Stemcor USA Incorporated v. Cia Siderurgica do Par , 927 F.3d 906 ( 2019 )

Case: 16-30984 Document: 00515010237 Page: 1 Date Filed: 06/25/2019
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 16-30984 June 25, 2019
Lyle W. Cayce
STEMCOR USA INCORPORATED, Clerk
Plaintiff
v.
CIA SIDERURGICA DO PARA COSIPAR, ET AL.,
Defendants
----------------------------------------------
DAEWOO INTERNATIONAL CORPORATION,
Plaintiff - Appellant
v.
THYSSENKRUPP MANNEX GMBH,
Intervenor Plaintiff - Appellee
v.
AMERICA METALS TRADING L.L.P., ET AL.,
Defendants
Appeal from the United States District Court
for the Eastern District of Louisiana
Case: 16-30984 Document: 00515010237 Page: 2 Date Filed: 06/25/2019
No. 16-30984
ON PETITION FOR REHEARING
Before HIGGINBOTHAM, GRAVES, and HIGGINSON, Circuit Judges.
JAMES E. GRAVES, JR., Circuit Judge:
On second rehearing of this matter, we certified to the Louisiana
Supreme Court the question of whether a suit seeking to compel arbitration is
an “action for a money judgment” under Louisiana’s non-resident attachment
statute, La. Code Civ. Proc. art. 3542. See Stemcor USA Inc. v. Cia Siderurgica
do Para Cosipar, 740 F. App’x 70 (5th Cir. 2018). The Louisiana Supreme
Court having now provided its answer, we conclude that Louisiana’s non-
resident attachment statute allows for attachment in aid of arbitration. Thus,
we grant rehearing, withdraw our prior opinion, 895 F.3d 375 (5th Cir. 2018),
and substitute the following. We also VACATE the judgment of the district
court and REMAND.
I
This is a dispute between two creditors, each of which attached the same
pig iron owned by America Metals Trading L.L.P. (“AMT”). Plaintiff–Appellant
Daewoo International Corp. (“Daewoo”) is a South Korean trading company.
In May 2012, Daewoo entered into a series of contracts with AMT for the
purchase of pig iron, to be delivered in New Orleans. The sale contracts
contained arbitration clauses. Although Daewoo made payments under the
contracts, AMT never shipped the pig iron. Thyssenkrupp Mannex GMBH
(“TKM”) is a German company. Between June 2010 and February 2011, TKM
entered into six contracts to purchase pig iron from AMT. AMT never
delivered. In response to the breach of contract, TKM and AMT negotiated a
settlement, which required AMT to make quarterly payments to TKM. AMT
did not pay.
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Daewoo sued AMT in the Eastern District of Louisiana, seeking an order
compelling arbitration and an attachment of the pig iron on board a ship then-
anchored in New Orleans. Daewoo invoked both maritime attachment and the
Louisiana non-resident attachment statute, which allows attachments in aid
of any “action for a money judgment.” La. Code Civ. Proc. art. 3542. Citing
both types of attachment, the district court granted Daewoo its attachment.
Intervenor-Appellee TKM later attached the same pig iron in Louisiana state
court and intervened in Daewoo’s federal action arguing that maritime
jurisdiction was improper and Louisiana’s non-resident attachment statute
was inapplicable.
The district court agreed with TKM and vacated Daewoo’s attachment.
See Stemcor USA, Inc. v. Am. Metals Trading, LLP, 199 F. Supp. 3d 1102 (E.D.
La. 2016). Specifically, the district court found that because Daewoo’s
underlying suit sought to compel arbitration, it was not an “action for a money
judgment.” Thus, the district court found that Daewoo could not receive a non-
resident attachment writ. After Daewoo’s writ was dissolved, TKM’s state
court attachment became first in time and the district court transferred
proceeds from the parties’ agreed sale of the pig iron to state court. Daewoo
appealed the district court’s conclusion that its Louisiana non-resident
attachment writ was invalid. This court heard oral arguments, rendered a
decision and reconsidered this matter on rehearing. See Stemcor USA Inc. v.
