Under Alabama Law, Awards Must Be Confirmed in the County Where the Award Was Made

An Alabama Civil Appeals Court reversed an order confirming an arbitration award for lack of subject matter jurisdiction and addressed the consumer’s “no money lent” argument, finding it without legal merit.

In MBNA America Bank, N.A. v. Bodalia, No. 2040847, 2006 WL 1793211 (Ala. Civ. App. June 30, 2006), Bodalia had a credit card with MBNA. The parties’ agreement included an arbitration clause, requiring that all disputes be resolved through the National Arbitration Forum.

After attempting to modify the agreement to allow her to choose the arbitration service, Bodalia filed a claim through the National Arbitration Council (“NAC”) and sent MBNA a demand for arbitration.

Bodalia claimed that, although she had an $8,500 balance on her MBNA credit card, MBNA actually owed Bodalia money. Employing a “no money lent” or “vapor money” theory, Bodalia argued that payments made by MBNA for goods and services was money that had never existed; therefore, MBNA owed Bodalia money because it failed to lend her anything.

Without MBNA’s participation in the arbitration proceeding, NAC issued an award in Bodalia’s favor. An Alabama Circuit Court confirmed NAC’s award, and MBNA challenged confirmation of the award for lack of subject matter jurisdiction.

First, the Court noted that Bodalia’s claim under the “no money lent” theory was without merit and had no basis in law; additionally, the NAC proceeding did not appear to meet minimum due process standards.

As to the subject matter jurisdiction, the Court pointed to the Alabama Arbitration Act, which states that a party can seek confirmation of an arbitration award in the county in which the award was made. Since the NAC award was made in Florida, the Alabama Circuit Court did not have jurisdiction to confirm the award.