Before us is an appeal from the district court's order, 610 F. Supp. 306, refusing to order arbitration in a major lawsuit flowing out of the world's largest oil spill.1 Presently plaguing the long suffering mariners on their litigious voyage is an historically hatched rule of admiralty which often rears its head like a leviathan from the deep in order to founder those who seek interlocutory relief.2 Today, however, possessed with recent chartings by the Supreme Court and Congress, we are able to keep hands steady on the helm past the Schoenamsgruber peril.3 As pilots, we have often groused about the treacherous course compelled by these instructions from astronautical heights.4 But as mariners of all ages, until such time as the wrecks and shoals disappear, we must ply our course with the navigational aids at our disposal. We hope our log which follows makes the voyage easier for those who must travel after us. The prizes secured on our voyage--judicial economy and the promotion of arbitration--are recompense for the perils. Safely ashore, we remand for the district court to order that Sedco and Permargo proceed to arbitration in accordance with their contract. Upon remand, the district court should consider whether the remaining litigation should be stayed pending arbitration.5

In June of 1979 the semi-submersible drilling vessel, SEDCO 135, owned by Sedco, Inc. (Sedco), was in the bay of Campeche, Gulf of Mexico, under bareboat charter to Perforaciones Marinas del Golfo, S.A. (Permargo), a Mexican drilling company. Permargo had contracted with Petroleous Mexicanos (Pemex), the Mexican state owned oil company, to drill oil wells. On June 3, a massive blowout took place. The SEDCO 135 was a total loss; the flow of oil into the Gulf became the largest oil spill in history.6

On September 11, 1979, Sedco filed a petition under the Limitation of Shipowners Liability Act, 46 U.S.C. Sec. 181 et seq. All litigation by shrimpers, hotel owners, and governmental entities against Sedco, Permargo, and Pemex was consolidated into the limitation proceeding.7 On September 23, Sedco tendered its defense to Permargo pursuant to an indemnity clause in the charter party. In part, the bareboat charter party stated that Permargo would:

assume all responsibility for, including control and removal of, and to protect, and indemnify and hold harmless the owner [Sedco] and the vessel [SEDCO 135] from loss or damage arising from pollution or contamination, regardless of cause and without regard to the negligence of any party.

Permargo refused to defend Sedco. In the limitation proceeding Sedco then filed a third-party claim against Permargo and Pemex alleging that Permargo had breached its obligation to hold Sedco harmless under the charter. Sedco sought damages for the breach, indemnity for any sums Sedco was found liable to pay to third-parties, and attorneys' fees. The district court originally dismissed Pemex under the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. Sec. 1602 et seq., but denied Permargo's motion to dismiss. Sedco then settled with the United States and certain class action plaintiffs. Sedco demands indemnity from Permargo for these payments.

Throughout the district court proceedings, Permargo has made extensive efforts to resist discovery on jurisdictional grounds. As a result of this jurisdictional jousting, Permargo did not file its first answer to Sedco's third party complaint until April 8, 1983; Permargo's answer thus came almost three years after being sued by Sedco. This answer raised as a defense an arbitration clause in the charter party between Sedco and Permargo. Then, on April 12, 1983, Permargo filed motions (i) for a stay pending arbitration and (ii) a mandatory order to direct arbitration. On August 24, 1984, the district court issued an order reconsidering its dismissal of Pemex. The same order summarily denied both Permargo's motions regarding arbitration with the statement that "Pemex is now a party to the pending litigation and complete resolution of the matters before this court cannot be had without Permargo's participation as a party to this litigation." The questions for us to decide in this appeal are: (1) whether the district court's order refusing to order arbitration (with a stay of proceedings pending arbitration) is appealable; and, (2) if so, whether Permargo has waived its right to arbitration.

Clause 21 of the charter party between Sedco and Permargo provides that they would submit "any dispute or difference between the parties" to arbitration in New York under the rules of the International Chamber of Commerce.8 Sedco is a Texas company; Permargo is a Mexican company. Both Mexico and the United States are signatories to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (Convention), 3 U.S.T. 2517, T.I.A.S. No. 6957, 330 U.N.T.S. 38 [1970], republished as a note following 9 U.S.C. Sec. 201.9 The Convention contemplates a very limited inquiry by courts when considering a motion to compel arbitration:

1) is there an agreement in writing to arbitrate the dispute; in other words, is the arbitration agreement broad or narrow;10

2) does the agreement provide for arbitration in the territory of a Convention signatory;

3) does the agreement to arbitrate arise out of a commercial legal relationship;

4) is a party to the agreement not an American citizen?