Cia Siderurgica do Para Cosipar, 870 F.3d 370 (5th Cir. 2017), opinion
withdrawn and superseded on reh’g, 895 F.3d 375 (5th Cir. 2018).
On second rehearing of this matter, we certified to the Louisiana
Supreme Court the question of whether a suit seeking to compel arbitration is
an “action for a money judgment” under Louisiana’s non-resident attachment
statute, La. Code Civ. Proc. art. 3542. See Stemcor USA Inc. v. Cia Siderurgica
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do Para Cosipar, 740 F. App’x 70 (5th Cir. 2018). The Louisiana Supreme
Court has now answered. See Stemcor USA Inc. v. Cia Siderurgica do Para
Cosipar, --- So.3d ----, 2018-CQ-1728, 2019 WL 2041826, (La. May 8, 2019).
II
The district court found federal subject matter jurisdiction under the
Convention on the Recognition and Enforcement of Foreign Arbitral Awards
(the “Convention”). We agree.
For a federal court to have jurisdiction under the Convention, two
requirements must be met: (1) there must be an arbitration agreement or
award that falls under the Convention, and (2) the dispute must relate to that
arbitration agreement. These requirements flow from the text of two sections
of the Convention. The explicit jurisdictional provision is Section 203, which
gives federal courts jurisdiction over all “action[s] or proceeding[s] falling
under the Convention.” 9 U.S.C. § 203. “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.” 9 U.S.C. § 202.
Accordingly, the first step for determining jurisdiction is deciding whether the
“arbitration agreement or award . . . falls under the Convention.” Id.The next step, derived from Section 203, is to ask whether the “action or
proceeding”—as opposed to the arbitration agreement or award—falls under
the Convention. The Convention’s removal statute offers guidance on what
“falling under” means because “[g]enerally, the removal jurisdiction of the
federal district courts extends to cases over which they have original
jurisdiction.” Francisco v. Stolt Achievement MT, 293 F.3d 270, 272 (5th Cir.
2002). Section 205 of the Convention allows for removal whenever “the subject
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matter of an action or proceeding pending in a State court relates to an
arbitration agreement or award falling under the Convention.” 9 U.S.C. § 205.
We have read “relates to” to mean “has some connection, has some relation,
[or] has some reference” to. Acosta v. Master Maint. & Constr. Inc., 452 F.3d
373, 378–79 (5th Cir. 2006). And reading “falling under” to mean “relates to”
makes sense grammatically. “Fall” means “to come within the limits, scope, or
jurisdiction of something.” Merriam-Webster’s Collegiate Dictionary 418 (10th
ed. 2002). Accordingly, the second step of the jurisdictional question is asking
whether the “action or proceeding” “relates to” a covered arbitration agreement
or award. See Fred Parks, Inc. v. Total Compagnie, 981 F.2d 1255, 1992 WL
386999, at *1–2 (5th Cir. 1992) (unpublished) (treating the question of original
and removal jurisdiction under the Convention as identical).
This two-step jurisdictional inquiry is consistent with case law
interpreting the Convention. See, e.g., BP Expl. Libya Ltd. v. ExxonMobil
Libya Ltd., 689 F.3d 481, 487 & n.4 (5th Cir. 2012) (finding jurisdiction where
there was a covered arbitration agreement and the suit sought appointment of
arbitrators); Borden, Inc. v. Meiji Milk Prods. Co., 919 F.2d 822, 826 (2d Cir.
1990) (holding that jurisdiction over preliminary injunction in aid of covered
arbitration was proper because the remedy sought did not try to “bypass
arbitration”); Sunkyong Eng’g & Const. Co. v. Born, Inc., 149 F.3d 1174, 1998
WL 413537, at *5 (5th Cir. 1998) (unpublished) (“The FAA grants the United
States district courts original federal question jurisdiction over arbitral awards
and agreements to arbitrate that fall within the Convention.”); Venconsul N.V.
v. Tim Int’l. N.V., 03Civ.5387(LTS)(MHD), 2003 WL 21804833, at *3 (S.D.N.Y.
