|
|
Publications
The Venue Clause In A Disputed Arbitration Provision Cannot Govern Venue For A Suit To Enjoin The Arbitration
Surety and Construction Law Briefings
Summer 2001
Textile Unlimited, Inc. v. A..BMH and Company, Inc.
240 F.3d 781
This case holds that nothing in the Federal Arbitration Act requires that an action to enjoin an arbitration must be brought in the district where the contract designated that the arbitration occur. In this case, the seller of yarn submitted its dispute with the buyer to the American Arbitration Association in Georgia. The seller did so pursuant to an arbitration provision contained in its invoices and order acknowledgments, which it sent to the buyer with each shipment of yarn, upon receipt of a purchase order from the buyer. Pursuant to the invoices and order acknowledgments, the buyer was to notify the seller within 24 hours if it did not agree to their terms.
The buyer never notified the seller that it disagreed with the arbitration provision, nor did it immediately object to the notice of arbitration. However, the buyer did successfully file an action in California federal court to enjoin the arbitration and obtain a stay of the pending Georgia arbitration. The seller appealed the courts injunction.
In an opinion which weaves together legal analysis with every manner of textile related pun, the Ninth Circuit Court of Appeals held that venue for the sellers action was proper in California, noting the United States Supreme Courts recent explanation, in Cortez Byrd Chips, Inc. v. Bill Harbert Constr. Co., 529 U.S. 193 (2000), that the Federal Arbitration Acts venue provisions are discretionary, not mandatory, and do not supplant the general federal venue provisions. The court also noted that requiring a party such as the buyer to contest the existence of an arbitration agreement in a forum dictated by the disputed arbitration clause would run counter to fundamental principles of contract. This case demonstrates the importance of obtaining unequivocal agreement to arbitration provisions.
|
Related Practices
|