? 2. FAAs purpose is to enforce agreements so if the parties agreed to vacatur on certain grounds, the court must enforce. a. NO!!!! the court does NOT buy this argument either b/c there is something that prevents the FAA from expanding its scope i. ejusdem generic doctrine specifies that a general word will be interpreted to be consistent with specificsthis suggests that FAA canNOT be expanded b. FAA 9 is restrictive b/c it says must grantunless for the following. this also indicates that 9 was intended to be restrictive. 3. Can parties agree to contract for greater review of arbitration awards? a. Court said parties canNOT do this b/c reasons for vacating awards is EXCLUSIVE. i. Defense: however, look at Volt. According to Volt, parties can incorporate state law, so perhaps state law can allow for a standard of review. 4. Summary: Statutory grounds for expedited judicial review to confirm, vacate, or modify/correct arbitration award are exclusive and canNOT be supplemented by contract. Also, arbitrations are contracts and parties can contract for the standard of review. The issue becomes whether this is enforceable? Some parties even K for no review b/c they want finality. Dissent:

 Dissent says majoritys decision conflicts with FAA and ignores historical context.

ENFORCING VACATED AWARDS:

res judicata of an issue decided in a foreign court; unique b/c arbitration agreement prohibits seeking appeal; award is set aside

CHROMALLOY AEROSERVICES V. ARAB REPUBLIC

OF

EGYPT [D.D.C. 1996]

Issue: Can annulment of an arbitration award made in a foreign competent authority of the country in which or under the law of which that award was made be used to deny enforcement of an award? Holding: No, not under the doctrine of international comity. This is because no nation is under an unremitting obligation to enforce foreign interests which are fundamentally prejudicial to those of the domestic forum. Analysis: The precise question is whether the US court should give res judicata effect to the decision of the Egyptian Court of Appeal, NOT whether the court properly decided the matter under Egyptian law. Here the court has assumed that the Egyptian Courts decision is proper. The court finds that the act of state doctrine as a whole does NOT require a U.S. court to defer to a foreign sovereign on these facts.

confirmation of award in U.S. declared vacated in state under whose laws arbitrated under Background: There is arbitration in country X. Yet the court of country X sets aside the award when the winning party tried to enforce the arbitration award. Therefore the winning party brings suit in U.S. to confirm the award. Arbitration Agreement: any dispute, controversy, or claim arising out of this K or the breach, termination or validty therefof, shall be finally and conclusively settled by arbitration in accordiance w/ Arbitration Rules of UNCITRAL. The arbitration procedure not governed by UNCITRAL shall be governed by the substantive laws of Nigeria and contracts shall be governed by the substantive laws of Nigeria. K also said judgment upon the award of the arbitrators may be entered in any court having jD. Analysis: This dispute arises under NYC b/c party is seeking enforcement of arbitration award in a nation other than the nation where the awards were made (Art. 1 allows for the enforcement of awards in a territory of a State other than the State where the recognition and enforcement of such awards is sought.

Baker Marine v. Chevron [2nd Circuit, 1999]

 Article V(1)(e) provides that a court may refuse enforcement of an award that has been set aside or suspended by a competent authority of the country in which or under the law of which the award was made. i.e. if a foreign court sets aside or vacates an award, the US court may refuse to enforce the award that was set aside of suspended as long as the original vacatur was done by the competent authority Holding: [From Termorio]: b/c there is noting in the record indicating that the proceedings before the foreign court is other than authentic, the dt. ct. is obliged to respect the jdgmt of foreign ct.

TERMORIO V. ELECTRANTA [COA, DT. CT. 2007]

grounds for nullification; enforcement of arbitration award on public policy grounds; validity of a foreign judgment vacating an arbitration award

FRAMEWORK: X wins an award against Y in a foreign tribunal. Y has the

award nullified in the judicial forum of the state under which the tribunal made its decision because it argued that the award could NOT have been made under the laws of the state. Despite the award NOW NULLIFIED, X seeks enforcement in US courts because under FAA 201, an award must be enforced.

BACKGROUND: VACATED.

APPELLANTS SEEKING TO ENFORCE AN AWARD THAT HAS BEEN

Tribunal issues an award in favor of TermoRio. Losing party, Electranta, files an extraordinary writ in Colombia, where the award was rendered to overturn the award. The Colombian court does nullify the award on the ground that the parties agreement violated Colombian law. Despite the nullification, an investor for TermoRio sought enforcement of the award. Investors argument is that under FAA 201 [enforces NYC], enforcement of the award is required. The Dt. Ct. dismissed TermoRios request for enforcement of the award which was nullified on the following grounds: 1. failure to state a claim for which relief can be granted. 2. forum non conveniens 3. Dt. Ct. also dismissed TermoRios enforcement axn under Art. V(1)(e) of NYC ANALYSIS: Firstly: who is the winning party? The one who initially won the award or the one who was able to nullify it? The way Termorio frames the argument: o Electranta is undermining the award by filing an extraordinary writ to overturn the award. This led to the vacatur of the award.

