Pursuant to Chapter 1 of the Federal Arbitration Act (“FAA”), arbitrators may issue summonses. If any person or persons so summoned to testify refuses or neglects to obey the summons, “upon petition the United States district court for the district in which such arbitrators, or a majority of them, are sitting may compel the attendance of such person or persons before said arbitrator or arbitrators, or punish said person or persons for contempt in the same manner provided by law for securing the attendance of witnesses or their punishment for neglect or refusal to attend in the courts of the United States.” 9 U.S.C. § 7. (emphasis added)
Section 208 of Chapter 2 of the FAA provides that Chapter 1 actions and proceedings not in conflict with Chapter 2 or the New York Convention are applicable in international arbitrations.
In Jones Day v. Orrick, Herrington & Sutcliffe LLP, Jones Day brought an arbitration against ex-partner Michael Bhuler for allegedly breaching his partnership agreement as he negotiated to depart Jones Day and join Orrick Herrington & Sutcliffe LLP (“Orrick”). The arbitration agreement calls for JAMS arbitration, seated in Washington, D.C., under the Federal Arbitration Act (“FAA”).
The arbitrator subpoenaed Orrick and its two partners to appear at a hearing in Washington. Orrick refused, and Jones Day attempted to enforce the subpoena in D.C. Superior Court. Among the arguments posited by Orrick was that only the California courts have personal jurisdiction over Orrick. Jones Day objected.
Orrick claims that only California courts have personal jurisdiction, and that only D.C. federal court can enforce the arbitral subpoena, when Orrick no doubt would argue that D.C. federal court lacks subject-matter jurisdiction. Orrick’s position would mean that Jones Day’s validly-issued arbitral subpoena cannot be enforced in any court in the United States.
The Washington, D.C. court sided with Orrick, holding that it did not have personal jurisdiction over Orrick.
After the ruling, the JAMS arbitrator issued a new subpoena, calling for Orrick and the partners to appear before him at a hearing in California. Orrick again refused to comply.
Jones Day moved to enforce the subpoena in federal court in San Francisco, thereby circumventing Orrick’s personal jurisdiction argument. In addition to relying on Section 7, Jones Day contended that the court had subject matter jurisdiction pursuant to Chapter 2 of the FAA because Jones Day is seeking to enforce the power of an arbitrator in an international arbitration. Chapter 2, Section 203 of the FAA provides that “[a]n action or proceeding falling under the [Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958, (the “New York Convention”)] shall be deemed to arise under the laws and treaties of the United States,” and “[t]he district courts of the United States . . . shall have original jurisdiction over such an action or proceeding, regardless of the amount in controversy.” 9 U.S.C. § 203.
The district court was unpersuaded and denied the motion, ruling that the FAA required Jones Day to seek enforcement in federal court in the jurisdiction where the arbitration is seated, interpreting the word “sitting” found in 9 U.S.C. § 7 as the equivalent of “seat.” See Jones Day v. Orrick, Herrington & Sutcliffe LLP, et al, Case No. 21-mc-80181-JST, N. D. Calif. (2021)
The matter is now on expedited appeal to the Ninth Circuit. Jones Day argues that the district court’s interpretation of Section 7 impairs an arbitrator’s ability to obtain information from a non-local witness. Jones Day further asserts that under the FAA and commercial arbitration rules, arbitrators can “sit” for hearings in other locales. Thus, the language of the statute allows enforcement to be wherever arbitrators are sitting for hearings, not just the seat of the arbitration.
Orrick has countered that Jones Day is attempting to rewrite the statute to allow arbitrators to manufacture venue by traveling to different jurisdictions. Orrick further asserts that Jones Day’s attempt to establish subject matter jurisdiction is misplaced because Jones Day is relying on provisions in the law granting federal-court jurisdiction for actions to compel international arbitration and enforce international arbitration awards and have no applicability to the question of enforcing subpoenas.
Oral argument before the Ninth Circuit is scheduled for 10 February 2022.
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