Who Decides Whether New Claims Are Precluded By Old Arbitration? An Arbitrator, Says 2d Circuit
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We all know that the doctrines of issue preclusion (collateral estoppel) and claim preclusion (res judicata) apply with equal force to both arbitration awards and court orders. But, if your adversary brings new claims that you believe have already been determined in arbitration, where do you go to shut down those new claims — court or arbitration? A recent decision from the Second Circuit clarifies that arguments about issue or claim preclusion should generally be made in arbitration. Citigroup, Inc. v. Abu Dhabi Investment Authority, __ F.3d__, 2015 WL 161745 (2d Cir. Jan. 14, 2015).
In Citigroup, the parties’ investment agreement provided that “any dispute that arises out of or relates to” the agreement will be decided in AAA arbitration. The Abu Dhabi Investment Authority (ADIA) asserted claims against Citigroup in arbitration, and after a full hearing, the panel ruled in favor of Citigroup. ADIA moved to vacate the award, but the Southern District of New York found no “manifest disregard” and confirmed the award. At that point, ADIA did two things. It appealed the confirmation to the Second Circuit and served Citigroup with a new arbitration demand, asserting some of the same claims it asserted in the first arbitration. (Gutsy move.)
At that point, Citigroup started a new federal action, seeking to enjoin the second arbitration under the All Writs Act (or the Declaratory Judgment Act). ADIA moved to dismiss the complaint and compel arbitration. The district court compelled arbitration.
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