Today my little update came in from the Global Arbitration Review, and I noticed a little by-line about a 5th Circuit decision moving the place of arbitration out of Venezuela due to political conditions. “Sounds interesting,” I thought, “and maybe worth looking up.” Well, Marc Goldstein is far ahead of me, providing an excellent overview of the case:
“The US Fifth Circuit Court of Appeals, acting in a long-running contract dispute between an American shipbuilder and the Republic of Venezuela, has held that the Federal Arbitration Act (”FAA”) might permit a District Court, in proper circumstances and with sufficient statement of justification, to compel arbitration at a place of arbitration other than the one established in the contract, or to deny enforcement of the arbitration clause entirely based on political conditions at the agreed place of arbitration.”
This looks a bit different than the headline on GAR, but interesting nonetheless. It appears the Fifth Circuit looked past the New York Convention and the FAA to anticipate potential set aside grounds under US principles of contract law. Sounds like a difficult position to take and a bit reactionary in light of the constant praise the Supreme Court gives to freedom of contract. Seems to me that when you agree to arbitrate in Venezuela, you take the good with the bad, even when you don’t agree with the political system.
Quinn Smith