Background
Global Advantech Resources Limited sued Richard Brown and related entities for disclosing proprietary information in violation of a confidentiality agreement containing an arbitration clause. The defendants filed multiple motions to dismiss and later moved to compel arbitration, which the district court denied. The district court also certified the appeal as frivolous but allowed proceedings to continue.
The court’s reasoning
The Fifth Circuit reviewed the denial de novo and found that the defendants waived their right to arbitrate. The court noted that the defendants filed two Rule twelve motions to dismiss without asserting arbitration, sought dismissal with prejudice, and engaged in significant discovery. The court stated that the defendants substantially invoked the judicial process by acting inconsistently with the right to arbitrate.
We are convinced that the district court correctly determined that the Brown Defendants waived—intentionally relinquished—their arbitration rights vis-à-vis GAR’s claims by substantially invoking the judicial process.
What it means going forward
The case remains in federal court for trial, and the defendants cannot force the dispute into private arbitration under the London Court of International Arbitration rules.
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