AltaCorp Capital Inc. v. Financial Industry Regulatory Industry, Inc., FINRA Regulation Inc.

At a glance

Parties

AltaCorp Capital Inc. (now ATB Capital Markets Inc.) v. Financial Industry Regulatory Industry, Inc., FINRA Regulation Inc. (formerly FINRA Dispute Resolution, Inc.) and John C.T. Cloghesy

Case no.

20 Civ. 5221 (PAE)

Court

U.S. District Court, Southern District of New York

Forum and rules

Federal Arbitration Act; New York Convention (9 U.S.C. §§ 201–208)

Treaty

New York Convention 1958

Court

Paul A. Engelmayer, District Judge

Sector

Investment banking; employment

Outcome

Procedural order of 29 December 2020: the Court raised on its own motion whether the New York Convention gives it original jurisdiction over the motion to compel arbitration, and ordered supplemental briefing.

The dispute

AltaCorp Capital Inc., a Canadian investment firm, sued FINRA entities and its former employee John C.T. Cloghesy. By the time of this order, the case concerned whether AltaCorp's dispute with Cloghesy had to go to arbitration. Cloghesy filed counterclaims and moved to compel arbitration. AltaCorp argued that the Court lacked subject-matter jurisdiction. In its view, chapter 1 of the Federal Arbitration Act grants no jurisdiction, and the motion raised only state-law claims between two Canadian citizens, so there was no diversity jurisdiction. Cloghesy largely accepted this but asked the Court to exercise supplemental jurisdiction.

Key holdings

1. The Court has an independent duty to determine whether it has subject-matter jurisdiction. The parties had not addressed one possible basis: chapter 2 of the FAA, which implements the New York Convention and gives federal courts original jurisdiction over motions to compel arbitration (9 U.S.C. §§ 203, 206). pp. 1–2
2. The Convention applies to a commercial arbitration agreement that is not entirely between citizens of the United States. Cloghesy is Canadian and AltaCorp is a Canadian corporation, so the Court found it appears to have original jurisdiction under the Convention over at least the motion to compel arbitration, rather than only supplemental jurisdiction. p. 2
3. The Court ordered supplemental briefing limited to the effect of the New York Convention on its authority: Cloghesy by 8 January 2021 and AltaCorp by 15 January 2021. Each memorandum is capped at 10 pages, and no reply is allowed. p. 3

Procedural history

1. 29 December 2020Order raising New York Convention jurisdiction on the Court's own motion and directing supplemental briefing. The published documents do not show how the jurisdiction question or the motion to compel was later decided.
2. 8 January 2021Deadline for Cloghesy's supplemental memorandum.
3. 15 January 2021Deadline for AltaCorp's supplemental memorandum in response.

Tribunal, counsel and experts

Decided by

• Paul A. Engelmayer Judge, U.S. District Court, Southern District of New York

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Keywords

• motion to compel arbitration
• subject-matter jurisdiction
• New York Convention
• 9 U.S.C. § 203
• Federal Arbitration Act chapter 2
• supplemental jurisdiction
• diversity jurisdiction
• FINRA
• employment dispute
• Canadian parties
• ATB Capital Markets
• Cloghesy
• counterclaims

Summary generated with AI from the published documents — refer to the award for the authoritative text.