United States District Court, S.D. New York
OPINION & ORDER
PAUL A. ENGELMAYER, District Judge.
Petitioners here seek to compel arbitration, based on a 1999 written agreement with respondents that contains a binding arbitration clause. Trial is-and for some time, has been- scheduled to begin on September 2, 2014, limited to a single issue: whether, as respondent claims, the agreement is a forgery. See Dkt. 36 at 4. Respondent, however, has now come forward with an alternative argument: that, even if the contract at issue were authentic, it is governed by, and technically invalid under, the laws of the United Arab Emirates ("UAE").
For the reasons that follow, the Court rejects that claim. The contract, the Court holds, is governed by New York law, and under that law, respondent has raised no claim of invalidity other than its alleged lack of authenticity. Trial will therefore proceed as scheduled, beginning September 2, 2014, on the single issue of whether the contract is a forgery.
I. Procedural Background
On January 14, 2014, Al Maya Trading Establishment ("Al Maya") petitioned this Court to compel arbitration with respondent Global Export Marketing Co., Ltd. ("Global"). Dkt. 1 ("Pet."). In its petition, Al Maya alleges that, on June 16, 1999, it entered into a written agreement with Global, in which Global agreed that Al Maya would be its exclusive distributor in the UAE for Global's American Garden line of products. Pet. ¶ 1; Dkt. 3 Ex. A (the "Agreement"). Al Maya alleges that Global has recently violated the Agreement by unilaterally terminating it. Pet. ¶ 3. Al Maya seeks an order, pursuant to the Agreement, compelling arbitration and appointing an arbitrator. Pet. ¶¶ 4-5.
On February 26, 2014, Global moved to dismiss the petition, on the grounds that the Agreement is a forgery. See Dkt. 12-24. It contended that, although it has long had business dealings with Al Maya, those dealings were based not on a written agreement, but on a handshake agreement. See Dkt. 24 ("Global MtD Br.") at 2. Global submitted a number of sworn declarations in support of its claim of forgery. Dkt. 20-23. Global demanded a jury trial as to the authenticity of the Agreement, pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 4. See Global MtD Br. 2-5.
On March 5, 2014, Al Maya filed an opposition to the motion to dismiss. Dkt. 25 ("Al Maya MtD Br."). Al Maya denied that Global had raised a genuine issue of disputed fact as to the authenticity of the Agreement. However, it agreed with Global that, in the event the Court concluded that Global had raised a genuine issue of fact, an expedited trial was the proper means of determining whether the Agreement is authentic. Id. at 1-8.
On March 12, 2014, Global replied. Dkt. 31 ("Global MtD Reply Br."). In its reply, Global raised a new argument: that Al Maya was not a "proper party in interest" because, it claimed, a different Al Maya corporate entity had been Global's distributor in the UAE since 2002. Id. at 6.
On March 19, 2014, the Court ruled that the parties' dispute raised a genuine issue of material fact as to the authenticity of the Agreement-and therefore as to whether there was a binding contractual duty to arbitrate the present dispute-which, pursuant to the FAA, was to be resolved at a jury trial. Dkt. 36 at 2 (citing the FAA, 9 U.S.C. § 4 and Glencore Ltd. v. Degussa Engineered Carbons L.P., 848 F.Supp.2d 410, 423 (S.D.N.Y. 2012)). The Court ruled:
This case will proceed towards the jury trial provided for by 9 U.S.C. § 4, with the sole issue to be decided being whether the Agreement was in fact signed by the parties, as Al Maya contends, or whether, as Global claims, it is a forgery. The Court intends to move this case swiftly towards resolution: The discrete factual issue presented appears likely limited in time, space, and relevant discovery materials. And the FAA contemplates "efficient, streamlined procedures tailored to the type of dispute."
Id. at 4 (quoting AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740, 1749 (2011)). The Court directed the parties to meet and confer upon an expedited discovery schedule. Id.
The Court also addressed Global's argument that a different Al Maya corporate entity had in fact functioned as Global's distributor. It held that this argument is "a merits issue irrelevant to the instant motion to compel arbitration" and that "[a]ny claim along these lines is to be raised, if at all, before the eventual factfinder, " i.e., the arbitrator. Id. at 4. Thus, were the arbitration agreement held to be valid, any dispute as to whether Global was liable to the particular Al Maya entity with which it had contracted, and if so, whether it owed any damages for the alleged breach of contract, would be resolved by the arbitrator. See AT&T Technologies, Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 649-50 (1986) ("[I]n deciding whether the parties have agreed to submit a particular grievance to arbitration, a court is not to rule on the potential merits of the underlying claims.... The agreement is to submit all grievances to arbitration, not merely those which the court will deem meritorious.") (citation omitted).
