Collection Efforts Case Was Not Related To International Arbitration Agreement Or Award, And So Belonged In State Court.
The District Court for the Western District of Washington denied plaintiff Cerner's motion to remand to state court an action that defendants had removed to federal court on the basis that it related to an international arbitration award. 9 U.S.C. section 205 authorizes removal from state to federal court of an action that "relates to an arbitration agreement or award falling under" the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958. And in fact plaintiff Cerner had obtained an international arbitration award against iCapital, LLC and Dhaheri. Problem was that those two defendants were not the defendants in the state court action brought to enforce the award and alleging alter ego status. So the issue presented in the 9th Circuit appeal of the district court's order denying remand was whether the case fell within section 205 -- whether the case "relates to an arbitration agreement or award falling under the Convention." Cerner Middle East Limited v. Belbadi Enterprises LLC, et al., No. 17-35157 (9th Cir. 9/23/19) (Clifton, Callahan, Benitez).
Ultimately, the 9th Circuit panel held that the case did not relate to the arbitration agreement. For one thing, the defendants in the case were not the same as the respondents in the arbitration (though maybe they will be found to be related). The arbitration award did not have preclusive effect over issues in the arbitration that would have to be adjudicated, and the findings in the arbitration would be inadmissible hearsay in the lawsuit. That the court might find the legal analysis "persuasive" in the arbitration did not mean that the arbitration "relates to" and "conceivably affects" the arbitration. So the case will be remanded, because removal jurisdiction is lacking.
BEST LINE IN THE CASE: "It has famously been observed that "'[jurisdiction' is a word of many, too many, meanings.""
Quasi-In Rem Jurisdiction Existed Over Defendant Because Court of Appeal of Paris Confirmed International Arbitration Award And Defendant Owned Property In Oregon.
In Cerner Middle East Limited v. iCapital, LLC, a U.A.E. Limited Liability Company; Ahmed Saeed Mahoud Al-Badi Al-Dahari, No. 17-35514 (9th Cir. 9/23/19) (Clifton, Callahan, Benitez), an appeal from the District Court for the District of Oregon, the panel reversed the district court's dismissal, for lack of personal jurisdiction, of an action to enforce a foreign arbitration award against property in Oregon owned by defendants. Note: in the two Cerner cases, the defendants are not the same, and in fact, the district court judges are different. This Cerner case involved efforts to enforce the arbitration award against the arbitration respondent's property in Oregon. The other Cerner case involved efforts to enforce collection against property owned by related entities in Washington.
In this case, the panel found that quasi in rem jurisdiction over defendants existed (a) because plaintiff possessed a valid judgment against the defendant; and (b) the defendant owned property in Oregon. A "court of competent jurisdiction" -- to wit, the Court of Appeal of Paris -- confirmed the international arbitration panel's conclusion that the defendant was subject to its jurisdiction, while the appeal from the District Court to the 9th Circuit was pending!
And so this Cerner case is also reversed and remanded for further proceedings.
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