INTERNATIONAL ARBITRATION

Voltage Pictures LLC v. Gussi S.A. de C.V., 92 F. 4th 815,

Voltage, a limited liability company resident in California, filed a motion in federal court seeking to confirm an arbitration award that it had obtained against Gussi, a Mexican corporation. Voltage asserted that the court had subject matter jurisdiction because of diversity of citizenship. Gussi moved to dismiss, arguing that there was no subject matter jurisdiction because the diversity rules would not apply if any of Voltage’s principals was a Mexican citizen and given that Voltage failed to identify its principals, there was no evidence of complete diversity. There was no personal jurisdiction because Gussi was served by mail when 9 U.S.C. 9 required service by a U.S. marshal where the parties resided in different districts. The district court granted the motion.

The Ninth Circuit affirmed. The court had subject matter jurisdiction because Section 203 of Chapter 2 of the FAA vests federal district courts with subject matter jurisdiction over motions seeking to confirm non-domestic arbitral awards. See HayDay Farms, Inc. v. FeeDx Holdings, Inc., 55 F.4th 1232, 1239 (9th Cir. 2022). Here it was undisputed that the arbitral award at issue involved at least one foreign party because Gussi was a citizen of Mexico.

The court also had personal jurisdiction over Gussi. By ratifying the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) and enacting Chapter 2 of the FAA, Congress clearly intended for international arbitral awards to be confirmable in the courts of the United States. But U.S. marshals cannot effect service outside the territorial United States. This requirement, in effect, requires prevailing parties to do the impossible when a nonresident adverse party cannot be found for service of process in any judicial district of the United States. In that circumstance, requiring service by the marshal of the district within which the adverse party may be found would prevent a federal court from confirming an arbitral award governed by the New York Convention. That result would necessarily conflict with 9 U.S.C. § 207, which requires a federal court to confirm an award governed by the Convention "unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention." When § 9 does not apply, Section 6 of the FAA states that "[a]ny application to the court hereunder shall be made and heard in the manner provided by law for the making and hearing of motions, except as otherwise herein expressly provided" fills the gap. That language plainly refers to the reigning rules governing the service of written motions and notices in federal court, which is found in FRCP Rule 5. The court therefore held that Rule 5(b), the federal procedural law governing how service of a motion is made, is the default rule for serving notice of an application to confirm an award when § 9 conflicts with Chapter 2.