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____________________
No. 95-1495
Plaintiff-Appellee,
v.
Defendant-Appellant.
____________________
No. 95-1497
Plaintiff-Appellant,
v.
Defendant-Appellee.
_______________
____________________
Before
____________________
Luis A. Melendez-Albizu,
_________________________
and Sanch
_____
Betances & Sifre, were on brief for Menorah Insurance Company, Ltd.
________________
Juan H. Saavedra Castro
__________________________
was
on
brief
for
INX
Reinsura
Corporation.
____________________
_________________
*Of
the
United
designation.
States
Court of
International
Trade,
sitting
-2-
LYNCH,
LYNCH,
Circuit
Judge.
Circuit
Judge.
_______________
After
unsuccessfully
contracts,
Menorah Insurance
default judgment in an
Corporation
and then
obtained an
$812,907
sought to
After waiting
Company
enforce the
judgment in
Rico under
Arbitral
(1994).1
Awards,
The
implemented
federal
arbitration and
court
remanded.
in 9
U.S.C.
found
that
We affirm
201 et
__
INX
had
because INX
seq.
____
waived
has both
Under
Menorah,
an
seven
Israeli
corporation, agreed
reinsurance
company,
and
INX,
than
treaties
between
them,
Puerto
Rican
rather
____________________
1.
330
and is
reprinted in
9 U.S.C.A.
201 n.
2.
The
arbitration
clause
presented
by
INX
as
being
Agreement
originating
connected
or
therefrom
with
the
to
or
same,
any
in
and
matter
any
way
whether
-33
was
to be
Each
side was
to appoint an
arbitrator and
disagree, then an
decide.
There
was a
default provision
of sorts:
"In the
months after
the
arbitration has
question
in dispute,
then
for
the
time
being
of
the
in
either
such
for under
case
the
Israeli
Fire
Insurance
Association."
that it owed
the
$500,000 difference.
After
for
unsuccessful negotiations,
Menorah,
on July
would seek
and
1, 1992,
informed INX
arbitration, asked
by letter
INX to assent
that it
to arbitration
____________________
arising before or
of
after the
entitled
than a
[sic]
in
termination
agreement shall be
an equitable
rather
the
to the
Reinsurer
and
and
the
in
other
the
by the
event
of
two, then
an
two
arbitrators previous
entering
upon
the
to their
reference,
arbitrators
and/or
umpire
shall
managers
chief
officials
of
or
the
be
fire
-44
and that if
"free
to
available."
INX failed
pursue
INX
all
to assent, then
other
responded
that even
if ordered
legal
and
promptly
Menorah would
judicial
not
and
it
measures
would
to arbitrate, its
that
feel
financial condition
On September
10, 1992,
in Tel
attorneys' fees.
it seek to remove
the default.
On September
action
in
judgment.
that
the
arbitrated.
the Superior
Court in
San
Juan to
an exequatur3
enforce the
controversies
between
the
parties
had
to
be
INX answered,
____________________
3.
"Exequatur"
from another
refers to
jurisdiction.
an action
to execute
a judgment
Schiffahrtsgesellschaft
MBH & Co.
_____________________________________
v.
-55
Navimpex Centrala
__________________
to arbitration was in
On October 14,
1994,
the
petition
for
exequatur
an order to
should
not
be
granted.
In
U.S.C.
205.4
The federal
1995,
finding
that
court remanded
INX
had
scheme.
Now, over
this matter
arbitration
March 15,
and
the
three
waived
the case on
years
after Menorah's
original
travel of
different courts,
____________________
4.
pending
to
in
of an action or
a
State
an arbitration
court
agreement or
the Convention,
the
defendant or
at any
time
the
remove
before
trial thereof,
of
the
United
States
for
the
the
pending.
causes
action
The
or
proceeding
procedure for
otherwise
provided by
is
removal of
law shall
shown in the
action
this section
been
but may be
the purposes of
any
Chapter 1 of this
or proceeding
shall
brought in
the
which it is removed.
For
title
removed under
be deemed
to
district court
have
to
-66
INX asks us to reverse the district court and send the matter
to arbitration.
Review
of
district
court's
determination
of
Co. v. Gilbane Bldg. Co., 992 F.2d 386, 390 (1st Cir. 1993);
___
__________________
Leadertex, Inc. v.
________________
F.3d 20, 25
[legal]
conclusion
[of
"[T]he
waiver]
is
based
are
predicate
erroneous."
In the increasingly
the
use
of
arbitration
international business
agreements
may
be
particularly
with
respect
to
any
contract
rules.
specifying
contractual
provision
disputes shall
be litigated and
to
is, therefore,
be applied
world,
the law
an almost
the
orderliness
essential
to any
and
predictability
international business
transaction.
Scherk
______
These
v.
