BULENT COSGUN v. SEABOURN CRUISE LINE LIMTED INC.
CASE NO. 21-cv-61378-ALTMAN/Hunt
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA
March 28, 2023
Our Plaintiff, Bulent Cosgun—a crewmember aboard the M/V Seabourn Odyssey (a cruise ship)—agreed to arbitrate any dispute he might have with his employer, Seabourn Cruise Line Limited (“Seabourn“). But, after injuring himself aboard the Odyssey, Cosgun bypassed the parties’ agreement and sued Seabourn in state court. Seabourn removed the case to us and promptly moved to compel arbitration. Cosgun responded by urging us to remand his case to state court. After careful review, we conclude both that we have jurisdiction to compel arbitration and that we must compel the parties to arbitrate in the Southern District of Florida. We, therefore, GRANT Seabourn‘s Motion to Compel Arbitration [ECF No. 26] and DENY Cosgun‘s Motion to Remand [ECF No. 27].
THE FACTS
I. Background
Cosgun is a citizen of Turkey and a “seaman” by trade. Complaint [ECF No. 1-2] ¶¶ 1, 6. On December 3, 2018, Seabourn hired Cosgun to work “as a waiter on board the cruise ship M/V SEABOURN ODYSSEY.” Id. ¶ 6; see also Seafarer‘s Employment Contract [ECF No. 26-3] at 2. On September 16, 2019—while working on the Odyssey—Cosgun “slipped and fell on a flooded deck that was covered in water leaking from a broken water line.” Complaint ¶ 10. As a result of his fall, Cosgun sustained injuries that required everything from “steroid injections,” id. ¶ 15, to “back surgery,” id. ¶ 34. Because of these injuries, Cosgun says, he “can no longer work . . . in his chosen profession.” Id. ¶ 38.
II. The Arbitration Agreement
On December 27, 2017, Seabourn and the Norwegian Seaman‘s Union entered into a Collective Bargaining Agreement (the “Agreement“), which delineated “the terms and conditions of employment of seafarers serving onboard vessels owned, operated or managed by Seabourn Cruise Line Limited[.]” Agreement [ECF No. 26-4] at 2. The Agreement took effect on January 1, 2018. See ibid. In Cosgun‘s signed employment contract, he agreed to “abide by the terms and conditions set forth in the Collective Bargaining Agreement[.]”
If not resolved by the Unions, the Owners/Company, and/or the Seafarer as provided in the Dispute Resolution Procedure above, all grievances and any other dispute whatsoever, whether in contract, regulatory, statutory, common law, tort or otherwise relating to or in any way connected with the Seafarer‘s service for the Owners/Company under this Agreement, including but not limited to claims for personal injury/disability or death, no matter how described, pleaded or styled, and whether asserted against the Owners/Company, Master, employer, Vessel owner, Vessel or Vessel operator shall be referred to and resolved exclusively by mandatory binding arbitration pursuant to the United Nations Conventions [sic] on the Recognition and Enforcement of Foreign Arbitral Awards (New York 1958), 21 U.S.T. 2517, 330 U.N.T.S. (“The Convention“), except as provided by any government mandated contract. In addition, Seafarer agrees to arbitrate any and all disputes regarding the existence, validity, termination, or enforceability of any term or provision in this Agreement.
Agreement at Art. 35(1). In our case, the “Seafarer” is Cosgun—the “person who is employed or engaged or works in any capacity onboard a ship.” Id. at Art. 1(C)(1). And Seabourn is the “Owner[]/Company[.]” Id. at Art. 35(2). The Agreement provides that “arbitration shall take place in such place as is agreed upon by the Unions, Owners/Company and Seafarer.” Id. at Art. 35(3). But, “[i]n the event that all three parties are unable to agree upon an alternative location, the agreement of any two of the three shall prevail.” Ibid.
