The tug-of-war over money paid to victims in the 1986 hijacking of Pan Am Flight 73 made its way to Washington’s federal courthouse today, as lawyers argued fiercely over whether the dispute should be sent into private arbitration.
For background on the dispute, see an earlier BLT post about the case from this morning. But to sum up, sisters Gargi and Giatri Davé are battling with Crowell & Moring over whether the two women will get to keep millions of dollars in awards paid to them by the U.S. government as compensation for the injuries in the hijacking.
The Davés were part of a joint prosecution agreement with more than 170 of the hijackings victims, in which they agreed to let Crowell represent them in a civil suit against the government of Libya. All recoveries would then be split among entire group, many of whom were not United States citizens. The casee was dismissed, however, after the United States and Libya negotiated a treaty that settled the matter.
Latham and Watkins, which represents the liason committee that coordinated the relationship between the hijacking victims and Crowell, filed a motion to compel arbitration in D.C. to decide whether or not the Davés should be forced to return their awards to the group. Today, the sisters’ attorney, Lee Boyd, a Newbury Park, Calif. litigator, tried to convince Judge John Bates of the District of Columbia that the arbitration clause in the prosecution agreement should not apply, because Crowell had essentially misled the two sisters into signing the contract.
Bates seemed largely skeptical. Although he admitted Boyd had a “colorable argument” about the validity of the contract itself, it might not affect whether the case should land in arbitration.
“You can’t just say ‘there are problems with the contract, therefore there are problems with the arbitration clause,” Bates said.
At the same time, the judge appeared to express concern that any arbitration could run parallel to the lawsuit the Davés filed against Crowell in the Central District of California, in which they have asked for a judgment preventing the firm from claiming their award money.
Bates asked Latham partner Edward Shapiro whether, in the case that he did order arbitration, the private hearing would run at the same time as the California litigation.
“Its possible, but there are ways around it,”Shapiro said. Eventually, he acknowledged there was a significant chance the dispute would be battled out on both coasts.
During the arguments, Boyd also told the judge that the U.S. State Department is considering filing a statement of interest in the case. She said it was one more reason to keep the case out of arbitration, as, unlike a judge, a private panel would not be required to consider the United States’ foreign policy interest when deciding the case.