Alberto-Culver Co.,
__________________
same interests
implement the
motivated
417
U.S.
this country
to federal court:
-77
506, 516
(1974).
to adopt
and
The
goal
principal
of
the
Convention,
purpose
underlying
and
the
American
commercial arbitration
agreements in
by
which
arbitrate
are
observed
unify the
agreements
and
to
arbitral
awardsareenforcedinthesignatorycountries.
Against
policy
favoring
arguments.
that it
this backdrop
arbitration,
waived arbitration in
of a
INX
strong United
essentially
erred, it says,
the events of
States
makes
two
in deciding
1992.
In
any
event, INX says, it now has the right to have the question of
INX's
or the law.
saved from
offered
that
in the
was
INX
expressly declined.
declination by
July 1,
it
the fact
1992 letter
It is
not
that Menorah
had
to have
an arbitrator
both unwilling
and
unable
to
participate in
the
arbitration.5
____________________
5.
INX
claims
the
agreement
required
________
an
arbitrator
be
appointed
hardly
for it
if it declined
to do
so.
The language,
-88
of conduct.
course
court."
v. American
________
Bankers Life Assurance Co., 715 F.2d 17, 19 (1st Cir. 1983).
___________________________
In
Caribbean,
_________
found
waiver where
the
so until six
months after it
sued
we
exchange
for a
Id. at 20.
___
"reprieve from
cert.
_____
denied, 459
______
eleven months
U.S. 943
671 F.2d
(1982), we
38, 43
(1st Cir.),
found waiver
that
parties
go
to
far
in
court
proceedings
where
arbitration was
require
was
contempt finding."
[T]o
claiming
a likely
party
before
seeking
arbitration
would
often
be
allow a
That
Packer Co.,
___________
waiver
493 F.2d
where a
938, 945
(1st
party unconditionally
Cir. 1974),
we found
submitted part
advantage of
counterclaimed.
Cf.
___
Raytheon Co.
_____________
Systems, Inc.,
______________
882 F.2d
6,
8 (1st
-99
v.
Cir.
of an
take
Automated Business
__________________
1989) (defendant
waived issue of
damages being
raising it
whether it
consented to
issue of
submitted to arbitration by
in desultory manner
punitive
on first day
of arbitration
It
for plaintiffs
must
to prevail on
show prejudice."
"their claim
Sevinor v.
_______
F.2d
of waiver,
they
16,
18
(1st Cir.
1986)
(finding
no
prejudice
where
prejudice
reason
showing
here, as
the
prejudice to
found,
was ample
we have
establish
waiver
and
suit); accord
______
Because there
district court
explicitly
a defense to a
at 390.
to reconsider whether to
of
defendants
or to
no
test of a
apply
circumstances"
test for
the determination of
one factor);
waiver, where
S+L+H S.p.A. v.
____________
Miller-St.
__________
Ignoring
action,6
its
failure
INX characterizes
its
to appear
in
delay
over a
of
the
Israeli
year
in
____________________
6.
INX asserts
jurisdiction of the
entered
the proceedings in
into
Israeli court.
reinsurance
-1010
agreements
right to
But
INX
with
an
is
no per
___
se
__
rule that
one
year delay
is
or is
resolution
discovery.
one in
of
which
the
Cf.
___
information useful
dispute
was
(thirteen
not
not
was
There
being
to
the ultimate
procured
v.
through
Kraftmaid
_________
of prejudice
parties spend
in
determining information
anyway).
until
to
they would
1988) (waiver
demand
found where
for
error in
owed.
759 (9th
arbitration
judicial determination
it thought
delay
arbitration
try to
need in
while
decision to
continuing
of arbitrable claims).
Cir.
to
seek
There was no
____________________
any
arbitration proceedings.
forum selection
clause,
In
even one
the commercial
for arbitration,
context a
confers
See
___
v. Beneficial Life
________________
-1111
expenses as a
direct result of
and
INX
suggests that
the
question of
arbitrability
should be decided
As
to that
and to
enforceability
arbitrated,
v. Kaplan,
______
faced
decide
with
in the first
of
INX's
the
argument that
Israeli
we are guided by
115 S.
Ct. 1920
the question
whether parties
their dispute.
the
judgment
arbitrator.
issue of
must
the
itself
be
(1995).
of who
agreed
Id. at 1923.
___
instance by the
has
the primary
to arbitrate
was
power to
the merits
of
whether the
default
judgment following
arbitration clause.
is
conceivable
That
that
failure
to
arbitrate under
an
parties
could
decide
that
such
enforceability
disputes
"[A]rbitration
is simply
parties; it is a
subject
a matter
to
arbitration.
of contract
arbitration."7
are
between the
disputes -- but
only
submit to
Id. at 1924.
___
____________________
7.
enforce
foreign
money
as a matter of law,
judgments,
even
those
actions to
confirming
(1974).
See
___
First Options.
______________
See
___
also
____
Mastrobuono
___________
-1212
v. Shearson Lehman
________________
So we apply the
unless there
did
agreement between
question of
INX and
There is
an arbitrator.
nothing in the
that the
be decided by
We
also
agree
with
the
not required.
