Answer ... Section 3 of the Federal Arbitration Act (FAA) states that a federal court, with a valid agreement before it, “shall on application of one of the parties stay the trial of the action until such arbitration has been had” (9 USC §§ 2-3). Thus, when a party initiates litigation despite having an arbitration clause in its agreement, the counterparty may move to stay the litigation, pursuant to Section 3 of the FAA, and to compel arbitration under Section 4 of the FAA. Where appropriate, a stay of litigation “enables parties to proceed to arbitration directly, unencumbered by the uncertainty and expense of additional litigation, and generally precludes judicial interference until there is a final award” (Katz v Cellco P’ship, 794 F3d 341, 346 (2d Cir 2015)). A party may waive the right to arbitration when it engages in protracted litigation that prejudices the opposing party.
Answer ... Under the FAA, courts do not have jurisdiction over procedural issues that arise during an arbitration, with the exception of arbitrator appointment issues.
However, most federal and state courts have held that under the FAA, a court may grant interim relief pending arbitration (Sojitz Corp v Prithvi Info Solutions, Ltd, 921 NYS 2d 14, 17 (App Div 2011); Stemcor USA Inc v CIA Siderurgica Do Para Cosipar, 870 F3d 370, 374-79 (5th Cir 2017)). And under Section 7 of the FAA, when a party fails to comply with a tribunal’s order to testify or produce documents, the party seeking to enforce the order may petition a court for enforcement (9 USC § 7).
Courts also have the power to grant anti-suit injunctions in cases concerning a pending or threatened foreign arbitration (Citigroup, Inc v Abu Dhabi Inv Auth, No 13 Civ 6073 (PKC), 2013 WL 6171315 (SDNY 25 November 2013) (enjoining actions filed in Greece raising claims covered by the arbitration agreement), aff’d, 776 F 3d 126 (2d Cir 2015)). In the Second Circuit, a court may enjoin a party from pursuing a foreign action if “two threshold requirements are met: first, the parties must be the same in both proceedings, and second, resolution of the case before the enjoining court must be dispositive of the action to be enjoined” (Eastman Kodak Co v Asia Optical Co, 118 F Supp 3d 581, 586 (SDNY 2015)).
Finally, US courts have the authority, pursuant to 28 USC § 1782, to compel the production of evidence for use in international proceedings. The statute requires that the documents or testimony sought by the parties be for use “in a proceeding in a foreign or international tribunal”. While courts have ruled that investor-state arbitration panels are covered by Section 1782, they are divided as to whether private international arbitrations constitute tribunals.
Answer ... While the parties can provide in the arbitration agreement that gateway issues involving jurisdiction can be decided by the tribunal, assuming that intention is clearly and unmistakeably expressed, the court’s powers cannot be entirely excluded by agreement. Under the FAA, for example, the court is empowered to issue a stay of proceedings when litigation is subject to arbitration, as well as an order to compel arbitration (9 USC §§ 3, 4). Further, in the absence of agreement, the court must appoint arbitrators (9 USC § 5), enforce summonses issued by the tribunal (9 USC § 7), confirm and enforce awards, and vacate awards (9 USC §§ 9, 10).