Federal Arbitration Act Preempts State Law; Action Stayed Pending Arbitration In Canada Under Canadian Law

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Audio Visual Concepts, Inc. v. Smart Technologies, ULC, et al., Civil No. 11-1551 (JAG-CVR) (D. P. R. 2011), addresses the issue of the staging or sequencing the resolution of disputes pending in an international arbitration on the one hand and in courts of law on the other. Plaintiff sought a preliminary injunction to stop its termination as the distributor of Smart Technologies’ products in the Puerto Rico. Plaintiff alleged a violation of the Puerto Rico Dealer’s Act and sued in federal court. Smart Technologies moved to stay the action in favor of arbitration. The operative agreement provided for mandatory arbitration in Calgary, Canada under Canadian Law. The plaintiff dismissed the arbitration provision as a boilerplate contract of adhesion to circumvent the provision of the Puerto Rican law.

The District Court (delegating the decision to a Magistrate Jude) stayed the litigation in favor of the arbitration route. Noteworthy points for international practice discussed in the decision include...

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