Ninth Circuit, In A Case Of First Impression, Follows Second And D.C. Circuits
In a case of first impression for the Ninth Circuit, the Court of Appeals holds “that as long as an arbitration agreement is between sophisticated parties to commercial contracts, those parties shall be expected to understand that incorporation of the UNCITRAL rules delegates questions of arbitrability to the arbitrator.” Oracle America, Inc. v. Myriad Group A.G., Case No. 11-17186 (9th Cir. July 26, 2013) (Christen, J., author 3:0) (published).
The underlying case involved a royalty dispute between Myriad Group A.G., the licensee, and Oracle America, Inc., the licensor and developer of Java. Oracle sued in the Northern District of California for breach of contract, violation of the Lanham Act, copyright violation, and unfair competition. Myriad Group sued in the District of Delaware, and moved in the Northern District of California to compel arbitration. The district court granted the motion to compel arbitration of contract claims, but denied the motion with respect to all other claims, concluding that, because an arbitration clause stated the court’s jurisdiction was exclusive with respect to intellectual property claims, the parties intended for the court to decide questions of arbitrability.
Apparently the only issue on the appeal was whether the arbitrator or the court was to decide the issue of arbitrability. The general rule is, “unless the parties clearly and unmistakably provide otherwise,” it is the court rather than the arbitrator that decides arbitrability. Here, however, the Court of Appeal, following the Second and D.C. Circuits, held incorporation of the UNCITRAl Arbitration Rules clearly and unmistakably delegates the power to decide arbitrability to the arbitrator.
So now the arbitrator now gets to decide whether the non-contract claims need to be arbitrated.
Blog Bonus: Wikipedia notes a distinction between the UNCITRAL Model Law on International Commercial Arbitration, and the UNCITRAL Arbitration Rules. The distinction is explained on UNCITRAL’s website: “The UNCITRAL Model Law provides a pattern that law-makers in national governments can adopt as part of their domestic legislation on arbitration. The UNCITRAL Arbitration Rules, on the other hand, are selected by parties either as part of their contract, or after a dispute arises, to govern the conduct of an arbitration intended to resolve a dispute or disputes between themselves. Put simply, the Model Law is directed at States, while the Arbitration Rules are directed at potential (or actual) parties to a dispute.”