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High Court Finds Venue Provisions Permissive
By Mitchell S. Ostwald

In an unanimous decision late last month, the U.S. Supreme Court held that venue for confirming or vacating an arbitration award is not limited to the place where the award was made.

In Cortez Byrd Chips, Inc. vs. Bill Harbert Construction Company (2000WL 289572 (U.S. )), the court revisited the venue provisions of the Federal Arbitration Act (FAA), specifically to decide whether venue is limited to the place in which the parties had agreed to conduct binding arbitration or are permissive, permitting a motion to confirm, vacate or modify an arbitration award, either where the award was made or any district proper under the general venue statute.

The dispute involved a Mississippi construction project; however, the respondent filed a claim in the Atlanta office of the American Arbitration Association which conducted the arbitration in Birmingham, Alabama. The arbitration panel issued an award in favor of the respondent. Thereafter, the petitioner filed a complaint in the U.S. District Court for the Southern District of Mississippi seeking to vacate or modify the arbitration award, which Harbert (a respondent) then sought to confirm by filing this action seven days later in the Northern District of Alabama. When petitioner moved to dismiss, the transfer stayed the Alabama action. The Alabama District Court denied the motion concluding that venue is proper only in the Northern District of Alabama, and entered judgment in favor of respondent. The Court of Appeals for the 11th Circuit affirmed. The U.S. Supreme Court reversed the lower court's ruling.

Section 9 of the FAA governs venue for the confirmation of arbitration awards: "If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made, any party to the arbitration may apply to the court so specified for an order confirming the award?If no court is specified in the agreement of the parties, then such application may be made to the United States Court, in and for the district within which such award was made. "

In this dispute, although the parties had agreed to binding arbitration, where the arbitration would be held and its venue was not so stated. Justice Souter writing the opinion for the court reversed the lower court's ruling and held that the venue provisions of the FAA are permissive, permitting a motion to confirm, vacate or modify an arbitration award, either where the award was made or in any district under the general venue statute.

Once again, we find the court easing any restrictions in the arbitration process. As arbitration becomes as prevalent as trials by jury, the U.S. Supreme Court apparently found it necessary to expand its definition of venue thereby eliminating further litigious issues after an arbitration award is rendered.

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