The basis for this overruling is that the arbitration agreement calls for governing of the agreement via ICC rules and Colombian law but Colombian law does NOT permit use of ICC procedure. o Breach of K claim Electrantas defense: o The award was properly vacated by Colombian court o Dt. Ct. lacks subject-matter jD by operation of the Foreign Sovereign Immunities Act o SoL barred the suit o complaint should be dismissed under doctrine of forum non conveniens Standard of review for failure to state a claim : de NOVO Standard of review for forum NON conveniens : reversal only upon clear abuse of discretion 1stly: does the NYC apply? o the NYC allows courts in one country to enforce arbitral awards rendered in another signatory country FAA 201 o the NYC provides that signatory nations are to recognize and enforce arbitral awards rendered in other nations (NYC Art. III) o HOWEVER, enforcement of awards may be refused if the award was set aside by a competent authority in the country in which the award was made. Art. V(1)(e) VALIDITY OF A FOREIGN JUDGMENT VACATING AN ARBITRATION AWARD o in Mitsubishi the court said there is a federal policy in favor of dispute resolution o General Rule: each contracting state shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon {NYC Art. III} o General Rule: if the place where the arbitration award was rendered is a party to the convention, then all other Convention states are required to recognize and enforce the award, regardless of the citizenship or domicile of the parties to the arbitration [Creighton Ltd.] Exception: Those enumerated in NYC Art. V o Rule: under the NYC only a court in a country w/ 1O jD over an arbitral award may annul the award. [Karasha] o Rule: Art. V(1)(c) the state in which, or under the law of which the award is made will be free to set aside or modify an award in accordance with its domestic arbitral law; on the other hand, when there is an action for enforcement in a foreign state, the state may refuse to enforce the award only based on Art. V o The party trying to argue that theres no claim stated is saying that a party to NYC does NOT need to recognize and enforce an award if refusing party furnishes proof that the award was set

aside by a competent authority of the country in which or under the law of which the award was made. Art (V)(1)(e). Appellees (refusing party) argue that there is NOTHING in the record indicating that the proceedings were tainted or that the judgment of the court is NOT authentic. therefore there is NOT claim nor cause of action under FAA nor NYC. The court agrees. It cites Baker Marine and states that it does NOT want to mechanically apply domestic law to foreign awards under the NYC because this would undermine finality and regularly produce conflicting jdmts. Another reason it cites is that the NYC does NOT exist to be enforced in Contracting states if it has been lawfully set aside by a competent authority. CONSIDERATION OF PUBLIC POLICY o The party wanting to enforce the award, appellee, says US has discretion under NYC to enforce an award despite annulment in another country b/c Art. (V)(1)(e) says recognition and enforcement may be refused if the award was set aside by a competent authority in the primary state. It also argues that a state is NOT required to recognize a foreign judicial proceeding if that proceeding is contrary to public policy. Appellant argues that the since the vacatur of the award was contrary to both the Colombian and international law. This means that the vacatur is an insult to both international and US [how US?] policy. Therefore, the process of nullifying the award is just wrong. To support its claim, appellant relies on In re Chromalloy where the dt. ct. refused to recognize that the Egyptian court nullified an award [meaning the dt. ct. recognized the award] because it would violate US policy that favors arbitration. Appellees say that In re Chramolloy is NOT applicable b/c in Chramolloy the parties contracted on the appealability of the vacated award whereas here, Electranta questioned and objected to the tribunal that the arbitration panel was NOT proper nor authorized by law o Court also holds that a jdgmt whether to recognize or enforce an award that has NOT been set aside in the State in which it was made is quite different from a jdmt whether to disregard the axn of a court of competent authority in another State. o Court interprets NYC such that as the state in which or under the law of which the award is made will be free to set aside or modify an award in accordance with its domestic arbitral law, and its full panoply of express and implied grounds for relief.This means that a primary State necessarily may set aside an award on grounds that are NOT consistent with the laws and policies of a secondary Contracting StateThe NYC does NOT endorse a regime in which secondary States routinely second-guesses the jdmt of a court in primary state when the

MOTION

TO

court in the primary state has lawfully acted pursuant to competent authority to set aside an arbitration award made in its country. MY OWN SUMMARY: the threshold is very high for asking a US court to ignore the judgment of a court of competent authority in a primary state vacating an award. it takes more than arguing it offends the public policy of US to overcome Art. V(1)(e). RULE/SUMMARY OF THIS COURTS DECISION: when a competent foreign court has nullified a foreign arbitration award, US courts should NOT go behind that decision absent extraordinary circumstances NOT present I this case. the test of public policy canNOT be simply whether the courts of a secondary State would set aside an arbitration award if the award had been made and enforcement had been sought w/n its jD. The policy behind this is that different states may have different grounds for setting aside arbitration awards, which would lead to inconsistent enforcement of arbitral awards. DISMISS FOR FAILURE TO STATE A CLAIM UNDER 12(b)(6) Std that this case uses is dismissal is appropriate under 12(b)(6) only if it is clear that NO relief could be granted under any set of facts that could be proved consistent with the allegations. So appellees are arguing that the standard was NOT met. Appellants argue that appelles are raising an affirmative defense. An affirmative defense can only support a 12(b)(6) dismissal if the defense is unavoidably established by the facts alleged on the face of the complaint. Therefore, appellants argue that Colombia has to conclusively argue that the nullification defeats the appellantss claim; however, application of the Art. V(1)(e) canNOT be conclusive under NYC and US law, an arbitration award may be enforced despite having been nullified in the country in which it was issued. Therefore, this is NOT a conclusive issue so appellees motion for sJ should NOT be granted. The court does NOT agree with this premise. WhY???