At a March 28, 2014 conference with the parties, the Court set this case down for trial beginning September 2, 2014. Dkt. 37; see also Dkt. 44 ("IPTC Tr.") at 16. The Court also approved the parties' case management plan and scheduling order, which stated: "Discovery will be limited at this time to materials and matters relevant to the issue of whether the 1999 Agreement was in fact signed by the parties, as Al Maya contends, or whether, as Global claims, it is a forgery. Following a trial on that issue, should the court proceed to the merits, the parties reserve the right to seek broader discovery." Dkt. 38 at 3.
Fact discovery concluded on June 10, 2014. See Dkt. 50. Pursuant to the Court's ruling at the March 28, 2014 conference, any party that intended to move for summary judgment was to submit a letter, setting forth the basis for the anticipated motion, by June 19, 2014. IPTC Tr. 17; see also Individual Rule 3.H. Neither party filed such a letter.
On June 27, 2014, the Court held a pre-trial conference, at which it reviewed in detail the witnesses and evidence anticipated at trial. At that conference, Global made a new argument. It asserted that if the Agreement were authentic, it is governed by UAE law, which imposes certain technical requirements that the Agreement does not meet. Tr. 24-26. Global sought to move for summary judgment on that issue. Although expressing skepticism that respondents had properly preserved the issue, the Court, after an extended colloquy, directed briefing. Tr. 29-60. On June 30, 2014, Global filed its memorandum of law on these points. Dkt. 59 ("Global Br."). On July 7, 2014, Al Maya filed its opposing memorandum of law. Dkt. 60 ("Al Maya Br.").
On July 10, 2014, the Court issued an order giving the parties notice, for the purpose of pre-trial planning, that it had determined that the Agreement is governed by New York law, and that it would shortly issue an opinion-this opinion-setting forth its reasons for that ruling. Dkt. 63.
On July 11, 2014, Global moved for reconsideration of the Court's order of July 10, 2014, notwithstanding that the Court's opinion explaining the reasoning behind its order had yet to issue. Dkt. 65 ("Global Reconsideration Br."). As explained here, Global's brief in support of reconsideration abandoned some of its earlier arguments and sought to make new ones.
Global argues that the contract is governed by, and invalid under, UAE law. Al Maya makes three independent arguments in response: that (1) Global's request to apply foreign law is untimely under Federal Rule of Civil Procedure 44.1; (2) there is no conflict between UAE and New York law, because the Agreement is valid under both; and (3) if there is a conflict between UAE and New York law, this Court must apply New York law. For the reasons that follow, each of Al Maya's arguments is meritorious.
A. Federal Rule of Civil Procedure 44.1
Federal Rule of Civil Procedure 44.1 requires that "[a] party who intends to raise an issue about a foreign country's law must give notice by a pleading or other writing." Fed.R.Civ.P. 44.1. Congress passed Rule 44.1 in part "to avoid unfair surprise." Rationis Enterprises Inc. of Panama v. Hyundai Mipo Dockyard Co., Ltd., 426 F.3d 580, 585 (2d Cir. 2005). Notice under Rule 44.1 must be reasonably timely. Al Maya argues that the Court should disregard Global's argument that the Agreement is invalid under UAE law because it was not reasonably timely. Al Maya Br. 5-6.
"The District Court's determination regarding what constitutes reasonable... notice' under Rule 44.1... falls within the discretionary powers of the District Court to supervise litigation." Rationis, 426 F.3d at 585.
As to what constitutes reasonable timeliness, Rule 44.1 "does not attempt to set any definite limit on the party's time for giving the notice of an issue of foreign law; in some cases the issue may not become apparent until the trial and notice then given may still be reasonable." Fed.R.Civ.P. 44.1 advisory committee's note. Factors relevant to reasonableness include "[t]he stage which the case had reached at the time of the notice, the reason proffered by the party for his failure to give earlier notice, and the importance to the case as a whole of the issue of foreign law sought to be raised." Id.
In the Court's judgment, Global's announcement that it intended to raise the UAE law issue was not reasonably timely. Global first disclosed this intention at the June 27, 2014 pretrial conference, over six months after Al Maya filed the petition and just over two months before trial was scheduled to commence. The purpose of that conference was to review the witnesses and evidence at the upcoming trial. Prior to that point, the Court, and opposing counsel, understood this case to concern a single issue-whether the Agreement is a forgery-on which foreign law had no bearing. That understanding was based on, inter alia, Global's brief in support of its motion to dismiss; the parties' case management plan; and the parties' conference with the Court on March 28, 2014-all of which focused on the forgery issue and none of which raised the UAE law issue. See Global Mtd Br. 2 (listing the issues presented, and not including, or elsewhere mentioning, a UAE law issue); Dkt. 38 at 3 (case management plan, stating that "[d]iscovery will be limited at this time to materials and matters relevant ...