Miami Now Go-to Destination for International Arbitration: Part 2 of 2
Recently we reported on the creation of an international arbitration court iin Miami, and the myriad benefits that it will bring to the local judicial system as well as the many corporations that conduct business in Miami. In this post, we will discuss what kinds of disputes are eligible to be heard by the International Arbitration Court (IAC), and what types of relief can be sought.
What Disputes Are Eligible for the IAC?
Two types of arbitration-related matters may be heard by Miami’s IAC: (1) those falling within the Florida International Commercial Arbitration Act (Chapter 684, Florida Statutes) — which mirrors the United Nations Commission on International Trade Law (UNCITL) Model Law on International Commercial Arbitration enacted in seven U.S. states and more than 50 countries, or (2) those falling within the Federal Arbitration Act (9 U.SC. § 1).
To qualify under FICAA, a matter must meet either of two conditions:
First, the parties’ “places of business” must have been “in different countries” at the time they reached their arbitration agreement. Alternatively, the agreed-upon arbitration situs, or the place where a “substantial part of the obligations of the commercial relationship are to be performed or the place with which the subject matter of the dispute is most closely connected” must be “outside the country in which the parties have their places of business.”
In contrast, the FAA applies more broadly to contracts involving interstate commerce and, in those circumstances, controls over inconsistent state law. Although a federal statute, the FAA applies in state and federal courts and to contracts made pursuant to state law.
So, for example, the FAA would apply to an arbitration proceeding between a Florida construction company and California supplier, while the FICAA would not. An arbitration proceeding between a Florida importer and a Brazilian manufacturer would fall under both the FAA and the FICAA.
Miami’s IAC is authorized to hear matters relating to various types of arbitration, with the exception of those involving parties based in the United States. Indeed, to ensure the international character of the matters brought before the IAC, the order creating the court specifically exempts FAA arbitrations “arising out of a relationship which is entirely between citizens of the United States.”
This limitation itself has three exceptions: (1) the parties’ relationship “involves property located abroad;” (2) “envisages performance or enforcement abroad;” or (3) “has some other reasonable relation with one or more foreign states.”
What Requests for Relief Could Be Brought Before the IAC?
Apart from these criteria, the Miami-Dade County Circuit Court, in establishing the IAC, did not limit the types of issues the court can hear. As a result, arbitrating parties should be able to bring before the IAC most requests for judicial assistance that are incidental to their arbitration agreement.
One of the most common of these requests is a petition to compel arbitration. Sometimes, despite having agreed in writing to arbitrate, one party may decide for any number of reasons to choose litigation over arbitration. If the other party objects, that party can ask the IAC to stay any pending litigation and compel arbitration.
Another important topic in international arbitration is the extent of discovery and, in particular, disclosures from third parties. Depending on how the parties have crafted their arbitration clause, these fact-gathering tools may be available in their arbitration.
And if the arbitration is seated in Florida, the FICAA expressly permits the arbitral tribunal or a party to seek “assistance in taking evidence” from Florida courts. The FAA, at Section 7, also provides means to obtain documents and testimony in arbitration.
Finally, an arbitration proceeding culminates with an award, which typically explains the tribunal’s findings and the relief it has decided to grant. The parties will then apply to a court for recognition and enforcement. Both the FICAA and the FAA address these issues and provide very limited grounds for rejecting an arbitral award.