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As a service to Jenner & Block's clients and the greater legal community, the Firm's Complex Commercial Litigation practice maintains this online resource center that offers the latest case law and other developments in international dispute resolution.
Jenner & Block will update this web page with new developments and items of interest as they become available. For further information, please contact Partner Lawrence S. Schaner.
Highlighting the perils of drafting arbitration agreements, the Ninth Circuit re-affirmed its view that an arbitration clause calling for the arbitration of any dispute “arising under” a contract signifies a narrow arbitration agreement that does not extend, for example, to tort claims that do not depend upon an interpretation of any provision of the contract. Cape Flattery Ltd. v. Titan Maritime, LLC, No. 09-15682 (9th Cir. July 26, 2011). The court contrasted the clause in the contract at hand with clauses using the phrase “arising out of or relating to,” characterizing the latter as “broad” clauses. The Ninth Circuit acknowledged that at least three other circuits disagree with its reasoning, but concluded that it would narrowly construe the “arising under” language, thereby adhering to Ninth Circuit precedent, Mediterranean Enterprises, Inc. v. Ssangyong Construction Co., 708 F.2d 1458 (9th Cir. 1983) and Tracer Research Corp. v. National Environmental Services Co., 42 F.3d 1292 (9th Cir. 1994). The court therefore affirmed the district court’s denial of defendant’s motion to compel arbitration.
Cape Flattery also addressed whether foreign law may govern the scope of an arbitration agreement and, if so, when – a rarely litigated issue . The court concluded that foreign law could apply, provided that the parties made their intention “clear and unmistakable.” In the case at bar, however, the court found no such evidence. The arbitration clause in the parties’ agreement stated that disputes would be settled by arbitration under the English Arbitration Act of 1996, but it did not state specifically whether English law would also apply to determine whether a given dispute was arbitrable in the first place. In view of this ambiguity, the court held that federal law would apply.
A recent Colorado district court’s decision, Republic of Ecuador v. Bjorkman, No. 11-cv-01470 (D. Colo. Aug. 9, 2011), addressed the use of 28 U.S.C. §1782 (“Section 1782”) in aid of international arbitration. First, the court seemed to declare the war over as to whether Section 1782 applies in the arbitration context, at least where the UNCITRAL Rules are in use, noting: “There appears to be significant agreement at the district court level that, after the Supreme Court’s dicta in Intel Corp., ‘international arbitral bodies operating under UNCITRAL rules constitute ‘foreign tribunals’ for purposes of Section 1782.’” Id. slip op. at 4, n. 1. Second, the court construed the first discretionary factor considered by courts in determining whether to allow Section 1782 discovery narrowly. The factor looks to whether the party from whom discovery is sought is a participant in the foreign proceeding or otherwise subject to the jurisdiction of the foreign tribunal. The court ruled that the party opposing Section 1782 discovery was a non-participant in the arbitration even though he was an expert who had be retained by one of the parties to the arbitration. The court explained that the expert, as a nonparty to the arbitration, could be outside of the arbitral tribunal’s jurisdictional reach.