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Blackwater Liability Case Axed for Fee Nonpayment

(CN) - The company formerly known as Blackwater successfully dismissed a lawsuit in North Carolina that sought to hold the military mercenary liable for four of its workers' deaths at the hands of insurgents in Fallujah, Iraq.

The lawsuit - originally filed in 2005 by Richard Nordan, an administrator for the four men's estates - had entered arbitration proceedings. The arbitration tribunal terminated and dismissed the case in 2010 because the parties were not paying.

"For the three years between 2007 and 2010, the arbitration proceeding foundered and stalled for various reasons, not the least of which was that after November 2008, neither party paid any sum on invoices from the ICDR for arbitrators' compensation or expenses." U.S. District Judge James Fox wrote in a Jan. 21 order (emphasis in original). "Prior to that time, Blackwater had advanced 100 percent of all sums that were paid; Nordan supplied none."

Blackwater put its share of the amount due in escrow but said the funds should only be released when Nordan paid his share.

Nordan's counsel argued that the tribunal was imposing an impermissible "pay-to-play" burden on estates. In one letter, according to Fox's ruling, the an attorney for the administrator wrote: "When [your] family members and loved ones read about the Fallujah incident in their textbooks or in the numerous news stories, and then ask you how you handled the case, will you tell them that you just threw it out because you didn't get paid?"

Nordan then asked a North Carolina Federal court to vacate its 2007 orders compelling arbitration and to permit his common law claims to go forward in North Carolina state court. Blackwater counter-moved for an order confirming the arbitration panel's decision terminating arbitration and dismissing the claims.

"Now, for all intents and purposes, Nordan seeks a complete 'do-over,' moving the court to vacate its 2007 orders referring the matter to arbitration, even though the arbitration proceedings have been terminated and his claims dismissed because the parties failed to comply with the Panel's orders," Fox wrote.

Nordan based his motion on the claim that the estates he represents cannot afford arbitration and that the court should not have ordered it.

"The professed inability to finance his share of the arbitration process is the 'factual' basis for all of Nordan's legal arguments, yet he never raised it in this court until the instant motion," the ruling states. "Nordan has failed at any point to substantiate his claim of financial impossibility of compliance with this court's order compelling arbitration or the panel's multiple orders directing payment of fees. Nor has Nordan directed this court's attention to any ruling or other representation in the arbitration proceedings exempting him from contributing to payment for those proceedings or imposing on Blackwater the obligation to bear all costs, fees and expenses thereof. None of Nordan's current arguments is based on sound legal or factual ground."

Blackwater created a "stalemate" by putting its share in escrow, the judge found, and Nordan's response, or lack of one, forced the tribunal's hand.

Fox wrote that he was convinced by the parties' refusal to prosecute their claims that the process was futile. He rejected Nordan's motion and confirmed the dismissal order of the American Arbitration Association's International Center for Dispute Resolution (ICDR), which was assigned to handle the case.

"The law is well-established that an arbitration agreement may be unenforceable if the party seeking to avoid arbitration proves that the costs of arbitration would preclude the effective vindication of statutory rights," the ruling states. "Here, Nordan offered nothing more than arguments, relying primarily on his position that the fee payment requirements of the ICDR in fact amount to a 'pay-to-play' scheme, whereas he could litigate in state court for free. Similarly, Nordan's claim that he is unable to afford arbitration fees is unsupported by any competent evidence."

Blackwater renamed itself Xe Services in 2007 after reports of war crimes in Iraq surfaced.

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