Aug. 6, 2003) (“Borden has been interpreted as recognizing a court’s power to
entertain requests for provisional remedies in aid of arbitration even where
the request for remedies does not accompany a motion to compel arbitration or
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to confirm an award.”).
Both jurisdictional requirements are met here. First, Daewoo’s
arbitration agreements with AMT are covered by the Convention. For an
arbitration agreement to be covered by the Convention, four requirements
must be met: (1) there must be an agreement in writing to arbitrate the
dispute; (2) the agreement must provide for arbitration in the territory of a
Convention signatory; (3) the agreement to arbitrate must arise out of a
commercial legal relationship; and (4) at least one party to the agreement must
not be an American citizen. See Freudensprung v. Offshore Tech. Servs., Inc.,
379 F.3d 327, 339 (5th Cir. 2004); Sunkyong, 149 F.3d 1174, 1998 WL 413537,
at *5; Sedco, Inc. v. Petroleos Mexicanos Mexican Nat’l Oil Co. (Pemex), 767
F.2d 1140, 1144–45 (5th Cir. 1985). All four requirements are met here:
• There is an agreement in writing to arbitrate Daewoo and AMT’s
dispute.
• That agreement provides for arbitration in New York, and the United
States is a signatory to the Convention.
• The agreement arises out of a commercial relationship between Daewoo
and AMT.
• Both Daewoo and AMT are not American citizens.
Second, this suit is related to the AMT arbitration agreements because
Daewoo seeks an attachment to facilitate the arbitration provided for in the
AMT agreements. See Borden, 919 F.2d at 826 (“[T]he desire for speedy
decisions in arbitration is entirely consistent with a desire to make as effective
as possible recovery upon awards, after they have been made, which is what
provisional remedies do.” (internal quotation marks and citation omitted)).
Our decision in E.A.S.T., Inc. of Stamford v. M/V Alaia, 876 F.2d 1168 (5th
Cir. 1989), strongly counsels towards recognizing subject matter jurisdiction
based on the Convention to issue provisional remedies in aid of arbitration.
The court in E.A.S.T., albeit in the context of a maritime attachment, found
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that the “the arrest of a vessel prior to arbitration is not inconsistent with the
Convention.” Id. at 1173. And the court noted that the Convention “does not
expressly forbid pre-arbitration attachment” and that pre-arbitration
attachment “may ‘serve[] . . . as a security device in aid of arbitration.’” Id.(alteration in original) (quoting Atlas Chartering Servs., Inc. v. World Trade
Grp., Inc., 453 F. Supp. 861, 863 (S.D.N.Y. 1978)).
Indeed, E.A.S.T.’s reasoning mirrors the reasoning of courts that have
found subject matter jurisdiction under the Convention to order state-law
provisional remedies. Like the court in E.A.S.T., those courts reason that
“nothing in the Convention divests federal courts of jurisdiction to issue
provisional remedies . . . such as an attachment, when appropriate in
international arbitrations.” Bahrain Telecomms. Co. v. Discoverytel, Inc., 476
F. Supp. 2d 176, 181 (D. Conn. 2007); see also China Nat’l Metal Prods.
Imp./Exp. Co. v. Apex Dig., Inc., 155 F. Supp. 2d 1174, 1180 (C.D. Cal. 2001)
(“Rather than conflicting with the parties’ agreement to arbitrate, provisional
remedies such as attachment reinforce arbitration agreements by ensuring
that assets from which an arbitration award would be satisfied are secured
while arbitration is pending.”). E.A.S.T. therefore strongly suggests that this
court recognizes jurisdiction under the Convention to issue state-law
preliminary remedies in aid of arbitration. 1
1 And there are compelling reasons against reading jurisdiction under Section 203 as
narrowly limited to the three remedies expressly allowed by the Convention (compelling
arbitration and appointing arbitrators in Section 206 and confirming awards in Section 207).
