Arbitration Agreements Versus Agency Deference
When the strong federal policy in favor of honoring arbitration agreements in the U.S. comes into conflict with another strong legal principle, which one should come out on top? The United States Court of Appeals for the Ninth Circuit recently illustrated this tension in Kolev v. Euromotors West/The Auto Gallery, 658 F.3d 1024, holding that a mandatory arbitration agreement in an auto sales contract was invalid because a federal agency’s regulation supposedly barred it. This decision demonstrates the danger of excessive deference to agency rules, which can limit the enforcement of arbitration agreements on dubious legal grounds.
The plaintiff, Diana Kolev, bought a used Porsche from an a [...]
Bribery and an Arbitrator’s Task
Adjudicating contract disputes where it is alleged that the contract has been tainted by bribery, either in its procurement or in its performance, presents difficult issues for arbitrators, as well as for counsel. While the arbitrability of disputes involving allegations of bribery is generally no longer in doubt, a tribunal will still confront a number of issues when adjudicating such claims.
This is particularly true where the allegations of bribery are themselves in dispute, as well as where the parties have not raised any such allegation, but the facts and circumstances suggest that bribery has tainted the contract underlying the dispute. It is now well-settled that any such contract s [...]
Implied Waiver Of the Right to Arbitrate
In February 2011, the United States Supreme Court granted certiorari in Stok & Associates, P.A., v. Citibank, N.A, (No. 10-514). The question presented was whether, under the Federal Arbitration Act (“FAA”), a party should be “required to demonstrate prejudice after the opposing party waived its contractual right to arbitrate by participating in litigation, in order for such waiver to be binding and irrevocable” – an issue on which the United States Courts of Appeals are divided. However, the parties settled their dispute before any merits briefs had been filed and the Court accordingly dismissed the case on June 2, 2011.
Stok and Associates (“Stok”) is a small Florida law fi [...]
U.S. Court of Appeals Illustrates Obsolescence of Law that Allows Court to Consider Timeliness Challenge to Arbitrable Claim
On March 22, the United States Court of Appeals for the Second Circuit held in Bechtel do Brasil Construções Ltda. v. UEG Araucária Ltda., 638 F.3d 150, that the question whether a claim subject to arbitration was time-barred was for the arbitrator, not the district court, to decide, notwithstanding a New York state law that permits an arbitral party to assert a limitations defense in court. Above all, the Bechtel decision illustrates the obsolescence of laws like this New York provision, whose usefulness is highly questionable and whose application is effectively limited to situations where it is unnecessary in the first place.
In 2000, UEG Araucária, a Brazilian energy company, entere [...]
The U.S. Supreme Court and Class Arbitration: A Tragedy of Errors
This post addresses the U.S. Supreme Court’s misadventures with class arbitration over the past decade. Those misadventures have resulted in striking confusion and waste of resources by litigants, courts and arbitral institutions. More broadly, the Court’s conflicting and often ill-considered decisions on the subject now threaten to undermine U.S. arbitration law more generally – turning a field where U.S. courts once pioneered international developments, in decisions like Mitsubishi and Scherk, into one where the U.S. Supreme Court’s decisions stand out as examples of how not to deal with the arbitral process.
U.S.-style class actions are by now familiar, if only by reputation, in [...]
New York Court Grants Pre-Award Attachment in Aid of a Foreign-Seated International Arbitration
The recent decision of the New York Supreme Court, Appellate Division (an intermediate state appellate court) in Sojitz Corp. v. Prithvi Information Solutions Ltd., 2011 N.Y. Slip Op. 1741; 2011 N.Y. App. Div. LEXIS 1709, bolsters New York’s reputation as a jurisdiction friendly to international arbitration. In this case, which involved two non-U.S. parties in an arbitration seated in Singapore, the appellate court held that a petitioner can attach a respondent’s assets located within New York in anticipation of an arbitral award, even where the New York courts have no personal jurisdiction over the respondent. The appellate court upheld the attachment of a debt owed by a New York-domi [...]
