[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
_________________________ FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 05-14092 February 1, 2007
_________________________ THOMAS K. KAHN
CLERK
D.C. Docket No. 04-22661-CV-JLK
RINTIN CORP., S.A.,
a Panamanian corporation,
Plaintiff-
Counter-Defendant-
Appellant,
versus
DOMAR, LTD.,
a Bermuda corporation,
Defendant-
Counter-Claimant-
Appellee.
_________________________
Appeal from the United States District Court
for the Southern District of Florida
_________________________
(February 1, 2007)
Before DUBINA, KRAVITCH and GIBSON,* Circuit Judges.
*Honorable John R. Gibson, United States Circuit Judge for the Eighth Circuit, sitting by
designation.
GIBSON, Circuit Judge:
Rintin Corp., a Panamanian corporation, appeals from the district court's
order confirming an arbitral award in a dispute between Rintin and Domar, a
Bermudian corporation. Rintin was the minority shareholder and Domar the
majority shareholder in a holding company, Dominicana Cement Holdings, S.A.,
which in turn owns 70% of Cementos Colon, S.A., which owns and operates a
cement plant in the Dominican Republic. Rintin and Domar entered into a
Shareholders' Agreement, under which the dispute arose and which provided for
arbitration of such disputes. The Arbitrators ordered Domar to buy out Rintin's
stock at a premium price of $5,184,000 and also ordered Rintin to terminate a
number of lawsuits Rintin had filed around the world against Domar's affiliates
and the affiliates' officers, because the Arbitrators found Rintin's filing of the
lawsuits breached its contractual obligations to Domar. Rintin filed suit to vacate
the arbitral order, and Domar cross-moved to confirm the award. The district
court denied the motion to vacate and granted the motion to enforce. Rintin
argues that the Shareholders' Agreement is void and that the Arbitrators
adjudicated a controversy not submitted to them by ordering Rintin to discontinue
foreign litigation against corporate affiliates of Domar and their officers. We
affirm.
2
On October 23, 1996, Rintin and Domar entered the "Dominicana Cement
Holding, S.A. Shareholders' Agreement" in order to set forth the rules by which
each would participate in Dominicana. Domar was said to own 75% of the stock
in Dominicana, and Rintin 25%. The Agreement contained a section governing
resolution of disputes, which included an arbitration clause stating: "Any dispute
which may arise from the interpretation, execution or termination of this
agreement or from the breach thereof . . . shall be submitted to arbitration . . .
according to the provisions of the Florida International Arbitration Act and in
compliance with the rules of the American Arbitration Association (AAA)." The
Agreement specified that Florida law would govern the Agreement. Later
amendments on April 11 and 12, 1997, modified the agreement so that Domar
owned 85% of the stock, Rintin owned 13%, and a third party, Eurocaribic
Services, Inc., owned 2%. The business purpose of Dominicana was to hold 70%
of the stock of Cementos Colon, S.A., which had acquired ownership of a cement
plant in the Dominican Republic when the plant was privatized in 1996. The other
shareholder in Cementos Colon was Corporacion Dominicana de Empresas
Estatales (known as "Corde"), a company owned by the government of the
Dominican Republic. Corde later sold its interest in Cementos Colon.
After the privatization, Rintin alleges that it discovered that Domar, its
affiliates, and related parties had engaged in wrongful conduct that diminished the
3
value of Rintin's shares in Dominicana. Rintin filed lawsuits in the Dominican
Republic against Corde and affiliates of Domar, seeking to set aside the sale of the
cement plant to Cementos Colon, which would destroy the asset Dominicana was
formed to own; lawsuits in Panama against Dominicana, seeking to nullify
corporate actions of Dominicana; and criminal proceedings in Switzerland and
Spain against officers of Cementos Colon and of Domar's grandparent corporation,
Holderbank, for fraud.
Domar responded to this onslaught by filing a demand for arbitration before
the American Arbitration Association, seeking, among other things, (1) a
declaration that Rintin had breached the Shareholders' Agreement by filing the
foreign lawsuits; (2) an injunction against the lawsuits pending around the world;
and (3) a forced valuation and buy-out of Rintin's shares of Dominicana. Rintin
refused to submit to arbitration and instead filed suit in Florida state court seeking
a declaration that the matters Domar raised before the AAA were not arbitrable.
The Florida courts ruled against Rintin, holding that the Shareholders' Agreement
specified that disputes would be handled pursuant to the Florida International
Arbitration Act, under which the arbitrability of a dispute is to be decided by the
arbitrators. Rintin Corp., S.A. v. Domar, Ltd., 766 So. 2d 407, 408-09 (Fla. Dist.
Ct. App. 2000) (quoting Fla. Stat. ch. 684.22(1)). The Florida courts stayed
judicial proceedings pending arbitration. Id. at 409.
