Monday, December 31, 2012
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International Arbitration Award Held Enforceable
Panel Rejects Claim That Federal Law Required Express Consent to Judgment
By KENNETH OFGANG, Staff Writer
An international arbitration award may be enforced by entry of a California judgment, even if the parties did not expressly provide for judicial confirmation of the award in their arbitration agreement, the Court of Appeal for this district ruled Friday.
Div. Three upheld a judgment for more than $1.4 million in favor of Swissmex-Rapid, a Mexican manufacturing company against SP Systems, LLC. The parties’ dispute arose out of two contracts under which SP distributed Swissmex agricultural sprayers in the United States and Canada.
Each party filed for arbitration under those agreements, which designated the American Arbitration Association as the provider.
The AAA chose a retired judge as arbitrator, and a hearing was held in Los Angeles in December 2010. In March of last year, the arbitrator ruled that both parties had breached the agreements, and gave Swissmex a net award of $1.424 million.
Swissmex petitioned the Los Angeles Superior Court to confirm the arbitration award, which SP opposed on jurisdictional grounds. SP argued that it never consented to entry of judgment on the award; that in an international arbitration, such consent is required by the Federal Arbitration Act; and that any state law to the contrary is preempted.
Los Angeles Superior Court Judge Alan Rosenfield found no impediment to confirmation and ordered entry of judgment on the award.
Presiding Justice Joan Dempsey Klein, writing for the Court of Appeal, said Rosenfield was correct.
Klein acknowledged that Sec. 9 of the Federal Arbitration Act provides that awards are enforceable by entry of judgment only with the consent of the parties. But that provision is procedural, not substantive, so prior Court of Appeal decisions holding that procedural provisions of the FAA do not bind state courts are applicable.
Even if Sec. 9 were controlling, Klein went on to say, it would not preclude enforcement by entry of judgment in this particular case.
By designating the AAA as provider, Klein explained, the parties implicitly agreed to the organization’s Commercial Arbitration Rules, including a rule making awards enforceable by entry of judgment, thus satisfying Sec. 9. She cited a Second U.S. Circuit Court of Appeals holding that an express agreement to submit a commercial dispute to AAA arbitration supplied the consent required by the federal act.
Attorneys on appeal were Lawrence Laporte and Steven P. Inman II of Dickstein Shapiro for SP and Joseph Carpello for Swissmex-Rapid.
The case is Swissmex-Rapid S.A. de C.V. v. SP Systems, LLC, B238054.
Copyright 2012, Metropolitan News Company