A federal district court in New York denied an Israeli inventor’s motion to stay a pending arbitration because, as the Court explained, the New York Convention and its implementing statutes do not provide for a stay of arbitration.

In Ghassabian v. Hematian, No. 08 Civ. 4400, 2008 WL 3982885 (S.D.N.Y. Aug. 27, 2008), Ghassabian, an Israeli citizen, invented a wrist-mounted telephone device. To market his invention Ghassabian joined with Hematian and two other Americans (collectively, Hematian) to form Classicom LLC in the United States.

The structure and operations of Classicom were detailed in two separate contracts, each containing an agreement to arbitrate. When a dispute arose between Ghassabian and Hematian, Hematian issued a demand for arbitration. Ghassabian objected and filed a motion to stay the arbitration proceedings pursuant to the New York Convention (the Convention) and its implementing statutes.

The Court rejected Ghassabian’s interpretation of the Convention. The goal of the Convention is to encourage the recognition and enforcement of agreements to arbitrate in international contracts. Accordingly, as the Court noted, the Convention applies only to the recognition and enforcement of arbitral awards.

The Court explained that the Convention does not contain language pertaining to the restraint of a pending or ongoing arbitration proceeding. Therefore, the Convention does not create a cause of action to stay arbitration, as Ghassabian had argued.

The Court further examined the federal statutes implementing the Convention and noted that none of these statutes created such a cause of action. To the contrary, federal courts are specifically empowered to compel arbitration and confirm arbitration awards, but not expressly granted the power to stay proceedings.

Finally, the Convention incorporates the first chapter of the Federal Arbitration Act (FAA). The FAA does not provide for petitions to stay an arbitration. Thus, neither the Convention nor federal laws implementing it create a cause of action upon which Ghassabian could rely to stay the arbitration. Accordingly, the Court denied Ghassabian’s motion for a stay.