4
The Arbitrators began by resolving the arbitrability issue. After hearings
and briefing, the Arbitrators held that the allegations of Domar's Amended Claim
were subject to arbitration and that the allegations of Rintin's Counterclaim were
also arbitrable, with the exception of Counts I, II, and V, which charged that
Domar and third parties engaged in unlawful conspiracy. The Arbitrators held that
Rintin's Third Party Claims against Umar (Domar's parent corporation),
Holderbank (Umar's parent corporation), Corde, Dominicana, and certain officers
of Holderbank and Colon were not arbitrable, as none of those parties were bound
by the arbitration clause.
There followed a lengthy arbitration that lasted about four years. The
Arbitrators' Final Award held that the Shareholders' Agreement and the April 11
and 12, 1997, amendments to it were made with unanimous consent of
Dominicana's shareholders and were valid and binding on Rintin. The Arbitrators
found that Rintin had "breached the Shareholders' Agreement by filing multiple
law-suits in various countries against Domar and third parties, which challenge the
basic agreements that govern [Dominicana] and Colon and, hence, their normal
operations." The Arbitrators held that the evidence established that the
disagreements of Rintin and Domar threatened the future viability of Dominicana;
accordingly, they ordered Domar to buy Rintin's 13% interest in Dominicana for a
price of $5,184,000, which included a $3,000,000 premium designed in part to
5
compensate Rintin for giving up its foreign lawsuits. (Rintin's investment in
Dominicana was about $1.3 million.) The Arbitrators then ordered Rintin to
terminate "definitively, irrevocably and unconditionally" its lawsuits against
Domar, Dominicana, Umar, Cementos Colon, Holderbank, Corde, corporate
officers Ackerman and Villanueva, and any other persons closely related to them.
Rather than complying with the award, Rintin then filed this suit to vacate
the arbitral award, and Domar cross-moved to confirm the award. The district
court found that Domar met its burden for confirmation by tendering the
agreement to arbitrate and the arbitral award. Rintin Corp., S.A. v. Domar, Ltd.,
374 F. Supp. 2d 1165, 1169 (S.D. Fla. 2005). The district court held that Rintin
did not meet its burden of establishing a basis for vacating the arbitral award under
the Florida International Arbitration Act, Fla. Stat. ch. 684.25. Accordingly, the
district court confirmed the award and ordered Rintin to submit proof within 90
days that it had terminated its lawsuits against Domar, Dominicana, Umar,
Cementos Colon, Holderbank, Corde, their corporate officers Ackerman and
Villanueva, and any other entities or individuals closely related to the parties in
that list. Id. at 1171. Rintin has been held in contempt for failure to dismiss the
lawsuits, and a warrant has been issued for the arrest of Roberto Prats, Rintin's
principal. Rintin Corp., S.A. v. Domar, Ltd., 403 F. Supp. 2d 1201, 1206 (S.D.
6
Fla. 2005), appeal dismissed, No. 05-17157, 2006 WL 936706 (11th Cir. March
30, 2006).
Rintin appeals, contending that the Shareholders' Agreement is void and
that the Arbitrators granted relief in favor of non-parties in ordering Rintin to
terminate its foreign suits against Domar's and Cementos Colon's corporate
affiliates and officers of the corporate affiliates.
On an appeal of a district court's decision to confirm or vacate an arbitration
award, we review the district court's resolution of questions of law de novo and its
findings of fact for clear error. Riccard v. Prudential Ins. Co., 307 F.3d 1277,
1289 (11th Cir. 2002).
The Florida International Arbitration Act closely hems in judicial review of
arbitrators' awards. Fla. Stat. ch. 684.25(1) lists the affirmative defenses available
to a party seeking to avoid confirmation; of these, Rintin argues that it has
established three:
(a) There was no written undertaking to arbitrate . . . .
(d) The award . . . is contrary to the public policy of the United States
or [Florida] . . . [and]
(f) The award resolves a dispute which the parties did not agree to
refer to the arbitral tribunal . . . .
Florida law specifies our method for deciding whether Rintin has established any
of these three defenses. First, under the Florida International Arbitration Act,
when the parties have raised in the arbitration the issue of whether a written
7
undertaking to arbitrate is valid and enforceable and the arbitrators have resolved
the question, "the tribunal's decision is final," see Task Force on International
Arbitration, Proposed Florida International Arbitration Act, Extended
Commentary 39 (1985),1 and we make no independent assessment. Second, the
courts have power to assess whether the arbitral award violates public policy, but
the test is not whether the court would have granted the same award, but whether
the award offends "some basic principle of justice or morality or [threatens] to
frustrate some urgent public necessity." Id. at 40. Third, the arbitral tribunal's
determination that the parties agreed to refer a particular dispute to arbitration is
reviewed by the courts for clear error.2 Fla. Stat. ch. 684.25 (1)(f).
