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Swissmex-Rapid S.A. De C.V v. Sp Systems

December 28, 2012

SWISSMEX-RAPID S.A. DE C.V., PLAINTIFF AND RESPONDENT,
v.
SP SYSTEMS, LLC, DEFENDANT AND APPELLANT.



APPEAL from a judgment of the Superior Court of Los Angeles County, Alan S. Rosenfield, Judge. (Los Angeles County Super. Ct. No. BS132864)

The opinion of the court was delivered by: Klein, P. J.

CERTIFIED FOR PUBLICATION

Affirmed.

Defendant and appellant SP Systems, LLC (SP) appeals a judgment confirming an arbitration award in favor of plaintiff and respondent Swissmex-Rapid S.A. de C.V. (Swissmex), a Mexican corporation.

SP contends the trial court erred in entering judgment on the award because section 9 of the Federal Arbitration Act (FAA) (9 U.S.C. § 9) preempts state law with respect to confirmation of arbitration awards, section 9 does not permit judicial confirmation of an arbitration award without the written agreement of the parties that the award could be judicially confirmed, and here, the parties had no prior agreement regarding judicial confirmation.

We conclude section 9 of the FAA is procedural, not substantive, and therefore does not apply in state court proceedings.

Further, even assuming section 9 of the FAA does apply to state court proceedings so as to require the parties' prior consent to judicial confirmation of an arbitration award, the parties herein consented to judicial confirmation of any arbitration award. Specifically, their arbitration agreement provided for arbitration of disputes before the American Arbitration Association (AAA). By providing for AAA arbitration, the parties are deemed to have made the AAA rules a part of their agreement. (AAA Commercial Arbitration Rules, rule R-1(a).)*fn1 The Rules further provide that "[p]arties to an arbitration under these rules shall be deemed to have consented that judgment upon the arbitration award may be entered in any federal or state court having jurisdiction thereof." (Rule R-48(c).) Accordingly, SP and Swissmex consented to judicial confirmation of any arbitration award. Therefore, Section 9 of the FAA is not an impediment to judicial confirmation of the award.

The judgment confirming the award is affirmed.

FACTUAL AND PROCEDURAL BACKGROUND

1. Arbitration proceedings.

SP is a California limited liability corporation which is the exclusive distributor in the United States and Canada of backpack agricultural sprayers manufactured by Swissmex, a Mexican corporation.

On March 1, 2010, SP filed a Demand for Arbitration pursuant to the Commercial Arbitration Rules of the AAA, seeking to arbitrate its claim against Swissmex in the sum of $1.5 million. The demand stated: "The named claimant, a party to an arbitration agreement dated March 1, 2007, which provides for arbitration under the Commercial Arbitration Rules of the American Arbitration Association, hereby demands arbitration." Swissmex filed a counterclaim.

The parties stipulated to binding arbitration before Judge Sullivan, retired. The hearing was held at the offices of the AAA in downtown Los Angeles, between December 6 and 10, 2010. The arbitration was conducted by the International Centre for Dispute Resolution, the international division of the AAA.

On March 14, 2011, the arbitrator issued an 18-page award, finding that both SP and Swissmex were in breach of their 1999 and 2007 agreements, SP owed Swissmex $1,528,997, and SP was entitled to a credit from Swissmex in the sum of $104,957, resulting in a net award to Swissmex in the sum of $1,424,039.

2. Superior court proceedings.

On July 7, 2011, Swissmex filed a petition in the Los Angeles Superior Court to confirm the award and to enter judgment thereon. The petition was brought pursuant to Code of Civil Procedure section 1285 et seq., within the California ...


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