|
A federal court in the Virgin Islands held that a party failed to demonstrate that arbitration would be prohibitively expensive when it did not provide evidence of what numbers it used to calculate the cost of arbitration and did not show that it would be unable to pay the costs of arbitration.
In Spenceley Office Equipment v. Ricoh Latin America, Inc., No. 2005-152, 2007 WL 683787 (D.V.I. Feb. 28, 2007), Spenceley and Ricoh entered into an agreement whereby Spenceley would distribute Ricoh office products in the Virgin Islands. The agreement contained an arbitration clause.
Spenceley brought an action for breach of contract, alleging that Ricoh breached the agreement by allowing another company in the Virgin Islands to distribute Ricoh's office products. Spenceley argued that it should not be required to arbitrate because of the prohibitively high cost of arbitration.
To satisfy her burden of proving that arbitration would be cost-prohibitive, Spenceley had to show "(1) that the costs of arbitration are likely to be significantly higher than litigation costs, and (2) that [Spenceley] is unable to pay high costs of arbitration."
In attempting to satisfy this burden, Spenceley relied on an estimated cost of arbitration obtained from a cost calculator on the International Chamber of Commerce website. However, Spenceley did not present any information about how it obtained this number or any evidence that it would be required to pay these costs. Moreover, Spenceley failed to provide any evidence that it would be unable to pay the costs of arbitration. Accordingly, the Court held that Spenceley failed to show that arbitration would be cost-prohibitive.
Subscribe to a free weekly update on ADR case law and
legislation
|