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26 ORDER – 1

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT SEATTLE

KOREA WHEEL CORPORATION,

Petitioner,

v.

JCA CORPORATION,

Respondent.

CASE NO. C05-1590C

ORDER

This matter has come before the Court on Petitioner’s motion for an order confirming a foreign

arbitration award (Dkt. No. 9) and Respondent’s cross-motion for an adjournment or stay (Dkt. No. 11). 

Having carefully considered the papers filed by the parties in support of and in opposition to the motion,

the Court has determined that no oral argument shall be necessary. For the reasons that follow,

Petitioner’s motion is DENIED and Respondent’s motion is GRANTED. 

In January 2004, the parties to this action entered into a written contract regarding the purchase

and sale of metal wheels for tires. (Pet’r’s Mot. to Confirm 2.) Respondent JCA alleges that a few

months later, in May 2004, it learned of a “significant design defect” in one of the types of wheels being

provided to it by Petitioner. (Resp’t’s Opp’n 3.) As a result of the alleged defect, JCA paid damage

claims made by its customers and expects to pay more such claims. (Id.) After learning of the problem,

JCA asked Korea Wheel to replace the allegedly defective wheels. (Id.) By September 2004, Korea

Wheel had delivered only 50 replacement wheels, compared to 19,690 allegedly defective wheels. (Id.) 

JCA stopped making payments on Korea Wheel’s outstanding invoices. (Id.) In response, Korea Wheel

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Most of the operative facts in this section are taken from Respondent’s brief. However,

Petitioner did not object to Respondent’s representations.

ORDER – 2

notified JCA that it would suspend further shipments until payment was made. (Id.)1

In November 2004, JCA submitted this dispute to arbitration with the Korean Commercial

Arbitration Board. (Id.) JCA sought damages for the allegedly defective wheels and for Korea Wheel’s

alleged failure to deliver goods on other JCA purchase orders. Korea Wheel counterclaimed for the

unpaid invoices. (Id.)

At the arbitration, JCA rejected an offer by Korea Wheel to pay $350,000 as compensation for

the defective wheels. JCA believed that this amount would be insufficient to cover its future damages

from the allegedly defective wheels. In response, the arbitration panel recommended that JCA withdraw

its damages claim and reinstate the claim again later, after it had developed additional evidence regarding

the amount of damages. After the claim was withdrawn, the panel awarded Korea Wheel the amounts

due on the unpaid invoices, $869,929.62.

In October 2005, JCA started a new arbitration proceeding on its claim for damages regarding the

defective wheels. The principal amount sought is $1,060,299.26. A decision on this proceeding could be

rendered in about six months. 

Under the circumstances of this case as set forth above, the Court finds that a stay pending

resolution of JCA’s damages claim is warranted. 

A court considering an enforcement action may postpone enforcement of an arbitral award under

Article VI of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards

(“Convention”), 9 U.S.C. §§ 201–208 (implementing Convention, June 10, 1958, 21 U.S.T. 2517,

T.I.A.S. No. 6997, 330 U.N.T.S. 38), or through its inherent power to stay. 

Article VI of the Convention provides that “[i]f an application for the setting aside or suspension

of the award has been made[,] . . . the authority before which the award is sought to be relied upon, may,

if it considers it proper, adjourn the decision on the enforcement of the award.” Here, the second arbitral

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proceeding regarding JCA’s damages claim, though it may result in a set-off, is not properly

characterized as an “application for the setting aside or suspension” of the original award. Indeed, JCA

expressly recognizes the validity of the panel’s first award, in favor of Korea Wheel. (See, e.g., Resp’t’s

Opp’n 5:11–12.) Thus, Article VI does not provide any relief for JCA.

However, despite the validity of the first award, the resolution of the dispute between the parties

is still incomplete. JCA’s now-pending claim for damages was originally to be decided together with

Korea Wheel’s counterclaim on the unpaid invoices and was voluntarily withdrawn at the suggestion of

the arbitral panel until evidence of the amount of damages could be developed. That JCA’s claim and

Korea Wheel’s claim were split by the arbitrators need not result in a splitting of the relief afforded. See,

e.g., Hewlett-Packard Co. v. Berg, 61 F.3d 101, 105 (1st Cir. 1995) (noting with favor that HewlettPackard had made a reasonable effort to have the claims and counter-claims heard at the same time).

Having reviewed the parties’ representations, and for the foregoing reasons, the Court finds that a

stay of the enforcement action pending resolution of the arbitration of JCA’s claim is a cautious and

prudent exercise of the Court’s inherent power to stay. Hewlett-Packard, 61 F.3d at 106.

Accordingly, the Court hereby ORDERS that Korea Wheel’s motion to confirm the award be

DENIED and that JCA’s motion for a stay be GRANTED. This action shall be removed from the

Court’s active caseload. JCA is ORDERED to pay the amounts due to Korea Wheel under the June 23,

2005 arbitration award into the registry of the Court. The parties may submit a subsequent order

pursuant to Local Rule GR 6(a) regarding investment of the deposited funds. The parties are

DIRECTED to keep the Court informed of the progress of the arbitration of JCA’s damages claims and

to notify the Court once the arbitration has concluded. 

SO ORDERED this 16th day of December, 2005.AUNITED STATES DISTRICT JUDGE

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