Czarina, L.L.C. v. W.F. Poe Syndicate, 03-10518.

• Decision Date: 04 February 2004
• Docket Number: No. 03-10518.,03-10518.
• Citation: 358 F.3d 1286
• Parties: CZARINA, L.L.C., as assignee of Halvanon Insurance Co. Ltd., Plaintiff-Appellant, v. W.F. POE SYNDICATE, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

358 F.3d 1286

CZARINA, L.L.C., as assignee of Halvanon Insurance Co. Ltd., Plaintiff-Appellant, v. W.F. POE SYNDICATE, Defendant-Appellee.

No. 03-10518.

United States Court of Appeals, Eleventh Circuit.

February 4, 2004.

COPYRIGHT MATERIAL OMITTED

Mary Cannon Veed, Chicago, IL, F. Lorraine Jahn, The Solomon Tropp Law Group, P.A., Tampa, FL, for Plaintiff-Appellant.

Alice Ruth Huneycutt, Stearns, Weaver, Miller, Weissler, Alhadeff & Sitterson, P.A., Tampa, FL, for Defendant-Appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before BLACK, HULL and COX, Circuit Judges.

COX, Circuit Judge:

I. INTRODUCTION

Plaintiff Czarina, L.L.C., as assignee of Halvanon Insurance Co. Ltd., appeals the district court's denial of its application to confirm a foreign arbitration award. The district court denied Czarina's application, concluding that it did not have subject matter jurisdiction to confirm the award. Czarina, L.L.C. ex rel. Halvanon Ins. Co. Ltd. v. W.F. Poe Syndicate, 254 F.Supp.2d 1229 (M.D.Fla.2002). We affirm.

II. BACKGROUND AND PROCEDURAL HISTORY

Halvanon Insurance Company was an Israeli company. In 1984, Halvanon entered into an agreement with Defendant W.F. Poe Syndicate, a Florida reinsurance company and member of the Miami-based Insurance Exchange of the Americas ("IEA"), by the terms of which Poe and other IEA members agreed to reinsure some of Halvanon's risks. As was common in the IEA's reinsurance business, Halvanon and Poe agreed for Poe to reinsure Halvanon before specifying all the details of the agreement. They agreed that their lead underwriters would come together later and flesh out the agreement by drafting a "wording," or written contract, but their underwriters never did. Nonetheless, Halvanon later took the position that Poe was indebted to it under this reinsurance agreement.

In 1985, Halvanon became insolvent and was liquidated. In the liquidation, Czarina purchased some of Halvanon's accounts receivable, including the Poe account. After Poe refused to pay Czarina on that account, Czarina initiated an arbitration in London to collect the alleged indebtedness. Before the arbitrators, Czarina asserted that arbitration was the proper forum for deciding its dispute with Poe based on the following four items:

(1) a form dated December 22, 1983, sent by the IEA's broker to Halvanon's broker, stating that an IEA member would reinsure Halvanon, and that the terms of the reinsurance agreement would be negotiated with Halvanon later by the IEA's lead underwriter;

(2) a form dated February 1, 1984, from Halvanon's broker to Halvanon stating that twenty percent of Halvanon's business would be reinsured by IEA members;

(3) a "Confirmation of Cover" form, dated March 8, 1984, signed by Poe and other IEA members, confirming reinsurance coverage to Halvanon; and

(4) an unsigned, unexecuted sample wording, drafted in 1982, which Halvanon used in 1982 in its reinsurance relationships.

None of the first three forms, which were sent between Halvanon, its broker, Poe, and the IEA's broker, contained any reference to arbitration. Only the fourth item, the 1982 Sample Wording, included an arbitration clause; it provided for arbitration before a two-member panel in London. The 1982 Sample Wording was simply a sample: it was not drafted for the Halvanon-Poe transaction.

Poe's defense in the arbitration consisted of two short letters to the arbitration panel. Both letters began with the unequivocal assertion that Poe had never agreed to arbitrate this dispute. Specifically, Poe pointed out that it neither agreed to nor signed the 1982 Sample Wording. The letters also included various reasons why Poe should prevail on the merits of the dispute. Nevertheless, the arbitration panel concluded that Poe had agreed to submit to arbitration, and awarded Czarina over £ 150,000. The panel's award noted that Poe's position was that it never submitted this dispute to arbitration.

Czarina filed this award-confirmation action in the district court, invoking the court's jurisdiction pursuant to article two of the Federal Arbitration Act, 9 U.S.C. §§ 201-208.¹ The court conducted a three-day bench trial on the issue of whether Halvanon and Poe had agreed to arbitrate, a question the court held was dispositive of its own subject matter jurisdiction in the confirmation action. The court found that there had been no agreement to arbitrate, and based on this, dismissed for lack of subject matter jurisdiction Czarina's application to confirm the award. Czarina appeals this judgment.