III. Our Case
On June 14, 2021, Cosgun sued Seabourn in the 17th Judicial Circuit in and for Broward County, Florida. See generally Complaint; see also Notice of Removal [ECF No. 1] ¶ 7. In his state-court complaint, Cosgun asserted five claims: (1) Jones Act negligence (Count I); (2) unseaworthiness (Count II); (3) failure to provide maintenance and cure (Count III); (4) failure to provide prompt, proper, and adequate medical care (Count IV); and (5) disability benefits under the Agreement (Count V). See Complaint ¶¶ 39-65. Seabourn—citing
After reviewing the parties’ briefs, we found that both sides had failed to “address the critical issue” in the case. March 24, 2022 Hearing Transcript (“Hr‘g Tr.“) [ECF No. 23] at 4:2-3. So, we brought the parties in for a hearing, see Paperless Minute Entry [ECF No. 21], where we explained, in detail, what we thought was really at issue in the case—namely, whether (as a prerequisite to our jurisdiction to compel arbitration) the parties’ agreement needed to specify that arbitration would take place in a signatory nation.1 See Hr‘g Tr. at 10:13-15 (“[T]hat suggests to us that there really is no requirement that the arbitration agreement include the forum of arbitration as a jurisdictional prerequisite.“). And we told the parties that we were going to “deny both motions without prejudice,” id. at 17:6-7; give them a chance to “research these issues,” id. at 4:18; and allow them to brief the “elephant in the room,” id. at 17:7. Once the parties refiled their briefs addressing this key issue
So, here we are (again)—adjudicating Seabourn‘s Renewed Motion to Compel Arbitration (the “Motion to Compel“) [ECF No. 26] and Cosgun‘s Renewed Motion to Remand (the “Motion to Remand“) [ECF No. 27].2 Conspicuously absent from these motions, however, is any analysis of the issue we raised at the hearing. See generally Motion to Compel; Motion to Remand. The parties, in other words, ignored just about everything we said at the hearing and refused to brief the sole issue we identified as important when we denied their previous motions.3 It‘s typically not our role to make the parties’ arguments for them. See United States v. Campbell, 26 F.4th 860, 872 (11th Cir. 2022) (“It is inappropriate for a court to raise an issue sua sponte in most situations.“). But, when the parties manage to raise the right issue—and then fail to make the correct arguments—we‘re not obliged to decide the question with blinders on. See United States v. Undetermined Quantities of All Articles of Finished & In-Process Foods, 936 F.3d 1341, 1350 (11th Cir. 2019) (“[T]he court is not limited to choosing one side‘s position or the other‘s. The court‘s role is to get it right, not to choose which side‘s argument is better and adopt it lock, stock, and barrel.“); see also Campbell, 26 F.4th at 872 (“However, the party presentation principle is supple, not ironclad, and there are no doubt circumstances in which a modest initiating role for a court is appropriate.” (cleaned up)). And that‘s particularly true in the circumstances we have here—where, after we called the parties in for a hearing, at which we laid out for them (in painstaking detail) the issues we wanted them to address, the parties elected to ignore our directions and to proceed (in essence) with the same misplaced arguments they‘d raised before. We‘ll thus adjudicate both motions here—looking, without much help from the parties, “to get it right.” Undetermined Quantities, 936 F.3d at 1350.
THE LAW
In 1958, the United Nations Economic and Social Council adopted the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 3 (the “New York Convention” or the “Convention“). “The New York Convention is a multilateral treaty that addresses international arbitration.” GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC, 140 S. Ct. 1637, 1644 (2020). “The Supreme Court has explained that ‘the principal purpose’ behind the adoption of the Convention ‘was to encourage the recognition and enforcement of commercial
Article II of the Convention “addresses the enforcement of arbitration agreements” and is divided into three parts. Article II(1) mandates that “[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.” Article II(2) defines “[t]he term ‘agreement in writing‘” to “include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams.” Finally, Article II(3) requires courts to compel arbitration absent an affirmative defense: “The court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.”
“In 1970, the United States acceded to the New York Convention, and Congress enacted implementing legislation in Chapter 2 of the [Federal Arbitration Act (the “FAA“)].” GE Energy, 140 S. Ct. at 1644; see also
The Convention, on its own, “creates obligations only for State Parties and ‘does not by itself give rise to domestically enforceable federal law’ absent implementing legislation passed by Congress.” Bond v. United States, 572 U.S. 844, 850-51 (2014) (quoting Medellín v. Texas, 552 U.S. 491, 505 (2008)); see also Medellín, 552 U.S. at 521-22 (citing the New York Convention as an example of a “non-self-executing treat[y]“). Now codified in a federal statute (i.e., the FAA), the Convention is “enforce[able] in United States courts in accordance with [the provisions of Chapter 2].”
The FAA grants federal district courts “original jurisdiction” over “[a]n action or proceeding falling under the Convention,” which “shall be deemed to arise under the laws and treaties of the United States.”
And the FAA tells us which kinds of cases “fall under the Convention”
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. For the purpose of this section a corporation is a citizen of the United States if it is incorporated or has its principal place of business in the United States.
Congress enacted the FAA in 1925 to “reverse the longstanding judicial hostility to arbitration agreements that had existed at English common law and had been adopted by American courts, and to place arbitration agreements upon the same footing as other contracts.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991) (cleaned up). The original version of the FAA from 1925—which today appears in Chapter 1 of the statute—“applies residually to supplement the provisions of [Chapter 2 of the statute.]” Bautista v. Star Cruises, 396 F.3d 1289, 1297 (11th Cir. 2005).5 That said, “Congress gave the treaty-implementing statute[] primacy in [its] field[ ].” Ibid.; see also
is not in conflict with this chapter or the Convention as ratified by the United States.“); Internaves de Mexico s.a. de C.V. v. Andromeda Steamship Corp., 898 F.3d 1087, 1092-93 (11th Cir. 2018) (“Chapter 2 also applies Chapter 1 to all actions arising under Chapter 2 to the extent that the two Chapters do not conflict.“).
