Construction: Venue under the FAA

Article excerpt

Resolving a split among the federal courts of appeal, the Supreme Court held that parties may move to vacate or modify an award under Sections 10 and 11 of the Federal Arbitration in any venue proper under the general venue statute. Thus, parties are not restricted to moving only in the court where the award was issued.

Bill Harbert Construction Co. contracted to build a wood chip mill for Cortez Byrd Chips in Brookhaven, Miss. The agreement provided for arbitration of "[a]ll claims or disputes between the contractor and the owner arising out of or relating to the contract, or the breach thereof." The agreement stated that Mississippi law applied, but did not provide for jurisdiction in a particular court, and did not specify venue for confirmation, vacatur or modification of an award. It merely stated that "judgment may be entered upon [the arbitration award] in accordance with applicable law in any court having jurisdiction thereof."

The parties submitted their dispute to arbitration under the Construction Industry Arbitration Rules of the American Arbitration Association. The arbitration took place in Birmingham and resulted in an award in Harbert's favor. The following month Cortez Byrd filed an action in federal court in Mississippi, seeking to vacate or modify the award. Seven days later Harbert filed the instant action in Alabama district court, seeking to confirm the award. When Cortez Byrd moved to dismiss, transfer or stay Harbert's Alabama suit, the Alabama district court denied the motion, concluding that venue was proper only in the Northern District of Alabama. Cortez Byrd appealed.

The 11th Circuit affirmed. It reasoned that it was bound by pre-1981 5th Circuit precedent holding that the venue of a motion to vacate, confirm or modify an award under the FAA is proper only in the district where the award was made.

The Supreme Court reversed. First, the Court observed that Cortez Byrd's motion to vacate or modify the award was properly laid in Mississippi under the general venue statute, which covers diversity jurisdiction. Next, it concluded that the language of Sections 10 and 11 is "is less clear than either party contends," leading it to consider the legislative history. …