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According to a federal district court in Connecticut, disputing a particular arbitration venue does not constitute a “refusal to arbitrate” that triggers a court’s jurisdiction under the Federal Arbitration Act (FAA) to compel arbitration and determine the proper venue, especially when controlling arbitration rules empower the arbitration administrator to determine the proper venue.
In Carrington Capital Management, LLC v. Spring Investment Services, Inc., Civ. No. 3:06CV1665(WWE), 2007 WL 2684728 (D. Conn. Aug. 2, 2007) Carrington and Spring entered into an agreement in which Spring was to exclusively sell and promote Carrington’s funds. The agreement contained an arbitration clause requiring the mediation and arbitration of disputes under the agreement. Carrington accused Spring of violating the agreement by withholding payments after the relationship was terminated, and filed a demand for mediation.
After an impasse in mediation, Spring filed a demand for arbitration, with a request that the arbitration be held in Boston. Carrington opposed the venue suggestion, and suggested alternative locations. After several attempts to resolve the venue dispute, the arbitration administrator refused to conduct the arbitration until the venue question was resolved between the parties.
Thirteen months from the initial demand for arbitration, Carrington filed a motion with the court to compel arbitration pursuant to the FAA and asking the Court to select the venue, alleging Spring’s lack of cooperation with venue selection constituted a refusal to arbitrate. Spring opposed the motion, claiming that it had not refused to arbitrate, and that the arbitration administrator, not the Court, was empowered by the agreement to resolve the venue dispute.
The Court held that Spring’s actions during the venue dispute did not constitute a refusal to arbitrate, and left the Court without the jurisdiction to compel arbitration or select a venue. The Court noted that the conduct of Carrington suggested that it, and not Spring, had been the party refusing to comply with the administrator’s requests for phone conferences on the venue issue, and had asserted that the administrator was without authority to determine the proper venue.
The Court also found that the rules of the arbitration administrator clearly empowered it to determine the location of any administered arbitration, should the parties fail to consent to a mutually agreeable location. The Court distinguished the instant case from other cases where a forum selection clause mandated a certain venue for dispute resolution; here, the parties had clearly agreed to conduct the arbitration in a mutually agreeable location, and, failing such an agreement, empowered the administrator, and not the court, to determine the proper venue.
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