Namely,
[n]othing in § 206 or § 207 limits the subject matter jurisdiction
of federal courts. These sections merely identify the remedies
that federal courts may grant, and do not speak in jurisdictional
terms or refer in any way to the jurisdiction of the district courts.
. . . To grant the remedies provided in those sections, the Court
must first determine that it has jurisdiction . . . .
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Applying E.A.S.T. and the cases that follow it, the Convention grants
jurisdiction over Daewoo’s request for an attachment. Like the plaintiff in
E.A.S.T., Daewoo sought to attach the pig iron in order to facilitate arbitration
and increase its chance of recovering on any award. Because Daewoo sought
attachment to bring about a covered arbitration—that is, because Daewoo’s
suit related to a covered arbitration agreement—this court has subject matter
jurisdiction. 2
III
The parties dispute whether Louisiana’s non-resident attachment
statute allows for attachment in aid of arbitration. The district court held that
it does not.
As stated previously, we certified to the Louisiana Supreme Court the
question of whether a suit seeking to compel arbitration is an “action for a
money judgment” under Louisiana’s non-resident attachment statute, La.
Treating §§ 206 and 207 as jurisdictional provisions confuses the
subject matter jurisdiction of federal courts with their remedial
authority. Although jurisdiction is a word of many . . . meanings,
there is a difference between the two. The nature of the relief
available after jurisdiction attaches is, of course, different from
the question whether there is jurisdiction to adjudicate the
controversy . . . . The breadth or narrowness of the relief which
may be granted under federal law . . . is a distinct question from
whether the court has jurisdiction over the parties and the
subject matter. Any error in granting or designing relief does
not go to the jurisdiction of the court.
CRT Capital Grp. v. SLS Capital, S.A., 63 F. Supp. 3d 367, 374–75 (S.D.N.Y. 2014) (internal
quotations marks, citations, and alterations omitted). Simply put, the question of what
remedies are available in a Convention suit is distinct from the question of jurisdiction.
2 We asked the parties to brief whether this court has personal jurisdiction under
quasi in rem principles. We are satisfied that we have personal jurisdiction. See Republic
Nat’l Bank of Miami v. United States, 506 U.S. 80, 88–89 (1992); Nassau Realty Co., Inc. v.
Brown, 332 So. 2d 206, 210 (La. 1976).
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Code Civ. Proc. art. 3542. See Stemcor USA Inc. v. Cia Siderurgica do Para
Cosipar, 740 F. App’x 70 (5th Cir. 2018). The Louisiana Supreme Court
accepted the certified question and answered: “Louisiana Code of Civil
Procedure article 3542 allows for attachment in aid of arbitration if the origin
of the underlying arbitration claim is one pursuing money damages and the
arbitral party has satisfied the statutory requirements necessary to obtain a
writ of attachment.” See Stemcor USA Inc. v. Cia Siderurgica do Para Cosipar,
--- So.3d ----, 2018-CQ-1728, 2019 WL 2041826, *1 (La. May 8, 2019).
Louisiana’s attachment statute provides that “[a] writ of attachment
may be obtained in any action for a money judgment, whether against a
resident or a nonresident, regardless of the nature, character, or origin of the
claim, whether it is for a certain or uncertain amount, and whether it is
liquidated or unliquidated.” La. Code Civ. Proc. art. 3542. The underlying
action seeking to compel arbitration here is clearly an “action for a money
judgment” under Louisiana’s non-resident attachment statute. See La. Code
Civ. Proc. art. 3542. Daewoo has made it clear from the outset that it would
be pursuing a money judgment. The “nature, character, or origin of the claim”
just happens to be arbitration. La. Code Civ. Proc. art. 3542. Thus, we
conclude that the district court erred in finding that the Louisiana non-
resident attachment statute was not available to Daewoo.
IV
For the above reasons, we VACATE and REMAND.
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