ANALYSIS
This case requires us to answer two questions: First, do we have jurisdiction over the parties’ dispute? Second, if we do, must we compel the parties to arbitrate? At first glance, the answers to both questions seem simple. After all, as we‘ve highlighted, the Convention and its implementing statute include only three jurisdictional prerequisites: the agreement must be in writing; it must govern a commercial dispute; and it must include at least one party who is not a citizen of the United States. Noticeably absent from this list is the fourth element Cosgun has insisted on—viz., that the arbitration agreement specify that arbitration will be held in the territory of a signatory nation. Normally, that would be the end of that.
We‘re thus faced with a bit of a conundrum: Do we follow the dicta of several published Eleventh Circuit decisions—and, as we‘re about to show, it is plainly dicta—even though that dicta added a jurisdictional element that doesn‘t appear in the Convention (or the FAA) at all? Or do we disregard that dicta—and the First Circuit case it relies on—in favor of the unambiguous language of the Convention and the FAA themselves? As we‘ll see, in other circumstances, our Circuit has been clear that we should opt for the latter course. We therefore conclude that neither the Convention nor the FAA requires, as a jurisdictional prerequisite, that an arbitration clause stipulate that the arbitration will be conducted in the territory of a signatory nation. Having made that determination, we have little trouble finding both that we have jurisdiction over this dispute and that we must order the parties to arbitration.
I. Jurisdiction
“In deciding a motion to compel arbitration under the Convention Act, a court conducts a very limited inquiry.” Bautista, 396 F.3d at 1294 (cleaned up). To determine whether we have jurisdiction to compel the parties to arbitrate, we look to Chapter 2 of the FAA—the Convention‘s implementing statute. Chapter 2 confers on federal district courts “original jurisdiction” over any “action or proceeding falling under the Convention.”
The text of Chapter 2 of the FAA thus includes two jurisdictional prerequisites to the enforcement of an arbitration agreement, and there‘s no dispute that our arbitration agreement satisfies both. See generally Motion to Compel Response (not disputing that the parties’ arbitration
agreement arises out of a commercial legal relationship); Motion to Remand (same);6 see also Complaint ¶¶ 2, 6 (asserting that
The Convention also includes a third jurisdictional prerequisite—i.e., that the arbitration agreement must be “in writing.” See Art. II(1) (“Each 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.“); see also Czarina, L.L.C. v. W.F. Poe Syndicate, 358 F.3d 1286, 1291 (11th Cir. 2004) (“Article II of the Convention imposes a prerequisite on a party asking the court to compel arbitration: it requires that the party bring the court the written agreement.“). As we‘ll soon see, this third jurisdictional element also found its way into the FAA. See infra pp. 15-16. And there‘s no dispute that our parties’ arbitration agreement is in writing. See generally Motion to Remand (not contesting this point).7
Taken together, then, the Convention and the FAA lay out three jurisdictional elements, and the parties’ agreement appears to satisfy all three—thus placing our agreement squarely within the Convention‘s purview. And, since our arbitration agreement is governed by the Convention, Seabourn properly removed this action to federal court. See
Despite how straightforward the analysis has seemed thus far, Cosgun insists that we lack jurisdiction to compel arbitration in this case. See Motion to Remand at 19 (“[T]he Court lacks subject matter jurisdiction[.]“). In Cosgun‘s view, because the arbitration agreement doesn‘t specify where the arbitration will take place, see Motion to Remand ¶ 7 (“The arbitration clause upon which SEABOURN relies does not require arbitration in any specific location whatsoever[.]“)—i.e., because it fails to specify that the arbitration will be conducted in the territory of a Convention signatory—the agreement doesn‘t trigger our original jurisdiction, see id. ¶ 6 (“The Convention allows enforcement of only arbitration clauses which require arbitration in the territory of a signatory to that treaty itself.” (emphasis in original)).8 And (Cosgun says), with “no enforceable arbitration agreement,” we have no choice but
In support of his argument, Cosgun cites Outokumpu Stainless USA, LLC v. Converteam SAS, where the Eleventh Circuit outlined the following four-factor test for determining whether an arbitration agreement is enforceable:
[To] determine whether the notice of removal describes an arbitration agreement that may “fall[] under the Convention,” the district court . . . 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.
902 F.3d 1316, 1324 (11th Cir. 2018) (emphasis added) (citing Bautista, 396 F.3d at 1294 n.7). And Cosgun‘s right that our agreement never says where the arbitration will occur. It says only—as Cosgun notes—that the parties will arbitrate “in such place as is agreed upon by the Unions, Owners/Company and Seafarer.” Agreement at Art. 35(3).
It‘s a clever argument—and not without appeal. In Outokumpu, after all, the Eleventh Circuit did say that district courts lack jurisdiction where, as here, the arbitration clause doesn‘t specify that the arbitration will occur in the territory of a Convention signatory. 902 F.3d at 1324 (requiring, as a jurisdictional prerequisite, “that the arbitration agreement provide[] for arbitration in the territory of a signatory of the Convention“). Two problems with this, though. First, this stray remark from Outokumpu is just dicta. Now, that wouldn‘t be too big a deal in normal circumstances: We generally try to follow the Eleventh Circuit‘s dicta when we can. But—and this is the second problem—this purported jurisdictional element (the one we find only in Circuit dicta) appears nowhere in either the Convention or the FAA. We‘ll take each of these problems in turn.
