DENISE COTE, District Judge.
Travelport Global Distribution Systems B.V. ("Travelport") seeks an order compelling Bellview Airlines Limited ("Bellview") to arbitrate pursuant the terms of the parties' written Distribution Agreement. For the following reasons, its petition is granted.
The following facts are undisputed unless otherwise noted. Travelport is a foreign business corporation organized and existing under the laws of the Netherlands. Bellview is a Nigeria corporation. On March 21, 1997, Travelport (then known as Galileo International Partnership) entered into a Distribution Agreement with Bellview, pursuant to which Bellview was to distribute in Nigeria a computerized travel reservation system owned by Travelport. The Distribution Agreement contained the following provision (the "Arbitration Provision"):
On October 3, 2011, Travelport advised Bellview by letter that it would terminate the Distribution Agreement due to Bellview's alleged material breach of multiple obligations unless Bellview cured its breach within 30 days. By letter dated October 5, Bellview denied that it was in breach of the agreement and requested that Travelport withdraw its notice of termination. Travelport responded by letter dated October 31 declining to withdraw the notice of termination. By letter dated November 1, Bellview stated as follows:
Travelport terminated the Distribution Agreement by letter dated November 3.
On November 10, Bellview initiated an action (the "Nigeria Action") in the Federal High Court in the Federal Republic of Nigeria (the "Nigeria High Court") by filing a summons. The summons sought a declaration that a dispute had arisen between the parties and that Bellview was entitled to refer the dispute to arbitration, and an order for injunctive relief. On November 14, the Nigeria High Court issued a restraining order enjoining Travelport from terminating the Distribution Agreement and from appointing another entity to distribute its computerized travel reservation system in Nigeria. On November 24, Travelport filed two applications to the Nigeria High Court to discharge the restraining order. Both applications were denied. Travelport submitted a response to Bellview's November 10 summons by affidavit dated December 16. Travelport's response agreed that the dispute should be submitted to arbitration but contested the other relief requested.
Travelport served a notice of arbitration on Bellview on January 26, 2012 seeking damages, costs, and a declaration that Travelport lawfully terminated the Distribution Agreement. By letter dated February 24, Bellview stated its intention to continue pursuing the Nigeria Action because it had concluded that the arbitral body specified in the Distribution Agreement, the United States Council of Arbitration, is a "non-existent body" and the Arbitration Provision was therefore "incapable of being performed."
On March 7, Bellview initiated contempt proceedings against Travelport's directors and officers for alleged violations of the November 14 restraining order. Also on March 7, the Nigeria High Court issued an order notifying these directors and officers that disobedience of its orders would result in them being found in contempt of court.
On March 15, Bellview filed a motion before the Nigeria High Court requesting leave to amend its November 10 summons in order to allow the Nigeria High Court to adjudicate the underlying dispute directly instead of referring it to arbitration. The motion alleges that the Arbitration Provision cannot be performed and "is not mandatory." On April 26, 2012, Bellview filed a second summons before the Nigeria High Court for damages and declaratory and injunctive relief, requesting that the Nigeria High Court resolve the underlying dispute directly.
Traveport filed its petition in this Court to compel arbitration and for injunctive relied on May 2, 2012. The petition was fully submitted on June 1.
Travelport seeks,
As a preliminary matter, the Distribution Agreement falls within the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 21 U.S.T. 2517, 330 U.N.T.S. 38 (Dec. 29, 1970),
The FAA is "an expression of a strong federal policy favoring arbitration as an alternative means of dispute resolution."
It is well established that "arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit."
The parties do not dispute that the Distribution Agreement constitutes a valid and enforceable contract; they dispute only whether the Arbitration Provision triggers "mandatory" or "permissive" arbitration.
The overwhelming balance of authority in this circuit and elsewhere indicates that, absent some separate suggestion that an Arbitration Provision is intended to trigger permissive arbitration, provisions with the word "may" trigger mandatory arbitration.
The respondent acknowledges the "many cases" in the Second Circuit that have construed arbitration clauses with the word "may" as mandatory clauses. Indeed, it offers no explanation as to why the parties might have chosen to include the Arbitration Provision in the first place if it is not mandatory. "An interpretation of a contract that has the effect of rendering at least one clause superfluous or meaningless is not preferred and will be avoided if possible."
Bellview makes two brief arguments in support of a permissive reading of the Arbitration Provision. First, it mistakenly relies on
Bellview also attempts to introduce extrinsic evidence suggesting that the parties intended arbitration to be permissive. According to the head of Bellview's legal department Andrew Orji ("Orji"), Travelport assured Bellview during negotiations that the Distribution Agreement would contain a "non-exclusive arbitration clause." Orji further alleges that Bellview was "a relatively new company and did not have legal counsel" at that time. The language of the contract is unambiguous, however, and recourse to extrinsic evidence is therefore not necessary.
