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Outokumpu Stainless USA, LLC v. Converteam SAS, 17-10944 (2018)

Court: Court of Appeals for the Eleventh Circuit Number: 17-10944 Visitors: 3
Filed: Aug. 30, 2018
Latest Update: Mar. 03, 2020
Summary: Case: 17-10944 Date Filed: 08/30/2018 Page: 1 of 20 [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT _ No. 17-10944 _ D.C. Docket No. 1:16-cv-00378-KD-C OUTOKUMPU STAINLESS USA, LLC, SOMPO JAPAN INSURANCE COMPANY OF AMERICA, as subrogee of Outokumpu Stainless USA, LLC, POHJOLA INSURANCE LIMITED, AIGEL EUROPE LIMITED, as subrogee of Outokumpu Oyj, TAPIOLA GENERAL MUTUAL INSURANCE COMPANY, as subrogee of Outokumpu Oyj, AXA CORPORATE SOLUTIONS ASSURANCE SA UK BRANCH, as subr
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            Case: 17-10944   Date Filed: 08/30/2018   Page: 1 of 20


                                                                      [PUBLISH]

             IN THE UNITED STATES COURT OF APPEALS

                     FOR THE ELEVENTH CIRCUIT
                       ________________________

                              No. 17-10944
                        ________________________

                   D.C. Docket No. 1:16-cv-00378-KD-C

OUTOKUMPU STAINLESS USA, LLC,
SOMPO JAPAN INSURANCE COMPANY OF AMERICA,
as subrogee of Outokumpu Stainless USA, LLC,
POHJOLA INSURANCE LIMITED,
AIGEL EUROPE LIMITED,
as subrogee of Outokumpu Oyj,
TAPIOLA GENERAL MUTUAL INSURANCE COMPANY,
as subrogee of Outokumpu Oyj,
AXA CORPORATE SOLUTIONS ASSURANCE SA UK BRANCH,
as subrogee of Outokumpu Oyi,
HDI GERLING UK BRANCH,
as subrogee of Outokumpu Oyj,
MSI CORPORATE CAPITAL LTD.,
as sole Corporate Member of Syndicate 3210,
as subrogee of Outokumpu Oyj,
ROYAL & SUN ALLIANCE, PLC,
as subrogee of Outokumpu Oyj,

                                Plaintiffs – Appellants,

SOMPO JAPAN INSURANCE COMPANY OF AMERICA, et al.,

                                Plaintiffs,
versus

CONVERTEAM SAS,
a foreign corporation now known as
GE Energy Power Conversion France SAS, Corp.,
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                                   Defendant – Appellee
                            ________________________

                    Appeals from the United States District Court
                       for the Southern District of Alabama
                           ________________________

                                  (August 30, 2018)

Before TJOFLAT and JULIE CARNES, Circuit Judges, and BLOOM, * District
Judge.

BLOOM, District Judge:

      This appeal requires us to examine seemingly interrelated—but actually

quite separate—questions under the Convention on the Recognition and

Enforcement of Foreign Arbitral Awards (“New York Convention” or

“Convention”): (1) whether an action between a buyer and a sub-contractor of a

seller “relates to” an arbitration agreement signed by the buyer and seller sufficient

to establish federal subject matter jurisdiction, and (2) whether a non-signatory

sub-contractor may compel arbitration against the buyer under that arbitration

agreement.    In following our sister circuits, we conclude that these inquiries

require a bifurcated analysis. Beiser v. Weyler, 
284 F.3d 665
(5th Cir. 2002);

Sarhank Grp. v. Oracle Corp., 
404 F.3d 657
(2d Cir. 2005). Where jurisdiction is




      *
          Honorable Beth Bloom, United States District Judge for the Southern District of
Florida, sitting by designation.

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challenged on a motion to remand, the district court shall first perform a limited

inquiry on the face of the pleadings and the removal notice to determine whether

the suit “relates to” an arbitration agreement falling under the Convention under

the factors articulated in Bautista v. Star Cruises, 
396 F.3d 1289
, 1294 n.7 (11th

Cir. 2005). On a motion to compel arbitration, the district court must engage in a

more rigorous analysis of the Bautista factors to determine whether the parties

before the district court entered into an agreement under the meaning of the

Convention to arbitrate their dispute.

