A federal judge awarded more than $260,000 in legal fees to a Georgia company that had already won nearly $900,000 after an Israeli business partner lost an arbitration battle and a subsequent court challenge to that decision.
The earlier award itself included nearly $235,000 in fees for OA Development Inc. and its lawyers, Simon Bloom and Troy Covington of what is now the Bloom Parham firm.
The order issued Aug. 23 by Judge Eleanor Ross of the U.S. District Court for the Northern District of Georgia gave the Israeli company, Bamberger-Rosenheim, 30 days to pay $261,000 in fees to OAD.
Bloom said the order was a victory for the arbitration process and that the challenge should never have been filed.
“I have said from the very beginning that Bamberger’s strategy of re-litigating and incessantly appealing a final arbitration award, confirmed by the U.S. district court, flies in the face of the essence of alternative dispute resolution,” Bloom said via email.
“The jurisprudence on arbitration is designed to pay heightened deference to arbitrators faithfully executing their job,” he said.
“What is the point of choosing a forum like the [International Court of Arbitration] if the two year process to get to a supposed ‘final award’ is anything but,” Bloom said.
Bamberger is represented by Greg Hecht and Jon Jordan of Hecht Walker.
In an email, Jordan said they respect Ross, but do not agree with her ruling.
“In regard to the appeal itself, our client wanted this jurisdictional issue to go to the U.S. Supreme Court in relation to forum selection clauses in international commercial contracts,” Jordan said.
In their view, the arbitration forum selection portion of the underlying agreement “specified that the forum for OAD’s claims in arbitration should be in Israel, our client’s home country.”
“There was a conflict in circuits on this exact forum selection issue, and Profimex hoped the U.S. Supreme Court would take up this issue to clarify the dispute,” he said.
A Bamberger subsidiary, Profimex, had partnered with OAD several years ago on several development projects, but in 2014 the Israeli company filed a breach of contract complaint against Norcross-based OAD over the division of proceeds from the sale of one of the properties.
OAD counterclaimed, charging Profimex with defamation for telling investors it was dishonest and circulating emails decrying OAD as “crooks in Atlanta,” among other things.
As per their contract, the case was sent to mediation in Georgia as the venue of the nonfiling party, and both parties were awarded damages. But Profimex filed a lawsuit to void the award against it, arguing that their 2008 contract mandated any dispute be arbitrated in the challenged company’s chosen venue and that OED’s counterclaims should have been arbitrated in Tel Aviv instead of Atlanta.
In 2016, Ross sided with OED, confirming the arbitrator’s award and ordering Profimex to pay $469,697 in general damages; $187,879 in punitive damages and $234,848 in attorney fees.
The U.S. Court of Appeals for the Eleventh Circuit upheld Ross’ order last year, and the U.S. Supreme Court declined to hear Profimex’s appeal.
OED filed for fees related to the appeals litigation, and Ross’ recent order granting them makes clear that they are not a sanction.
Rather, she wrote, they are proper under indemnification provisions of the contract between the parties, if one were found to have violated the law.
“[Bamberger’s] challenge of the arbitration award in this court arises from, relates to, and otherwise is connected with [its] violation of New York law by defaming [OED],” Ross wrote.
Bloom said the recovery of “nearly every penny of attorneys fees spent on this case from its inception is very, very gratifying for a litigator. And more importantly, it is vindication for our clients that have stayed the course from the beginning.”
Jordan said the case reflects “hands-off” approach to domestic arbitration that is being applied to international arbitration decisions that “will only diminish the willingness of international businesses to enter into arbitration agreements with U.S. counter-parties.”