772 F.Supp.3d 689
M.D. La.2025Background
- Plaintiffs (CSRS, LLC and Fides Consulting, LLC) sued Element 25 Limited for breach of contract and related claims over unpaid invoices for services on an industrial construction project in Louisiana.
- The contract between CSRS and Element 25 contained an arbitration clause specifying arbitration in London under the LCIA Rules, which plaintiffs alleged was permissive, not mandatory.
- Element 25 moved to compel arbitration and to stay the federal court proceedings pending arbitration, invoking the Federal Arbitration Act (FAA) and the New York Convention.
- Plaintiffs argued Louisiana law (La. R.S. § 9:2779) rendered the arbitration clause unenforceable by declaring foreign forum and choice-of-law clauses in Louisiana construction contracts null and void.
- The court examined whether federal law (FAA/Convention) preempts the Louisiana statute and whether the arbitration clause was enforceable and mandatory.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the arbitration agreement mandatory or permissive? | "May submit" language means arbitration is optional, not mandatory. | "May" should be read as providing either party the right to compel. | Arbitration is mandatory if either party invokes it. |
| Does the contract delegate arbitrability to the arbitrator? | The LCIA rules' delegation is not enforceable due to public policy. | Incorporation of LCIA rules is a valid delegation clause. | Delegation clause is clear and enforceable. |
| Does Louisiana law invalidate the arbitration clause? | La. R.S. § 9:2779 nullifies out-of-state arbitration forums in construction. | FAA and the Convention preempt contrary state law on arbitration. | FAA and Convention preempt La. R.S. § 9:2779; clause enforceable. |
| Should the case be stayed pending arbitration? | Implied: should proceed in court due to unenforceable clause under state law. | Statute requires stay when arbitration compelled. | Case stayed pending outcome of arbitration. |
Key Cases Cited
- Deaton Truck Line, Inc. v. Int’l Bhd. of Teamsters, 314 F.2d 418 (5th Cir. 1962) ("may" in arbitration clause creates a binding right to arbitrate at either party's election)
- Sedco, Inc. v. Petroleos Mexicanos Mexican Nat’l Oil Co., 767 F.2d 1140 (5th Cir. 1985) (scope and application of New York Convention on arbitration agreements)
- OPE Int’l LP v. Chet Morrison Contractors, Inc., 258 F.3d 443 (5th Cir. 2001) (FAA preempts state law barring out-of-state arbitration clauses)
- Lim v. Offshore Specialty Fabricators, Inc., 404 F.3d 898 (5th Cir. 2005) (New York Convention preempts Louisiana anti-forum-selection statute in international context)
- McDermott Int’l, Inc. v. Lloyds Underwriters of London, 944 F.2d 1199 (5th Cir. 1991) (the Convention incorporates the FAA to the extent not conflicting)
- Francisco v. Stolt Achievement MT, 293 F.3d 270 (5th Cir. 2002) (enumerates requirements to compel arbitration under the Convention)
- Freudensprung v. Offshore Technical Servs., Inc., 379 F.3d 327 (5th Cir. 2004) (limited inquiry for court under the Convention to enforce arbitration agreement)
- Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 63 (2019) (parties may delegate arbitrability to the arbitrator if done clearly)
- Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (federal policy favoring arbitration, Convention and FAA preempt contrary state law)