      I.     FACTUAL BACKGROUND

      Plaintiff Outokumpu Stainless, LLC (“Outokumpu”) operates a steel plant in

Calvert, Alabama. The facility contains three “cold rolling mills,” or CRMs,

required for manufacturing and processing certain steel products. In November

2007, while the plant was still under construction, Outokumpu’s predecessor

ThyssenKrupp Stainless USA LLC entered into three contracts with Fives (then

F.L. Industries, Inc.) to provide three different sized CRMs (“Outokumpu-Fives

Contracts” or the “Contracts”). The Outokumpu-Fives Contracts each contain an

arbitration clause:

             All disputes arising between both parties in connection
             with or in the performance of the Contract shall be settled
             through friendly consultation between both parties. In
             case no agreement can be reached through consultation
             after a maximum period of 30 days or as soon as one of

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             the parties involved appeals for the arbitration tribunal
             the dispute shall be considered as failed and any such
             dispute shall be submitted to arbitration for settlement.

The arbitration clause further requires that the arbitration take place in Dusseldorf,

Germany in accordance with the Rules of Arbitration of the International Chamber

of Commerce and that the forum apply the substantive law of Germany.

      The Contracts define Outokumpu as the “Buyer” and Fives as the “Seller,”

and state that “Buyer and Seller [are] also referred to individually as ‘Party’ and

collectively as ‘Parties.’” The Contracts further provide that: “When Seller is

mentioned it shall be understood as Sub-contractors included, except if expressly

stated otherwise.” The Contracts define “Sub-contractor” as “any person (other

than the Seller) used by the Seller for the supply of any part of the Contract

Equipment, or any person to whom any part of the Contract has been sub-let by the

Seller[.]” Appended to each Contract is a subcontractor list that enumerates the

“Preferred Brands or Manufacturers” for Outokumpu and Fives; Defendant GE

Energy Conversion France SAS (“GE Energy”), formerly known as Converteam

SAS, is on that list.

      Each CRM requires three motors, and Fives subcontracted with GE Energy

to supply all nine motors. The motors were manufactured in France and delivered

and installed in Alabama between 2011 and 2012. However, by June 2014, the




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motors began to fail. Despite inspections and emergency repairs, motors from all

three of the CRMs failed by August 2015.

      Outokumpu approached Fives about replacing or repairing the motors.

Through correspondence between GE Energy and Fives, Outokumpu discovered

that GE Energy, Fives, and a third company, DMS SA, had entered into a

subcontractor agreement, the “Agreement for Consortial Cooperation,” three

weeks after the Outokumpu-Fives contracts were executed.            The Consortial

Agreement had “the aim of optimizing the chances of the parties to be awarded the

project.” Under the Consortial Agreement, GE Energy, Fives, and DMS agreed

that “[a]ny and all stipulations of the [Outokumpu-Fives Contracts] shall apply

mutatis mutandis to each party for its own scope of supply and services.”

      The Consortial Agreement in turn contains its own arbitration clause as

follows:

            The PARTIES shall endeavor to settle any dispute,
            controversy or claim arising out of or in connection with
            this AGREEMENT or with the [Outokumpu-Fives
            Contracts] or the breach, interpretation or validity of this
            Agreement amicably.

            If not agreement settlement can be reached within a
            reasonable time, either PARTY may commence
            arbitration after serving a 15 days written notice to the
            other PARTY. Such dispute shall be finally settled under
            the Rules of Arbitration of the International Chamber of
            Commerce by one or more arbitrators appointed in



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            accordance with the said Rules. The place of arbitration
            shall be Paris.

            ...

            In the event a dispute occurs between [Outokumpu] and
            [Fives], which results in an arbitration proceeding under
            the [Outokumpu-Fives Contracts], [Fives] shall have the
            right to join the other PARTY into the arbitration
            proceedings with [Outokumpu] and the PARTY so joined
            hereby agrees that it shall be bound by the arbitral award,
            as long as the latter is given the opportunity to defend its
            interest in the arbitration procedure held under the
            [Outokumpu-Fives Contracts].

Under the Consortial Agreement, Fives was designated the “Leading Party” of the

consortium and was tasked with representing the interests of the consortium.



      II.   THE DISTRICT COURT PROCEEDINGS

      When Outokumpu was unable to resolve the issues related to the motors

with GE Energy, Outokumpu and its insurers filed suit in the Circuit Court of

Mobile, Alabama on June 10, 2016. GE Energy timely removed based on federal

subject matter jurisdiction under 9 U.S.C. § 205 and diversity jurisdiction based on

fraudulent joinder of Outokumpu’s insurers. Outokumpu and the insurers moved

to remand, and GE Energy moved to dismiss and compel arbitration. Outokumpu

also sought limited discovery regarding the Consortial Agreement. The district




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court denied the motion to remand and the motion for limited discovery, and

granted the motions to compel and dismiss.

      As to the motion to remand, the district court, adopting the magistrate’s

report and recommendation, found removal proper under the New York

Convention and the Federal Arbitration Act (“FAA”) since this case “relates to”

the arbitration agreement found in the Outokumpu-Fives Contracts and that

arbitration agreement “fall[s] under the Convention.” As to the motion to compel

arbitration, the district court found that each of the four jurisdictional prerequisites

under Bautista was met and no affirmative defense applied. Specifically, as to the

first prerequisite, the district court found there was an “agreement in writing,”

signed by the Outokumpu and GE Energy, since Outokumpu signed the Contracts

and GE Energy, as a sub-contractor, was not expressly excluded from the

arbitration provision. The second prerequisite was not contested by the parties. As

to the third and fourth prerequisite, the district court found that the arbitration

agreement arose out of a legal commercial relationship between Outokumpu and

Fives and that that relationship had some reasonable relationship with a foreign

state. Accordingly, the district court granted the motion to compel and dismissed

the action.

      III.    STANDARD OF REVIEW




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      We review de novo both the district court’s denial of the motion to remand

and the district court’s grant of the motion to compel arbitration and dismiss.

Escobar v. Celebration Cruise Operator, Inc., 
805 F.3d 1279
, 1283 (11th Cir.

2015) (citing Bailey v. Janssen Pharmaceutica, Inc., 
536 F.3d 1202
, 1204 (11th

Cir. 2008) and 
Bautista, 396 F.3d at 1294
). The same de novo standard applies to

the district court’s interpretation of treaties and federal law. In re Clerici, 
481 F.3d 1324
, 1331 (11th Cir. 2007). We review the district court’s denial of Outokumpu’s

request for discovery for abuse of discretion. Holloman v. Mail–Well Corp., 
443 F.3d 832
, 837 (11th Cir. 2006).

      IV.    THE MOTION TO REMAND

      Federal policy favors arbitral dispute resolution. Mitsubishi Motors Corp. v.

Soler Chrysler-Plymouth, Inc., 
473 U.S. 614
, 631 (1985). Congress enacted the

FAA to counter widespread hostility to arbitration and encourage the recognition

and enforcement of arbitration awards. Escobar v. Celebration Cruise Operator,

Inc., 
805 F.3d 1279
, 1284 (11th Cir. 2015) (citing Am. Express Co. v. Italian

Colors Restaurant, 
133 S. Ct. 2304
, 2308–09 (2013)). In 1970, Congress amended

the FAA to incorporate the United Nations Convention on the Recognition and

Enforcement of Foreign Arbitral Awards, opened for signature June 10, 1958, 21

U.S.T. 2517, 330 U.N.T.S. 38. See 9 U.S.C. §§ 201 et seq. These amendments




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provide for the recognition of foreign arbitration agreements and arbitral awards.

9 U.S.C. §§ 201 et seq.

      In amending the FAA, Congress further sought to promote the development

of a uniform body of federal law under the Convention. Beiser v. Weyler, 
284 F.3d 665
, 672 (5th Cir. 2002). Section 203 provides that district courts have original

jurisdiction over an action falling under the Convention. Congress also included

broad grounds for removal “[w]here the subject matter of an action or proceeding

pending in a State court relates to an arbitration agreement or award falling under

the Convention.” 9 U.S.C. § 205.

      The phrase “falling under the convention” is defined in Section 202:

            An arbitration agreement or arbitral award arising out of
            a legal relationship, whether contractual or not, which is
            considered as commercial, including a transaction,
            contract, or agreement described in section 2 of this title,
            falls under the Convention. An agreement or award
            arising out of such a relationship which is entirely
            between citizens of the United States shall be deemed not
            to fall under the Convention unless that relationship
            involves property located abroad, envisages performance
            or enforcement abroad, or has some other reasonable
            relation with one or more foreign states.

9 U.S.C. § 202.    “Relates to,” however, is not defined in the FAA or the

Convention, and we have yet to examine its meaning.

      Our sister circuits, however, have had occasion to interpret this phrase. In

Beiser, a consulting company’s principal sued in his individual capacity regarding

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an oil 
investment. 284 F.3d at 666
. The investment was financed by an agreement

between the consulting company and a non-party which contained an arbitration

provision. The plaintiff challenged jurisdiction as he did not sign the arbitration

agreement. The Fifth Circuit, after noting that the plain meaning of “ ‘relates to’

sweeps broadly,” held that “whenever an arbitration agreement falling under the

Convention could conceivably affect the outcome of the plaintiff’s case, the

agreement ‘relates to’ to the plaintiff’s suit” sufficient for removal jurisdiction. 
Id. at 669
(emphasis in original).

      Both the Eighth and Ninth Circuits have followed the Fifth Circuit. Reid v.

Doe Run Res. Corp., 
701 F.3d 840
, 844 (8th Cir. 2012) (“Joining the Fifth and

Ninth Circuits, this court holds that a case may be removed under § 205 if the

arbitration could conceivably affect the outcome of the case.”); Infuturia Glob. Ltd.

v. Sequus Pharm., Inc., 
631 F.3d 1133
, 1137–38 (9th Cir. 2011) (noting that the

Fifth Circuit “construed this language to mean that ‘whenever an arbitration

agreement falling under the Convention could conceivably affect the outcome of

the plaintiff’s case, the agreement “relates to” the plaintiff’s suit.’ We agree with

this interpretation” (emphasis in original) (quoting Beiser v. Weyler, 
284 F.3d 665
,

669 (5th Cir. 2002))).

      We join the Fifth, Eighth, and Ninth Circuits and agree that the “relates to”

language of Section 205 provides for broad removability of cases to federal court.

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While the link between the arbitration agreement and the dispute is not boundless,

the arbitration agreement need only be sufficiently related to the dispute such that

it conceivably affects the outcome of the case. Thus, as long as the argument that

the case “relates to” the arbitration agreement is not immaterial, frivolous, or made

solely to obtain jurisdiction, the relatedness requirement is met for purposes of

federal subject matter jurisdiction.

      This initial jurisdictional inquiry is distinct from a determination of whether

the parties are bound to arbitrate. Bautista v. Star Cruises, 
396 F.3d 1289
, 1301

(11th Cir. 2005); see also Sarhank, 
404 F.3d 660
, Beiser v. Weyler, 
284 F.3d 665
,

671 (5th Cir. 2002). As we have noted, “Section 205 does not require a district

court to review the putative arbitration agreement—or investigate the validity of

the signatures thereon—before assuming jurisdiction: ‘The language of § 205

strongly suggests that Congress intended that district courts continue to be able to

assess their jurisdiction from the pleadings alone.’” 
Bautista, 396 F.3d at 1301
(quoting 
Beiser, 284 F.3d at 671
). Thus, in determining jurisdiction the district

court need not—and should not—examine whether the arbitration agreement binds

the parties before it. Rather, the “relates to” inquiry requires the court to determine

whether, on the face of the pleadings and the removal notice, there is a non-

frivolous claim that the lawsuit relates to an arbitration agreement that “falls under

the Convention.”

