Pharma Resources GmbH v. Oncogenerix Co. Ltd.

Background

Pharma Resources GmbH petitioned for an order requiring Oncogenerix Company Limited to participate in arbitration before the American Arbitration Association. The dispute arose from two usage-rights agreements under which the parties agreed to submit all disputes to one arbitrator and conduct arbitration in New York, New York, under the Federal Arbitration Act. After Oncogenerix failed to pay certain amounts due under the agreements, Pharma Resources began an American Arbitration Association proceeding and served Oncogenerix with a demand for arbitration and statement of claim. Oncogenerix did not respond.

The agreements required arbitration but did not identify the American Arbitration Association as the arbitration provider. The American Arbitration Association therefore told Pharma Resources that it could not proceed without Oncogenerix’s consent or a court order compelling Oncogenerix to participate.

Jurisdictional issue

Oncogenerix did not deny the petition’s factual allegations except those concerning venue. It argued that the court lacked an independent basis for federal jurisdiction because the case did not involve a federal question, diverse citizenship, or another basis listed in Title 28 of the United States Code. The court explained that the Federal Arbitration Act itself does not create federal jurisdiction. A court considering a request to compel arbitration must have jurisdiction over the underlying dispute.

The court concluded that the dispute fell under Chapter 2 of the Federal Arbitration Act, which implements the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. That provision gives federal district courts original jurisdiction over proceedings seeking to compel arbitration that fall under the Convention. The court found that the agreements were written, provided for arbitration in New York, concerned a commercial matter, and were international because they involved a German limited company and a Chinese limited company. The court therefore held that it had jurisdiction.

The court also noted that Oncogenerix’s venue argument was waived because Oncogenerix did not specifically assert that venue was improper in a timely pre-answer motion.

Ruling

Because Oncogenerix offered no other reason to deny the petition and admitted that Pharma Resources was entitled to an order requiring participation in arbitration before the American Arbitration Association, Judge Alvin K. Hellerstein granted Pharma Resources’ motion to compel arbitration. The court ordered Oncogenerix to appear and participate in a proceeding before the American Arbitration Association. The clerk was directed to terminate the motion and close the case.