Where a business contractually agrees to arbitrate in North Carolina does not mean that the business has consented to litigate in a North Carolina court. Curvatur, Inc. v. Cantel Computer Services, Ltd., 2019 NCBC 47 (J. Conrad). As a result, absent other evidence that satisfies a party’s requisite minimum contacts with North Carolina, the Business Court will not exercise personal jurisdiction over a defendant merely because it agreed to arbitrate in North Carolina.
Curvatur, Inc. (“Curvatur”) provides IT services in the United States and beyond. Cantel Computer Services, Ltd. (“Cantel”) is a technology company based in England. Cantel entered into a master services agreement (“MSA”) with Curvatur whereby Cantel agreed to serve as plaintiff’s subcontractor for work to be performed in England. Cantel’s president signed the MSA in England and returned it to a Curvatur officer, who was located in Europe when he received it. The MSA provided for arbitration in North Carolina of any dispute related to the MSA. The MSA also contained a choice of law provision applying North Carolina law. After failing to convince an arbitrator that she had the power to handle a dispute that arose with Cantel, Curvatur filed suit in a North Carolina court. Cantel filed a motion to dismiss for lack of personal jurisdiction, arguing it did not have sufficient minimum contacts with North Carolina that would satisfy traditional notions of fair play and substantial justice.
The Business Court agreed and rejected Curvatur’s argument that by consenting to arbitrate in North Carolina, Cantel had necessarily consented to litigating matters in a North Carolina court. In its holding, the Business Court found no North Carolina law to support Curvature’s argument and found the vast majority of federal law outright rejecting Curvature’s argument. The Business Court then analyzed whether Curvature had otherwise proven Cantel was subject to personal jurisdiction under the traditional notions of fair play and substantial justice. Finding none, the Business Court dismissed Curavture’s action.
Based upon this decision, any company doing business with a foreign entity that wants to have its disputes handled in North Carolina (either through arbitration or in the courts) would be well served to include a consent to jurisdiction provision that covers both arbitration and litigation in its contract.
Categories: Key Business Court Decisions