Opinion
Civil Action No. 01-11774-REK
November 6, 2002
Evan Slavitt, Gadsby Hannah LLP, Boston, MA, for Plaintiff.
Scott C. Gladstone, Barry Y. Weiner, Christopher P. Litterio, Ruberto, Israel Weiner, P.C., Boston, MA, for Defendants.
Opinion
I.
Pending for decision are the following motions:
(1) Plaintiff's Motion for Leave to File a Reply Brief in response to the Defendants' Opposition to Plaintiff's Request for Evidentiary Hearing (Docket No. 111, filed September 13, 2002); and
(2) Defendants' Motion to Compel Arbitration and for Stay Pending Arbitration (Docket No. 116, filed October 4, 2002).
II.
Plaintiff InterGen is an international energy company that develops and finances independent power producers who build, own, and operate power plants. In this action, InterGen alleges that it purchased faulty turbines from defendants for one of its power plants in reliance on defendants' misrepresentations, and that it consequently suffered significant damages.
InterGen originally filed suit in Bristol County Superior Court, asserting five causes of action (intentional deceit, negligent deceit, Chapter 93A, promissory estoppel, and tortious interference with advantageous relations). Defendants removed the case from the state court under 9 U.S.C. § 205, which grants United States district courts original jurisdiction over any action relating to an arbitration agreement that falls under Article II of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("the Convention"). The arbitration clauses that defendants rely upon appear in purchase orders and support and service agreements entered into pursuant to the sale. Because none of the currently named parties in this case is a signatory to these contracts, plaintiff contends that it is not bound by the arbitration clauses. Defendants disagree, and they have asked this court to issue an order to the London Court of International Arbitration compelling arbitration before the London Court.
As stated in their motion, defendants ask this court to "compel all of InterGen's claims to arbitration in London, England in accordance with the terms of the controlling arbitration agreements, and dismiss the [c]ourt action pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure or, in the alternative, stay the court proceedings pending arbitration of the matter." Docket No. 116 at 1. In fact, these two decisions — dismissal or stay — are not the only possible decisions among which this court must choose. A third possibility emerges from a careful examination of the Convention, the statute, and the distinctive circumstances of this case.
III.
Article II(3) of the Convention states the following directive:
The court of a Contracting State, when seized of an action in a matter in respect to which the parties have made an agreement within the meaning of the article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.
In this case, defendants ask not merely that I order the parties to arbitration, but that I compel arbitration in London. Defendants contend that the court has the power to compel arbitration by virtue of 9 U.S.C. § 206, which says:
A court having jurisdiction under this chapter may direct that arbitration be held in accordance with the agreement at any place therein provided for, whether that place is within or without the United States. Such court may also appoint arbitrators in accordance with the provisions of the agreement.
The defense contention fails to take account of the fact that under the Constitution of the United States, I have no authority to compel proceedings in London. The Convention cannot grant me that authority.
Section 206 is subject to the limitation that it does not apply unless the court has authority to require the arbitration to proceed. If I were to interpret the statute as purporting to grant authority to courts of the United States to compel an arbitration to proceed in London without a showing on the record that it would be reasonable to expect the arbitration to proceed, a serious issue of the statute's constitutionality would be presented. Explicitly, I avoid reaching that constitutional issue regarding an intrusion into adjudicative functions of the courts. I do so by interpreting the statute as not purporting to require courts to issue an order for arbitration that would be unenforceable as a practical matter.
This court has available to it no means of enforcement of the kind of order defendants propose. For example, it is beyond genuine dispute that this court is without authority to order the United States Marshal for the District of Massachusetts to send a team of deputies to London to find and effect service on all interested persons and entities. This is especially true as to an order to arbitrate before a London Court that an opinion of a British barrister, on file in this court, says would violate British law. See Docket No. 122, Declaration of Vivian Arthur Ramsey. This would be true even if all interested persons and entities had manifested consent to the arbitration in London before the London Court. In this case, even the manifestation of consent is in dispute, and the record before this court is insufficient to support a finding of manifested consent by all interested persons and entities.
IV.
The American Arbitration Association (AAA) has established practices and procedures (the International Arbitration Rules of the American Arbitration Association) under which it can hear cases if all interested persons and entities manifest consent. The AAA is a private organization, not a governmental entity. It is not bound by the jurisdictional limitations that apply to a court. The record before me does not include any evidence that the London Court is a private entity. Indeed, the record supports an inference that the London Court is a governmental entity. Thus it could not be free to proceed independently, as the AAA does. In any event, as stated above, even if the London Court were available to resolve controversies among all the persons and entities interested in this matter, not all of those persons and entities have manifested consent to its doing so.
V.
In summary, in this case, defendants have asked the court to issue an order to the London Court compelling arbitration there. Such an order would be unenforceable. This court has no practical means of ensuring that the London Court would hear the case. Indeed, the opinion of a British barrister that plaintiff has placed in the record before this court is that under English law, the parties could not commence in the London Court an arbitration related to these contracts.
In these circumstances, I decline to issue an order that cannot be enforced. The motion to compel arbitration is therefore DENIED.
ORDER
For the foregoing reasons, it is ORDERED:
(1) Plaintiff's Motion for Leave to File a Reply Brief in response to the Defendants' Opposition to Plaintiff's Request for Evidentiary Hearing (Docket No. 111) is ALLOWED;
(2) Defendants' Motion to Compel Arbitration and for Stay Pending Arbitration (Docket No. 116) is DENIED; and
(3) The court expects to await some further filing by one of the parties before scheduling the next Case Management Conference.