Preliminary Proceedings - Chapter 05 - AAA Yearbook on Arbitration and the Law - 27th Edition
Stephen K. Huber
Ben H. Sheppard Jr.
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Originally from AAA Yearbook on Arbitration and the Law - 27th Edition
5.01 Interim Relief by the Court
Adam Techs. Int’l S.A. de C.V. v. Sutherland Global Servs. Inc.,
729 F.3d 443 (5th Cir. 2013)
1. The district court had ancillary jurisdiction to hear the postjudgment
motion to appoint an arbitrator.
2. The district court did not err when it refused to appoint an
arbitrator because there was no lapse in the naming of an
3. The procedural questions are decided by the arbitrator,
which the court cannot disqualify before a final arbitration
Sutherland and Adam Technologies created a Letter of Intent and a
Master Services Agreement, which contained different forum-selection
and choice-of-law clauses from each other. The district court first
determined that the Master Services Agreement superseded the expired
Letter of Intent and dismissed the claims because Adam Technologies’
claims were based on the Letter of Intent. A few months later, the district
court vacated the original order and held that the determination of which
contract controlled was for the arbitrator, but the new order failed to
clarify if the claims were still dismissed. While the motion was still
pending, Adam Technologies filed a motion to appoint an arbitrator and
requested the removal of two of the appointed arbitrators.
First, the court had ancillary jurisdiction to hear the motion to
appoint an arbitrator. The district court did not err in refusing to appoint
an arbitrator because there was no breakdown requiring the court’s
intervention. Adam Technologies failed to comply with procedural rules.
No Section 5 lapse occurred because there was an arbitration panel that
had already set a final hearing date.
Finally, the district court did not err when it denied the motion to
appoint the arbitrator because the arbitrators decide procedural questions
and the panel has yet to decide a final arbitration award.
Justice Garza dissented because he disagreed that there was ancillary
jurisdiction to hear the post-judgment motion to appoint an arbitrator.
Citations and References:
a. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (1994)
(two principal purposes for ancillary jurisdiction: (1) disposition
by a single court and (2) enable court to effectuate proceedings).
b. BP Exploration Libya Ltd. v. ExxonMobil Libya Ltd.., 689 F.2d
481 (5th Cir. 2012) (a “lapse” occurred when the parties
deadlocked over empanelling arbitrators).
c. Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002) (the
law presumes the arbitrators answer questions of procedure).
Weingarten Realty Investors v. Miller, 661 F.3d 904 (5th Cir.
A party is not entitled to an automatic stay of the proceedings in a
lower court during the pendency of an appeal from an order denying
a motion to compel arbitration.
A lender, Weingarten Realty Investors (hereinafter “WRI”), brought
an action against the guarantor of a loan, Steward A. Miller (hereinafter
“Miller”). Miller, in response, moved to compel arbitration and stay the
proceedings. The district court denied Miller’s motion and Miller now
appeals. On appeal, Miller contends that the district court erred (1) in not
staying proceedings pending his appeal, (2) in finding that the guarantee
was not subject to arbitration, and (3) in finding that WRI was not
equitably estopped from avoiding arbitration.
First, noting that there is a circuit split on the issue, the court found
that one is not entitled to an automatic stay when appealing an order to
compel arbitration. The court reasoned that because answering the
question of arbitrability does not determine the merits of the case, the
lower court is free to continue proceedings on the merits of the case
during the pendency of appeal. The question of arbitrability is thus
collateral to the merits. Nevertheless, even if a party is not entitled to an
automatic stay, the decision to stay the proceedings is still at the