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Arbitration Award Upheld in Federal Court

Thursday, November, 5, 2015


A Federal Circuit Court Judge recently upheld an arbitration award in a foreign settlement. The US Court of Appeals for the Eight Circuit determined the federal district court’s enforcement would stand after the Appellant’s claims were precluded by foreign proceedings.

 

Interton, a division of American Hearing Systems, appealed the enforcement of the arbitration award and argued the district court had no jurisdiction over the subject matter. It cited the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Interton also argued that even if the court did have jurisdiction, the agreement did not apply to the dispute in question.

 

The arbitration was held in Israel after AVR Communication, Ltd. asserted the number of claims governed by a previous agreement. Interton argued the reason claims were higher was outside the scope of the contract containing the arbitration provision and should not be subject to the arbitration hearings. The company failed to prove this argument in the Israeli arbitration and in federal district court.

 

During the appeal, Interton interpreted the language from the Convention on the Recognition and Enforcement of Foreign Arbitral Awards to impose a subject matter jurisdiction requirement that included presentation of a written contract. The Eight Circuit Court dismissed the argument and found the issue was not whether was an agreement in writing, but whether the dispute was covered by the arbitration agreement in the first place. The court ultimately determined the question was precluded by the foreign arbitration proceeding in Israel and determined to uphold the award.