Case: 16-20690 Document: 00514108386 Page: 1 Date Filed: 08/09/2017
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
No. 16-20690
Fifth Circuit
FILED
August 9, 2017
BRITTANIA-U NIGERIA, LIMITED, Lyle W. Cayce
Clerk
Plaintiff - Appellant
v.
CHEVRON USA, INCORPORATED; ALI MOSHIRI; MONCEF ATTIA,
Defendants - Appellees
Appeal from the United States District Court
for the Southern District of Texas
Before HIGGINBOTHAM, SMITH, and HAYNES, Circuit Judges.
HAYNES, Circuit Judge:
Plaintiff Brittania-U Nigeria, Limited (“Brittania-U”) sued Defendants
Chevron U.S.A. Inc. (“Chevron”), Ali Moshiri, and Moncef Attia (collectively,
“Defendants”) for fraud, misrepresentation, and tortious interference with
business relations arising out of a bidding process for oil leases in Nigeria.
Brittania-U now appeals the district court’s denial of its motion to remand and
the grant of Defendants’ motions to dismiss based on an arbitration provision
in a confidentiality agreement between Brittania-U and Chevron. Finding no
error, we AFFIRM.
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No. 16-20690
I.
In 2013, Chevron Nigeria, Limited, a division of Chevron, opened a
bidding process for the sale of its interests in three Oil Mining Leases (“leases”)
in Nigeria. 1 BNP Paribas Securities Corp. (“BNP Paribas”) served as
Chevron’s financial advisor and agent for the potential transaction. Attia, then
an employee of BNP Paribas, invited Brittania-U to participate in the bidding
process. Chevron employee Moshiri was also involved in the negotiations.
Early in the bidding process Brittania-U signed a confidentiality
agreement, which Chevron also executed. The confidentiality agreement
contained an arbitration provision:
If the dispute is not resolved pursuant to direct
negotiations . . . then the dispute shall be finally
resolved by binding arbitration and either Party may
initiate such arbitration by giving notice to the other
Party. The arbitration shall be conducted in
accordance with the United Nations Commission on
International Trade Law (“UNCITRAL”) Arbitration
Rules, except to the extent of conflicts between the
UNCITRAL Arbitration Rules.
The confidentiality agreement’s arbitration provision also stated that “[t]he
arbitrator(s) has the power to rule on objections concerning jurisdiction,
including the existence or validity of this arbitration provision and existence
or the validity of this Agreement.”
Brittania-U did not win the leases, despite the fact that it bid higher
than the winning party. As a result, on May 18, 2016, Brittania-U filed suit
against Chevron, Attia, and Moshiri in Texas state court alleging fraudulent
1 Because this case is on appeal from the grant of a motion to dismiss, we accept
Brittania-U’s allegations as true. See Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009).
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inducement in the bidding process against each defendant and tortious
interference with prospective business relations against only Attia.
Chevron removed the case to federal court. Brittania-U filed a motion to
remand, and each defendant filed a motion to dismiss. The district court
denied Brittania-U’s motion to remand and granted Defendants’ motions to
dismiss. Brittania-U now timely appeals.
II.
We review a denial of a motion to remand de novo. Int’l Energy Ventures
Mgmt., L.L.C. v. United Energy Grp., Ltd., 818 F.3d 193, 199 (5th Cir. 2016).
We also review de novo a motion to dismiss in favor of arbitration. Gilbert v.
Donahoe, 751 F.3d 303, 306–07 (5th Cir. 2014).
III.
A.
Chevron asserted two bases for jurisdiction in its notice of removal: first,
that diversity jurisdiction exists under the diversity statute, 28 U.S.C. § 1332,
and second, that federal question jurisdiction exists under the Convention on
the Recognition and Enforcement of Foreign Arbitral Awards (the
“Convention”), 9 U.S.C. § 203. However, Brittania-U argues that Chevron
improperly removed under both statutes so that the district court erred in
denying Brittania-U’s motion to remand.
We disagree with Brittania-U and find that jurisdiction exists under the
Convention. The Convention Act provides United States courts with
jurisdiction over “[a]n action or proceeding falling under the Convention . . .
regardless of the amount in controversy.” Safety Nat’l Cas. Corp. v. Certain
Underwriters At Lloyd’s, London, 587 F.3d 714, 724 (5th Cir. 2009) (alterations
in original) (citation omitted); see also 9 U.S.C. § 203 (stating that “[a]n action
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or proceeding falling under the Convention shall be deemed to arise under the
laws and treaties of the United States.”); 9 U.S.C. § 202 (explaining when an
agreement falls under the Convention). The requirements for Convention
jurisdiction are typically “(1) there is a written agreement to arbitrate the
matter; (2) the agreement provides for arbitration in a Convention signatory
nation; (3) the agreement arises out of a commercial legal relationship; and (4)
a party to the agreement is not an American citizen.” Freudensprung v.
Offshore Tech. Servs., Inc., 379 F.3d 327, 339 (5th Cir. 2004) (citing 9 U.S.C.
§ 202) (citation omitted).
But the presence of a non-U.S. party is not required in all circumstances.
Freudensprung, 379 F.3d at 340. “Convention [jurisdiction] may apply in such
cases provided that there is a ‘reasonable relation’ between the parties’
commercial relationship and some ‘important foreign element.’” Id. (quoting
Jones v. Sea Tow Servs., Inc., 30 F.3d 360, 366 (2d Cir. 1994); Lander Co. v.
MMP Invs., Inc., 107 F.3d 476, 481 (7th Cir. 1997)). For an arbitration
agreement that is “entirely between citizens of the United States” to fall under
the Convention Act, it must “involve[] property located abroad, envisage[]
performance or enforcement abroad, or ha[ve] some other reasonable relation
with one or more foreign states.” 9 U.S.C. § 202; see also Freudensprung, 379
F.3d at 339–41; S & T Oil Equip. & Mach., Ltd. v. Juridica Invs. Ltd., 456 F.
App’x 481, 484 (5th Cir. 2012). 2
Here, Defendants are citizens of the United States, but the citizenship of
Brittania-U is unclear. See Stiftung v. Plains Marketing, L.P., 603 F.3d 295,
298 (5th Cir. 2010) (looking to whether a business entity was considered legally
2 Although S & T is not “controlling precedent,” it “may be [cited as] persuasive
authority.” Ballard v. Burton, 444 F.3d 391, 401 n.7 (5th Cir. 2006) (citing 5TH CIR. R. 47.5.4).
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independent or a “juridical person” under the laws of that foreign state in order
to determine the entity’s citizenship). We need not resolve the question of
Brittania-U’s citizenship because even if Brittania-U were an American
business entity so that all members to the agreement were U.S. parties,
Convention jurisdiction nevertheless exists. The disputed transaction and
related written arbitration provisions involve property located abroad and
envisage performance abroad—the leases were for sale in Nigeria and all
performance was to occur in Nigeria. Furthermore, the arbitration provision
provides for arbitration to occur in London, and the United Kingdom is a
signatory to the Convention. See, e.g., Smith/Enron Cogeneration Ltd. P’ship
v. Smith Cogeneration Intern., Inc., 198 F.3d 88, 93 n.5 (2d Cir. 1999).
Therefore, under these circumstances, the district court properly had
jurisdiction under the Convention.
Removal under the Convention was also proper. The Convention’s
removal provision, 9 U.S.C. § 205, allows for removal to a district court “at any
time before the trial” “[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.” If “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. Thus, [a] district court will have
jurisdiction under § 205 over just about any suit in which a defendant contends
that an arbitration clause . . . provides a defense.” Beiser v. Weyler, 284 F.3d
665, 669 (5th Cir. 2002).
Here, the agreement relates to Brittania-U’s suit. Like the defendant’s
argument in Beiser, Defendants’ arguments are all attempts to get Brittania-
U to submit to arbitration. Beiser, 284 F.3d at 669. Therefore, “the arbitration
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agreements [here] could conceivably affect the disposition of [Brittania-U’s]
claims.” See id. at 670. Accordingly, Chevron’s removal was proper, and we
affirm the district court’s denial of Brittania-U’s motion to remand. We
pretermit the issue of whether removal was proper under the diversity statute
because a court needs only a single jurisdictional basis to retain its power.
B.
Brittania-U also contends that the district court erred in dismissing the
case after concluding that the arbitration provision delegated “gateway issues,”
such as “the validity and enforcement” of the arbitration provision. We
disagree with Brittania-U and affirm.
“Just as the arbitrability of the merits of a dispute depends upon whether
the parties agreed to arbitrate that dispute, so the question ‘who has the
primary power to decide arbitrability’ turns upon what the parties agreed
about that matter.” First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 943
(1995) (citations omitted). In Kubala v. Supreme Production Services, Inc., 830
F.3d 199 (5th Cir. 2016), we provided an in-depth explanation of who decides
what when a contract includes an arbitration provision. We reasoned that the
“[e]nforcement of an arbitration agreement involves two analytical steps. The
first is contract formation—whether the parties entered into any arbitration
agreement at all.” Id. at 201. The second typically “involves contract
interpretation to determine whether this claim is covered by the arbitration
agreement.” Id. “[W]here the arbitration agreement contains a delegation
clause giving the arbitrator the primary power to rule on the arbitrability[,]
. . . [a court] performs the first step . . . as it always does,” but instead of moving
directly to the second step, a court must first determine “whether the purported
delegation clause is in fact a delegation clause—that is, if it evinces an intent
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to have the arbitrator decide whether a given claim must be arbitrated.” Id.
at 201–02.
In making this analysis, “[w]e will not assume that the parties agreed to
arbitrate arbitrability ‘[u]nless the parties clearly and unmistakably provide
otherwise.’” Petrofac, Inc. v. DynMcDermott Petroleum Operations Co., 687
F.3d 671, 675 (5th Cir. 2012) (second alteration in original) (quoting AT & T
Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 649 (1986)). If a court
does conclude that the parties to an arbitration agreement clearly and
unmistakably delegated arbitrability, it “must refer the claim to arbitration[;]”
however, if a court concludes that the parties did not, it “must perform the
ordinary arbitrability analysis.” Kubala, 830 F.3d at 203. Accordingly, we
must decide if Defendants and Brittania-U clearly and unmistakably provided
for the arbitrators to decide arbitrability. See Petrofrac, 687 F.3d at 675.
Here, the arbitration provision’s adoption of the United Nations
Commission on International Trade Law (“UNCITRAL”) Arbitration Rules
clearly and unmistakably delegates arbitrability. The arbitration provision
specifically states that “[t]he arbitration shall be conducted in accordance with
[UNCITRAL] Arbitration Rules.”
In Petrofrac, 687 F.3d at 675, we concluded that incorporating rules from
the American Arbitration Association (“AAA”) clearly and unmistakably
expressed the parties’ intent to leave the question of arbitrability to an
arbitrator. The AAA Rules at issue in Petrofrac stated that “[t]he arbitrator
shall have the power to rule on his or her own jurisdiction, including any
objections with respect to the existence, scope or validity of the arbitration
agreement.” Id. (alteration in original). In coming to its holding, “[w]e agree[d]
with most of our sister circuits.” Id.
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Three of our sister circuits have held that the language from the
UNCITRAL Arbitration Rules also clearly and unmistakably delegates
arbitrability. See Chevron Corp. v. Ecuador, 795 F.3d 200, 207–08 (D.C. Cir.
