Marks 3-Zet-Ernst Marks GmbH & Co.KG filed a petition to compelPresstek, Inc., to arbitrate their dispute under the terms oftheir agreement, the New York Convention, and the FederalArbitration Act ("FAA"). Presstek moves to dismiss the petition,pursuant to Federal Rule of Civil Procedure 12(b)(1), contendingthat the court lacks subject matter jurisdiction over the casebased on Marks's previous attempt to arbitrate before thePermanent Court of Arbitration ("PCA") at The Hague. Marksobjects to the motion.
Standard of Review
"Under [Rule] 12(b)(1), a party may contest the court's subjectmatter jurisdiction by challenging the allegations in thecomplaint as insufficient on their face or by questioning theaccuracy of those allegations." Hernandez-Santiago v. Ecolab,Inc., 397 F.3d 30, 33 (1st Cir. 2005). When the defendantchallenges the sufficiency of the plaintiff's factual allegations, the court accepts "the plaintiff's version of therelevant events, taking the well-pleaded facts as true anddrawing all reasonable inferences in favor of the pleader."Valentin v. Hosp. Bella Vista, 254 F.3d 358, 365 (1st Cir.2001). If the accuracy of the plaintiff's facts is challenged,however, the court may consider supplemental materials extrinsicto the complaint and engage in preliminary fact finding. Skwirav. United States, 344 F.3d 64, 71-72 (1st Cir. 2003); Gonzalezv. United States, 284 F.3d 281, 288 (1st Cir. 2002).
Marks alleges it entered an agreement with Presstek in Novemberof 2000 for selling and distributing Presstek products and thatPresstek attempted to terminate the agreement prematurely, in2002. After the parties were unable to resolve their dispute,Marks terminated the agreement. Marks issued notices ofarbitration of the dispute in November of 2002 and March of 2003.
When Presstek failed to respond to the second notice ofarbitration, Marks contacted the Permanent Court of Arbitration("PCA") in The Hague to begin arbitration proceedings there.Marks alleges that "[t]he President of the PCA subsequentlyconcluded that the application of the Uncitral Rules to the Agreement was not appropriate and gave no further opinion withrespect to the Agreement." Petition ¶ 14. Marks states that itthen issued a third notice of arbitration to Presstek in March of2004 requesting arbitration under the Netherlands Arbitration Actand that Presstek failed to respond.
Marks filed this petition pursuant to the Convention on therecognition and Enforcement of Foreign Arbitral Awards ("New YorkConvention"), reprinted at 9 U.S.C. § 201, and the FAA. Itseeks to compel arbitration of its dispute with Presstek under aprovision titled "Applicable Law and Jurisdiction" that provides:"Any dispute or difference between the Parties arising out of orrelating to this Agreement which cannot be settled amicably shallbe referred to and determined by arbitration in the Hague underthe International Arbitration rules." Marks alleges that thecircumstances satisfy the requirements for arbitration under theNew York Convention and asks that Presstek be ordered toarbitrate the dispute at The Hague under "the AmericanArbitration Act's International Rules." Pet. ¶ A.
In its motion to dismiss, Presstek contests Marks's version ofthe proceedings before the PCA in The Hague. Presstek submitscopies of the letters that constitute part of the record of thatproceeding. The letters show that Marks requested the PCA todesignate an appointing authority to address its requested arbitration proceeding. The PCA responded to the request in aletter dated August 4, 2003, by explaining that "[t]heSecretary-General of the PCA routinely designates AppointingAuthorities and acts as Appointing Authority under the UNCITRALArbitration Rules, and under other procedural rules and treatymechanisms. Prior to acting in such matters, theSecretary-General first satisfies himself, on the basis of aprima facie screening of the documentation submitted by theparties, that he is competent to act." The letter then directedPresstek as the respondent to "provide its comments with respectto Claimant's request."
Presstek, through counsel, first responded that the arbitrationprovision in the parties' agreement was too vague to support thejurisdiction of the PCA to arbitrate the dispute because thatprovision referred to "International Arbitration rules" ratherthan the UNCITRAL Arbitration Rules. Counsel for Presstek thenprovided a legal memorandum to support Presstek's view that thearbitration provision was ambiguous, preventing the PCA fromexercising its jurisdiction over the arbitration proceeding. OnOctober 21, 2003, a letter notified the parties that theSecretary-General could designate an Appointing Authority underthe UNCITRAL Arbitration Rules only if the parties had agreed toarbitration under those rules and that he was "not satisfied, onthe basis of a prima facie screening of the documentation submitted by the parties, that he is competentto act in this matter. The parties remain free to seek theinterpretation of their arbitration agreement from any courthaving jurisdiction."
Presstek contends that the October 21, 2003, letter from thePCA was an "award" within the meaning of the New York Conventionand that this court lacks jurisdiction to vacate, modify, orsuspend that award by providing the relief that Marks seeks here.Alternatively, Presstek argues that if the PCA failed to make afinal award by refusing to proceed, then the relief Marks seeksis time barred under 9 U.S.C. §§ 10 and 12. Marks responds thatno award was made by the PCA so that its action here is notbarred by the prior proceedings.
"The New York Convention provides a carefully structuredframework for the review and enforcement of internationalarbitral awards." Karaha Bodas Co. v. Perusahaan PertambanganMinyak Dan Gas Bumi Negara, 364 F.3d 274, 287 (7th Cir. 2004).Except in unusual circumstances, review of arbitral awards mustbe sought in the country where the award was made. Karaha BodasCo. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,335 F.3d 357, 364 (5th Cir. 2003). Some issues, however, are not addressed in the New York Convention, and the Convention isimplemented and interpreted through the FAA to the extent itsprovisions are not inconsistent with the Convention. See9 U.S.C. § 203.
Presstek acknowledges that the New York Convention does notdefine the term "award." See, e.g., Publicis Commc'n v. TrueNorth Commc'ns Inc., 206 F.3d 725, 728-29 (7th Cir. 2000)(discussing nature of "award" under Convention and FAA). Presstekargues that the term includes the circumstance when "thearbitrators exceeded their powers or so imperfectly executed themthat a mutual, final and definite award upon the subject mattersubmitted was not made." 9 U.S.C. § 10(a)(4). Based on thatdefinition of award, Presstek insists that the PCA's letter ofOctober 21, 2003, was an "award" that cannot be reviewed ormodified here. Marks counters that in this case no arbitratorsever considered the dispute so that they neither made an awardnor failed to make an award. Instead, Marks contends, only apreliminary decision was made that the PCA lacked jurisdiction.
Marks is correct that based on the record presented here noarbitrators were ever appointed to consider the parties' dispute.As a result, the jurisdictional question was not decided byarbitrators. The October 21, 2003, letter explaining that the PCAlacked jurisdiction to act in the matter was not an "award" within the meaning of either the New York Convention or the FAA.
Therefore, the jurisdictional issues Presstek raises, whichdepend upon the existence of a previous "award," are withoutmerit. Nevertheless, the October 21, 2003, letter demonstratesthat the PCA has determined that it lacks jurisdiction toconsider this matter. It would appear that Marks's petitionseeking an order compelling arbitration before the PCA is moot,based on that prior determination.
For the foregoing reasons, the defendant's motion to dismiss(document no. 8) is denied. The plaintiff shall file a memorandumnot to exceed fifteen pages on or before September 1, 2005, toshow cause why this action should not be dismissed as moot. Thedefendant shall have ten days from the date the memorandum isfiled to file its response.