A. The Dicta
To locate the origins of Outokumpu‘s second jurisdictional element—the one that purports to require “that the agreement provide[] for arbitration in the territory of a signatory of the Convention,” ibid.—we‘ll start with Outokumpu and work all the way back, through several other Eleventh Circuit decisions, to the element‘s supposed source: a mistaken opinion from the First Circuit. In Outokumpu, “[t]he parties concede[d] that the second and third Bautista factors [were] met,” so the court “only examine[d] the first and fourth factors.” Ibid. Since the parties in Outokumpu stipulated that the second factor—the one we‘re focusing on here—had been satisfied, the Eleventh Circuit never had occasion to analyze it. Indeed, the court said nothing more about it. At least as far as Outokumpu is concerned, then, this second element is pure dicta. See United States v. Gillis, 938 F.3d 1181, 1198 (11th Cir. 2019) (“[D]icta is ‘a statement that neither constitutes the holding of a case, nor arises from a part of the
opinion that is necessary to the holding of the case.‘” (quoting Black v. United States, 373 F.3d 1140, 1144 (11th Cir. 2004)))). And, as the Eleventh Circuit has time and again reminded us, “[t]he law cannot be established by dicta.” Santamorena v. Ga. Mil. Coll., 147 F.3d 1337, 1342 n.13 (11th Cir. 1998) (quoting Hamilton v. Cannon, 80 F.3d 1525, 1530 (11th Cir. 1996)); see also In re United States, 60 F.3d 729, 731 (11th Cir. 1995) (“Statements of dicta are not part of the law of the case.“); Great Lakes Dredge & Dock Co. v. Tanker Robert Watt Miller, 957 F.2d 1575, 1578 (11th Cir. 1992) (dicta is “neither the law of the case nor binding precedent“).
So, where did this dicta come from? Well, Outokumpu‘s supposed second element first appeared in the Eleventh Circuit in footnote 7 of Bautista:
These four [jurisdictional prerequisites] require that (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.
396 F.3d at 1294 n.7 (emphasis added). Again, however, the Bautista Court didn‘t have to grapple with our second element because it was “beyond dispute that the second and fourth conditions [were] fulfilled in this case.” Ibid. As with Outokumpu, therefore, this aspect of Bautista is dicta.9
But where did Bautista get this four-factor test from? Well, our journey takes us next to the Third Circuit—specifically, to footnote 7 of Standard Bent Glass Corp. v. Glassrobots Oy, in which that court had this to say about Convention jurisdiction: “Where a dispute arises from an international commercial agreement, a court must address four factors to determine whether the arbitration agreement falls under [the Convention].” 333 F.3d 440, 449 (3d Cir. 2003) (emphasis added). But, in a now-familiar refrain, the Third Circuit likewise didn‘t address the second prerequisite because (it said) only the first—i.e., whether there was “an agreement in writing to arbitrate“—was “at issue” in that case. Ibid. Indeed, as we‘ve indicated, the Third Circuit relegated the other three (uncontested) elements to a footnote, noting that “[q]uestions two through four are not pertinent here.” Id. at 449 n.13.10 Once again,
B. This Second Element Doesn‘t Appear in the Convention or the FAA
As we‘ve suggested, the Third Circuit got the four-factor test from a First Circuit case: Ledee v. Ceramiche Ragno, 684 F.2d 184, 186-87 (1st Cir. 1982). According to Ledee, “a court presented with a request to refer a dispute to arbitration pursuant to Chapter Two of the Federal Arbitration Act . . . . must resolve four preliminary questions.” Id. at 186 (emphasis added). Those four questions, Ledee said, are:
- Is there an agreement in writing to arbitrate the subject of the dispute? Convention, Articles II(1), II(2).
- Does the agreement provide for arbitration in the territory of a signatory of the Convention? Convention, Articles I(1), I(3);
9 U.S.C. s 206 ; Declaration of the United States upon accession, reprinted in 9 U.S.C.A. at 154 n.29 (1982 Supp.).
- Does the agreement arise out of a legal relationship, whether contractual or not, which is considered as commercial? Convention, Article I(3);
9 U.S.C. s 202 . - Is a party to the agreement not an American citizen, or does the commercial relationship have some reasonable relation with one or more foreign states?
9 U.S.C. s 202 .
Id. at 186-87 (emphasis added).