Ledee v. Ceramiche Ragno, 684 F.2d 184, 185-86 (1st Cir.1982).

If these requirements are met, the Convention requires district courts to order arbitration. Language similar to that used in the charter party arbitration clause between Sedco and Permargo has been described by the Court in Caribbean Steamship Co. v. Sonmez Denizcilik Ve Ticaret, 598 F.2d 1264, 1266 (2d Cir.1979). The court said "[i]t is difficult to imagine broader general language than that contained in the charter party's arbitration clause, 'any dispute'...."11 Additionally, when confronted with arbitration agreements, we presume that arbitration should not be denied "unless it can be said with positive assurance that an arbitration clause is not susceptible of an interpretation which would cover the dispute at issue...." Commerce Park of DFW Freeport v. Mardian Construction Co., 729 F.2d 334, 338 (5th Cir.1984), quoting Wick v. Atlantic Marine, Inc., 605 F.2d 166, 168 (5th Cir.1979). Thus, as a general rule, whenever the scope of an arbitration clause is in question, the court should construe the clause in favor of arbitration. United Steel Workers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 80 S. Ct. 1347, 1353, 4 L. Ed. 2d 1409 (1960); City of Meridian, Miss. v. Algernon Blair, Inc., 721 F.2d 525, 527 (5th Cir.1983). We hold that the arbitration agreement between Sedco and Permargo is of the broad type.

The Convention was negotiated pursuant to the Constitution's Treaty power. Congress then adopted enabling legislation to make the Convention the highest law of the land. As such, the Convention must be enforced according to its terms over all prior inconsistent rules of law.

Congress' implementing legislation for the Convention is found as part of the Arbitration Act. 9 U.S.C. Sec. 1 et seq. Chapter 1 of Title 9 is the Federal Arbitration Act passed long ago to overcome American courts' common law hostility to the arbitration of disputes.12 Chapter 2 of Title 9 is devoted entirely to the Convention and Congress' enabling legislation. Thus, Sec. 201 provides that the Convention "shall be enforced" by United States courts.13 In substance, the Convention replicates the Federal Arbitration Act. Indeed, Sec. 208 of the enabling legislation for the Convention incorporates all of the Convention into Chapter 1 of Title 9.14 But while the Convention requires courts of the United States to enforce arbitration clauses along lines similar to those specified in the Arbitration Act, its reach is broader than the Arbitration Act. Both the Arbitration Act and the Convention provide that if a dispute in a pending lawsuit is subject to arbitration, the district court "shall on application of one of the parties stay the trial of the action until such arbitration has been had."15 Both provide that the district court "shall make an order directing the parties to proceed to arbitration" when the site for arbitration is within the district.16 But Sec. 206 of the enabling legislation for the Convention also authorizes district courts to order parties to proceed with a Convention arbitration even outside the United States.17C. The Policy of Encouraging Arbitration and the End of

the Intertwining Doctrine

The goal of the convention, and the principal purpose underlying American adoption and implementation of it, was to encourage the recognition and enforcement of commercial arbitration agreements and international contracts and to unify the standard by which the agreements to arbitrate are observed and arbitral awards are enforced in the signatory countries.

Scherk v. Alberto-Culver Co., 417 U.S. 506, 520 n. 15, 94 S. Ct. 2449, 2457 n. 15, 41 L. Ed. 2d 270 (1974).

The Fifth Circuit has been friendly to arbitration except possibly in those limited areas affected by the intertwining doctrine; the securities and antitrust laws.18 Now, however, the Supreme Court has rejected the intertwining doctrine19 and mandated that courts enforce arbitration agreements as part of party's legitimate contractual expectations. Dean Witter Reynolds v. Byrd, 83 U.S. ----, 105 S. Ct. 1238, 84 L. Ed. 2d 158 (1985), involved the securities laws--long held to be an area of special federal concern in our circuit. Based on this special concern for the exclusive federal interest in enforcement of the securities laws, we used the intertwining doctrine to override party's arbitration agreements to prevent the piecemeal adjudication of disputes. As the Court said in Dean Witter Reynolds:

the Arbitration Act requires district courts to compel arbitration of pendent arbitrable claims when one of the parties files a motion to compel, even where the result would be the possible inefficient maintenance of separate proceedings in different forums.... By its terms, the Act leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed.

(emphasis in original).20

Thus, Dean Witter Reynolds confirms the Court's teaching in Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 103 S. Ct. 927, 74 L. Ed. 2d 765 (1982). In Moses Cone the Supreme Court held "[t]he Arbitration Act establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability."

Thus, "[a]bsent allegations of fraud in the inducement of the arbitration clause itself, arbitration must proceed when an arbitration clause on its face appears broad enough to encompass the party's claims." Life of America Insurance Co. v. Aetna Life Insurance Co., 744 F.2d 409, 413 (5th Cir.1984); Commerce Park at DFW Freeport v. Mardian Constr. Co., 729 F.2d 334, 338 (5th Cir.1984); Prima Paint Corp. v. Flood and Conklin Manufacturing Co., 388 U.S. 395, 406, 87 S. Ct. 1801, 1807, 18 L. Ed. 2d 1270 (1967). "Under the Arbitration Act, an arbitration agreement must be enforced notwithstanding the presence of other persons who are parties to the underlying dispute, but not to the arbitration agreement." Tai Ping at 1146; Cf. Commerce Park at 339.

D. The Schoenamsgruber Peril: Appealability of the Motion

to Compel Arbitration

In Schoenamsgruber v. Hamburg American Line, 294 U.S. 454, 55 S. Ct. 475, 79 L. Ed. 989 (1935), the Supreme Court held Courts of Appeals lacked jurisdiction to hear appeals from a district court's order staying an admiralty proceeding pending arbitration.21 Accordingly, we must closely examine the district court's order and the Convention to see if Schoenamsgruber causes us to founder.

The district court had before it two separate motions from Permargo. It chose, however, to dispose of both motions by means of one order. The district court denied both Permargo's motions (i) for an order directing arbitration and (ii) to stay all proceedings pending arbitration. The court denied the motions because of its ruling that Pemex was now a party to the litigation. In its order, the district court stated that arbitration had to be denied since Pemex was not bound by the arbitration clause in the charter party agreement between Sedco and Permargo.22 While it appears that the district court based its decision to deny Permargo's motions upon the now rejected doctrine of intertwining, our case cannot be solved by a simple remand. The district court rejected motions made under the Convention. This Convention is the supreme law of the land. By its ratification in 1970, the United States obligated itself to enforce arbitration agreements between foreign and domestic contracting parties. Any law or decision prior in time to this express undertaking must be construed as consistent with the Convention or set aside by it.

Our decision is further supported by the recent opinion in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., --- U.S. ----, 105 S. Ct. 3346, 85 L.Ed.2d ---- (1985). Despite the uniform rule throughout the Circuits that federal antitrust claims are inappropriate for arbitration, the Court ruled that antitrust claims are arbitrable under the Federal Arbitration Act when they are encompassed within a valid arbitration clause in an agreement embodying an international commercial transaction. The Court focused on:

concerns of international comity, respect for the capacities of foreign and transnational tribunals, and sensitivity to the need of the international commercial system for predictability in the resolution of disputes require that we enforce the parties' agreement, even assuming that a contrary result would be forthcoming in a domestic context.

The Convention was passed in order to secure the right of arbitration in a commercial context among foreign and domestic parties. Congress could not have intended that a court's refusal to enforce an arbitration agreement falling under the Convention would be immediately appealable in a nonmaritime action--at law or equity--but would be shielded from appellate scrutiny in an admiralty suit. Accordingly, Schoenamsgruber's mummified prohibition on the nonappealability of stays in admiralty, to the extent that it interferes with United States obligations under the Convention, must give way.23 We cannot extend the relic of Schoenamsgruber under 9 U.S.C. Sec. 8 to 9 U.S.C. Sec. 206. We hold that we have jurisdiction on this appeal to carry out the important congressional policy of insuring that arbitration contracts are enforced in the courts pursuant to the Convention. Moreover, to the extent that Schoenamsgruber was influenced by the ancient view that an admiralty court lacked the power to issue an injunction, the law has progressed. Judges may now "stride the quarterdeck" and issue injunctions. C.A.V.N. v. Perez, 303 F.2d 692 (5th Cir.1962), cert. denied, 371 U.S. 942, 83 S. Ct. 321, 9 L. Ed. 2d 276 (1962). Although the trial court did not style its order as the denial of an injunction, its order has all the earmarks of a denial of injunctive relief under 28 U.S.C. Sec. 1292. Permargo sought an order to compel the affirmative action of arbitration outside the litigation. If Permargo's motion had been granted instead of denied, the court's order would have required Sedco to participate in arbitration in New York. Such an order would be, in effect, a mandatory injunction. Accordingly, the district court's refusal to grant the injunction mandated by the Convention is appealable under 28 U.S.C. Sec. 1292 in order to prevent the United States from violating its Treaty obligations with 65 nations.24