2015), cert. denied, 136 S. Ct. 2410 (2016); Oracle Am., Inc. v. Myriad Group
A.G., 724 F.3d 1069, 1073 (9th Cir. 2013); Schneider v. Kingdom of Thailand,
688 F.3d 68, 73–74 (2d Cir. 2012). Although the UNCITRAL Rules do not
delegate arbitrability as obviously as the AAA Rules in that they do not
mention explicitly the arbitrator’s ability to determine the scope or validity of
the arbitration agreement, we nevertheless agree with the other circuits’
conclusions that incorporation of the UNCITRAL Rules clearly and
unmistakably delegates arbitrability by granting the arbitrators authority to
decide their own jurisdiction. See Oracle Am., 724 F.3d at 1073 (“By giving the
arbitral tribunal the authority to decide its own jurisdiction, . . . the . . .
UNCITRAL rules vest the arbitrator with the apparent authority to decide
questions of arbitrability.”). The district court therefore did not err in
dismissing this dispute so that it may be arbitrated.
Moshiri and Attia did not sign the confidentiality agreement and its
arbitration provision. But we nevertheless conclude that the delegation of
arbitrability applies to them as well. Under the Federal Arbitration Act,
“‘background principles’ of state contract law, when relevant ‘allow a contract
to be enforced by or against nonparties to the contract through assumption,
piercing the corporate veil, alter ego, incorporation by reference, third-party
beneficiary theories, waiver and estoppel.’” Crawford Prof’l Drugs, Inc. v. CVS
Caremark Corp., 748 F.3d 249, 257 (5th Cir. 2014) (quoting Arthur Andersen
LLP v. Carlisle, 556 U.S. 624, 631 (2009)); see also Hays v. HCA Holdings, Inc.,
838 F.3d 605, 609 & n.1 (5th Cir. 2016) (applying Texas law of direct benefits
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estoppel). Typically, a court would answer this question and determine these
circumstances, just as it would answer what is arbitrable, because “[w]ho is
actually bound by an arbitration agreement is a function of the intent of the
parties, as expressed in the terms of the agreement.” The Rice Co. (Suisse),
S.A. v. Precious Flowers Ltd., 523 F.3d 528, 537 (5th Cir. 2008) (quoting Bridas
S.A.P.I.C. v. Gov’t of Turkm., 345 F.3d 347, 355 (5th Cir. 2003)). But we must
first determine whether claims against Moshiri and Attia were also clearly and
unmistakably delegated to the arbitrator. See Kubala, 830 F.3d at 201–02.
In making this determination, we find Contec Corporation v. Remote
Solution, Co., 398 F.3d 205, 211 (2d Cir. 2005) instructive. In Contec, Contec
Corporation sued Remote Solution Co., Ltd. (“Remote Solution”) to compel an
indemnification dispute to arbitration. Id. at 207. Contec Corporation was a
nonsignatory to the indemnification agreement containing a clause delegating
arbitrability but nevertheless sought to enforce the delegation clause in its
dispute with Remote Solution as a successor in interest to a signatory. See id.
The Second Circuit held that the agreement’s delegation of arbitrability
applied to the dispute. Id. at 211. In coming to this conclusion, the court noted
that the “the party seeking to avoid arbitration was a signatory to the
arbitration agreement.” Id. The court reasoned that this was “an important
indicator of [the signatory’s] expectation and intent when binding itself to the
. . . [a]greement,” which justified binding the signatory, Remote Solution, to
the arbitration provision’s delegation clause. See id.
Like in Contec, the Defendants here—a signatory and two
nonsignatories—are attempting to enforce the arbitration provision against
signatory Brittania-U. Although the confidentiality agreement does not
explicitly state that it binds nonsignatories to the agreement, it does explicitly
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bind Brittania-U. Therefore, as in Contec, the language of the agreement
clearly and unmistakably delegates arbitrability, even with regard to
Brittania-U’s dispute with Moshiri and Attia.
Accordingly, the district court did not err in recognizing that the
confidentiality agreement’s arbitration provision delegated the question of
arbitrability to the arbitrators.
AFFIRMED.
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