Mercury Telco v. Empresa De Telecommunicaciones

• Decision Date: 02 November 2009
• Docket Number: Case No. 07-61529-CIV.
• Citation: 670 F.Supp.2d 1350
• Parties: MERCURY TELCO GROUP, INC., Plaintiff, v. EMPRESA DE TELECOMMUNICACIONES DE BOGOTA S.A. E.S.P., Defendant.
• Court: U.S. District Court — Southern District of Florida

Page 1350

670 F.Supp.2d 1350

MERCURY TELCO GROUP, INC., Plaintiff, v. EMPRESA DE TELECOMMUNICACIONES DE BOGOTA S.A. E.S.P., Defendant.

Case No. 07-61529-CIV.

United States District Court, S.D. Florida.

November 2, 2009.

Kraig Scott Weiss, Paul K. Silverberg, Silverberg & Associates, Weston, FL, for Plaintiff.

Arnoldo B. Lacayo, Edward Maurice Mullins, Maria Cristina Cardenas, Astigarraga Davis Mullins & Grossman, Miami, FL, for Defendant.

OPINION AND ORDER

KENNETH A. MARRA, District Judge.

This cause is before the Court upon Defendant EMPRESA DE TELECOMMUNICACIONES DE BOGOTA S.A. E.S.P.'s ("Defendant") Motion to Dismiss this Action in Favor of Arbitration, or Alternatively, to Stay Action (DE 19), filed May 29, 2009. The motion is fully briefed and ripe for review. The Court held a hearing on the motion on October 1, 2009. The Court has carefully considered the motion, response, supplemental response, and reply, and is otherwise fully advised in the premises.

I. Background

MERCURY TELCO GROUP, INC. ("Plaintiff") brings this seven-count Complaint alleging anticipatory breach of contract (count I), tortious interference (counts II-IV), fraud in the inducement (count V), violation of Federal Lanham Act (count VI), and defamation (count VII). The facts giving rise to this Complaint stem from a January 21, 2005 Prepaid Card Cooperation Agreement (the "Agreement"), wherein the parties agreed to commercialize prepaid calling cards for long distance calls. Under the Agreement, Mercury was to provide the calling cards and ETB was to provide the infrastructure and telephone services. (Compl. ¶ 6.) Attached to the Complaint is a copy of the Agreement in the original Spanish. (Comp. Exh. A). An English translation of the Agreement is attached to Defendant's motion to dismiss. See DE 19, Exh. A. Regarding dispute resolution, the Agreement states as follows:

Any dispute between the parties relating to the execution, interpretation, existence, validity, performance, termination, liquidation and other aspects of the Agreement shall be resolved first within the Oversight Committee. If no agreement is reached, the dispute shall be submitted to the legal representatives of the parties to seek a direct resolution by them; in the absence of a complete or definitive resolution, the dispute shall be submitted by either Party to an Arbitral Tribunal, composed of (1) arbitrator who is an attorney and a Colombian citizen. The Parties shall select the arbitrator by mutual agreement, pursuant to the rules of the arbitration Center and pursuant to the applicable law. The arbitrator shall decide at law and his or her judgment shall be final and binding upon the Parties. The Tribunal shall abide by Decree 1818 of 1998 and the other legal provisions amending or supplementing it.

The Arbitral Tribunal shall be seated in the city of Bogota, will operate in Spanish, at the Arbitration and Conciliation center of the Bogota Chamber of Commerce and will apply the rules of said Center and Colombian law.

The Costs of the arbitration will be borne by the non-prevailing party. The application of this arbitration clause does not imply the suspension of the performance of this Agreement in any way, and therefore the Parties must continue fulfilling their obligations while the dispute that led to the installation of the Arbitral Tribunal is resolved.

Id. at § 26.

In moving to compel arbitration and dismiss the complaint, Defendant argues that the arbitration clause encompasses each of the claims in the Complaint and that the strong public policy favoring arbitration requires that this case be dismissed. (DE 19 at 5, 7-14.) In response, Plaintiff argues some of its claims, particularly fraud in the inducement of the entire Agreement, should be heard by the Court, rather than by the arbitrator.

II. Discussion

There is a strong federal policy supporting arbitration agreements. See Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). One of the purposes of the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1 et seq. is to "ensure judicial enforcement of privately made agreements to arbitrate." Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 219, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985). As such, arbitration agreements must be "rigorously enforce[d]" by the courts. Id. at 221, 105 S.Ct. 1238; see also DePaoli v. Exotic Motorcars and Jewelry, Inc., 2008 WL 4279645, *1 (S.D.Fla.2008).