"[G]iven the
forced
to arbitrate
agreed
to submit
interpret
the
issues it
to arbitration,"
the
court
that
principle that a
only those
silence of
district
id. at
___
agreement on
party can
be
specifically has
1925, we
this
do not
point to
The
ultimately,
and
the strong
underlying
undercut,
not
the
policy reasons
adoption
served,
Arbitration clauses
lend itself to
by
of the
acceptance
favoring arbitration
Convention
of
would
be
INX's
position.
to be another
weapon in
the
arsenal
for imposing
delay
and costs
in
the dispute
____________________
arbitrability of petitioners'
-1313
resolution
process.
contracts to
agree
to a
Underlying
arbitrate is
the policy
a belief that
mutually optimal
method and
of
enforcing
where parties
forum for
can
dispute
Chrysler-Plymouth, Inc.,
_______________________
473 U.S.
Co.,
___
56 F.3d
844, 848
service sold in a
the sellers
(7th Cir.
Glass &
_______
v. Excelsior Foundry
_________________
1995) ("Arbitration
competitive market.
The rules
is a
adopted by
Shavell,
Alternative
Dispute
Resolution: An
Economic
__________________________________________________
Analysis,
________
24
J.
Legal
Stud.
1,
8-9
(1995)
(a
central
rationale for
In
the context
of
international
contracts,
the
procedural schematas,
and legal
cultures.
This
is fertile
arguments
sought
would lead
to
avoid.
to
the very
Cf.
___
problems the
Elizabeth
Warren,
92 Mich.
348-49
legal
(1993)
(Differences
among
Convention
Bankruptcy
__________
L. Rev.
systems
336,
provide
-1414
incentives
that
behind
are wasteful
such
and
drive up
[arbitration]
costs.).
clauses,
and
"The
the
intention
reason
for
judicial enforcement of
multiple forums."
Neither
adopting
party
allow or encourage
simultaneously or sequentially in
efficiency
INX's arguments.
nor
The
economy
are
scenario here --
served
by
in which a
contracted (even
if driven by looming
its
a default
hands while
insolvency8), sits on
judgment is
entered against
it
be filed
against it,
undermines
both
the
and only
certainty
then cries
and
predictability
arbitration agreements
Motors,
______
631
473
U.S.
at
(Courts
"arbitration" --
should
which
Cf. Mitsubishi
___ __________
avoid
inviting
"'unseemly
damage the
imperil the
fabric of
advantages. . . .
[It would]
trade, and
businessmen to enter
____________________
8.
Ordinarily
players
in
far
dispute
between
on-going
commercial
obtain an advantage
is
in a single dispute.
in financial distress,
But
where a party
these reputational
checks become
-1515
417
U.S.
at 516-17);
should
not
arbitration
make the
be
F.2d
see
___
108, 112
permitted
to
as a "tactic in
litigation too
also
____
use
Gilmore v.
_______
(2d
a war of
expensive for
Shearson/Am.
____________
Cir. 1987)
delayed
(parties
assertion of
attrition designed to
plaintiff"); Allied_______
Bruce Terminix Cos. v. Dobson, 115 S. Ct. 834, 841 (1995) (in
___________________
______
interpreting
the
Federal Arbitration
Act court
notes that
of Puerto
Rico
is also
appropriate,
allows
removal if
action "relates
under the
Convention.
to an
under either
of the
arbitration agreement
Convention," and it
of
two
Section
205
[state] court
. .
. falling
is arguable, though
far from
defense
"relating
to an
viewed as being
arbitration
agreement."
properly removed
If
on the basis
the case
is
of both
the
finding of
waiver ultimately
jurisdiction.9
for federal
____________________
9.
Menorah
jurisdiction
based on
argues
this
jurisdiction over
1447(d)
that
the
of
court
lacks
appellate
court's remand
order was
its lack
removed case
and
of
subject
that 28
matter
U.S.C.
See
___
-1616
counterclaim alone,
the
pendent claim
could
be
remanded.
removed
case where all the federal claims were gone and only
pendent
See
___
28 U.S.C.
52,
n.20 (1st
Cir.
1989).
Since
v. Comas, 888
_____
this case
over a year
prior to its
discretion
remand
the pendent
had been
to
claims
1367(c)
in
the
removal
exercise of
was particularly
appropriate.
The district
court's order
remanding the
case to
the
Superior Court
of
Puerto Rico,
so that
the exequatur
____________________
Menorah
also
that
the
of the proceedings
in
on
U.S.
resolved
524, 528-33
in favor
of
by it.
(1976)
See Norton
___ ______
(where merits
the party
v. Mathews,
_______
can
challenging
be easily
jurisdiction,
Cir. 1993);
not
reach those
arguments,
we
need
Because we
not address
that
-1717
Menorah.
_______
-1818