APG Worldwide Limited v. Passfeed, Inc.

Background

APG Worldwide Limited sued Passfeed Inc. APG asserted claims for breach of contract, breach of the duty to act in good faith and deal fairly, unjust enrichment, promissory estoppel, conversion, constructive trust, and money had and received. The opinion identifies APG as a Chinese cross-border payment solution provider and Passfeed as a Delaware corporation engaged in payment-processing services.

In December 2018, the parties entered into a Services Agreement under which APG would obtain payment-processing services from Passfeed. The agreement contains an arbitration provision requiring disputes arising from or relating to the contract—including disputes about whether claims are subject to arbitration—to be finally decided through arbitration administered by the Singapore International Arbitration Centre under its rules.

APG filed this action in April 2022 and later filed an amended complaint alleging that Passfeed materially breached the Services Agreement. Passfeed then moved to compel arbitration.

Positions of the Parties

The court explained that the Federal Arbitration Act requires enforcement of written arbitration agreements, subject to ordinary contract defenses. In deciding whether to compel arbitration, the court considers whether the parties formed a valid arbitration agreement and whether the dispute falls within its scope.

The court found that the parties did not appear to disagree about either issue. They agreed that the Services Agreement contains an arbitration provision, that the provision covers this dispute, and that the dispute should be sent to arbitration. APG's opposition stated that it had no objection to Passfeed's request to compel arbitration.

APG objected only to Passfeed's request that the court dismiss the action, preferring a stay while arbitration proceeded. The court noted that Passfeed had asked the court to dismiss or stay the action and concluded that both parties appeared to accept a stay. The court also stated that the Federal Arbitration Act requires a stay when the issues in the case are subject to arbitration. A footnote states that APG also asked the court to deny a motion to dismiss under Rule 12(b)(6), but Passfeed had filed no such motion, so the court did not address those arguments.

Ruling

The court granted Passfeed's motion to compel arbitration. It also directed the Clerk of Court to terminate docket entry 11 and stayed the matter pending arbitration. Judge Mary Kay Vyskocil did not decide the underlying contract and related claims in this order; the opinion directed the dispute to arbitration instead.