Skip to Content

Court Refuses to Compel Arbitration Based on Dissolution of Arbitral Forum
December 11, 2023

The U.S. District Court for the Eastern District of Louisiana recently refused to compel arbitration on the ground that the arbitral forum had ceased to exist and that a purported replacement forum was not the same forum and that a party could thus not be compelled to arbitrate there under the terms of an arbitration agreement requiring arbitration in the now defunct forum.

Baker Hughes Saudi Arabia Co. Ltd. contracted with Dynamic Industries Inc., Dynamic Industries International LLC, and Dynamic Industries International Holdings Inc. for materials and services related to an oil and gas project in Saudi Arabia. The agreement included an arbitration clause requiring arbitration with the Dubai International Financial Centre-London Court of International Arbitration (DIFC-LCIA).

Baker Hughes claimed that Dynamic breached the contract and filed suit in the U.S. District Court for the Eastern District of Louisiana. Dynamic moved to compel arbitration pursuant to the arbitration clause. Baker Hughes opposed the motion on the grounds that the government of Dubai had issued a decree abolishing the DIFC-LCIA and replacing it with the Dubai International Arbitration Centre (DIAC). Dynamic responded that the government of Dubai had transferred the assets, rights, and obligations of the DIFC-LCIA to the DIAC and had deemed all arbitration agreements subject to the DIFC-LCIA valid.

The district court denied the motion to compel arbitration. It noted that arbitration is based on consent and that binding Fifth Circuit precedent precluded compelling arbitration where “the agreed upon arbitration tribunal is unavailable or no longer exists.” The court rejected Dynamic’s arguments about the government of Dubai’s transfer and provision, noting that the DIAC was “not the same forum in which the parties agreed to arbitrate” and that the government of Dubai did not have the authority to compel Baker Hughes to arbitrate in a different forum.

Baker Hughes Saudi Arabia Co. v. Dynamic Industries, Inc., No. 2:23-cv-01396 (E.D. La. Nov. 6, 2023).
Authored By
Image: Brendan N. Gooley
Brendan N. Gooley
Related Practices
Reinsurance
©2025 Carlton Fields, P.A. Carlton Fields practices law in California through Carlton Fields, LLP. Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our Contact Us form via the link below. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites.

Disclaimer

The information on this website is presented as a service for our clients and Internet users and is not intended to be legal advice, nor should you consider it as such. Although we welcome your inquiries, please keep in mind that merely contacting us will not establish an attorney-client relationship between us. Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established. Please remember that electronic correspondence on the internet is not secure and that you should not include sensitive or confidential information in messages. With that in mind, we look forward to hearing from you.