After the second question—as we can see—the Ledee Court cited four things: (1) Article I(1) of the Convention; (2) Article I(3) of the Convention; (3) the FAA (specifically
The first, third, and fourth questions the First Circuit asked in Ledee—which, by way of the Third Circuit‘s decision in Standard Bent, ultimately passed through Bautista and, finally, Outokumpu—are easy: All plainly appear in the text of either the Convention or the FAA. As we‘ve explained, the first jurisdictional element—that the agreement must be “in writing“—finds its roots in both documents. Article II(1) of the Convention provides that “[e]ach Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration[.]” (emphasis added). And, while Chapter 2 of the FAA doesn‘t require an agreement in writing, Chapter 1 does. Specifically, for an arbitration agreement to be “valid, irrevocable, and enforceable,” Chapter 1 requires “a written provision” or “an agreement in writing to
1 applies to actions brought under Chapter 2 “to the extent that [C]hapter [1] is not in conflict with [Chapter 2] or the Convention as ratified by the United States.”
The third Ledee factor—that the agreement must be “commercial“—appears unmistakably in the text of Chapter 2. See
Finally, the fourth Ledee factor—that the agreement include at least one foreign party—comes unambiguously from Chapter 2‘s jurisdictional grant. See ibid. (“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[.]“).
But what about the second Ledee factor—the one that requires the agreement to “provide for arbitration in the territory of a signatory of the Convention,” Ledee, 684 F.2d at 186? After laying out this second factor, remember, the First Circuit cited Articles I(1) and I(3) of the Convention, Section 206 of the FAA, and the First Declaration the United States issued when it acceded to the Convention. Unfortunately, these four sources provide no support for the First Circuit‘s second requirement.
Let‘s review the text of each source in turn. The first—Article I(1) of the Convention—provides that “[t]his Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such
awards are sought[.]” The second—Article I(3) of the Convention—allows a signatory state “on the basis of reciprocity [to] declare that it will apply the Convention to the recognition and enforcement of awards made only in the territory of another Contracting State.” The third—
As we‘ve said, from these four sources, the First Circuit determined that a district court only has jurisdiction to compel arbitration under an agreement that “provide[s] for arbitration in the territory of a signatory of the Convention.” Ledee, 684 F.2d at 186. For four reasons, that‘s just not the case.
- Ledee‘s sources are relevant only to the confirmation of arbitral awards, not the enforcement of arbitration agreements
Ledee‘s first, second, and fourth sources all deal with the confirmation of
So, what‘s the difference between the confirmation of an arbitral award and the enforcement of an arbitration agreement? Well, we needn‘t guess because the Convention tells us. It defines an
arbitration agreement as “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 at Art. II(1). An arbitration agreement, in other words, is a kind of contract—executed by the parties—through which the parties select arbitration as their preferred dispute-resolution mechanism. An arbitral award, by contrast, is “made by arbitrators” or by “permanent arbitral bodies” after the arbitration has been completed. See New York Convention at Art. I(2). Agreements, then, come before the arbitration and tell us where the parties want their future disputes adjudicated, whereas awards come after arbitration and tell us what the arbitrators have decided. And what‘s especially important for our purposes is that each of these instruments—awards and agreements—comes with its own unique set of enforcement mechanisms.
So, to go back to Ledee‘s four sources, let‘s start with Article I(1), which (as we‘re about to see) is completely irrelevant to our case. By its plain text, after all, that article applies only to the “recognition and enforcement of arbitral awards“—not agreements.12 And the same is also true of both Article I(3) and the First Declaration. See Art. I(3) (allowing signatory states to declare that they will “apply the Convention to the recognition and enforcement of awards made only in the territory of another Contracting State” (emphasis added)); First Declaration (declaring that the United States will apply the Convention to the “recognition and enforcement of only those awards made in the territory of another Contracting State” (emphasis added)). The words in all three of these sources—Article I(1), Article I(3), and the First Declaration—are thus clear and unambiguous: Each governs only our obligations with respect to the enforcement of arbitral awards—not agreements. See SCALIA & GARNER
at 69 (“The ordinary-meaning rule is the most fundamental semantic rule of interpretation.“); see id. at 94 (“Nothing is to be added to what the text states or reasonably implies.“).
And, in fact, our Circuit has been clear that actions to compel arbitration and actions to confirm arbitral awards are “two separate stages of enforcement.” Lindo v. NCL (Bahamas), Ltd., 652 F.3d 1257, 1263 (11th Cir. 2011). The Convention‘s implementing statute, the Eleventh Circuit has said, “provides two causes of action in
Our Circuit‘s analysis in Lindo—which interpreted the very same language at issue here to mean that Article V of the Convention applies only to the enforcement of arbitral awards—is particularly instructive today. See 652 F.3d at 1280-81. Looking to the plain text of the Convention (as well as some dicta from the Supreme Court), Lindo held that “Article V applies only at the arbitral award-enforcement stage and not at the arbitration-enforcement stage at issue[.]” Id. at 1280. The Lindo panel noted that Article V‘s public-policy defense “by its own terms applies when the ‘[r]ecognition and enforcement of an arbitral award’ is sought[.]” Id. at 1268 (cleaned up); see also id. at 1280 (“Article V expressly provides, ‘Recognition and enforcement of an arbitral award may also be refused if the competent
authority in the country where recognition and enforcement is sought finds that . . . [t]he recognition or enforcement of the award would be contrary to the public policy of that country.’ Yet, Article V has no application in the interlocutory procedural posture of this case, where [the defendant] seeks to enforce arbitration at the outset of the dispute.” (emphases in original)).