In its February 24, 2012 letter to Travelport, Bellview alleged that the Distribution Agreement's Arbitration Provision could not be performed because the "United States Council for Arbitration," the "Appointing Authority" named in the provision, is a "non-existent body." Bellview does not pursue this argument in its brief in opposition to this petition; regardless it is without merit. The parties clearly expressed their intention to resolve this dispute through arbitration in the Distribution Agreement. This was the parties' primary intention; the agreement as to the particular forum was secondary. The Court may therefore designate a proper arbitral body.
In this case, the UNCITRAL Arbitration Rules referenced in the agreement itself provide a method for constituting an arbitral tribunal in the absence of a prior agreement by the parties.
Bellview argues that venue is not appropriate in the Southern District of New York and that this Court lacks personal jurisdiction over Bellview. Bellview is wrong. "[A] federal court generally may not rule on the merits of a case without first determining that it has jurisdiction over . . . the parties."
The Court has personal jurisdiction over Bellview because the parties agreed to arbitrate their disputes in the United States, pursuant to New York law, and in accordance with laws promulgated by UNCITRAL, a body within the United Nations system, which is headquartered in New York. This constitutes an agreement to arbitrate in New York.
Bellview argues that the Arbitration Provision constitutes a permissive forum selection clause because it lacks "specific language of exclusion," and that the Nigeria High Court is therefore a proper forum. In making this argument, Bellview fails to address the clear authority, identified above, indicating that the Arbitration Provision is mandatory and that this Court has full authority to compel arbitration. Moreover, the cases to which it cites do not construe arbitration clauses, but refer instead to forum selection clauses for litigation.
Bellview asserts that Travelport waived its right to compel arbitration through its participation in the Nigeria Action. This is incorrect. In determining whether a party has waived its right to arbitration, factors that must be considered include: "(1) the time elapsed from the commencement of litigation to the request for arbitration, (2) the amount of litigation (including any substantive motions and discovery), and (3) proof of prejudice."
The above factors strongly weigh against a finding of waiver. It is true that almost six months elapsed between the initiation of the Nigeria Action and Travelport's petition to compel arbitration. But, Travelport served Bellview with a notice of arbitration roughly two and a half months after commencement of the Nigeria Action, and Bellview only indicated its unwillingness to arbitrate on February 24, 2012. In short, Travelport has consistently sought arbitration; there has been no excessive lapse of time.
Nor has there been a substantial amount of litigation in the Nigeria Action. There have been no substantive rulings interpreting the Distribution Agreement, or findings as to Bellview's alleged material breach. There has been no discovery. Moreover, all of Travelport's filings — seeking to resist the jurisdiction of the Nigeria High Court and lift the restraining order entered against it, and answering Bellview's summons — have been defensive in nature. Finally, Bellview can provide no proof of prejudice because it is
Petitioner requests an order compelling the respondent to dismiss, or cause to be dismissed, the Nigeria Action. Although "[i]t is beyond question that a federal court may enjoin a party before it from pursuing litigation in a foreign forum," so, too, must courts be cognizant that "principles of comity counsel that injunctions restraining foreign litigation be used sparingly and granted only with care and great restraint."
There are two threshold requirements for the issuance of an anti-suit injunction as to foreign litigation: "(1) the parties must be the same in both matters, and (2) resolution of the case before the enjoining court must be dispositive of the action to be enjoined."
As to the two threshold requirements, first, there is no dispute that the parties in this action, Travelport and Bellview, are the same as the parties in the Nigeria Action. Second, judgment in this case is dispositive of the Nigeria Action because it will compel arbitration of those same issues that are currently being litigated in the Nigeria Action, namely Travelport's right to terminate the Distribution Agreement and Bellview's alleged material breach. In other words, by virtue of this Court's judgment, the issues in the Nigeria Action "are reserved to arbitration" and cannot be litigated.
The
As to the remaining factors, the Nigeria Action is vexatious. Despite Bellview's agreement to resolve this dispute in an arbitral forum, Bellview has obtained a restraining order and initiated contempt proceedings against Travelport through litigation. After initially
The delay and expense that have resulted from Bellview's actions are palpable. Travelport first accepted Bellview's invitation to arbitrate on January 26, 2012, but arbitration still has not commenced more than eight months later. Instead, Travelport has been forced to engage in litigation on multiple fronts and defend itself in an action on Bellview's home turf. Although the Nigeria Action has been ongoing for more than ten months, scovery has not yet even begun. The Nigeria High Court has apparently not yet ruled on Bellview's March 15 motion for leave to amend its summons.
The Nigeria Action also creates a serious risk of inconsistency and a race to judgment. Absent an anti suit injunction, the Nigeria High Court could go forward and try the case notwithstanding this Court's determination that arbitration is mandatory. Accordingly, it is proper to enjoin Bellview from further pursuing the Nigeria Action, or any other action that would interfere with the parties' arbitration proceedings in New York.
Travelport's May 2, 2012 petition to compel arbitration and injunctive relief is granted.
SO ORDERED.