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Stemcor USA Inc. v. Cia Siderurgica do Para Cosipar

United States Court of Appeals, Fifth Circuit

July 11, 2018

THYSSENKRUPP MANNEX GMBH, Intervenor Plaintiff - Appellee

          Appeal from the United States District Court for the Eastern District of Louisiana

          Before HIGGINBOTHAM, GRAVES, and HIGGINSON, Circuit Judges.


         We grant Intervenor Plaintiff-Appellees' Motion for Panel Rehearing and deny the Motion For Rehearing En Banc. We withdraw the prior opinion, 870 F.3d 370 (5th Cir. 2017), and substitute the following.

         This case 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") sued AMT in the Eastern District of Louisiana, seeking an order compelling AMT to arbitrate and an attachment of the pig iron. 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. Following Daewoo's attachment, Intervenor-Appellee Thyssenkrupp Mannex GMBH ("TKM") attached the same pig iron in Louisiana state court. TKM then intervened in the federal suit, arguing that Daewoo's attachment should be vacated because (1) maritime jurisdiction was improper and (2) Louisiana non-resident attachment was inapplicable.

         The district court agreed with TKM and vacated Daewoo's attachment. Specifically, the district court found that because Daewoo's underlying suit sought to compel arbitration, it was not an "action for a money judgment" and therefore Daewoo could not receive a non-resident attachment writ. Daewoo appeals only the district court's conclusion that its Louisiana non-resident attachment writ was invalid. We affirm on slightly different grounds.


         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. 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.

         On December 14, 2012, Daewoo filed suit in the Eastern District of Louisiana, seeking attachment of AMT's pig iron on board the M/V Clipper Kasashio, and asserting maritime jurisdiction. The district court issued the attachment. On December 21, Daewoo amended its complaint to seek a writ of attachment under the Louisiana non-resident attachment statute. The writ was granted. On December 22, the U.S. Marshals Service served Daewoo's writ on the cargo, which was then anchored in Kenner Bend.

         On December 28, 2012, TKM filed suit in Jefferson Parish state court seeking a writ of attachment over the same pig iron that Daewoo attached on December 22. TKM's state court writ of attachment was served on the cargo on December 29, 2012. TKM then moved to intervene in Daewoo's federal suit. TKM sought a federal writ of attachment over the pig iron, which was granted and served on the cargo on January 11.

         That same day, all of the parties moved in federal court to sell the pig iron. The court approved the sale. The parties agreed that the proceeds of the sale would serve as substitute res, subject to TKM's jurisdictional attack on the federal attachments.

         On May 9, 2016, TKM moved to vacate Daewoo's attachment.[1] The district court agreed with TKM and vacated Daewoo's writ on August 4, 2016. With Daewoo's federal writ vacated, the first valid remaining writ was TKM's state court writ. Accordingly, the district court ordered that the proceeds from the pig-iron sale be transferred to the Jefferson Parish state court. On August 10, Daewoo moved to stay the district court's order, arguing that "[i]n the event that Daewoo's appeal is successful it would be difficult to retrieve the funds from the state court, assuming the state court has not already dispersed the funds, and would create serious issues of federal-state comity." The district court denied the stay request because it was filed after the district court had sent the money to the Jefferson Parish state court.


         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 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 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 ...

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