Independent Specialty Insurance Company, et al. v. Lower Cameron Hospital Service District, et al.

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (Convention), implemented by Chapter 2 of the Federal Arbitration Act (FAA), see 9 U.S.C. §§ 201–208, governs enforcement of international arbitration agreements in federal court (to which it permits removal). In GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless USA, LLC, 590 U.S. 432, 445 (2020), the Court held that the Convention permits “enforcement of arbitration agreements by nonsignatories under domestic-law equitable estoppel doctrines.” But the Court reserved the question of “which body of law governs that determination.” Id. The courts of appeals have split 4–1 over whether federal or state law governs that equitable estoppel inquiry. Recognizing Congress’s desire to “unify the standards by which [international] agreements to arbitrate are observed” when it acceded to the Convention, see Scherk v. Alberto-Culver Co., 417 U.S. 506, 520 n.15 (1974), the First, Second, Fourth, and Ninth Circuits have held that federal common law supplies the relevant equitable estoppel principles. Here, in contrast, the Fifth Circuit held that when a party petitions to compel arbitration under the Convention, state law controls the equitable estoppel analysis. The question presented is whether federal common law or state law determines whether a nonsignatory can use equitable estoppel principles to enforce arbitration agreements governed by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards.