359 F. Supp. 3d 1253
S.D. Fla.2019Background
- Plaintiff Ytech (a Florida LLC) owns Grand Beach Apartments in Miami Beach; property damaged by Hurricane Irma on Sept. 10, 2017 and claimed under an all-risk insurance Policy issued by Defendants (including non-U.S. underwriters).
- The Policy contains an Arbitration Clause stating that “all matters in difference…including its formation and validity” shall be referred to an Arbitration Tribunal, with the seat in New York and New York law to apply.
- Plaintiff sued in state court seeking declarations that the Arbitration Clause is ambiguous/conflicted with other Policy provisions (Service of Suit, Applicable Law, Suits Against Us) and moved to remand after Defendants removed under the Convention (9 U.S.C. §§201–208).
- Defendants moved to compel arbitration under the Convention and FAA, arguing issues of arbitrability (including validity) are delegated to the arbitrator.
- The district court held it had subject-matter jurisdiction under the Convention after a limited, removal-stage inquiry and found the Arbitration Clause contains a clear-and-unmistakable delegation clause assigning arbitrability (including validity) to the arbitrator.
- Court ordered arbitration, denied remand, dismissed the action with prejudice, and left other contract-law choice-of-law and validity disputes for the arbitrator.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Subject-matter jurisdiction under the Convention | Removal premature; court lacks jurisdiction until state court determines Arbitration Clause valid | Federal courts have original jurisdiction under the Convention; limited jurisdictional inquiry suffices | Court has jurisdiction under the Convention; limited inquiry met (agreement in writing, commercial relationship, seat in signatory, non-U.S. party) |
| Agreement-in-writing (Convention requirement) | Policy ambiguous under Florida law; no agreement in writing | Arbitration Clause is in the Policy, signed, and covers disputes including formation/validity | Agreement-in-writing requirement satisfied on the pleadings; no merits review required at removal stage |
| Who decides arbitrability (delegation clause) | Arbitration Clause ambiguous; court should decide threshold arbitrability | Clause expressly delegates “formation and validity” to arbitrator — clear and unmistakable | Delegation clause is valid and clear; arbitrator has exclusive authority to decide arbitrability/validity |
| Compel arbitration under the Convention/FAA | Motion premature; challenge to enforceability defeats arbitration | Convention and FAA favor enforcement; no applicable Convention defenses raised | Court compelled arbitration under §206; no affirmative Convention defenses shown; dismissal with prejudice ordered |
Key Cases Cited
- Indus. Risk Insurers v. M.A.N. Gutehoffnungshutte GmbH, 141 F.3d 1434 (11th Cir.) (Convention confers original federal jurisdiction)
- Bautista v. Star Cruises, 396 F.3d 1289 (11th Cir.) (scope of district court inquiry under Convention removal)
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (U.S.) (federal policy favoring arbitration, esp. international)
- Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63 (U.S.) (severability and enforcing delegation clauses absent a specific challenge)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S.) (distinguishes who decides arbitrability and standard for delegation)
- Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (U.S.) (doubts about arbitrability resolved in favor of arbitration)
- Czarina, L.L.C. v. W.F. Poe Syndicate, 358 F.3d 1286 (11th Cir.) (district court should assure jurisdiction under Convention before enforcing arbitration)
- Outokumpu Stainless USA, LLC v. Converteam SAS, 902 F.3d 1316 (11th Cir.) (two-step limited jurisdictional inquiry for Convention removals)
- Parnell v. CashCall, Inc., 804 F.3d 1142 (11th Cir.) (examples of delegation clause language committing arbitrability to arbitrator)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (U.S.) (arbitration provisions severable from underlying contract challenges)
- Lindo v. NCL (Bahamas), Ltd., 652 F.3d 1257 (11th Cir.) (Convention confines defenses to standard contract defenses applicable internationally)