London, we have a problem

Lawyers’ business clients have used arbitration for years to resolve commercial disputes.

But there’s business, and then, there’s bidness.

Senior U.S. District Judge Robert G. Doumar had a case in Norfolk federal district court last month, Al-Haddad Commodities Corp. v. Toepfer Int’l Asia PTE Ltd. (VLW 007-3-147), that pitted an international commodities trader against an agricultural commodity trading business based in Hamburg, Germany.

The parties’ contract dispute over a shipment of “US No. 2 Long Grain White Rice” to Iraq went to arbitration before the U.S. Rice Millers’ Association. That trade group is headquartered in Arlington, but the arbitration was conducted before a five-member panel at the Houston, Texas offices of American Rice Inc. The panel ordered Toepfer to pay ACC a $2 million-plus award.

Apparently English law governed the contract. Toepfer’s lawyer claimed the panel chair at one point said he was “not interested in ‘all that fancy lawyer stuff.’” The losing side called the panel hearing “painfully farcical” and a “complete sham.”

But Doumar said he detected “something of a culture clash in this case, in which an arbitration panel of American businessmen who apparently pride themselves on providing quick commercial decisions held a hearing in Houston, Texas, over a contract governed by English law.”

Toepfer’s lawyer practiced arbitrations extensively in England, according to Doumar’s opinion. The attorney said he had “never before (and hopefully will never again) experience[] anything quite like the arbitration before” the Rice Millers’ Association.

“Of course, Houston is not London,” Doumar observed in understatement. “In Texas lore, cowboys and Indians long ago replaced the knights and dragons of English lore.”

He confirmed the arbitration award for ACC.