Although our usual course would be to remand for the district court to correct its error of law in not ordering arbitration, here the district judge who entered the order is no longer on the bench. However, after three years of extensive discovery with well over 400 docket entries, the record before us is adequate to see that the requisites mandating the issuance of an order to arbitrate under the Convention have been met. Indeed, under the Convention any factual inquiry prior to a court being required to enforce an arbitration clause is strictly limited. See, Convention, Art. II; Ledee v. Ceramiche Ragno, 684 F.2d at 185-86; Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 103 S. Ct. 927, 74 L. Ed. 2d 765 (1982); Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404, 87 S. Ct. 1801, 1806-07, 18 L. Ed. 2d 1270 (1967); cf. Oil, Chemical & Atomic Workers v. American Petrofina Co., 759 F.2d 512, 515 (5th Cir.1985) ("obligation of the parties to submit to the arbitrator the issue of arbitrability....").25

As we have emphasized throughout, the arbitration clause, in light of the substantive provisions of the charter party, is extremely broad. Consequently, we determine that it encompasses substantially all of the potential controversies growing out of the blowout of the IXTOC I well. Although in some situations we have stated that the court should first determine whether, and what, issues are for arbitration, we think that given the broad framework of the arbitration clause in this situation, the arbitrators should initially determine which of the intricate factual disputes come within the arbitration clause.26 It goes without saying that questions as to the conduct of the arbitration are reserved to the United States District Court for the Southern District of Texas.

Although arbitration is a contractual right which can be waived27 and Article II of the Convention contemplates the possibility of waiver of an arbitration agreement, the facts of this case do not demonstrate such a waiver. See I.T.A.D. Associates, Inc. v. Podar Bros., 636 F.2d 75, 77 (4th Cir.1981). Here Permargo raised the defense of arbitration in its answer. The only foundation for Sedco's assertion of waiver is the passage of time between filing of the limitation proceeding and the filing of Permargo's answer. As the court observed in Hilti v. Oldach, 392 F.2d 368, 371 (1st Cir.1968) "[w]e start with the fact that defendant's answer, in its special defense, served notice on plaintiff of the arbitration defense. Given this, the burden is heavy on one who would prove waiver."

Indeed, though the sparring in Hilti was for "nearly two years," the court thought it more important that the delay in the proceedings was caused by legitimate pre-arbitration discovery.28 Southwest Industrial Import & Export v. Wilmod Co., Inc., 524 F.2d 468, 470 (5th Cir.1975) (willing participation in settlement discussions & reselling goods not waiver of arbitration rights); Germany v. River Terminal Railway Co., 477 F.2d 546, 547 (6th Cir.1973) ("waiver may not be inferred from the fact that a party does not rely exclusively on the arbitration provisions of a contract, but attempts to meet all issues raised in litigation between it and another party to the agreement.")

In the case before us, the long fought dispute about whether the district court had jurisdiction over Permargo and Pemex likewise must be described as legitimate. Nor has Sedco been able to demonstrate that this jurisdictional jousting has been prejudicial. See also I.T.A.D. Associates, Inc. at 77; Robert Lawrence Co. v. Devonshire Fabrics, 271 F.2d 402, 412-13 (2d Cir.1959), cert. granted, 362 U.S. 909, 80 S. Ct. 682, 4 L. Ed. 2d 618 (1960), cert. denied, 364 U.S. 801, 81 S. Ct. 27, 5 L. Ed. 2d 37 (1960). We hold there has been no waiver.29

Our review of the language and purposes of the Convention and its enabling legislation lead us to conclude that (i) this appeal is properly before us and (ii) the district court erred in refusing to order arbitration. The parties agreed in writing that all disputes arising from their contractual relationship would be submitted to arbitration. Such an agreement falls squarely within Article II of the Convention. 9 U.S.C. Sec. 206 does not confer discretion in compelling arbitration. I.T.A.D. Associates, Inc. v. Podar Bros., 636 F.2d 75, 77 (4th Cir.1981). On remand the district court should order the parties to perform their arbitration agreement.

REMANDED WITH INSTRUCTIONS.