Appellate Law

CA1: suing non-parties to arbitration agreement, doesn?t get around mandatory arbitration

By S. COTUS

Sourcing Unlimited v. Asimco International, No. 07-2754 holds that a corporate signatory to a written partnership agreement that requires international arbitration of their commercial disputes may not escape arbitration of such disputes by naming as defendants two non-signatories, on the basis that there was no written agreement to arbitrate with those defendants. 

The First explains that it has jurisdiction under 9 U.S.C. § 16(a)(1)(C), even though the party requesting arbitration isn?t a party to the arbitration agreement, because even though there was no written arbitration agreement, the Federal Arbitration Act really favors arbitration and it wouldn?t be right to make jurisdiction depend on whether there was a writing.  It also concludes that it jurisdiction doesn?t depend on whether the moving party asked for a stay of proceedings for arbitration or a dismissal.

On the merits, the First notes a circuit split and explains that Chapter 2 of the Federal Arbitration Act implements the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, Sept. 30, 1970, 21 U.S.T. 2517, T.I.A.S. No. 6997, reprinted at 9 U.S.C.A. § 201, at 511.  Then it applies the doctrine of equitable estoppel and holds that because all of the non-moving party?s claims ?ultimately derive from benefits it alleges are due it under the partnership Agreement.?  So, the arbitration, if it happens, will happen in China.  (Insert Tibet reference here.)

Full post as published by Appellate Law and Practice on May 22, 2008 (boomark / email).