Just so with the provisions we‘re addressing here—which, recall, are Article I(1), Article I(3), and the First Declaration. By their very terms, all three apply to the “recognition and enforcement of only those awards made in the territory of another Contracting State.” First Declaration (emphasis added); see also Art. I(1) (“This Convention shall apply to the recognition and enforcement of arbitral awards[.]” (emphasis added)); Article I(3) (allowing signatory states to declare that they will “apply the Convention to the recognition and enforcement of awards made only in the territory of another Contracting State” (emphasis added)). Because the enforcement of an award is “a separate action under federal law,” Lindo, 652 F.3d at 1279 (emphasis in original), the requirement that the award be entered in a fellow signatory state is thus relevant only “at the award-enforcement stage, not at the arbitration-enforcement stage,” id. at 1281.
- The requirement that an award be enforced only if it was entered in a signatory nation is not a jurisdictional prerequisite—even at the award-enforcement stage
Ledee‘s second requirement isn‘t jurisdictional—even at the award-enforcement stage. If anything, it‘s simply an affirmative defense to the court‘s confirmation of an arbitral award, which can be asserted at the award-enforcement stage under
So, when does a federal court have jurisdiction over an arbitral award under Chapter 2? Well, we‘ve already
foreign party. That‘s it.13 Only Seabourn‘s failure to satisfy one of these two elements could deprive us of jurisdiction to enforce an arbitral award.
If we have jurisdiction, then we must “confirm the award unless [we] find[] one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention.”
3. The First Declaration isn‘t binding in federal court
Even if the First Declaration were somehow relevant to the enforcement of arbitration agreements (it isn‘t)—and even if it were jurisdictional (it‘s not)—it still wouldn‘t help Cosgun because it isn‘t binding in federal court. Unlike the Second Declaration, the First never made it into the text of the FAA. As we‘ve said, the Supreme Court has made clear that the Convention is not self-executing. See Medellin, 552 U.S. at 505 (citing the New York Convention as an example of a “non-self-executing treat[y]“). The Convention thus “do[es] not by [itself] function as binding federal law.” Id. at 504. What is “binding federal law enforceable in United States courts,” ibid., is the Convention‘s implementing statute—Chapter 2 of the FAA, see id. at 504 (“[W]hile treaties may comprise international commitments . . . they are not domestic law unless Congress has either enacted implementing statutes or the treaty itself conveys an intention that it be ‘self-executing’ and is ratified on these terms.“).
And, as we‘ve already noted, our implementing statute is crystal clear about when a federal court has jurisdiction to enforce an arbitration agreement: The district courts “have original jurisdiction,” the FAA says, over “[a]n action or proceeding falling under the Convention.”
Which brings us to the crux of this whole issue: While Congress unambiguously included the Second Declaration in the text of the FAA, see
4. 9 U.S.C. § 206 doesn‘t require an arbitration agreement to specify where the arbitration will take place
And that brings us all the way back to the First Circuit‘s decision in Ledee—which cited
Section 206 “empowers courts to compel arbitration[.]” GE Energy, 140 S. Ct. at 1644. It provides that “[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.”
Recall that “Chapter 2 [of the FAA] also states that ‘Chapter 1 applies to actions and proceedings brought under this chapter to the extent that [Chapter 1] is not in conflict with this chapter or the Convention.‘” GE Energy, 140 S. Ct. at 1644 (quoting
There‘s plainly no conflict between
Nor does
We thus agree with the Seventh Circuit that
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As we‘ve seen, then, neither the Convention nor the FAA requires an arbitration agreement, as a prerequisite to our jurisdiction, to specify the arbitral forum. Because Seabourn has satisfied the three jurisdictional elements set forth in both the Convention and its implementing statute, we have jurisdiction to compel arbitration—and, indeed, must do so unless Cosgun has successfully pled an affirmative defense.
II. Affirmative Defenses
At the initial arbitration-enforcement stage, Article II of the Convention requires us to refer the parties to arbitration when they‘ve made an agreement that falls under the Convention,
Relying on the Supreme Court‘s recent decision in GE Energy, Cosgun correctly contends that “United States law determines whether purported arbitration agreements are enforceable under the Convention in U.S. courts.” Motion to Remand at 12. From this premise, however, Cosgun advances two arguments—both of which push far beyond the “limited scope of the Convention‘s null and void clause.” First, Cosgun says that the Agreement is “null, void, and unenforceable” under “the law of these United States,” id. at 13, because “the FAA expressly excludes arbitration clauses in seamen‘s employment contracts from its reach,” id. ¶ 9. Second, he maintains that the Agreement is “null, void, and unenforceable” under “the law of these United States,” id. at 13, because “federal statutory law” and “federal public policy” somehow void the Agreement, id. at 18. We address—and reject—each argument in turn.