CONCLUSION: The CoA affirms the judgment of Dt. Ct. LITIGATION STRATEGY: When a foreign company is involved, the foreign company should defend enforcement in US by doctrine of forum non conveniens LITIGATION STRATEGY:

Be mindful of state owned and state controlled companies: they may be an agency or instrumentality of the state meaning they are covered by the Foreign Sovereign Immunities Act

YUKOS V. ROSENFT [COURT OF AMSTERDAM, 2009]

enforcement of vacated awards; conflict of law BACKGROUND: Yukos is awarded by tribunal. The award is overturned by a Russian court. So Yukos seeks to enforce the award in the Netherlands, even though it was overturned. It is important to note that Yukos is NOT challenging the nullification of the award, but just trying to enforce the award even though the Russian court nullified it. The issue is whether Dutch courts under Dutch law recognize the overruling. So what we have here is an inquiry of conflict of law; a clash. Russian law overturns an award legally. But is this legal under dutch law? Whether it is/isnt affects how the award can/cant be enforced in Netherlands. Article V permits the recognition of the setting aside of an award but does Dutch law? ISSUE: Whether Dutch law can refuse to recognize the overturning of a foreign award if that overning is NOT legal under Dutch law. Analysis: 1. GENERAL RULE: under the principle of NYC the judge being asked to render an award must respect the overturning of the arbitration rulings. 2. HOWEVER, the recognition and enforcement of an award may be refused at the losing partys request if a. losing party gives the competent authority of the place were recognition is being sought PROOF that (1) the award was set aside (2) by a competent authority of the country in which (3) the award was made. Article V(e)(2) 3. Premise: the question as to whether the rulings by the Russian civil court to overturn arbitration rulings may be recognized in the Netherlands must be answered on the basis of Dutch civil law. 4. Premise: Dutch judge does NOT have to recognize the overturned ruling in Russian court if the verdict given in the Russian court canNOT be recognized in the Netherlands. 5. General Rule: a foreign verdict is recognized as long as it was arrived through due process. 6. Yukos argues that it didnt get due process b/c the judiciary was NOT impartial NOR independent. The evidence it presents that the judiciary was biased: a. Analysis by a murdered journalist b. Analysis by a parliamentary assembly of the council of Europe

c. Sale of a business to a Russian state owned company is suspicious because of the ease and below market price of the sale d. Analysis by Transparency International 7. So the Dutch court finds that the Russian decision was partial and subjective. 8. As a defense, Rosneft, the party that had the award overturned invokes Art. V(2)(b) saying that the award should NOT be enforced because it would go against public policy of the Russia. Note that Rosnefts defense is NOT focused on the validity of the overturning of the award, but its defense strategy is the same as if the award were NOT nullified but it wanted to resist the recognition and enforcement of the award. The Dutch court rejects this defense because it finds that the reason proposed by Rosneft does NOT violate public policy of Netherlands. 9. Next, Rosenft raises the defense of Article V(1)(b) that recognition and enforcement of an award may be refused if the award invoked was NOT given proper notice of the appointment of the arbitrator or of the arbitrator proceedings or was otherwise NOT able to present his case. The court rejects this defense also because there was NO evidence. 10. So in conclusion, the Dutch court in finding that the Yukos was deprived of Due Process since the award was set aside by a NONCOMPETENT authority, a reqt of Art. V(1)(e), so that there is NO basis for refusing to recognize and enforce the award.

PERSONAL JURISDICTION
GLENCORE GRAIN V. SHIVNATH RAI HARNARAIN [9 CIRCUIT, 2002]
TH

personal jurisdiction

ISSUE: Does US court have personal jurisdiction over party that is a distributing company and whose shipments harbor in US. BACKGROUND: The arbitration agreement provides for English law and place of arbitration will be England. An award is rendered for Glencore Grain. Shivnath never pays so Glencore goes to India to enforce the award. Also, Glencore files for confirmation in California under FAA 201. India challenged being brought into US courts on the grounds that US courts have no pJ. Glencore Grain argues that Shivnath has minimum contact because its shipments to Cali are sufficient so there is pJ. REVIEW FOR BRINING AXN INTO COURT: 1. NOTICE 2. VENUE 3. SUBJECT MATTER JD

4.

PERSONAL JURISDICTION

a. ENTITY

PERSONAM, REM, QUASI IN REM [VERY IMPORTANT. if court identify property that could serve as the basis for jD over D, then there cant be jD even if there is jD. I.

B. ASSOCIATION

SPECIFIC, GENERAL SPECIFIC: RELATED TO EVENT II. GENERAL: NON-EVENT RELATED, SUBSTANTIAL C. IS IT REASONABLE!!!! [VERY IMPORTANT INQUIRY]

AND CONTINUOUS CONTACT

ANALYSIS: 1. Do US courts have subject matter jurisdiction? Yes because FAA is the implementing legislation and the UK is a party to the NYC. 2. Does California have jD? The exercise of personal jurisdiction over a non-resident must be authorized by a rule or statute and consonant with the constitutional principles of due process. Myers 238 F.3d LITIGATION STRATEGY: TO ARGUE THAT A COURT DOES NOT HAVE PERSONAL JURISDICTION, CAN TRY TO SHOW THAT IMPOSING PJD IS A VIOLATION OF DUE PROCESS. Anyway, the statute here is Calis long arm statute. The statute is very broad: it permits the exercise of jurisdiction to the limits of due process. Therefore the inquiry becomes is due process satisfied. 3. How is due process relevant to personal jurisdiction satisfied?? Due process is satisfied when a non-resident defendant has certain minimum contacts with the forum such that the maintenance of the suit does NOT offend traditional notions of fair play and substantial justice. International Shoe. Depending on the nature of the foreign defendants contacts with the forum, a federal court may obtain either specific or general jurisdiction over him. A court exercises specific jurisdiction where the cause of axn arises out of or has a substantial connection to the defendants contacts with the forum. Hanson v. Denckla. As an alternative a defendant whose contacts are substantial, continuous, and systematic is subject to a courts general jD even if the suit concerns matters NOt arising out of his contacts with the forum. Helicopteros. Whether dealing with specific or general jD, the touchstone remains purposeful availment. By requiring that contacts proximately result from actions by the defendant himself that create a substantial connection with the forum state the constitution ensures that a defendant will NOT be haled into a jD solely as a result of random, fortuitous, or attenuated contacts. Burger King. 4. Is specific jurisdiction proper? The test for specific jurisdiction is: a. (1) whether the D purposefully availed himself of the privileges of conducting activities in the forum (2) whether the claim arises out of or results from the Ds forum-related activities and (3) whether the exercise of jD is reasonable. Myers

5.

