United States District Court, Southern District of New York
December 18, 2000
BANCOL Y CIA. S. EN C., ET AL., PLAINTIFFS,
BANCOLOMBIA S.A., ET AL., DEFENDANTS.
The opinion of the court was delivered by: Rakoff, District Judge.
By Orders dated August 11, 1999 and December 14, 1999, the
Court stayed this action and compelled arbitration pursuant to
Clause Seventeenth of the August 1997 contract (the "Contract")
that is the
subject of this litigation.*fn1 See Affirmation of Marc J.
Goldstein, dated September 11, 2000, Ex. A (the Contract). The
arbitration has not yet commenced, however, because the parties
have been unable to agree on selection of the arbitrators.
Anticipating such an impasse, Clause Seventeenth of the Contract
provides that, "[a]s a last resort," the Santafé de Bogota
Chamber of Commerce ("Chamber of Commerce") will select the
arbitrators, who, in turn, "must be Colombian lawyers of
recognized prestige, with not less than 10 years' experience in
the private practice of law or in the judiciary."
In the teeth of this clear provision and the Court's prior
orders, plaintiffs have returned to this Court seeking to have
this Court hold, prior even to selection of the arbitration
panel, that arbitration of the parties' dispute must proceed
under the rules of the Inter-American Commercial Arbitration
Commission ("IACAC"), as made applicable by the Inter-American
Convention on International Commercial Arbitration ("Panama
Convention"). See 9 U.S.C. § 301 (1994) (notes).*fn2
However, even though an order compelling arbitration does not
divest a district court of jurisdiction over the underlying
case, see e.g. The Anaconda v. American Sugar Refining Co.,
322 U.S. 42, 44, 64 S.Ct. 863, 88 L.Ed. 1117 (1944), the court's
authority to direct or oversee that arbitration is narrowly
confined. See, e.g., Michaels v. Mariforum Shipping, S.A.,
624 F.2d 411, 414 (2d Cir. 1980); Compania Panemena Maritima San
Gerassimo, S.A. v. J.E. Hurley Lumber Co., 244 F.2d 286, 288
(2d Cir. 1957). In particular, it has little or no power to
afford interlocutory review of procedural matters, let alone to
determine at the outset what procedural rules are to be applied.
See generally, Prima Paint Corp. v. Flood & Conklin Mfg.,
388 U.S. 395, 404, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967); John
Wiley & Sons v. Livingston, 376 U.S. 543, 557, 84 S.Ct. 909,
11 L.Ed.2d 898 (1964). Rather, "[o]nce it is determined . . . that
the parties are obligated to submit the subject matter of a
dispute to arbitration, `procedural' questions which grow out of
the dispute and bear on its final disposition should be left to
the arbitrator." See John Wiley & Sons, 376 U.S. at 557,
84 S.Ct. 909.
Moreover, given the Court's prior orders, this is no longer a
case in which arbitrability is itself an issue. Cf. First
Options of Chicago, Inc. v. Kaplan, 514 U.S. 938,
115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). Rather, the Court has already
remitted the case for arbitration pursuant to Clause
Seventeenth, which requires arbitration of "any disputes that
might arise between the contracting parties in connection with
the making, validity, interpretation, execution and termination
of the within Contract." This broad arbitration clause
inherently subsumes the right of the arbitrators to determine
what procedural rules apply, subject only to whatever limited
review is available once the arbitrators have issued their final
determination. See generally, AT & T Technologies, Inc. v.
Communications Workers of America, 475 U.S. 643, 650,
106 S.Ct. 1415, 89 L.Ed.2d 648 (1986); United Steelworkers of America v.
Warrior & Gulf Nav. Co., 363 U.S. 574, 584-85, 80 S.Ct. 1347,
4 L.Ed.2d 1409 (1960).
Accordingly, plaintiffs' application is denied and the parties
are ordered to proceed immediately with the selection of
arbitrators under Clause Seventeenth of the Contract. Any
further delay by plaintiffs
would raise obvious questions of their good faith.