9th Circuit upholds $9M arbitration award in real estate dispute

Gibson, Dunn & Crutcher LLP partner Julian W. Poon scored a victory Monday for a China-based real estate developer and its Hong Kong subsidiary against two California venture capital funds, affirming an Oakland district judge's ruling that upheld an arbitrator's ruling.

The panel, in an unpublished decision, affirmed U.S. District Judge Haywood S. Gilliam's September 2022 decision in favor of the real estate companies - China Fortune Land Development Co. Ltd. And Global Industrial Investment Ltd. -- for $9 million plus interest, costs and attorney fees.

The three-judge panel - composed of Judge Jacqueline Nguyen, an appointee of President Barack Obama; Daniel A. Bress, and Ryan D. Nelson, both appointees of President Donald Trump - reviewed Gilliam's decision de novo but wrote in the unsigned opinion that they vacate arbitration awards only in very narrow circumstances if the arbitrator's decision was irrational.

"While the arbitrator did not explicitly mention the agreements' term provision in his analysis, he earlier acknowledged this provision, and the logic of his decision covers it," the panel wrote. "We also defer to the arbitrator's conclusion that ordering the funds to dissolve was the appropriate remedy." Global Industrial Investment Limited et al. v. 1955 Capital Fund I GP LLC et al., 23-2662 (9th Circ., filed Oct. 10, 2023).

The ruling confirms the appointment of an independent liquidator to dissolve the funds. Poon, in a statement, hailed the decision Monday.

"This morning's unanimous decision by a panel of the Ninth Circuit hits the nail on its head, and we look forward to 1955 Capital's prompt and long-overdue compliance with the arbitrator's order dissolving both funds and granting us the other relief to which we're entitled -- something the Northern District of California and the U.S. Court of Appeals for the Ninth Circuit have now upheld in full," he wrote in a statement.

1955 Capital, founded by Silicon Valley technology investor Andrew Chung, was represented on appeal by Quinn Emanuel Urquhart & Sullivan LLP attorneys Gregg Badichek and David M. Cooper.

"We are disappointed in the Ninth Circuit's decision, but we understand that the court felt compelled to affirm the arbitration award, no matter how incorrect--and in the court's words, 'bad' and 'ugly' --the arbitrator's decision might be," Cooper wrote in an email. 

"Regardless, of all the arbitrators and courts to consider this ongoing dispute, many of which have decided in favor of 1955 Capital, none has questioned the propriety or success of 1955 Capital's investments," he added. "1955 Capital will work with its outstanding portfolio companies to continue this success in the future."

Gibson Dunn partners Debra Wong Yang, Jason C. Lo, and associate Zachary C. Freund assisted on the briefs, with contributions from firm associates Yan Zhao, Elizabeth Strassner, and Erica L. Jansson.

Poon was busy last month, arguing three different appeals in state and federal court over a seven-day span.