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Legal Memorandum: Jurisdiction over Arbitration Claims

Issue: Under the law of the Virgin Islands, does a trial court lose jurisdiction over a case in which all claims are subject to arbitration?

Area of Law: Alternative Dispute Resolution, Litigation & Procedure
Keywords: Jurisdiction; Claims subject to arbitration
Jurisdiction: Federal, Virgin Islands
Cited Cases: None
Cited Statutes: 9 U.S.C. §§ 1–16; 9 U.S.C. § 3; 9 U.S.C. § 5; 9 U.S.C. § 7; 9 U.S.C. §§ 9–11, §§ 5, 7, 9, 10, or 11
Date: 05/01/2004

Under the Federal Arbitration Act, 9 U.S.C. §§ 1–16, the court may not grant a motion to dismiss if the claims involved are subject to arbitration.  In Lloyd v. HOVENSA, Inc., Nos. 03-1502, -1592, 2004 WL 1067931 (3d Cir. May 13, 2004), the court addressed the issue of whether a lower court has the discretion to dismiss a complaint after concluding that all claims are subject to arbitration.  Id., slip op. at 5-8.  It concluded that the plain language of the FAA precludes lower courts from dismissing a complaint.  Instead, the proper order is one that stays the federal action until arbitration has been completed.  Id., slip op. at 8.  The court noted that the FAA provides that when an action is brought in court upon an issue that the parties agreed, in writing, would be arbitrated,

the court in which such suit is pending, upon being satisfied that the issue . . . is referable to arbitration . . . shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, provided the applicant for the stay is not in default in proceeding with such arbitration. 

9 U.S.C. § 3, quoted in Lloyd, slip op. at 6 (emphasis added by court).  This language “affords a district court no discretion to dismiss a case where one of the parties applies for a stay pending arbitration.” Id. (emphasis added). 

Under the FAA, […]

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