Broad Enough To Encompass Claims Pre-dating the
Agreement or Having Nothing to Do the Agreement Containing the Arbitration
By Louis M. Solomon
Nanosolutions, LLC, et al. (Nano) v.
Prajza, et al., Civil Action No. 10-1741 (EGS)
(D.D.C. June 2011) [enhanced version available to lexis.com subscribers], grants a motion to stay litigation in favor of pending
arbitration. The rationale bears on international litigation disputes
generally in the several respects.
Nano is a biotech company that
develops "technology involving tissue-like nano-encapsulation delivery sytems,
providing instant delivery of payloads into the bloodstream". Prajza is a
citizen of Canada. His Agreement in Principle (AIP) with Nano refers to
prior dealings between the parties and contains a mandatory arbitration
provision of extraordinary breadth:
"Conflicts between the parties shall
be resolved through the [Canadian] Arbitration Act, Ontario, held in the City
The Court ruled:
First, the standard to be applied on
a motion to stay proceedings or to compel arbitration "is the same standard
used in resolving summary judgment motions" under Fed. R. Civ. P. 56(a) [enhanced version ].
Second, the Court rejected the
defense of fraud in the inducement of the AIP as being grounds to halt the
arbitration; since the arbitration clause itself, specifically was not alleged
to have been procured by fraud, the question of fraud in the inducement was one
for arbitrator, not the Court, to decide.
Third, given the breadth of the
arbitration clause, the District Court ruled that any controversy
between the parties, whether or not it related to the AIP, needed to be
arbitrated. That is, the "any controversy" language was broad enough to
require arbitration of disputes having nothing to do with the agreement in
which the arbitration clause appeared - indeed claims predating the agreement
containing the broad arbitration agreement would also be swept in to the great
Fourth, even though the parties to
the AIP agreed in another agreement to be bound to "all the terms and
conditions of" a wholly separate agreement that did not contain an arbitration
provision, the Court was not going to read "all the terms and conditions" of
that other agreement (without the arbitration clause) to trump the clear
language of the AIP that every controversy between these parties was to
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