6.

7.

8.

b. for prong 2 [arises out of] the court applies a but for test. The court asks, but for Shivnath Rais contacts with California, would Plaintiff have been injured? Here the court finds NO. Rule: Where contact giving rise to a dispute were negotiated abroad, involved foreign companies and required performance in India, such contact does NOT arise out of the conduct. Therefore, the court finds NO s-pJD. Is general jurisdiction proper? To have general jurisdiction, there must be continuous and systematic general business contacts that approximate physical presence. Bancroft. Engaging in commerce with residents of the forum state is NOt in and of itself the kind of activity that approximates physical presence w/n the states borders. Bancroft. Conclusion: there is NO g-pJD b/c there lacks sufficient contact with the state. Rule: having a sales agent who is NOT employed by the defendant nor is at liberty to contract on its behalf is not having a nexis with the forum. LITIGATION STRATEGY: ARGUES WHAT IS SUFFICIENT. Would it be reasonable to exercise personal jurisdiction over the Defendant? The Test: a. (1) the extent of a defendants purposeful interjection into the forum states affairs; (2) the burden on the defendant of defending in the forum (3) the extent of conflict with the sovereignty of the defendats home state (4) the forum states interest in adjudicating the dispute (5) the most efficient judicial resolution of the controversy (6) the importance of the forum to the plaintiffs interest in convenient and effective relief and (7) the existence of an alternative forum. Finding: unreasonable. Does Shivath Rai have jD in California under FRCP Rule 4(k)(2), which is like a federal long arm statute? This rule states that if a D is NOT subject to pJD but he is served a summon or files a waiver of service, either one is sufficient to confer pJD over the defendant. The TEST: a. The following conditions must be met to have jD under Rule 4(k)(2): (1) the cause of action must arise under federal law (2) the D must NOT be subject to the pjD of any state court of general jD and (3) the federal courts exercise of pjD must comport with due process. b. Glencore satisfies first two conditions by brining its enforcement axn under FAA 201-8. Prong 2 the court cant assess because this area of the law is undeveloped and even if Cali did have jD, it would NOT be reasonable for the courts to find jD because it fails the reasonable std. Even if Shivath had jD, the court would need to identify property could serve as the basis for jD over Shivnath. NYC does permit, or does NOT disallow quasi in rem compatibility with a jurisdiction. However, Glencore Grain fails to identify any property owned by Shivnath in the forum against which Glencore Grain would attempt to enforce its award. Rule: a party canNOT speculate as to what assets may confer pJD.
LITIGATION
STRATEGY: IDENTIFY LITIGATION ASSETS

personal jurisdiction; parallel litigations; seized property to confer jD; Rule 4(k)(2) REVIEW: FAA
AND

BASE METAL TRADING V. OJSC/NKAZ [4 CIRCUIT, 2002]

TH

NYC

GIVE SMJD BUT

NOT PJD.

BACKGROUND: BM is from Canary Islands and NKAZ from Russia. There is arbitration in Moscow and BM wins award. BM tries to confirm the award in Maryland and on the same day it files motion to seize attachment of Ds property. Dt. Ct. grants the motion. However, another party, MG, claims that the seized attachment belongs to it and wants to vacate the seizure. Dt. Ct. vacates the attachment and gives custody/control to MG. Then BM files mxn for reconsideration arguing Rule 4(k)(2). However, since there are pending parallel litigations, the court does NOT want to rule on prong (2) whether D is/isnt subject to the pJD of any state court of general jD, so on this basis the court denies pJD. BM appeals and argues that the presence of NKAZs property in MD confers jD over NKAZ for the purpose of confirming and enforcing the arbitration award. ANALYSIS: 1. Is pJD proper? To answer this, consider (1) if you have pJD (2) does state long-arm statute limit jD (3) is it reasonable to have pJD under due process. The test for due process is whether D has certain minimum contacts with the forum and where D has purposefully availed himself. Note that the minimum contact standard is used for all three: personam, rem, quai in-rem. 2. What is sufficient for a property to have jD? Having jD via property does NOT mean that just b/c the property is there, there is jD; there needs to be more connection/tie.

MONEGASQUE

2002] forum non convenins; state agency, foreign Sovereign Immune Act
DE OF
ND

REASSURANCES V. NAK

UKRAINE [2

CIRCUIT,

ANALYSIS: 1. LITIGATION STRATEGY:

IT IS POSSIBLE TO ATTACH A COUNTRY TO A SUIT WHEN CONFIRMING AN ARBITRATION

(1) AGENCY (2) INSTRUMENTALITY (3) ALTER EGO. Under these theories, Monegasque attached Ukraine in a petition to confirm arbitration. 2. Under Foreign Sovereign Immunities Act, can
AWARD UNDER THE DCOTRINES OF

SUMMARY QUESTIONS
TO

ANSWER:

1. 2. 3. 4. 5.

What is party going to do? How will it do it? What is going to be the basis for jD for doing that? What law governs that process? What argument are going to put forward?

