Reversing a district court decision, the U.S. Court of Appeals for the 9th Circuit recently ruled that federal district courts have jurisdiction to enforce a summons issued by arbitrators in international arbitrations that are subject to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention). In addition, the court ruled that such a summons can be enforced not only in the district in which the arbitration is taking place, but in any district court that has personal jurisdiction over the person or entity being summoned. This ruling should facilitate the enforcement of arbitral subpoenas in international arbitrations, at least within the 9th Circuit.
The case (Jones Day v. Orrick, Herrington & Sutcliffe, LLP, 2022 WL 3023605 (9th Cir. Aug. 1, 2022)), arose out of a dispute between the Jones Day law firm and one of its former partners who was based in its Paris office before leaving to join Orrick, a rival firm. Jones Day’s partnership agreement provides for mandatory arbitration of all disputes among partners, and provides that all such arbitration proceedings are governed by the Federal Arbitration Act (FAA). The partnership dispute proceeded to arbitration in Washington, D.C., seat of underlying arbitration as designated in the arbitration agreement.
Jones Day requested that the arbitrator issue a subpoena to Orrick for documents it deemed material to its claims against its former partner. The arbitrator issued a subpoena and summoned Orrick to appear before him to produce the specified documents. When Orrick failed to comply with the subpoena, Jones Day sought to enforce it in the Superior Court of the District of Columbia. That Court dismissed Jones Day’s petition, concluding that it lacked personal jurisdiction over Orrick, whose principal place of business is San Francisco, and that section 7 of the FAA “requires Jones Day to file its action to enforce an arbitral subpoena in a United States district court.”
Jones Day then requested that the arbitrator sit for a hearing in the Northern District of California and issue a revised subpoena requiring two Orrick partners residing in the Northern District to appear at a hearing in San Jose, California. The arbitrator granted Jones Day’s request and issued the arbitral summonses. Orrick refused to comply with those summonses, so Jones Day filed an action to enforce them in the U.S. District Court for the Northern District of California.
The district court denied Jones Day’s petition, concluding that it lacked authority to compel compliance with the summonses under FAA § 7, which it construed as providing that the district where the arbitrator sits is the only district in which a district court may compel attendance. Reasoning that it was undisputed that Washington D.C. was the seat of the underlying arbitration, the district court concluded it could not compel attendance at a hearing in San Jose, California. Because it dismissed Jones Day’s petition on venue grounds, the district court declined to decide whether Chapter Two of the FAA conferred subject matter jurisdiction over actions to enforce an arbitral summons to a third party.
Jones Day appealed, and the 9th Circuit reversed. The court first addressed whether the district court had subject matter jurisdiction to enforce the arbitral summons, which the district court had declined to decide. The court ruled that Chapter Two of the FAA provides federal district courts with jurisdiction over such proceedings, because Section 203 of the statute provides federal courts with jurisdiction over “[a]n action or proceeding falling under the [New York] Convention.” The Court rejected Orrick’s argument that Section 203 applies only to the recognition and enforcement of completed arbitration awards. Instead, agreeing with prior decisions of the 5th and 11th Circuits, the court ruled that a federal court has original jurisdiction over an action or proceeding if both of the following two requirements are met:
- There is an underlying arbitration agreement or award that falls under the New York Convention.
- The action or proceeding relates to that arbitration agreement or award.
For purposes of the second requirement, the court ruled that “relates to” applies to any proceeding that “could conceivably affect the outcome of the plaintiff’s case,” which clearly included the arbitral subpoena that Jones Day had sought to enforce.
Turning to the issue of venue, the 9th Circuit reversed the district court’s ruling that such a subpoena could be enforced only in a district court in the district in which the arbitration was taking place. The court ruled that the venue provision under the FAA supplements, rather than supplants, other venue rules, and that the generally applicable federal venue statute — 28 U.S.C. § 1391 — would therefore apply. Section 1391 provides for venue in a judicial district in which any defendant resides, if all defendants are residents of the state in which the district is located. Accordingly, the court ruled, Jones Day’s action was appropriately brought in the Northern District of California, where both of the Orrick partners who were subpoenaed resided, even though the underlying arbitration was being conducted in Washington, D.C.
The 9th Circuit’s ruling in binding in all federal courts within the 9th Circuit, which includes the courts in Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and the State of Washington.