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A federal district court in Oregon granted comity to a tribal court ruling vacating an arbitration award, finding that the tribal court properly exercised jurisdiction based on a “consensual relationship” between the parties. The decision to grant comity meant that the Court could not inquire into the propriety of the tribal court’s decision to conduct a de novo review of the arbitration award.
In First Specialty Insurance Corp. v. Confederated Tribes of Grand Ronde Community of Oregon, No. 07-05-KI, 2007 WL 3283699 (D. Or. Nov. 2, 2007), the Confederated Tribes of the Grande Ronde Community of Oregon (the Tribe) sued their investment advisor, Strategic Wealth Management (SWM), in an Oregon court. In response, SWM moved to compel arbitration pursuant to an arbitration agreement in the parties’ contract.
The court granted the motion and issued an order compelling arbitration. Following a hearing, the arbitration panel issued an award in favor of SWM, awarding attorney fees and costs well in excess of $1 million. Three days after the award was issued, the Tribe filed a motion for vacatur in tribal court.
SWM argued that the tribal court had no jurisdiction and sought an order for dismissal. The tribal court concluded that it had jurisdiction and vacated the award of costs and attorney fees. After the tribal court vacated the award, SWM’s insurer, FSIC, filed an action in federal court, seeking a declaration that the tribal court order was invalid for lack of jurisdiction.
The issue in federal court was whether to grant comity to the tribal court rulings. As the Court noted, comity must be withheld if the tribal court lacked either personal or subject matter jurisdiction. The Court concluded that the tribal court properly exercised jurisdiction over SWM based on the consensual relationship between SWM and the Tribe.
In reaching this conclusion, the Court rejected the argument that the tribal court lacked jurisdiction because the Tribe was challenging an arbitration award that was issued off the reservation by non-tribal members. As the Court explained, the arbitration would never have occurred in the absence of the SWM’s consensual relationship with the Tribe.
Alternatively, FSIC argued that the tribal court overstepped its authority in reviewing the arbitration award de novo instead of conducting the limited review prescribed by the Federal Arbitration Act. In rejecting this argument, the Court explained that it could not inquire into the merits of the tribal court ruling once it determined that the ruling was entitled to comity.
As the Court noted, the parties’ arbitration agreement did not specify an exclusive forum for confirming or challenging an award. If the agreement had designated an exclusive forum, the Court could have withheld comity on the basis that “the judgment [wa]s inconsistent with the parties’ contractual choice of forum.”
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