Rintin argues that there was no written undertaking to arbitrate because the
Shareholders' Agreement was void under Panamanian law. Rintin contends that
Panamanian law required that the Shareholders' Agreement be recorded in the
public record and incorporated into the bylaws of Dominicana, which Rintin
contends never happened. The Florida International Arbitration Act provides that,
1
The copy of the Task Force report in the record shows that it was obtained from the
Florida State Archives; the document was apparently never published.
2
The clear error standard of review is subject to an exception: a court may not make an
independent factual determination of whether the award resolves a dispute not submitted to the
arbitral tribunal if (a) the arbitration was conducted under the rules or under the supervision of an
arbitral authority and (b) such ground was submitted to the authority as a basis for challenging
the award. Fla. Stat. ch. 684.25(2). "In such a case, the determination of the arbitral authority
concerning such grounds shall be final." Id. The parties have not argued that the conditions
triggering this exception are present in this case.
8
except for the defenses of fraud in the inducement, contravention of public policy
or previous contrary determination by arbitral panel, the question of whether a
written undertaking to arbitrate is invalid or unenforceable is for the arbitrators to
decide. Fla. Stat. ch. 684.22(1). Here, the issue of validity was litigated before the
Arbitrators, and they found that the Shareholders' Agreement was duly adopted
and was valid, contrary to Rintin's contentions, and also that the arbitration clause
itself was valid and enforceable. We therefore have no authority to set aside the
award on this basis. Proposed Florida International Arbitration Act, supra, at 39.
Moreover, the legislative history of the Florida International Arbitration Act
indicates that the phrase "written undertaking to arbitrate" was not meant to
include all the elements of a binding contract. Id. at 9 (use of "written undertaking
to arbitrate" was to "avoid[] any inference that a court, in order to refer a party to
arbitration, must first establish that there is a valid 'agreement'–i.e., contract– to do
so"). Invalidity of the Shareholders' Agreement may be a substantive defense to a
claim based on the Agreement, id. at 14, but does not mean there was no "written
undertaking to arbitrate," nor does it establish any of the other statutory bases
under the Florida International Arbitration Act for denying confirmation of the
award.
Rintin relied in its brief on Cardegna v. Buckeye Check Cashing, Inc., 894
So. 2d 860 (Fla. 2005), for the proposition that an arbitration clause in a void
9
contract could not be enforced; however, after Rintin's brief was filed, the case
was reversed by the Supreme Court. In Buckeye Check Cashing, Inc. v. Cardegna,
546 U.S. 440, 126 S. Ct. 1204, 1210 (2006), the Supreme Court held that under the
Federal Arbitration Act, a challenge to the validity of a contract containing an
arbitration clause, rather than to the arbitration clause itself, should be determined
in the first instance by the arbitrators. The distinction on which Rintin relies,
between void and voidable contracts, was deemed irrelevant by the Supreme
Court.3 126 S. Ct. at 1209.
The district court correctly concluded that Rintin had not established the
absence of a written undertaking to arbitrate.
Rintin next contends that the Arbitrators resolved a dispute not properly
before them by enjoining Rintin to terminate its foreign lawsuits against Domar's
and Cementos Colon's affiliates and their officers.4 Rintin contends that the
Arbitrators cannot enjoin Rintin to discontinue its suits against those third parties
because those disputes were never submitted to the arbitral tribunal. Domar, on
3
The Supreme Court in Buckeye Check Cashing distinguished between challenges to the
validity of a contract with an arbitration clause and arguments that a party never consented to
such a contract. 126 S. Ct. at 1208 n.1. Rintin argues that the Shareholders' Agreement was void,
not that Rintin never effectively consented to the Agreement. Therefore, we need not pursue the
line of cases mentioned in footnote 1 to Buckeye Check Cashing.
4
Domar has just filed a notice with this Court advising us that the criminal action in Spain
has ended, with judgment entered in favor of the defendants. Therefore, the appeal may be moot
in this respect. However, since other foreign actions are still pending and require us to resolve
the issues raised by Rintin, we do not dismiss the appeal.
10
the other hand, contends that this argument mischaracterizes the relief the
Arbitrators granted, which was to remedy Rintin's breach of contract and preserve
the assets of Dominicana so that Domar would get something for its $5,184,000.
Whether the order to terminate the foreign suits could constitute an
affirmative defense under the Florida International Arbitration Act depends on
whether we view the issue as one of the scope of the arbitration, Fla. Stat. ch.
