Bamberger Rosenheim, Ltd. v. OA Development, Inc.
862 F.3d 1284 (2017)
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Rule of Law:
Disputes over the interpretation of an arbitration agreement's venue-selection clause are procedural questions presumptively for the arbitrator to decide, not questions of arbitrability for a court to review de novo.
Facts:
- In 2008, Bamberger Rosenheim, Ltd. ('Profimex'), an Israeli company, and OA Development, Inc. ('OAD'), an American company, entered into a Solicitation Agreement.
- The agreement contained a clause requiring binding arbitration for any disputes.
- The venue provision of the clause stated that proceedings would take place in Tel Aviv, Israel if the dispute was submitted by OAD, and in Atlanta, Georgia if submitted by Profimex.
- After their business relationship soured, Profimex initiated arbitration proceedings against OAD in Atlanta for breach of contract.
- In the same Atlanta arbitration, OAD filed a counterclaim against Profimex for defamation.
Procedural Posture:
- During arbitration proceedings initiated by Profimex in Atlanta, OAD filed a counterclaim.
- Profimex objected to the arbitration of the counterclaim in Atlanta, arguing the agreement required it to be heard in Tel Aviv.
- The arbitrator determined that venue for the counterclaim was proper in Atlanta.
- The arbitrator issued an award finding Profimex liable on OAD's defamation counterclaim.
- Profimex filed a petition to vacate the arbitral award in the U.S. District Court.
- OAD filed a cross-petition to confirm the award in the same court.
- The district court confirmed the arbitral award and denied Profimex's petition to vacate.
- Profimex, as the appellant, appealed the district court's decision to the U.S. Court of Appeals for the Eleventh Circuit, with OAD as the appellee.
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Issue:
Does a court defer to an arbitrator's interpretation of an arbitral-venue provision in a valid arbitration agreement, or is the proper venue a question of arbitrability for the court to decide?
Opinions:
Majority - Melloy, Circuit Judge
Yes, a court must defer to an arbitrator's interpretation of an arbitral-venue provision. The interpretation of a venue clause is a procedural question for the arbitrator, not a question of arbitrability for the court. The court distinguished between questions of 'arbitrability'—such as whether a valid arbitration agreement exists or covers a particular dispute, which are presumptively for courts to decide—and procedural questions that govern how the arbitration is conducted. The court held that a venue-selection clause falls into the latter category because it determines where an arbitration occurs, not whether a duty to arbitrate exists at all. Therefore, judicial review is extremely narrow and limited to determining whether the arbitrator was 'even arguably' interpreting the parties' contract. Because the arbitrator in this case engaged with the language of the venue provision to decide that the counterclaim could be heard in Atlanta, the court must defer to that interpretation, regardless of whether the court believes the interpretation was correct.
Analysis:
This decision reinforces the strong judicial deference afforded to arbitrators' procedural rulings under the Federal Arbitration Act. It clarifies for the Eleventh Circuit that arbitral venue is a procedural matter, not a gateway question of arbitrability, thereby aligning its precedent with at least four other circuits. The ruling narrows the grounds on which a party can challenge an arbitral award in court, promoting the efficiency and finality of arbitration. It signals to contracting parties that if they wish for a court to resolve disputes over venue, they must explicitly state so in their arbitration agreement.
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