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      Accordingly, upon removal the district court shall engage in a two-step

inquiry to determine jurisdiction, limiting its examination to the pleadings and the

removal notice. 9 U.S.C. § 205. First, the district court should determine whether

the notice of removal describes an arbitration agreement that may “fall[] under the

Convention.” To do so, the district court employs the test articulated in Bautista to

the four corners of the arbitration agreement and asks whether the removing party

has articulated a non-frivolous basis (1) that there is an agreement in writing, that

is, an arbitral clause in a contract or an arbitration agreement, signed by the parties

or contained in an exchange of letters or telegrams; (2) that the agreement provides

for arbitration in the territory of a signatory of the Convention; (3) that the

agreement arises out of a legal relationship, whether contractual or not, which is

considered commercial; and (4) that a party to the agreement is not an American

citizen, or that the commercial relationship has some reasonable relation with one

or more foreign states. See 
Bautista, 396 F.3d at 1295
–96 n.7 & 9. Second, the

district court must determine whether there is a non-frivolous basis to conclude

that agreement sufficiently “relates to” the case before the court such that the

agreement to arbitrate could conceivably affect the outcome of the case.

      The district court held that Outokumpu’s claims relate to an arbitration

agreement falling under the Convention. The parties concede that the second and

third Bautista factors are met, and thus we need only examine the first and fourth

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factors. As to the first factor, GE Energy has identified the arbitration clauses in

the Outokumpu-Fives Contracts. Because the Contracts are signed by Outokumpu

and Fives, the Contracts satisfy the first factor.

      As to the fourth factor, on the face of the complaint and removal notice, the

Outokumpu-Fives Contracts govern a commercial relationship that has a

reasonable relation to one or more foreign states. The Contracts contemplate

performance by certain foreign subcontractors in foreign states. Moreover, the

initial negotiations regarding the Outokumpu-Fives Contracts occurred in

Germany.     While these arguments may not prevail on a motion to compel

arbitration between the parties before the district court, they are sufficient to meet

GE Energy’s burden opposing remand.

      And this lawsuit sufficiently “relates to” the arbitration agreement in the

Outokumpu-Fives Contracts. As alleged in the pleadings, the present lawsuit

against GE Energy concerns the performance of the Outokumpu-Fives Contracts,

and the arbitration agreement contained in those Contracts is sufficiently related to

the instant dispute such that it could conceivably affect the outcome of this case.

      This approach is consistent with our removal jurisprudence, which confines

its analysis to the face of the pleadings. 
Bautista, 396 F.3d at 1301
. Nothing in 9

U.S.C. § 201 et seq. expresses an intent of Congress for the courts to engage in a

uniquely rigorous inquiry upon removal of cases on the basis of the Convention,

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and in fact, that FAA explicitly states that the “procedure for removal of causes

otherwise provided by law shall apply.” 
Id. § 205.
Accordingly, we decline to

read such a standard into the statute.

      V.     THE MOTION TO COMPEL ARBITRATION

      Having found that the district court properly exercised jurisdiction, we now

turn to the question of whether Outokumpu may be compelled to arbitrate its

dispute with GE Energy. Under 9 U.S.C. § 206, a “[a] court having jurisdiction

under this chapter may direct that arbitration be held in accordance with the

agreement at any place therein provided for, whether that place is within or without

the United States.” While only a “very limited inquiry” is required to determine

whether to compel arbitration, 
Bautista, 396 F.3d at 1295
, this inquiry is

necessarily more rigorous than on a motion to remand because the district court

must determine whether the parties before the court agreed to arbitrate their

dispute.

      Again, a party may compel arbitration under the Convention only if:

      (1) there is an agreement in writing within the meaning of the
      Convention; (2) the agreement provides for arbitration in the territory
      of a signatory of the Convention; (3) the agreement arises out of a
      legal relationship, whether contractual or not, which is considered
      commercial; and (4) a party to the agreement is not an American
      citizen, or that the commercial relationship has some reasonable
      relation with one or more foreign states.




