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Federal Courts Affirm Atlanta Arbitrator’s Decision in Dispute Between Georgia Real Estate Developer and Israeli Equity Company

Poole Huffman, LLC

Winning your commercial litigation matter is about more than just making sure that you have the facts on your side. It is about having the law on your side and also making sure that you have cleared all of the necessary procedural hurdles, like pursuing your case in the correct venue. These are all areas in which knowledgeable Georgia business litigation counsel can help you ensure that you are equipped to succeed.

One recent case in which venue was an issue was an action pitting against each other two former business partners whose relationship had definitely deteriorated. The defendant was a Norcross-based real estate developer. The plaintiff was an Israeli company that raises capital for real estate investments. In 2008, the two businesses consummated a Solicitation Agreement. The agreement came with an arbitration clause. That provision said that the parties agreed to arbitrate their disputes. If the capital company brought the case, the arbitration would proceed in Atlanta. If the developer brought the case, it would be arbitrated in Tel Aviv.

Some time later, once the relationship had soured, the capital company brought a breach of contract claim. In that same action, which was handled in Atlanta, the developer brought a counterclaim that accused the capital company of defaming the developer in statements made to other Israeli investors.

The arbitrator in Atlanta decided to resolve both the claim and the counterclaim, concluding that this was proper because the capital company was the one that originally initiated the action. The arbitrator eventually ruled in favor of the developer on its defamation claim.

The capital company appealed, first to the federal district court and eventually to the 11th Circuit Court of Appeals. In both circumstances, the courts ruled to uphold the arbitrator’s decision. The capital company argued that the arbitration award in favor of the developer could not stand because the arbitration of the defamation claim in Atlanta “was not in accordance with the agreement of the parties.” The parties’ agreement, it contended, demanded that the developer’s defamation claim be arbitrated in Israel.

The appeals court explained that the issue of proper venue (the proper location for the arbitration) was itself arbitrable. Since the issue was arbitrable, that meant that it was entitled to deference. When a decision is entitled to deference, it is much harder to get that ruling overturned by another body. This is a reminder of how important it can be to make especially certain that you put together your strongest possible case in your arbitration hearing.

In this case, the deference given to the arbitrator’s decision meant that, as long as the arbitrator actually interpreted the parties’ contract in deciding whether or not to proceed with the defamation claim, the decision stood, regardless of “whether he got its meaning right or wrong.”

In another piece of useful information, the court explained that the international nature of this venue dispute did not alter the court’s analysis. Whether the parties were contesting arbitration in Atlanta versus Tel Aviv or Atlanta versus Nashville, the rules were the same.

Whether you need to litigate or arbitrate in Georgia, you need knowledgeable Georgia counsel working on your behalf. The skilled Atlanta business litigation attorneys at Poole Huffman, LLC have been working for many years to help their clients craft and achieve beneficial outcomes. Contact our attorneys online or by calling 404-373-4008 to schedule your confidential consultation.

More blog posts:

Confirmation Letters – Avoiding Potential Conflict Regarding Agreement Terms, Atlanta Business Litigation Attorneys Blog, April 5, 2016

New Garnishment Ruling: What You Should Know, Atlanta Business Litigation Attorneys Blog, Atlanta Business Litigation Attorneys Blog, Sept. 29, 2015

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