West African Ventures Limited v. Ranger Offshore, No. 4:17-CV-00548 (S.D. Tex. Jan. 24, 2018) [click for opinion]
Plaintiffs, West African Ventures Limited and Sea Trucks Group FZE, brought a guarantee-enforcement action against two guarantors under various service agreements relating to oil and gas production projects offshore Nigeria. When the underlying contracts were not paid by the contracting parties, Plaintiffs sued the guarantors for payment. One of the defendant guarantors, Ranger Offshore, Inc. (“Ranger”), brought several counterclaims for breach of the underlying contracts.
Plaintiffs moved to dismiss Ranger’s counterclaims for lack of standing or, in the alternative, to stay the case in favor of arbitration. Ranger argued that it possessed standing to assert the counterclaims on behalf of the parties to the underlying contract, and that Plaintiffs had waived arbitration by filing the initial suit.
The district court held that dismissal of the counterclaims without prejudice was warranted because all of the issues raised by the counterclaims were subject to the underlying contracts’ arbitration provisions. The court further found that Plaintiffs did not waive arbitration of those counterclaims by bringing the guarantee-enforcement action, because the subject guarantees did not contain arbitration clauses. As a result, the court concluded that Plaintiffs’ suit did not amount to any overt act that evinces a desire to resolve an arbitrable dispute in litigation since the enforcement action did not raise any arbitrable dispute in the first instance.
Finally, the court found that a stay of the case as to Ranger only was appropriate because Ranger’s arbitrable counterclaims “could potentially reverse or diminish any amount awarded” in the litigation.
A version of this post originally appeared in the March 2018 edition of Baker McKenzie’s International Litigation & Arbitration Newsletter, which is edited by David Zaslowsky and Grant Hanessian.