JURISDICTION: 1. Do you have pJD? 2. Do you have s-m jD? a. you have s-m jD under 203 if it is a NYC award. b. this means that an award is governed by the convention and its required to be enforced SUBJECT-MATTER: 1. WHAT DO YOU WHEN AN ISSUE COMES UP THAT THE PARTIES DID NOT EXPLICTLY AGREE TO ARBITRATE BUT ARISES UNDER THE ARBITRATION AGREEMENT? a. 1st Look at the Arbitration Agreement. b. Mitsubishi says that if there is a broad arbitration clause and the dispute touches matters covered by the enumerated articles, then the matter is properly resolved in favor of arbitration. 2. Rule: Anti-trust claims are arbitrable as a matter of US law/public policy. 3. Rule: Mitsubishi was interpreted liberally; if Congress did NOT expressly write that the subject matter is excluded, then the subject matter is open for arbitration. Note how this is a liberal reading; Congress did NOT specify any matters it wanted to exlude from arbitration in implementing NYC. Fn 19. 4. Rule: The Duty to enforce arbitration agreement is NOT diminished when a party raises claims founded on statutory rights, even when those causes of action are criminal. Shearson/American Express v. McMahon 5. Rule: Federal law prevails under the Supremacy clause over state law. Southland v. Keating DEFENSE: If a party wants to challenge that the arbitrators did NOT have subject-matter jD, it can raise this issue again during award enforcement proceedings. A party can try to say that out of public policy reasons, a matter that was agreed to be arbitrated should NOT be arbitrated. However, the courts are likely to not buy this defense. Mitsubishi. Also, in Breman the SCOTUS said that it is NOT good for trade and commerce to have parochial view that US laws should dominate. The policy is to enforce agreements to arbitrate. BREMAN DOCTRINE: ENFORCE
ARBITRATION FOR SAKE OF INTERNATIONAL AGRT

WHETHER

TO STAY AN

AXN

AND

COMPEL ARBITRATION:

This is governed by US federal substantive law FAA. ISSUES THAT PARTIES CAN DISPUTE WHETHER THEY ARE ARBITRABLE OR NOT: 1. Dissolvation of a court ordered injxn based on what the arbitrators/tribunal had decided [Tracer] a. Generally: whether a motion/court ordered axn based on an arbitrators decision is valid since the arbitrators decision may NOT have been arbitrable. If its NOT arbitrable, then the dt. ct. incorrectly decided/based his decision. b. inquiry of this issue involves determining whether the scope of the arbitration is broad/narrow and whether the action was a consequence of the contract if the scope of the arbitration agreement is narrow. 2. Bribery in the making of the Principal Contract [Premium Nafta] a. Generally, this is addressed by doctrine of severability/separability. Under this doctrine the arbitration agreement is a separate K from the main K and as long as the parties had the intention of resolving all disputes arising under or related to the K [what the arbitration agreement says], then this matter is arbitrable. TO COMPEL ARBITRATION: 1. Is there a dispute? 2. Is there an agrt b/w parties to arbitrate the dispute? a. Congress enacted the FAA to replace judicial indisposition to arbitrate with a national policy favoring arbitration and placing arbitration agreements on equal footing with all other contracts. Buckeye check Cashing v. Cardegna b. the court makes this determination by applying the federal substantive law of arbitrability applicable to any arbitration agreement w/n FAA. c. there should be a healthy regard for the federal policy favoring arbitration. Moses Cone d. can always specify what NOT to arbitrate 3. Look at the public policy a. so when is litigation preferred; IP, offends morality and justice LAWS AND RULES: 1. Parties contract which law governs. Therefore, this is the law that dictates the construction of the contract. 2. However, FAA governs the SCOPE of the arbitration clause. 3. FAA requires piecemeal resolution when necessary to give effect to an arbitration agreement. [Moses Cone]. PERSONAL JURISDICTION: 1. See Glencore Notes

2. As a DEFENSE AND TO TRY TO ARGUE THAT OPPOSING PARTY DOES HAVE JD, can argue that FRCP Rule 4(k)(2) under certain circumstances authorizes jD based on a defendants national contacts. This is akin to a federal long arm statute. Glencore Grain. TO ENFORCE ARBITRATION AGREEMENTS: LOOK TO US STATE K LAW [PROCEDRAL LAW] 1. FAA 201 provides that NYC shall be enforced in US courts. 2. Article II of NYC requires states to recognize an agreement in writing under which the parties undertake to submit to arbitration all or any difference which have arisen or which may arise between them. 3. FAA 203 provides that an action or proceeding falling under NYC shall be deemed to arise under the laws and treaties of the US. 4. FAA 206 says that a court having jD may direct arbitration to be held in accordance with the agreement at any place provided for, whether that place is within or without the US. a. This makes it clear that the FAA contemplates foreign arbitration. b. In Intergen v. Grina the court said so long as the parties are bound to arbitrate and the dt. ct. has personal jd over them, the court is under an unflagging, nondiscretionary duty to grant a timely motion to compel arbitration and thereby enforce the NYC as provided in chapter 2 of the FAA, even though the agreement in question requires arbitration in a distant forum. 5. The issue becomes under what law does a court decide whether to stay or compel arbitration? Is it the law of the country as designated by the arbitration agreement? Or is it US law, since the suit was filed in US and a signatory to the arbitration agreement wants to compel arbitration where the parties agreed. a. This is US federal law because 203 says an action or proceeding falling under NYC shall be deemed to arise under the laws and treaties of the US. b. This means that it is the US courts who get to decide if the arbitration agreement is valid or not. If it is, then the US courts are bound to the NYC because of the FAA, so they must enforce arbitration. 6. FAA governs enforcement, interpretation, and validity of the arbitration clauses in commercial Ks. Moses Cone. 7. There is a presumption in favor of arbitration. Mitsubishi. 8. FAA 201 enables NYC into US law. NYC is designed to encourage arbitration of international commercial disputes and unify the standards. Therefore, 201 allows US courts to enforce arbitration agreements that provide for arbitration in a foreign forum. a. However, there are limitations: USs reservations to the NYC. 9. FAA 203, 206 confer the power to compel arbitration anywhere in the world where the parties have agreed. However, they are limited by reservations made by the U.S.

