Ariel Freaner v. Enrique Martin Lutteroth Valle, Case
No. 11CV1819 JLS (MDD) (S.D. Cal. 2011), involves the removal of a
case to federal court and the court's decision to maintain
federal jurisdiction, and not remane, under the New York
Convention. The issue is an important one for international
litigation practitioners.
The noteworthy holdings in the decision include:
First, the Court determined that the international agreement
among the parties was one that "falls under" the New York
Convention. Said the Court,
Under § 202 [of the Convention], "[i]n order for an
agreement to fall under the Convention, it must arise out of a
commercial relationship. At least one of the parties to the
agreement must not be a U.S. citizen, or, if the agreement is
entirely between U.S. citizens, it must have some 'reasonable
relation' with a foreign state."
Second, this, in turn, requires an understanding of whether the
agreement "relates to" the subject matter of the action.
In a significant decision that we posted on (
here), the Court stated:
The Ninth Circuit has recently interpreted the "relates
to" requirement, concluding that "an arbitration
agreement or award falling under the Convention 'relates
to' the subject matter of an action whenever it could
conceivably affect the outcome of the plaintiff's suit."
[Infuturia Global Ltd. v. Sequus Pharm., Inc., 631 F.3d
1133 (9th Cir. 2011)]; see also [Beiser v. Weyler, 284
F.3d 665 (5th Cir. 2002)] ("[Federal courts] will have
jurisdiction under § 205 over just about any suit in which a
defendant contends that an arbitration clause falling under the
Convention provides a defense. As long as the defendant's
assertion is not completely absurd or impossible, it is at least
conceivable that the arbitration clause will impact the disposition
of the case. That is all that is required to meet the low bar of
'relates to'.")
Finally, the Court was unwilling to read the contract's
choice of law provision, designating California, as clear evidence
that California's arbitration rules should apply as well.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
Specific Questions relating to this article should be addressed directly to the author.
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