UNITED STATES 13 February 2023 Phoenix East II

United States District Court, Southern District of Alabama, Southern Division, 13 February 2023, CIVIL ACTION NO. 22-00436-CG-N

(Phoenix East II ... Read more

United States District Court, Southern District of Alabama, Southern Division, 13 February 2023, CIVIL ACTION NO. 22-00436-CG-N

(Phoenix East II Association, Inc. v. Certain Underwriters at Lloyd’s, et al.)

13 - 02 - 2023

UNITED STATES 13 February 2023 Phoenix East II

Jurisdiction United States
Summary

The Court granted the motion to compel arbitration of an insurance dispute. It first held that the four jurisdictional requirements for compelling arbitration under the New York Convention were met: there was an arbitration agreement in writing, providing for arbitration in the United States, a Convention signatory and concerning a commercial legal relationship, and at least one party was not a US citizen. The Court then rejected the plaintiff’s affirmative defense that the arbitration agreement was “inoperative” due to its choice of law provision. The plaintiff argued that the agreement’s choice for the law of New York as the proper law of the insurance conflicted with Alabama law, which provides at ALA. CODE § 27-14-22 that all insurance contracts, the application for which is taken in this state, are governed by Alabama law. Other than Alabama law, the plaintiff contended, New York law does not allow an arbitral tribunal to award exemplary, punitive, multiple, consequential, or other damages of a similar nature. The Court explained that it had previously found that § 27-14-22 does not override a parties’ contractual choice of law. Moreover, this defense was not the type of defense that the null-and-void clause has been found to encompass, which are grounded in standard breach-of-contract defenses – such as fraud, mistake, duress, and waiver – that can be applied neutrally before international tribunals.

Related topics
214-216 Field of application
220

The court discusses how to interpret the Convention’s requirement that the agreement is not null and void etc., as well as specific cases of invalidity: e.g., lack of consent (misrepresentation, duress, or fraud), vague wording of the arbitral clause; other terms of the contract contradict the intention to arbitrate, etc.

"Null and void", etc.
UNITED STATES 13 February 2023 Phoenix East II