Schlumberger Technology Corp. v. Baker Hughes Inc.
355 S.W.3d 791
| Tex. App. | 2011Background
- Schlumberger and Baker Hughes are rivals in oilfield tools and patents and are in arbitration over a four-p patent dispute.
- The dispute concerns whether the AAA panel or the mediator under the 2004 settlement handles a specific forum question about license and release defenses.
- A 2004 settlement included reciprocal licenses and a mediation/arbitration framework; it allowed mediation for interpretation/performance disputes and then arbitration if needed.
- In 2009 the Resolution Agreement and Procedure Agreement created a streamlined process for Current Disputes and disputes under licenses, with arbitration administered by AAA.
- Baker Hughes sought court relief to compel arbitration before a mediator under the 2004 settlement, while Schlumberger sought to continue arbitration under the Resolution/Procedure Agreements; the district court granted Baker Hughes and denied Schlumberger, prompting Schlumberger’s interlocutory appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the appeal is interlocutoryly reviewable under the Texas Arbitration Act | Schlumberger—motion to compel arbitration qualifies under Sec. 171.021; denial is appealable under Sec. 171.098 | Baker Hughes—no appellate review because not a proper ‘application to compel arbitration’ or denial | Yes, interlocutory appellate jurisdiction exists |
| Whether Schlumberger’s motion to compel arbitration was proper under the Resolution Agreement | Resolution Agreement governs Current Disputes; AAA panel should decide the forum and jurisdiction | Merits lie under the 2004 settlement and mediator’s procedure, not AAA arbitration | Motion proper; AAA panel must determine jurisdiction under Resolution Agreement |
| Whether Baker Hughes refused to arbitrate under the Resolution Agreement | Baker Hughes initiated court action and sought a separate arbitration, effectively refusing to arbitrate under the Resolution Agreement | Baker Hughes agreed to arbitrate but sought a different forum | Yes, Baker Hughes refused to arbitrate under the Resolution Agreement |
| Whether the AAA panel had authority to determine arbitrability and forum under AAA Rule 7(a) | AAA Rule 7(a) grants arbitrator power to rule on jurisdiction and existence/scope of agreement | Forum question should be resolved outside arbitration under the 2004 settlement | AAA panel had authority to determine arbitrability under the Resolution Agreement |
Key Cases Cited
- CMH Homes v. Perez, 340 S.W.3d 444 (Tex.2011) (interlocutory review limited to statutorily authorized orders)
- Walker Sand, Inc. v. Baytown Asphalt Materials, Ltd., 95 S.W.3d 511 (Tex.App.-Houston [1st Dist.] 2002) (analyze substance and function of order for jurisdiction)
- McReynolds v. Elston, 222 S.W.3d 731 (Tex.App.-Houston [1st Dist.] 2007) (interlocutory review where conflicting arbitration rights exist)
- Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444 (U.S. 2003) (arbitration contract interpretation reserved for arbitrators)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. 1995) (arbitrability questions generally for courts unless clear delegation to arbitrator)