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Case of the Day: In re Dubey

The case of the day is In re Dubey (C.D. Cal. 2013). The case raises a question we have considered many times before, and which is also the subject of S.I. Strong’s excellent paper: is a private arbitration a “proceeding in a foreign or international tribunal,” for purposes of 28 U.S.C. § 1782?

Microelectronics Technology, Inc., a Taiwanese firm, and its US subsidiary, MTI Laboratory, commenced an arbitration against Prabhat K. Dubey and others. The arbitration involved a 2009 sale of assets to MTI. A third party, Powerwave Technologies, Inc., had sued MTI for patent infringement, and MTI sought indemnification from Dubey and others under the terms of the agreement governing the asset sale. The arbitration was to take place in Los Angeles under the American Arbitration Association’s International Dispute Resolution Procedures.

The decision contains a useful summary of the state of the law: prior to Intel it was clear that private arbitration tribunals were not within the scope of the statute, but that in light of Intel a split of authority on the question developed. The judge helpfully cites cases on both sides of the question from around the country. In the end, the judge concluded that private international arbitrations are not within the scope of § 1782. The judge reasoned that Intel was not meant to expand the meaning of “foreign or international tribunal” and that there was a real distinction between private arbitrations and treaty arbitrations that justified different treatment.

The most interesting aspect of the decision, I think, is the judge’s consideration of whether the arbitration was international in the first place—a question the judge found it unnecessary to decide given his announcement of a per se rule regarding private arbitrations. (Wouldn’t it have been preferable to decide the case on the narrower ground? But I digress). On the one hand, the place of the arbitration was California, and the parties were mostly US parties. On the other hand, the case was “international in nature” and conducted under the AAA rules applicable to international disputes. A more relevant consideration, which the court didn’t mention, was that the arbitral award would be subject to the New York Convention, as not all of the parties were US citizens. See 9 U.S.C. § 202. But it seems to me that it is kind of crazy to think of a private arbitral tribunal sitting in the United States as a foreign or international tribunal. Wouldn’t the better answer be to seek a subpoena from the arbitrators themselves under 9 U.S.C. § 7? Of course, unlike an application under § 1782, that would require an order from the tribunal itself.

New article on the US Reception of Private International Law Conventions

HT to Conflict of Laws.net for a link to a new paper by Hannah L. Buxbaum on the reception of private international law conventions, including the Hague Service, Evidence, and Apostille Conventions and the New York Convention, in the United States. The paper is available on SSRN.

The paper focuses on the ways in which the US implements these conventions in domestic law. As Buxbaum points out, the conventions are self-executing—or were thought to be self-executing before the Supreme Court’s decision in Medellín, though Buxbaum opines that Medellín should not affect this understanding. However, the US has typically enacted legislation in one form or another to provide for uniformity in their application.

Sometimes this is done via amendments to the Federal Rules of Civil Procedure (e.g., FRCP 44(a)(2), which provides for the admissibility in evidence of documents authenticated by apostille, or FRCP 4(f)(1), which provides for service of process via the Service Convention). Buxbaum points out the potential difficulty in implementing conventions via the Rules Enabling Act, since the judiciary has no role in treaty-making and since, under the Act, once a rule takes effect it supersedes any law to the contrary and “could potentially trump a pre-existing treaty obligation.”

Sometimes conventions are implemented in domestic law by statute (e.g., Chapter 2 of the FAA, which implements the New York Convention). Federal legislation, of course, provides the most uniform implementation of a treaty (more uniform than federal judicial rulemaking, since the conventions are frequently applied in the state courts), but Buxbaum notes that because of the Erie doctrine and the system of federalism in the US, much private international law has been made at the state level. For example, the judgments of foreign courts are typically enforced under the Uniform Foreign Country Money Judgments Recognition Act or a predecessor statute, as we discussed here a few days ago. On the other hand, the Hague Convention on Choice of Courts Agreement is not yet in effect, though the US has signed it. Perhaps if and when it is ratified, the federal government will act to implement it. But on yet another hand, because the Choice of Courts Convention is limited in scope to enforcement of judgments in civil or commercial matters where the parties had made a choice of court agreement, any implementing federal legislation or rules would either leave room for state law to apply to enforcement of judgments not within the scope of the Convention or else be broader than required to implement the Convention.

I think Buxbaum does go astray on one minor point, when she writes that the FAA “applies only to proceedings in federal court.” I think that under Southland Corp. v. Keating, the FAA preempts state law in the state courts to the extent inconsistent with the FAA. Just by way of a recent example, in Lloyds’ Underwriters v. Netterstrom, 17 So.3d 732 (Fla. Dist. Ct. App. 2009), a wrongful death suit where the defendant impleaded its insurer for indemnification under an insurance policy that contained an agreement to arbitrate, and where the New York Convention applied, the court held that a state law barring arbitration of the dispute was preempted by the FAA.

But with this caveat, the article is a clear and welcome outline of the US approach to reception of private international law conventions.

Pre-hearing discovery in arbitration: Beck’s Superior revisited

We recently looked at Beck’s Superior Hybrids v. Monsanto, an Indiana decision denying enforcement of an arbitrator’s subpoena on the grounds that the proper court in which to seek enforcement, under Section 7 of the FAA, was the court at the seat of the arbitration.  I thought it would be worth comparing the approach in Beck’s to the approach a party seeking evidence in an international arbitration could take to obtain evidence in advance of the hearing. Continue reading Pre-hearing discovery in arbitration: Beck’s Superior revisited