10. Before the US courts compel arbitration in a foreign forum, certain elements must be satisfied. These elements are from Article II of the NYC. If these factors are met, then arbitration is mandatory. They are: a. is there a written arbitration agreement? b. does the agreement provide for arbitration in a signatory country? c. does the agreement arise out a commercial legal relationship? d. does the commercial transaction have a reasonable relationship to the foreign state? 11. For the party that does NOT want to enforce arbitration agreement, there is a limitation in Art. II 3, where it says that a court does NOT have to compel arbitration if it finds that the said agreement is null and void, inoperative, or incapable of being performed. 12. Rule: The stay or enforcement of an arbitration agreement is US Federal law even though the US law may have nothing to do with the arbitration agreement because the US is bound to NYC as it is implemented by Chapter 2 of the FAA. 13. Rule: Location of arbitration agreement must be enforced unless a party raises an Article V defense. National Iranian Oil v. Ashland Oil *DEFENSE* TO CHALLENGE ENFORCEMENT OF ARBITRATION AGREEMENT: 6. NYC Article II 3 provides that an arbitration does NOT need to be enforced if unless it finds that the said agreement is null and void, inoperative or incapable of being performed. a. Rule: The stay or enforcement of an arbitration agreement is US Federal law even though the US law may have nothing to do with the arbitration agreement because the US is bound to NYC as it is implement by Chapter 2 of the FAA. MARCHETTO V. DEKALB GENETICS 7. The party seeking to enforce arbitration agreement is NOT a signatory to NYC i.e. Iran National Iranian Oil v. Ashland Oil TO CONFIRM ARBITRATION: 1. LITIGATION STRATEGY: make sure you have personal jurisdiction to confirm. 2. Under FAA 9, a court must confirm an arbitration award UNLESS it is vacated, modified, or corrected as prescribed in 10, 11 3. I believe the holding of Hall is that FAA 9 shall be interpreted strictly such that parties canNOT have an agreement to permit judicial review of a vacatur award on matters that are beyond 9. Therefore if there is NO grounds for vacating an award under10(a), then the award shall be confirmed

4. If a party wants to confirm an award, it can compel a foreign party to US courts under 201 [see Enablement of NYC]. Make sure there is a personal jurisdiction because the opposing party can raise this as a defense and say it canNOT be compelled to US courts NOR will it be compelled to deliver an award in US courts because he is NOT within the US courts jurisdiction. 5. Under FAA 207, there is time limit of 3 years and the place of arbitration MUST be in a signatory country. A DEFENSE against confirmation is forum non conveniens. TO VACATE ARBITRATION: 1. FAA 10(a) lists grounds for vacating awards: a. where the ward was procured by corruption, fraud, or undue means b. where arbitrator displayed evident partiality or corruption c. where arbitrator was guilty of misconduct in refusing to postpone hearing even though sufficient cause was shown or in refusing to hear evidence pertinent and material to the controversy or by any other misbehavior that would prejudice a party d. where arbitrator exceeds its powers 2. FAA 11 provides grounds for modifying or correcting an award: a. material miscalculation of figures or material mistake of description b. arbitrator submitted an award on a matter NOT submitted to it UNLESS the matter does NOT affect the merits of the decision c. award is imperfect in matter of form NOT affecting the merits of the controversy 3. NY CONVENTION RECOGNIZES AN AWARD MAY BE VACATED IN ART. V(1)(A) 4. Dissent in Hall believes that parties can CONTRACT for matters that are beyond FAA 9 [confirmation of award] 5. In Chromalloy Egypt had argued that an award should vacated because the award was annulled in Egyptian court, the court of the competent authority in which or under the law in which the award was rendered. a. the Dt. Ct. found that it was NOT obligated to vacate an award just because the award was nullified in a foreign country under the doctrine of international comity. 6. Argue on Public Policy grounds, Art. V(2)(b), though this is more likely NOT a successful strategy. In Karasha, the court said the public policy defense is to be construed narrowly. 7. When a foreign award is involved, a party may seek to vacate or set aside an award in the state in which or under the law of which the award is rendered. Based on the language and history of the Convention, such a motion is to be governed by domestic law of the rendering state 8. a.

B.

DEFENSE TO VACATING OF AN ARBITRATION AWARD: challenge the validity of the vacating of an award: ask yourself, is it foreign award or domestic award. argue on public policy grounds, Art. V(2)(b), though this is NOT a successful defense strategy. In Karasha, the court said the public policy defense is to be construed narrowly. When a foreign award is involved, a party may seek to vacate or set aside an award in the state in which or under the law of which the award is rendered. Based on the language and history of the Convention, such a motion is to be governed by domestic law of the rendering state.

