The Ninth Circuit's decision in Smallwood v. Allied Van Lines, et al., No.
09-56714 (9th Cir. 2011), discusses the important interplay between
federal law and private contracts containing arbitration
clauses. The topic arises frequently in international
litigation.
The plaintiff hired Allied to move some of his household goods
from southern California to the United Arab Emirates (UAE). After
UAE officials discovered a box of firearms and ammunition among
Smallwood's possessions, he was arrested, imprisoned for
11 days, and allegedly duped into pleading guilty to smuggling
firearms. He brought a variety of claims against the shipper.
The Ninth Circuit had jurisdiction by reason of the District
Court's denial of the plaintiff's motion to compel
arbitration. The principal issue was the effect of the
Carmack Amendment, 49 U.S.C. 14706, which was argued to preclude
arbitration clauses.
The Ninth Circuit held, among other things, as follows:
First, the arbitration clause at issue might be reviewed by
corporate lawyers and other draftsmen, though the particulars of
the language did not control this case:
Any disputes in relation to the conclusion, implementation,
interpretation, cancellation, dissolution or invalidity of the
contract or stemming therefrom or connected thereto in any form
shall be referred to arbitration in accordance with the Dubai
Chamber of Commerce and Industry Commercial Conciliation and
Arbitration Regulation.
Second, the Court of Appeals found that the Carmack Amendment
rendered unenforceable the arbitration clause since the Amendment
was designed to give a shipper of goods the choice of forum.
The Court of Appeals held that "Carmack expressly prohibits
carriers of household goods from contracting around the
statute's requirements". There was no discussion as
to how the language of the statute applied to claims asserted by a
plaintiff consumer.
Third, the Court of Appeals found that the statute was clear and
unambiguous because it stated that a civil action "may be
brought . . . in a district court of the United States .
. . in a judicial district . . . through which the defendant
carrier operates", or, when suing the carrier alleged to have
caused the damage, "in the judicial district in which such
loss or damage is alleged to have occurred". These
provisions "assure the shipper a choice of forums as
plaintiff". But in explaining why, even supposing that
were correct, the provisions also preempt private contract
arbitration provisions, the Court of Appeals explained, in a
footnote, that Supreme Court dictum in Regal-Beloit
Corp. v Kawasaki Kisen Laisha Ltd., 130 S.Ct. 2433
(2010), provided that clear guidance. The balance of the
Court of Appeals decisions assumes that "Carmack expressly
prohibits carriers of household goods from contracting around its
venue provisions".
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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