III. CONTENTIONS OF THE PARTIES AND STANDARD OF REVIEW

Czarina contends that the district court erred in denying for lack of subject matter jurisdiction its application. Specifically, it contends that the court erred in holding that the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958, reprinted in 9 U.S.C. § 201 (historical and statutory notes) (hereinafter the Convention), requires a party invoking a federal court's jurisdiction to confirm an award falling under the Convention to establish that the award was entered pursuant to a written arbitration agreement, signed by the parties. Alternatively, Czarina contends that even if it had to present a written, signed arbitration agreement, it satisfied this requirement by providing the unsigned 1982 Sample Wording which the arbitration panel found Halvanon and Poe had agreed to. Czarina contends that the district court was bound to accept this finding by the panel, and thus erred by not accepting it and taking jurisdiction. As a second alternative, Czarina contends that it need not have met the signed-and-written-agreement requirement because Poe waived any objection to the arbitrability of the dispute by defending the arbitration on the merits. Thus, Czarina contends, the requirement was no bar to the court's jurisdiction in this confirmation action. Poe contends that the district court properly concluded that it lacked subject matter jurisdiction because Czarina failed to comply with the requirements of the Convention.

These contentions present questions of law, which we review de novo. Newell v. Prudential Ins. Co. of Am., 904 F.2d 644, 649 (11th Cir.1990).

IV. DISCUSSION

A. Does the Convention, as Incorporated into the Federal Arbitration Act, Require a Party Requesting a Federal District Court to Confirm a Foreign Arbitration Award to Comply with Article II's Agreement-in-Writing Requirement to Establish the Court's Jurisdiction?

Czarina first contends that the Convention does not require the proponent of an arbitration award to meet Article II's agreement-in-writing requirement for the court to have subject matter jurisdiction over the confirmation action. We disagree.

Article 2 of the Federal Arbitration Act ("FAA") provides for enforcement of foreign arbitration agreements and awards, and to these ends, it ratifies and incorporates the Convention. 9 U.S.C. § 201 (historical and statutory notes). Under the FAA, federal district courts have original jurisdiction over actions "falling under the Convention." 9 U.S.C. § 203.² The FAA provides two causes of action in federal district court for enforcing arbitration agreements falling under the Convention: an action to compel arbitration pursuant to an arbitration agreement falling under the Convention, 9 U.S.C. § 206, and an action to confirm an arbitration award made pursuant to an agreement falling under the Convention, 9 U.S.C. § 207.

To determine whether an award falls under the Convention, and thus, whether the district court has jurisdiction over the action to compel arbitration or to confirm an award, courts look to the language of the Convention. See Sphere Drake Ins. PLC v. Marine Towing, Inc., 16 F.3d 666, 669 (5th Cir.1994); Kahn Lucas Lancaster, Inc. v. Lark Int'l Ltd., 186 F.3d 210, 215 (2d Cir.1999). The Convention imposes prerequisites to both types of actions. 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. Convention, supra, art. II, 9 U.S.C. § 201 (historical and statutory notes). Articles III and IV govern actions to confirm an arbitration award. Article III provides:

Each Contracting State shall recognize arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the following articles.

Id. at art. III (emphasis added). Article IV imposes two conditions:

To obtain the recognition and enforcement mentioned in the preceding article, the party applying for recognition and enforcement shall, at the time of the application, supply:

(a) The duly authenticated original award or a duly certified copy thereof;

(b) The original agreement referred to in article II or a duly certified copy thereof.

Id. at art. IV, sec. 1.

Both articles II and IV explicitly refer to article II's definition of an arbitration agreement in writing. That definition reads: "[t]he term `agreement in writing' shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams." Id. at art. II, sec. 2.

Where a party has failed to satisfy the agreement-in-writing prerequisite, courts have dismissed the action for lack of jurisdiction. See, e.g., Kahn, 186 F.3d at 218 (reversing order compelling arbitration under the Convention, and dismissing motion to compel arbitration with prejudice, for lack of subject matter jurisdiction, where the written purchase orders containing the arbitration clause had not been signed by both parties); Lo v. Aetna Int'l, Inc., No. 3:99CV195 JBA, 2000 WL 565465, *4 (D.Conn. Mar.29, 2000) ("Since Aetna has shown no written agreement to arbitrate these claims signed by Ms. Lo in her capacity as beneficiary, the Court concludes it...