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Bautista, 396 F.3d at 1294
n.7. Here, our inquiry starts and ends with the first

factor because we find that there is no agreement in writing within the meaning of

the Convention. Under the New York Convention, “[e]ach Contracting State shall

recognize an agreement in writing under which the parties undertake to submit to

arbitration all or any differences which have arisen or which may arise between

them in respect of a defined legal relationship, whether contractual or not,

concerning a subject matter capable of settlement by arbitration.” New York

Convention, Article II, ¶ 1. Article II further states that “[t]he term ‘agreement in

writing’ shall include an arbitral clause in a contract or an arbitration agreement,

signed by the parties or contained in an exchange of letters or telegrams.” New

York Convention, Article II, ¶ 2. The requirement that the agreement to arbitrate

be “signed by the parties” applies to both an arbitral clause and an arbitration

agreement. Yang v. Majestic Blue Fisheries, LLC, 
876 F.3d 996
(9th Cir. 2017);

Standard Bent Glass Corp. v. Glassrobots Oy, 
333 F.3d 440
, 449 (3d Cir. 2003);

Kahn Lucas Lancaster, Inc. v. Lark Int'l Ltd., 
186 F.3d 210
, 218 (2d Cir. 1999),

partially abrogated on other grounds by 
Sarhank, 404 F.3d at 660
n.2. But see

Sphere Drake Ins. PLC v. Marine Towing, Inc., 
16 F.3d 666
(5th Cir. 1994)

(reading “signed by the parties” to only modify “an arbitration agreement” and not

“an arbitral clause in a contract” and finding a signature was not required to

compel arbitration under an arbitration provision of an insurance contract).

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      The district court determined that GE Energy and Outokumpu were parties

to the Contracts by tracing the definitions of “Buyer” and “Seller,” which included

subcontractors unless explicitly stated otherwise, and the definition of “parties” as

“Buyer” and “Seller.” Inserting these definitions into the arbitration clause, the

district court found that there was an agreement in writing under the meaning of

the Convention which required Outokumpu and GE Energy to arbitrate.

      However, GE Energy is undeniably not a signatory to the Contracts. At the

time the Contracts were signed by Outokumpu and Fives, GE Energy was a

stranger to the Contracts and, at most, a potential subcontractor. Private parties—

here Outokumpu and Fives—cannot contract around the Convention’s requirement

that the parties actually sign an agreement to arbitrate their disputes in order to

compel arbitration. New York Convention, Article II, ¶ 1; see also Czarina, L.L.C.

v. W.F. Poe Syndicate, 
358 F.3d 1286
(11th Cir. 2004) (finding sample wording,

not signed by the parties, did not satisfy the “agreement in writing” requirement);

Yang, 876 F.3d at 1001
(finding “agreement in writing” requirement not satisfied

to compel arbitration between a non-signatory company and signatory employee).




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Accordingly, we hold that, to compel arbitration, the Convention requires that the

arbitration agreement be signed by the parties before the Court or their privities. 1

       This requirement is consistent with our prior decisions. In 
Czarina, 358 F.3d at 1289
, 1293, we found on a motion to confirm an arbitration award that an

unsigned, unexecuted “sample wording” containing an arbitral clause could not

satisfy the “agreement in writing” requirement, even when the arbitration panel

found the sample wording sufficient. We held that the parties in Czarina could not

avoid the “agreement in writing” requirement based on an erroneous arbitration

finding “because accepting it would eviscerate an important principle of United

States and international arbitration law.” 
Id. at 1293.
So too here: GE Energy

cannot avoid U.S. and international arbitration law that require that the parties sign

an agreement to arbitrate the dispute between them.

       The fact that non-signatory GE Energy, and not signatory Outokumpu, seeks

to enforce the arbitration provision does not alter our analysis. While the FAA

“places arbitration agreements on equal footing with all other contracts and sets

forth a clear presumption—‘a national policy’—in favor of arbitration,” Parnell v.


