SOURCE: PRACTICAL LAW ARBITRATION
In Binh v. King & Spalding LLP, 2022 WL 130879 (S.D. Tex. Jan 10, 2022), the US District Court for the Southern District of Texas compelled arbitration of a client’s claim against his lawyers under an arbitration agreement signed by the client and a third-party funder but not signed by the lawyers.
The Dutch client, Trinh Vinh Binh (Binh), sued his law firm King & Spalding (K&S) for allegedly mishandling the distribution of proceeds resulting from a PCA administered UNCITRAL arbitration under the Netherlands-Vietnam bilateral investment treaty (1994). In the UNCITRAL arbitration, K&S won an award of over USD45 million on Binh’s behalf. K&S moved to dismiss the case and compel arbitration under an arbitration clause contained in Binh’s financing agreement with Burford Capital. Binh opposed the motion on the ground that K&S was a non-signatory to the financing agreement.
The District Court disagreed with Binh and compelled arbitration. The court found that the arbitration agreement covered claims under all “Transaction Documents”, which were defined in the financing agreement to include a letter agreement between Binh and K&S concerning distribution of funds recovered in the UNCITRAL arbitration.
Moreover, the Court found that the agreement containing the arbitration clause tasked K&S “with performing certain duties” and that the issues K&S seeks to arbitrate are “intertwined” with the financing agreement. The Court dismissed Binh’s lawsuit rather than stay it under section 3 of the Federal Arbitration Act, allowing Binh to take an appeal.
