Jurisdiction Issues

Finding that a California trial court’s statement of decision was not a judgment or appealable order, the California Court of Appeal dismissed the appeal, having no jurisdiction or authority to review it.

The appellant argued that the statement of decision was a final judgment within the meaning of California Code of Civil Procedure section 904.1(a)(1). The court disagreed, as a judgment is final “when it terminates the litigation between the parties on the merits of the case and leaves nothing to be done but to enforce by execution what has been determined.” Thus, a statement of decision will be appealable only when it is “signed and filed and does, in fact, constitute the court’s final decision on the merits.” The court found that the statement of decision was a limited ruling on a discrete issue that did “not finally resolve the dispute alleged in the operative pleadings.”

The appellant argued, in the alternative, that its opening brief should be treated as a petition for a writ of mandate. The court noted, “Although we have the power to treat the purported appeal as a petition for writ of mandate, we should not exercise that power expect under unusual circumstances.” Seeing no justification for such relief, the court held that “[u]nder the circumstances presented here, treating the instant appeal as a writ application would … encourage parties to knowingly appeal from nonappealable orders, safe in the knowledge that their appeal will be saved by the appellate courts. We cannot condone or encourage such practice.”

Warwick Cal. Corp. v. Applied Underwriters, Inc., No. A155523 (Cal. Ct. Ap. Jan. 7, 2020).

The dispute involved an arbitration related to alleged medical malpractice by doctors selected by Carnival Cruise Lines to treat a wrist injury of a Serbian employee of Carnival. The employee’s employment agreement with Carnival contained mandatory arbitration and forum selection clauses and a choice-of-law clause designating the governing law as the law of Panama, the law of the flag of the employee’s cruise ship. Notwithstanding the choice of Panamanian law, the employee filed a foreign arbitration asserting a claim under U.S. law, including the Jones Act, for vicarious liability against Carnival. The arbitrator ruled that the employee could not assert the U.S. law claims and that she would not be entitled to relief under Panamanian law. The employee then filed a lawsuit in a federal district court seeking to vacate or deny enforcement of the foreign award under the New York Convention. The district court denied the employee’s petition, rejecting the employee’s arguments that the arbitrator wrongfully deprived her of the opportunity to assert her claim under the Jones Act and that the award was void as against U.S. public policy.

On appeal, the Eleventh Circuit affirmed the district court’s ruling. The Eleventh Circuit rejected the employee’s argument that the court was required to refuse to enforce the award because she was allegedly deprived of a statutory remedy against Carnival. The court ruled that it would not refuse to enforce the award “simply because the remedies available under Panamanian law [were] less favorable” to the employee “than the remedies available under U.S. law.” The court further found that the remedies available under Panamanian law were not “so inadequate that enforcement would be fundamentally unfair.” The court held: “[T]he test for whether a court should refuse to enforce a foreign arbitral award based on public policy is not whether the claimant was provided with all of her statutory rights under U.S. law during arbitration. Rather the public-policy defense ‘applies only when confirmation or enforcement of a foreign arbitration award would violate the forum state’s most basic notions of morality and justice.'” The employee had not made that showing here.

Cvoro v. Carnival Corp., No. 18-11815 (11th Cir. Oct. 17, 2019).

The parties entered into a contract under which the plaintiff Cerner Middle East Limited would provide hardware, software, and services to iCapital S/E to facilitate iCapital’s fulfillment of a contract that it had been awarded by the United Arab Emirates Ministry of Health. The contract required the parties to submit any disputes to binding arbitration under the rules of the International Chamber of Commerce, specified that the seat of arbitration would be in Paris, and provided a choice-of-law clause electing the law of the state of Missouri.

A dispute arose and Cerner issued a request for arbitration when iCapital failed to make payments due under the contract, to which iCapital responded by objecting to the arbitration. The principal of iCapital, Ahmed Saeed Mahmoud Al-Badi Al-Dhaheri, declined to respond at all. The International Court of Arbitration concluded that the arbitration should proceed against both iCapital and Dhaheri and appointed a tribunal. The tribunal issued an award against both iCapital and Dhaheri for $62 million in July 2015, determining that it had jurisdiction over the latter as he was the sole proprietor of iCapital and, alternatively, because he was the alter ego of the reorganized iCapital LLC.

Cerner sought to enforce the arbitration award in Oregon state court seeking to attach funds in an Oregon bank account owned by Dhaheri. Cerner relied on a quasi in rem theory to establish jurisdiction. The case involved “type two” quasi in rem jurisdiction, which requires that (1) a court of competent jurisdiction render a judgment against the defendant; and (2) the defendant owns property in the forum state. The defendants removed to federal court and moved to dismiss for lack of personal jurisdiction, arguing that Cerner did not possess a valid judgment against Dhaheri and therefore could not rely on quasi in rem to establish jurisdiction. The district court agreed and dismissed the case.

Cerner appealed to the Ninth Circuit Court of Appeals. While the appeal was pending, the Court of Appeal of Paris affirmed a French trial court decision that confirmed the arbitration award and found that the tribunal had jurisdiction over Dhaheri in addition to iCapital. In light of this development, the Ninth Circuit determined that it was not required to decide whether the district court was correct in deciding that the tribunal’s award had to be confirmed as valid by another court before quasi in rem jurisdiction could be exercised.

The defendants then argued that the Ninth Circuit should not recognize the tribunal’s award (or the Paris court’s ruling), in part because the French decision was not entitled to recognition under the principles of international comity. Citing to the U.S. Supreme Court, the Ninth Circuit stated that foreign decisions should be accorded deference unless an underlying issue renders the judgment suspect. The Ninth Circuit found that none of the grounds for disregarding a foreign judgment applied here, noting that a foreign judgment may be entitled to comity even if the U.S. court disagrees with its reasoning. The decision of the Paris court met the minimum standard of reasonableness, and therefore the decision deserved recognition under principles of international comity. The requirements for quasi in rem jurisdiction were thus met, and the action seeking to enforce the award should not have been dismissed for lack of jurisdiction.

Cerner Middle E. Ltd. v. iCapital, LLC, No. 17-35514 (9th Cir. Sept. 23, 2019).

The underlying insurance policy was issued by Certain Underwriters at Lloyd’s London and contained an arbitration clause. The court applied the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (also known as the New York Convention) under the FAA. The court found that all four requirements under the Convention were met. The court easily determined that there was a written agreement and that the agreement arose out of a commercial relationship. With respect to the requirement that the agreement provide for arbitration in the territory of a signatory of the Convention, the court found that the requirement was met where the insurance policy (although separate from the arbitration clause), provided that “any action brought against [the insurer] must be in the United States of America, ‘in a court having proper jurisdiction.'” And regarding the final requirement of the Convention, that a party to the agreement is not an American citizen or that the commercial relationship has a reasonable relation with a foreign state, the court found it was met because a portion of the insurance policy was subscribed to by Lloyd’s Syndicate 2001, which is wholly owned by a company that is organized and principally based in the United Kingdom.

Although Section 3 of the FAA states that district courts “shall” stay proceedings pending arbitration upon the motion of a party, the court found that it is appropriate to dismiss the lawsuit where all of the issues presented are arbitrable and the plaintiff has not requested a stay. The complaint only raised one claim, which the court found subject to arbitration, and the plaintiff did not respond to the motion to compel or otherwise request a stay. As a result, the court dismissed the complaint with prejudice.

German Int’l Sch. of Fort Lauderdale, LLC v. Certain Underwriters at Lloyd’s, London, No. 0:19-cv-60741 (S.D. Fla. May 14, 2019).