A. The Seamen‘s Exemption
First, Cosgun insists that Chapter 1 of the FAA exempts from the Convention‘s reach employment contracts with seamen. See id. at 12 (“U.S. domestic law voids arbitration clauses in seamen‘s employment contracts.“). But the Eleventh Circuit has expressly rejected this argument, see Bautista, 396 F.3d at 1296—and nothing in GE Energy undermined that decision.
In Bautista, the Eleventh Circuit held that “[t]he statutory framework of [the FAA] and the language and context of the Convention Act [i.e., Chapter 2 of the FAA] preclude the application of [Chapter 1 of] the FAA seamen‘s exemption” to arbitration agreements governed by Chapter 2. Ibid. This “seamen‘s exemption” is contained in Chapter 1 of the FAA—which, in defining commerce, provides that “nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”
Still resisting, however, Cosgun maintains that the Supreme Court abrogated Bautista in GE Energy. The question in GE Energy was whether certain state-law doctrines—applicable under Chapter 1 of the FAA—conflicted with the Convention. See GE Energy, 140 S. Ct. at 1644–45 (“We must determine whether the equitable estoppel doctrines permitted under Chapter 1 of the FAA ‘conflict with . . . the Convention.‘” (cleaned up)). “Applying familiar tools of treaty interpretation,” the Court concluded that “nothing in the text of the Convention ‘conflict[s] with’ the application of domestic equitable estoppel doctrines[.]” Id. at 1645. Since the Convention is “simply silent” as to “whether nonsignatories may enforce arbitration agreements under domestic doctrines such as equitable estoppel” and because “Article II(3) contains no exclusionary language“—the Court found the Convention‘s silence “dispositive.” Ibid.
For two reasons, we don‘t think GE Energy helps Cosgun here. One, the relevant provision of Chapter 2 isn‘t (as the Convention in GE Energy was on the doctrine of equitable estoppel) silent on the application of the seamen‘s exemption. Chapter 2, remember, says that “[a]n 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.”
A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract or as otherwise provided in chapter 4.
As this summary of the statutory scheme should make plain, “section 202 [of Chapter 2] does not incorporate section 2 of [Chapter 1] as an exhaustive description of the Convention Act‘s scope. Rather, section 202 [of Chapter 2] uses section 2 [of Chapter 1] as an illustration of the types of agreements covered by the Convention Act.” Bautista, 396 F.3d at 1297 (emphases added). In other words, as the Bautista Court correctly recognized:
[Chapter 2‘s] reference to section 2 [of Chapter 1] does not indicate an intent to limit the definition of “commercial” to those described in section 2 of [Chapter 1] as modified by section 1 [of Chapter 1]; the expansive term “including” would be superfluous if [Chapter 1 of] the FAA provided the full and complete definition. “Including” demonstrates that, at the very least, Congress meant for “commercial” legal relationships to consist of contracts evidencing a commercial transaction, as listed in section 2 [of Chapter 1], as well as similar agreements. See Federal Land Bank v. Bismarck Lumber Co., 314 U.S. 95, 100, 62 S.Ct. 1, 4, 86 L.Ed. 65 (1941) (“the term ‘including’ is not one of all-embracing definition, but connotes simply an illustrative
application of the general principle.“); Argosy Ltd. v. Hennigan, 404 F.2d 14, 20 (5th Cir. 1968) (“The word ‘includes’ is usually a term of enlargement, and not of limitation. . . It therefore conveys the conclusion that there are other items includable, though not specifically enumerated by the statutes.“). We therefore understand the reference to section 2 of [Chapter 1 of] the FAA to be generally illustrative of the commercial legal relationships covered by section 202 [in Chapter 2]. The illustration rendered by section 2 [of Chapter 1] includes employment agreements and makes no mention of the section 1 [of Chapter 1] seamen exemption. Cf. Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 113–14 (2001) (construing section 2 and rejecting the proposition that an employment contract is not a “contract evidencing a transaction involving interstate commerce“). Accordingly, the terms of the Convention Act do not provide that we read section 1 [of Chapter 1] into section 202 [i.e., Chapter 2].
We agree with the Eleventh Circuit‘s reasoning and find nothing in GE Energy to contradict it. In Chapter 2, after all, Congress elected to incorporate the limited definition of Chapter 1 as only a part of the full scope of the commercial relationships covered by Chapter 2. That‘s what Chapter 2‘s purposeful use of the word “including” necessarily means. And, since Congress passed Chapter 2 decades after it had promulgated Chapter 1, we can presume that, in expanding the scope of Chapter 2, it knew about the seamen‘s exemption and chose not to incorporate it. Since Congress thus wasn‘t, strictly speaking, silent (as the Convention was in GE Energy) on whether it wanted to hoist into Chapter 2 the same limited definition of commerce it had included in Chapter 1, we reject Cosgun‘s attempt to deploy the seamen‘s exemption as an affirmative defense in this case.
