The case of the day is Wires Jolley LLP v. Shlaimoun (C.D. Cal. 2013). Wires Jolley was an Ontario law firm. Zia Shlaimoun and Oussha Arda Shlaimoun, who apparently resided in California, had hired Wires Jolley to represent it in Canadian proceedings. The written agreement between the firm and the Shlaimouns called for arbitration of disputes in Toronto.
Claiming the Shlaimouns owed it $326,000 in unpaid legal fees, Wires Jolley initiated an arbitration. The arbitrator decided that the firm’s services were “acceptable” but that the fee was somewhat excessive. He awarded Wires Jolley approximately $227,000.
Wires Jolley sought confirmation of the award. The Shlaimouns raised none of the grounds that, under Article V of the New York Convention, could justify a refusal to confirm the award, but they did argue for a stay while they litigated a claim for malpractice, fraud, and breach of contract against Wires Jolley in the Los Angeles Superior Court. Under Article VI, a stay is permissible “if an application for the setting aside or suspension of the award has been made to a competent authority referred to in Article V(1)(e),” that is, to a competent authority “of the country in which, or under the law of which, that award was made.” There is also, however, precedent permitting stays for other prudential reasons. But such stays are exceptional. Here, the Shlaimouns had had the opportunity to raise their claims in the arbitration and the arbitrator had specifically found that the lawyers’ services were acceptable. “To stay this action to allow Respondents to assert these same claims, even if it was within this Court’s authority to do so, would impermissibly thwart the purpose of the Convention, “to expedite the recognition of foreign arbitral awards with a minimum of judicial interference [ellipsis].”