Federal arbitration law is codified in the three chapters of Title 9 of the United States Code. The Federal Arbitration Act ("FAA"), enacted in 1947, comprises the first chapter. See 9 U.S.C. §§ 1-14. The "Convention on the Recognition and Enforcement of Foreign Arbitral Awards," implementing the treaty of the same name, was enacted in 1970. This statute, commonly called the New York Convention, comprises the second chapter. See 9 U.S.C. §§ 201-208. The third chapter implements the Inter-American Convention on International Commercial Arbitration. See 9 U.S.C. §§ 301-307. See Rogers v. Royal Caribbean Cruise Line, 547 F.3d 1148, 1152-1153 (9th Cir.2008); Industrial Risk Insurers v. M.A.N. Gutehoffnungshutte GmbH, 141 F.3d 1434, 1440 (11th Cir.1998).

The Inter-American Convention on International Commercial Arbitration [opened for signature Jan. 30, 1975, O.A.S.T.S. No. 42, 1438 U.N.T.S. 245,] (the "Panama Convention") (reprinted after 9 U.S.C. § 301) mandates that a court must enforce arbitral clauses in agreements within the scope of the Convention: "[a]n agreement in which the parties undertake to submit to arbitral decision any differences that may arise or have arisen between them with respect to a commercial transaction is valid." 9 U.S.C.A § 301.

Additionally, the New York Convention, implemented at 9 U.S.C. §§ 201-208, provides that "[a]n arbitration agreement or arbitral award arising out of a legal relationship, whether contractual or not, which is considered as commercial, including a transaction, contract or agreement described in section 2 of this title, falls under the Convention."

The New York Convention is incorporated into federal law by the FAA, which governs the enforcement of arbitration agreements, and of arbitral awards made pursuant to such agreements, in federal and state courts. See Allied-Bruce Terminix Cos., Inc. v. Dobson, 513 U.S. 265, 269-73, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995). Chapter 2 of the Act, 9 U.S.C. §§ 201-208, mandates the enforcement of the New York Convention in United States courts. See 9 U.S.C. § 201. Chapter 2 generally establishes a strong presumption in favor of arbitration of international commercial disputes.

Industrial Risk Insurers, 141 F.3d at 1440 (emphasis added).

The FAA has created "a body of federal substantive law" which is applicable in both state and federal court. Southland Corp. v. Keating, 465 U.S. 1, 12, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984); see also Goodman Ltd. Partnership v. THF Construction, Inc., 321 F.3d 1094, 1097 (11th Cir. 2003). Moreover, the FAA guides the courts in enforcing arbitration agreements "A written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. Further, the FAA allows a party "aggrieved by the alleged failure, neglect, or refusal of another to arbitrate" under an otherwise valid arbitration clause to seek an order from a court compelling arbitration. 9 U.S.C. § 4.

In reviewing a motion to compel arbitration, a district court must consider three factors: (1) whether a valid written agreement to arbitrate exists, (2) whether an arbitrable issue exists, and (3) whether the right to arbitrate was waived¹. See, e.g., Integrated Sec. Services v. Skidata, Inc., 609 F.Supp.2d 1323, 1324 (S.D.Fla. 2009). A court may dismiss a case where it determines that the claims sued upon are arbitrable under the relevant agreement. See id.; Allen v. Royal Caribbean Cruise, Ltd., 2008 WL 5095412 (S.D.Fla. 2008).

Here, Defendant argues that the Court need not even address the issue of whether Plaintiff's claims are arbitrable under the Agreement because the arbitration clause in the Agreement calls for the arbitrator to decide that issue. (Mot. at 5). "[W]hen . . . parties explicitly incorporate rules that empower an arbitrator to decide issues of arbitrability, the incorporation serves as clear and unmistakable evidence of the parties' intent to delegate such issues to an arbitrator." Terminix Intern. Co., LP v. Palmer Ranch Ltd. Partnership, 432 F.3d 1327, 1332 (11th Cir.2005), quoting Contec Corp. v. Remote Solution, Co., 398 F.3d 205, 208 (2d Cir. 2005). See First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) (holding that the question of who has the primary power to decide arbitrability turns upon whether the parties agreed to submit that question to arbitration).

Defendant claims that the Agreement provides clear and unmistakable evidence that the parties agreed to entrust the question of arbitrability to the arbitrator selected pursuant to the terms of the Agreement and under the rules of the Arbitration and Conciliation Center of the Bogota Chamber of Commerce. See DE 19 Exh. A at § 26 (stating that the arbitrator will apply the rules of the Arbitration and Conciliation center of the Bogota Chamber of Commerce and Colombian law). The Agreement also states that "[t]he Tribunal shall abide by Decree 1818 of 1998 and the other legal provisions amending or supplementing it." This Decree states, in pertinent part that: "[t]he Tribunal shall rule on its own jurisdiction through a ruling against which only a motion for reconsideration may be entered." Id. at Art. 147. Additionally, that same Decree provides that:

1. The Tribunal shall rule...