Two, in GE Energy, the Supreme Court was clear that the Convention “requires courts to rely on domestic law to fill the gaps” in the Convention—and that, because the Convention operates against the backdrop of domestic law, it “does not set out a comprehensive regime that displaces domestic law.” GE Energy, 140 S. Ct. at 1645. In other words, when the Convention is, as it often will be, silent on a specific point of law—there, on the applicability of the doctrine of equitable estoppel—domestic law must “fill the gaps.” Here, however, we aren‘t faced with a potential conflict between an age-old domestic doctrine and the broad strokes of an international treaty. Here, instead, we have a domestic law, passed by Congress, that appears purposefully to exclude an exemption Congress had included in an earlier domestic law. In these circumstances, GE Energy‘s justifiable concern that courts would use the skeletal framework of an international convention to supersede well-established principles of U.S. domestic law is neither here nor there.15
Second, Cosgun says that his arbitration agreement is “void and otherwise unenforceable under the Jones Act, the FAA, FELA, the Limitation of Liability Act, and federal public policy as expressed in the general maritime law of the United States.” Motion to Remand at 18. In Cosgun‘s view, the Convention “fails to define” the phrase “null and void“—which is a problem (Cosgun insists) because, in GE Energy, the Supreme Court held that “the Convention requires Courts to rely on domestic law to fill the gaps[.]” Id. at 13 (quoting GE Energy, 140 S. Ct. at 1645). Once again, we‘re unpersuaded.16
The Convention (it‘s true) doesn‘t define what it means for an arbitration agreement to be “null and void.” But the Supreme Court has told us that “the Convention requires courts to rely on domestic law to fill the gaps[.]” GE Energy, 140 S. Ct. at 1645. And that‘s exactly what Chapter 1 of the FAA—a domestic law that, under
That, of course, is precisely what the Eleventh Circuit did in Bautista and Escobar. “The null-and-void clause,” that court said, “encompasses only those defenses grounded in standard breach-of-contract defenses—such as fraud, mistake, duress, and waiver—that can be applied neutrally before international tribunals.” Escobar, 805 F.3d at 1286 (emphasis added) (citing Bautista, 396 F.3d at 1302). Since Cosgun doesn‘t even try to show that any of these breach-of-contract defenses save him here, we won‘t follow him down the rabbit-hole of inapplicable federal statutory schemes he‘s cited.
Finally, Cosgun‘s argument that the Agreement contravenes “public policy” because “seamen are emphatically the wards of the court,” Motion to Remand at 16 (cleaned up), is inappropriate at this stage of the proceedings. A party to an arbitration agreement can only raise a public-policy defense at the award-confirmation stage. See Lindo, 652 F.3d at 1280–82 (“Article V applies only at the arbitral award-enforcement stage and not at the arbitration-enforcement stage at issue
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Cosgun has thus failed to plead any viable affirmative defenses.
CONCLUSION
Because we have jurisdiction to compel arbitration in this case—and since Cosgun has failed to plead a viable affirmative defense—we now GRANT the Defendant‘s Motion to Compel Arbitration and DENY Cosgun‘s Motion to Remand. And, given that the parties “agreed to arbitrate, but failed to provide for a forum,” we “must compel arbitration, but only within [our] own district pursuant to the provisions found in Chapter 1.” Internaves, 898 F.3d at 1092 (cleaned up) (citing
After careful review, we hereby ORDER AND ADJUDGE as follows:
- The Defendant‘s Motion to Compel Arbitration [ECF No. 26] is GRANTED.
- The Plaintiff‘s Motion to Remand [ECF No. 27] is DENIED.
- The parties shall submit their dispute to arbitration in the Southern District of Florida.
- This case is STAYED pending the completion of arbitration.
- This case shall remain CLOSED. All pending deadlines are TERMINATED, and any pending motions are DENIED AS MOOT.
- Every ninety days from the date of this Order, the parties shall jointly file a report on the status of their arbitration proceedings.
- Within fifteen days of the arbitration‘s conclusion, the parties shall jointly file a notice briefly describing the outcome of that arbitration.
DONE AND ORDERED in the Southern District of Florida on March 28, 2023.
ROY K. ALTMAN
UNITED STATES DISTRICT JUDGE
cc: counsel of record
Notes
The Eleventh Circuit cited the Seventh Circuit‘s analysis approvingly in Internaves:
However, if the parties agreed to arbitrate, but failed to “provide[] for” a forum, then the court must compel arbitration, but only within its own district pursuant to the provisions found in Chapter 1.
9 U.S.C. § 4 (“The hearing and proceedings, under [an arbitration] agreement, shall be within the district in which the petition for an order directing such arbitration is filed.“); see also Jain v. de Mere, 51 F.3d 686, 690 (7th Cir. 1995) (“[9 U.S.C.] § 4 not only permits but requires a court to compel arbitration in its own district when no other forum is specified.“).