Key aspects of Miami as a place for international arbitrations
October 2016 | SPECIAL REPORT: INTERNATIONAL DISPUTE RESOLUTION
Financier Worldwide Magazine
International arbitration, like any other professional activity, is subject to a high level of competition. The competition may surface among lawyers, institutions or even cities. The importance of the place where the parties agree to arbitrate a dispute is two-fold. First, the local law where the arbitration is seated will, in absence of parties’ agreement, by default, serve as the rules of procedure (commonly referred to as the lex arbitri). Second, parties may, at the time of choosing an arbitration venue, also consider intangibles like the quality of the judicial system, the availability of capable lawyers and arbitrators, language, accessibility and infrastructure.
After New York, Miami is the second most frequently selected city in the US for ICC arbitration. The ICDR (the international arm of the American Arbitration Association) has a permanent office in Miami, between 100 and 200 hearings taking place in Miami, and the ICDR deems Miami as the “preferred venue for Latin American international arbitrations”. It is thus commonly accepted that Miami represents a readily acceptable neutral venue with a reliable legal market to satisfy the needs of the parties. As evidence of this trend, Miami recently received wide press coverage as the place chosen to resolve disputes arising out of the expansion of the Panama Canal.
In sum, Miami is an ever-more viable venue in international arbitration. Parties, however, should be aware of certain aspects of arbitration practice at both the local and national level which would impact international arbitrations taking place in Miami.
The US has a federal system of government, with the powers of the federal government being those attributed to it in the Constitution. The treaty-making power resides only in the federal government, and treaties to which the US is a party form part of federal law. The Constitution makes federal law supreme, and Congress is competent to legislate in matters affecting international and interstate commerce. However, individual state law still plays an important role in the regulation of international arbitration in the US.
General federal arbitration legislation is codified in Title 9 of the United States Code, which is divided into three chapters. Chapter 1 contains the federal arbitration legislation presently known as the Federal Arbitration Act. Chapter 2 incorporates the New York Convention into federal law; Chapter 3 does the same for the Panama Convention. The basic tenet of this legislation is that a party can bring an original action in federal court to enforce an arbitration agreement or an arbitration award supported by either the New York or the Panama Conventions.
The states also legislate in the area of arbitration. Florida, for example, has adopted the Florida International Commercial Arbitration Act or FICAA (entirely based on the UNCITRAL Model Law) in addition to having enacted the Revised Florida Arbitration Act applicable to domestic arbitration. Thus, two different courts, the United States District Court for the Southern District of Florida and the Florida 11th Judicial Circuit Court, the state court in Miami, may entertain actions related to the enforcement of arbitral agreements and awards. In fact, the 11th Judicial Circuit Court has assigned a special division for cases involving international commercial arbitration. Transfers between federal and state courts are available for actions to enforce arbitration agreements falling under either the New York Convention or the Panama Convention, for actions to set aside awards falling under either Convention issued in Miami, and for actions to recognise and enforce foreign arbitration awards and awards not considered to be domestic under US law.
However, federal law will pre-empt state law in certain circumstances. For example, defences to enforcement specifically tailored to arbitration agreements by state legislatures or courts are pre-empted by federal law. Likewise, the courts will not apply procedural laws that are inconsistent with the federal pro-arbitration policy.
The federal jurisprudence of the 11th Circuit Court of Appeals may be the most international arbitration-friendly in the US. This is important since federal arbitration jurisprudence is developed primarily in the several federal courts of appeal. Since the Supreme Court rarely resolves issues involving international arbitration, an understanding of differences among the courts of appeal is crucial to an evaluation of federal arbitration law in any specific situation.
There are many contributions by the 11th Circuit Court of Appeals to federal arbitration jurisprudence, including the following: (i) the ‘null and void’ defence to a request to refer a matter to arbitration that had been filed in court requires that the defence be one recognised universally in world legal systems; (ii) the grounds for setting aside a New York Convention arbitral award were those found in Article V of the Convention, rather than those found in general federal arbitration law; and (iii) the grounds for non-recognition and non-enforcement of a New York Convention award are exclusively those found in Article V of the New York Convention. This case law is in contract with other Circuits which have effectively added other grounds like manifest disregard for the law or forum non conveniens.
For those states within the appellate jurisdiction of the 11th Circuit Court of Appeals, this case law makes international arbitration extremely appealing.
At the Florida local level, the FICAA includes several unique and useful features aimed at facilitating the prosecution of arbitral disputes. It grants the arbitral tribunal the power to order interim measures without the need for court intervention and the allowable measures arguably go beyond those normally available in judicial proceedings. It permits arbitrator challenges only when there are circumstances giving rise to justifiable doubts as to the arbitrator’s impartiality or independence, or if the arbitrator does not comply with any qualifications agreed to by the parties. If a challenge is rejected by the tribunal, the challenging party may, within 30 days of receiving notice of the tribunal’s decision, request the circuit court in the county in which the seat of the arbitration is located to decide on the challenge. It fills the void left by the Federal Arbitration Act, which only addresses the effect on the award of evident partiality or corruption on the part of the arbitrator or arbitrator. And it grants authority to state courts to entertain requests to set aside an award if federal jurisdiction is lacking because the application of either of the Conventions is not satisfied.
The prevailing party in an arbitration seated in Miami has two options, which are not mutually exclusive: (i) confirmation of the award by a court located in Miami; or (ii) an enforcement action in another country. Confirmation in Miami should not be necessary in order to commence enforcement abroad (that is a question to be determined by the law of the place in which enforcement is sought), but confirmation is necessary in order to execute on the award within the US. At the state court level, international arbitration awards are to be enforced in accordance with the FICAA. The only recourse available to a party resisting enforcement of an international arbitral award is probing one of the seven defences to enforcement or recognition found in Article V of the New York and Panama Conventions, or the corresponding section of FICAA.
An arbitral award, whether domestic or international, can also be confirmed before a federal district court. The confirmation of a New York Convention award involves a summary proceeding which is not intended to involve complex factual determinations, other than a determination of the limited statutory conditions for confirmation or grounds for refusal to confirm. Upon issuance of an arbitral award in Miami, the prevailing party may apply to the Federal District Court for the Southern District of Florida for an order confirming the award. So long as the opposing party is unsuccessful in its challenges to the award pursuant to the grounds for refusal of recognition and enforcement contained in Article V of the New York Convention, the award will be confirmed.
Once a court has confirmed the arbitral award by order and upon entry of judgment, the confirmed order acquires the effects of a civil judgment entered by that court. Having secured a civil judgment, the prevailing party can execute on the order, which makes available to that party the tools available for enforcement of a civil judgment, such as: an attachment; the fixing of priority for the order among the creditors of the losing party; placing third parties on notice of the existence of the order; and subjecting the judgment debtor to prompt supplemental proceedings, such as depositions in aid of execution, garnishment, levy and the other tools of collection.
Daniel E. Vielleville is a partner at Assouline & Berlowe. He can be contacted on +1 (305) 567 5576 or by email: email@example.com.
© Financier Worldwide
Daniel E. Vielleville
Assouline & Berlowe