TO RESIST ENFORCEMENT OF AWARD: 1. LITIGATION STRATEGY: Article V of the NYC is all about when an award shall NOT be recognized nor enforced. 2. LITIGATION STRATEGY: Note, these strategies - Anything in Article V, 1 and 2 can be used even if a party has had an award against it overturned (i.e. now the party does NOT have to pay an award) but the opposing party (the party that had originally won an award but now lost it because it was overturned) is still trying to enforce the award in a judicial forum [Yukos]. This is because originally the party who had the award overturned lost in arbitration while the award was overturned in the judiciary. Therefore the award is still valid; it is only invalid in the jD where it was overturned. The party that had the award overturned will argue Article V defenses as a way of showing that the award should NOT be recognized/enforced. The party that wants a court to recognize the award even though it was later overturned will invoke Article V(1)(e) and challenge that the award was NOT properly set aside or suspended by competent authority. In Yukos, Yukos was saying that though the award was set aside, it was done so by a biased and partial court it was NOT competent. Since the award was NOT set aside by a competent authority, it is not eligible for an Art. V defense [refusal of recognition and enforcement of an award] which means the award must be recognized and enforced. 3. Article V(1)(d): composition of the arbitral authority or the arbitral procedure was NOT in accordance with the agreement of the parties or failing such agreement, was NOt in accordance witht eh law of the country where the arbitration took place. 4. GENERAL RULE: a foreign verdict, such as the overturning of a foreign award, will be recognized as long as it was arrived through due process. Due process means that the award was rendered impartially and independently. 5. LITIGATION STRATEGY: ask the court of the place where the award was made (i.e. competent authority) to set aside the award. Article V of NYC recognizes the setting aside of an award. [Yukos] 6. if the award was vacated by a foreign court:

a. Rule: enforcement of awards may be refused if the award was set aside by a competent authority in the country in which the award was made. NYC Art. (V)(1)(e) i. What is this country? 1. the place of arbitration in an arbitration agreement will tell you the location or under the law of which the arbitration agreement was governed. Therefore, court can set aside an award where it used the law in which or under which the law was made. a. this is a procedural law, not substantive law. b. argue that the award was properly vacated; that the vacatur of the award was valid c. argue that the court lacks subject-matter jD b/c the party is immune from Foreign Immunity Act d. argue that US court should NOT enforce on grounds of forum NON conveniens e. argue that court should dismiss the case for failure to state a claim 7. argue on public policy grounds, Art. V(2)(b), although this is NOT likely to work. In Karasha, the court said the public policy defense is to be construed narrowly. Also, another reason why public policy ground may NOT work is because there is NO public policy exception in Art. V(1)(e). 8. When a foreign award is involved, a party may seek to vacate or set aside an award in the state in which or under the law of which the award is rendered. Based o the language and history of the Convention, such a motion is to be governed by domestic law of the rendering state. 9. Another defense to raise for NOT recognizing and enforcing award is PERSONAL JURISDICTION. 10. FORUM NON CONVENIENS. a. Article 3 b. very few awards have been dismissed because of this defense ARTICLE V(1)(E) DEFENSE: in Termario, the court said that the power and authority of the local courts of the rendering state remain of paramount importance the NYC does NOT provide any international mechanism to insure the validity of the award where it was rendered. This is up to the local law. TO ENFORCE AWARDS THAT HAVE BEEN VACATED : 1. NYC Art. V(1)(e) says that recognition and enforcement of the award may be refused at the request of the party against whom it is envoked (= losing party) only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that the award has been set aside by a competent authority of the country in which that award was made. 2. Article V defenses are permissive, NOT mandatory. a. Does the K expressly forbid the vacatour?

3. Courts may enforce vacated awards if there is extensive evidence of foreign corruption [Yukos] (1) Look at the adopted rule provision [ICC, AAA, UNCITRAL] = These provide procedural framework (2) Look at the substantive law provision/choice of law a. This defines rights and obligations (3) Look at the procedural law that governs the arbitration. a. if you want to vacate, invoke 10 i. Defense: if arbitrator does NOT follow provisions, parties can set aside award b/c it is contrary to public policy. Article V(1)(e) talks about set aside; it is defense to enforcement. However, it is permissive, NOT mandatory. RESISTING ARBITRATION: ARGUMENT 1: THE SUBJECT-MATTER IS NOT ARBITRABLE. in Scherk v. Alberto-Culver, B introduces a domestic cause of action against foreign company that was NOT mentioned in the contract. o The court still enforces arbitration because a parochial refusal to enforce the agreement would result in a kind of business chaos. in Mitusubishi v. Soler, B tries to resist arbitration by raising a counterclaim from American law when the agreement was international. o the court enforces arbitration anyway. in Shearson v. McMahon, B argued judicial proceedings should NOT be stayed because the federal statute had a clear provision stating that a waiver of RIGHTS canNOT be made. o The court did NOT buy this argument because it said that parties are NOT waiving substantive rights when they go to arbitration and there is NO reason to assume to that arbitrators will NOT follow the law. in Shearson v. McMahon, B argues that overlap b/w civil and criminal provisions renders the claim non-arbitrable. o The court does NOT buy this argument b/c just because there is a criminal remedy does NOT mean there is NO bona fide civil remedy. in Rodriquez v. Shearson, A argues that the federal statute says resolution of the dispute is limited to judicial forum. o Court says the judicial forum is NOT an essential feature of the Act and there is NO indication that the arbitral system would NOT afford P the rights to which he is entitled. ARGUMENT 2: THE CLAIM IS NOT ARBITRABLE B/C (1) PARTIES NOT BOUND AND/OR (2) CLAIMS ARE
OUTSIDE THE SCOPE OF THE ARBITRATION AGREEMENT