1
  Nothing in this opinion disturbs our holdings that an arbitration agreement is “signed by the
parties” when signed by a party’s privy or incorporated by reference in an arbitration agreement.
Bautista v. Star Cruises, 
396 F.3d 1289
, 1293 (11th Cir. 2005); Doe v. Princess Cruise Lines,
Ltd., 
657 F.3d 1204
, 1213 (11th Cir. 2011).




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CashCall, Inc., 
804 F.3d 1142
, 1146 (11th Cir. 2015) (quoting Buckeye Check

Cashing, Inc. v. Cardegna, 
546 U.S. 440
, 443 (2006)), the Convention, as codified

in Chapter 2 of the FAA, only allows the enforcement of agreements in writing

signed by the parties and Congress has specified that the Convention trumps

Chapter 1 of the FAA where the two are in conflict. See 9 U.S.C. § 208 (“Chapter

1 applies to actions and proceedings brought under this chapter to the extent that

chapter is not in conflict with this chapter or the Convention as ratified by the

United States.”). Although parties can compel arbitration through estoppel under

Chapter 1 of the FAA, estoppel is only available under Chapter 1 because Chapter

1 does not expressly restrict arbitration to the specific parties to an agreement. See

Arthur Andersen LLP v. Carlisle, 
556 U.S. 624
, 630–31, 
129 S. Ct. 1896
, 1902

(2009). But the Convention imposes precisely such a restriction. New York

Convention, Article II, ¶ 2 (requiring that an “agreement in writing” be “signed by

the parties or contained in an exchange of letters or telegrams”). Thus, GE Energy

cannot compel Outokumpu to arbitrate through estoppel. For this same reason, GE

Energy also cannot compel arbitration through a third-party beneficiary theory

because, again, the Convention requires that the agreement to arbitrate be signed

by the parties (or exchanged in letters or telegrams).

      GE Energy’s argument that it may compel arbitration based on the

Consortial Agreement fares no better. Even if GE Energy had agreed with Fives

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and the third subcontractor DMS that it would arbitrate any disputes arising out of

the Consortial Agreement or the Contracts, or that GE Energy would be bound to

any arbitration agreement in the Contracts, these agreements were entered into

unbeknownst to Outokumpu. GE Energy’s unilateral acquiescence to arbitrate

with Outokumpu is not an agreement “signed by [] parties” Outokumpu and GE

Energy. And though the Consortial Agreement may have established that Fives

could act as an agent of GE Energy in its dealings with Outokumpu, Fives did not

become GE Energy’s agent until after Fives and Outokumpu had already signed

the Outokumpu-Fives Contracts. As such, Fives did not sign the Contracts on

behalf of GE Energy as GE Energy’s agent. Altogether, in the absence of a signed

agreement, Outokumpu cannot be compelled to arbitrate its dispute with GE

Energy under the Convention.

      In its supplemental briefing on appeal, GE Energy raises for the first time

the argument that it is entitled to compel arbitration under Chapter 1 of the FAA.

This issue was not raised before the district court and was not presented in the

parties’ initial appellate briefing. Accordingly, we decline to consider it now.

      VI.    MOTION FOR LIMITED DISCOVERY

      Outokumpu also appeals the district court’s denial of its motion for limited

discovery into the corporate relationship between GE Energy, Converteam, and the

Consortial Agreement. “[A] district court is allowed a range of choice in such

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matters, and we will not second-guess the district court’s actions unless they reflect

a clear error of judgment.”      Holloman v. Mail–Well Corp., 
443 F.3d 832
, 837

(11th Cir. 2006) (internal quotation marks omitted). We find no clear error in the

district court’s determination that such discovery was unnecessary given the

allegations in the complaint and the agreement under which GE Energy sought to

compel arbitration.

      VII. CONCLUSION

      Based on the foregoing, we AFFIRM the district court’s denial of the motion

to remand and denial of limited discovery, but REVERSE and REMAND the

district court’s order compelling arbitration for further proceedings consistent with

this opinion.

      SO ORDERED.




                                          20

Source:  CourtListener

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