684.25(1)(f) (affirmative defense, arbitrators' decision reviewed for clear error), or
of the scope of the remedy, Fla. Stat. ch. 684.24(1). Under the latter view, Rintin's
argument fails; the Florida International Arbitration Act specifically commands
that it is irrelevant to our confirmation of the award "whether a court of law or
equity would . . . grant the relief provided for in the award." Fla. Stat. ch.
684.24(1).5 But even if we characterize the issue as involving the scope of the
arbitration, the Florida statute makes the Arbitrators' resolution of the scope issue
reviewable only for clear error. Fla. Stat. ch. 684.25(1)(f). Therefore, if the
Arbitrators did not clearly err in concluding that the remedy fell within the scope
of the controversy referred to them, Rintin will not have established an affirmative
defense to confirmation.
5
Because of this provision in the Florida Act, cases considering whether a court should
enjoin litigation against a party's affiliates are not controlling. E.g., Paramedics Electromedicina
Comercial, Ltda. v. GE Med. Sys. Info. Techs., Inc., 369 F.3d 645, 652 (2d Cir. 2004) (affirming
district court's injunction of Brazilian suit against affiliates of party, where suit was based on
affiliate's identity with party to arbitration agreement).
11
The Arbitrators expressly acknowledged that Rintin's claims against Umar,
Holderbank, and the other third parties were not within the scope of the arbitration
clause. The final award did not grant relief to the third parties, but to Domar.6
The Arbitrators found that by filing the lawsuits against Domar's and Cementos
Colon's affiliates and their officers, Rintin breached the Shareholders' Agreement
and disrupted the normal operations of Dominicana and Cementos Colon. As the
district court found,
The ultimate effect and object of [Rintin's] lawsuits was to completely
dissolve and nullify the privatization of the cement plant, the
ownership of which was the ultimate basis of [Dominicana], the
investment vehicle in which [Rintin] was a minority shareholder and
[Rintin's] only connection or interest to the cement plant.
374 F. Supp. 2d at 1167. Accordingly, the Arbitrators found it necessary, in order
to enforce the Agreement, to compel termination of the suits against the affiliates
and their officers. The district court also found that termination of the foreign
suits was indispensable to granting relief to Domar because Rintin's suits
threatened the "foundational documents of [Dominicana]" that defined Rintin's
and Domar's rights with each other and with Dominicana. 374 F. Supp. 2d at
6
The fact that the award runs only in favor of Domar, not the third parties, distinguishes
this case from Nationwide Mutual Insurance Co. v. Home Insurance Co., 330 F.3d 843 (6th Cir.
2003). There, the arbitrators ordered payment directly to a non-party, which the Sixth Circuit
found exceeded the arbitrators' authority. Id. at 847. Here, although the third parties will benefit
from the award, the Arbitrators found that they could not vindicate Domar's rights under the
Shareholders' Agreement without ending the foreign suits that Rintin brought in breach of the
Agreement.
12
1171. Neither the Shareholders' Agreement nor the American Arbitration
Association's International Arbitration Rules (which the Shareholders' Agreement
specifies as the rules by which the arbitration shall proceed) limit the Arbitrators'
power to award equitable relief. The Arbitrators did not clearly err in concluding
that the order to cease litigating against the affiliates and their officers was an
essential part of the remedy in the arbitrable dispute. We therefore reject the
contention that the Arbitrators resolved a dispute not submitted to them.
In a similar vein, Rintin argues that the order to terminate the lawsuits
pending against the affiliates in other countries violates the public policy of
Florida, to wit, the policy favoring international comity. See generally Karaha
Bodas Co., L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara,
335 F.3d 357, 371-74 (5th Cir. 2003) (involving injunction by court, not
arbitrator's award). The consideration of international comity must be balanced
against the effect of the enjoined litigation on the proceedings in the United States.
Id. at 366. Another public policy of Florida, that favoring the use of arbitration to
resolve disputes arising out of international relationships, Fla. Stat. ch. 684.02(1),
is far more directly implicated by the situation before us. The arbitrators found
that requiring Rintin to dismiss the foreign suits was crucial to the overall relief
granted. It follows that to invalidate that requirement would set the entire
arbitration at naught. Moreover, the arbitration would become a sideshow if
13
Rintin were allowed to circumvent the arbitration by suing Domar surrogates in
four countries. Rintin has not demonstrated that the award offends a "basic
principle of justice or morality" or would "frustrate some urgent public necessity,"
as Rintin would have to do to establish a defense to confirmation of the award.
See Proposed Florida International Arbitration Act, supra, at 39.
To the extent that Rintin's other arguments have not been subsumed in the
points we have discussed, they have no merit. Rintin did not establish an
affirmative defense to confirmation of the Arbitrator's award. The judgment of the
district court is AFFIRMED.
14