 in Collins & Aikman v. Building System: B wanted to bring A to arbitration but A claimed that the contract under which the matter arises does NOT touch matter o Here there were two contracts but the one with the arbitration agreement was NOT the one from which allegations were made. o This is like saying that arbitration award was narrow. [nonsignatory defense] in Thomson v. American Arbitration Association A and B had a contract but later A was bought by another company, C. B tries to enforce the arbitration agreement by saying C is agent of B. o But court thought otherwise; it held that even though the A is party to the arbitration, C has NOT voluntarily submitted to arbitrate its disputes NOT subject to arbitration agreement. [nonsignatory defense] in Thomson v. AAA a 3rd party can argue that a corporate relationship alone is NOT sufficient to bind a nonsignatory to an arbitration agreement. [nonsignatory defense] in Thomson v. AAA, 3rd party nonsignatory could say it did NOT directly benefit from an agreement so it is NOT estopped from avoid arbitration. For example, the decision-making structure did NOT directly benefit nonsignatory. ARGUMENT 3: THE AWARD SHOULD BE VACATED. COMPELLING ARBITRATION in Mitsubishi v. Soler A wanted to compel B to arbitration so it did so by seeking an order pursuant to FAA 4 and 201 o 4: a party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under WRITTEN AGREEMENT may petition any US dt. ct. for an ORDER directing arbitration AFTER it has been satisfied that the issue is NOT (1) the making of the arbitration agreement or (2) the failure to comply o 201: NYC shall be enforced in the US. in Shearson v. McMahon A wanted to compel B to arbitration (B was first to file suit in dt. ct.) so A moved to compel arbitration pursuant to 3 of FAA if a party wants to compel arbitration against a third party, can try: o incorporation by reference: this is when a party has entered into a separate contractual relationship with the nonsignatory which incorporates the existing arbitration clause o assumption: this is when a party may be bound by arbitration if its subsequent conduct indicates that is assuming the obligation to arbitrate. in Thomson v. AAA the court found that T did NOT show any intention to be bound by arbitration agreement and in fact explicitly disavowed any obligations arising out of working agret. o agency: in Thomson v. AAA the court found that the arbitration agreement was entered into well before the new owner

purchased the original signatory to the arbitration agreement therefore the new owner canNOT possibly be bound. o veil piercing: this is when a corporate relationship b/w parent and its subsidiary are sufficiently close as to justify piercing the corporate veil and holding one corporation legally accountable for the axn of another. Rule: as a general matter a corporate relationship alone is NOT sufficient to bind a nonsignatory to an arbitration agreement. analysis is done based on the totality of the circumstances. Rule: however, the court will pierce the corporate veil in two broad situations: to prevent fraud or other wrong or where a parent dominates or controls a subsidiary. Standard: the party trying to compel 3rd party to arbitration by veil piercing must demonstrate that the new owner has exerted a degree of control over original signatory to justify piercing the corporate veil. The compelling party can show abandonment of the corporate structure or an intermingling of corporate finances such that original signatory fails to continue to fxn as a distinct entity. o estoppel: this is when a party knowingly exploits an agreement but then avoids arbitration claiming that it is not a signatory to the agreement. it is essentially benefiting itself without taking responsibility for any of the downsides. In other words intimately founded in and intertwined w/ underlying K obligations. Rule: a party that benefits directly from an agreement would be estopped from avoiding arbitration. Application: a party can argue that nonsignatory eliminated competition and therefore benefited directly from an agreement. However, the court here was NOT compelled to find arbitration because nonsignatory did NOT benefit directly from the arbitration agreement and because it was NOT bound by arbitration agreement. ENFORCEMENT OF ARBITRATION AWARD read Article IV to se what need holistically by enforcing party. FAA 9 provides that an award must be confirmed UNLESS it is vacated, modified, or corrected. Article IV needs to be invoked to show if youre seeking enforcement of an award. It is the mechanism and procedure provision. o DEFENSE/LITIGATION STRATEGY: try to have the award vacated. ENABLEMENT WITHIN US
OF

NYC - THIS

IS

HOW

PARTY

TRIES TO ENFORCE AN ARBITRATION AWARD

 FAA 201 provides that the NYC shall be enforced in US courts o Article II 1 of NYC provides that each contracting state shall recognized a WRITTEN ARBITRATION AGREEMENT (whether contractual or NOT) concerning subject matter capable of settlement by arbitration. o Article II 3 of NYC provides that the court of a contracting state shall at the request of one of the parties refer the parties to arbitration unless it finds the agreement null and void, inoperative or incapable of being performed. FAA 203 confers jD on the dt. ct. of US over an action falling under NYC; this provision allows for the enforcement of an arbitral award via NYC; states US district courts have original jd over actions falling under NYC. This section gives dt. ct. original jD over an axn proceeding under NYC. FAA 207: within three years of an arbitration award under the convention any party to the arbitration may apply to any court having jD for an order confirming the award as against any other party to the arbitration. Note that there is a time frame of three years and that the foreign award must be made in a country that is a signatory to the convention. PROCEDURAL RULES: According to Biotronik, you canNOT get default judgment in arbitration. Therefore, if a party does NOT show up for arbitration, the arbitration still goes forward. o However, if a party does NOT show up, the award was NOT granted based on fraud. NOT showing up and letting the other party win is the partys own decision. The award to the party that did show up is legitimate and valid. In such a case, a party canNOT raise an Article V defense. There is a difference between opposing and award and vacating an award. o Opposing meaning a part opposes where the award is sought. o Vacating is Article V. This article says may be refused which means it is NOT compulsory. SUMMARY an Agreement to arbitrate a statutory claim does NOT forego the substantive rights afforded by the statute. [Mitsubishi] a duty to enforce arbitration is NOT diminished when a party bound by an arbitration agreement raises a claim founded on statutory rights. [Mitsubishi] even if a domestic court believes that in enforcing an arbitration agreement a contrary result will follow, for the sake of international comity the arbitration agreement is enforced. WHAT
IS

COVERED

BY

FAA/NYC

 Chapter 2 of FAA helps you consider whether an award is domestic. Any commercial transaction is covered by NYC and hence FAA except those transactions that are between two US citizens. o But there are exceptions to this if a transaction involves property located abroad or has some other reasonable relationship with one or more foreign state, then two citizens can bring an action under NYC. o if you have an agreement b/w two foreign parties and the arbitration place is US, it is considered a non-domestic award under 202 An arbitration agreement that says arising out of is a narrow claim