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SUPREME COURT OF THE UNITED STATES
_________________
No. 18–1048
_________________
GE ENERGY POWER CONVERSION FRANCE SAS, CORP.,
fka CONVERTEAM SAS, PETITIONER
v. OUTOKUMPU STAINLESS USA,
LLC, et al.
on writ of certiorari to the united states
court of appeals for the eleventh circuit
[June 1, 2020]
Justice Thomas delivered the opinion of the
Court.
The question in this case is whether the
Convention on the Recognition and Enforcement of Foreign Arbitral
Awards, June 10, 1958, 21 U. S. T. 2517,
T. I. A. S. No. 6997, conflicts with domestic
equitable estoppel doctrines that permit the enforcement of
arbitration agreements by nonsignatories. We hold that it does
not.
I
In 2007, ThyssenKrupp Stainless USA, LLC,
entered into three contracts with F. L. Industries, Inc., for
the construction of cold rolling mills at ThyssenKrupp’s steel
manufacturing plant in Alabama. Each of the contracts contained an
identical arbitration clause. The clause provided that “[a]ll
disputes arising between both parties in connection with or in the
performances of the Contract . . . shall be submitted to
arbitration for settlement.” App. 171.
After executing these agreements, F. L.
Industries, Inc., entered into a subcontractor agreement with
petitioner GE Energy Power Conversion France SAS, Corp. (GE
Energy), then known as Converteam SAS. Under that agreement, GE
Energy agreed to design, manufacture, and supply motors for the
cold rolling mills. Between 2011 and 2012, GE Energy delivered nine
motors to the Alabama plant for installation. Soon thereafter,
respondent Outokumpu Stainless USA, LLC, acquired ownership of the
plant from ThyssenKrupp.
According to Outokumpu, GE Energy’s motors
failed by the summer of 2015, resulting in substantial damages. In
2016, Outokumpu and its insurers filed suit against GE Energy in
Alabama state court. GE Energy removed the case to federal court
under 9 U. S. C. §205, which authorizes the removal of an
action from state to federal court if the action “relates to an
arbitration agreement . . . falling under the Convention
[on the Recognition and Enforcement of Foreign Arbitral Awards].”
GE Energy then moved to dismiss and compel arbitration, relying on
the arbitration clauses in the contracts between F. L.
Industries, Inc., and ThyssenKrupp.
The District Court granted GE Energy’s motion to
dismiss and compel arbitration with Outokumpu and Sompo Japan
Insurance Company of America.
Outokumpu Stainless USA LLC v.
Converteam SAS, 2017 WL 401951 (SD Ala., Jan. 30,
2017).[
1] The court held that
GE Energy qualified as a party under the arbitration clauses
because the contracts defined the terms “Seller” and “Parties” to
include subcontractors.
Id., at *4. Because the court
concluded that both Outokumpu and GE Energy were parties to the
agreements, it declined to address GE Energy’s argument that the
agreement was enforceable under equitable estoppel.
Id., at
*1, n. 1.
The Eleventh Circuit reversed the District
Court’s order compelling arbitration.
Outokumpu Stainless USA,
LLC v.
Converteam SAS, 902 F.3d 1316 (2018). The court
interpreted the Convention on the Recognition and Enforcement of
Foreign Arbitral Awards (New York Convention or Convention) to
include a “requirement that the parties
actually sign an
agreement to arbitrate their disputes in order to compel
arbitration.”
Id., at 1326 (emphasis in original). The court
concluded that this requirement was not satisfied because “GE
Energy is undeniably not a signatory to the Contracts.”
Ibid. It then held that GE Energy could not rely on
state-law equitable estoppel doctrines to enforce the arbitration
agreement as a nonsignatory because, in the court’s view, equitable
estoppel conflicts with the Convention’s signatory requirement.
Id., at 1326–1327.
Given a conflict between the Courts of Appeals
on this question,[
2] we granted
certiorari. 588 U. S. ___ (2019).
II
A
Chapter 1 of the Federal Arbitration Act (FAA)
permits courts to apply state-law doctrines related to the
enforcement of arbitration agreements. Section 2 of that chapter
provides that an arbitration agreement in writing “shall be
. . . enforceable, save upon such grounds as exist at law
or in equity for the revocation of any contract.” 9
U. S. C. §2. As we have explained, this provision
requires federal courts to “place [arbitration] agreements
‘ “upon the same footing as other contracts.” ’ ”
Volt Information Sciences, Inc. v.
Board of Trustees of
Leland Stanford Junior Univ.,
489 U.S.
468, 474 (1989) (quoting
Scherk v.
Alberto-Culver
Co.,
417 U.S.
506, 511 (1974)). But it does not “alter background principles
of state contract law regarding the scope of agreements (including
the question of who is bound by them).”
Arthur Andersen LLP
v.
Carlisle,
556 U.S.
624, 630 (2009).
The “traditional principles of state law” that
apply under Chapter 1 include doctrines that authorize the
enforcement of a contract by a nonsignatory.
Id., at 631
(internal quotation marks omitted). For example, we have recognized
that arbitration agreements may be enforced by nonsignatories
through “ ‘assumption, piercing the corporate veil, alter ego,
incorporation by reference, third-party beneficiary theories,
waiver and estoppel.’ ”
Ibid. (quoting 21 R. Lord,
Williston on Contracts §57:19, p. 183 (4th ed. 2001)).
This case implicates domestic equitable estoppel
doctrines. Generally, in the arbitration context, “equitable
estoppel allows a nonsignatory to a written agreement containing an
arbitration clause to compel arbitration where a signatory to the
written agreement must rely on the terms of that agreement in
asserting its claims against the nonsignatory.”
Id., at 200
(2017). In
Arthur Andersen, we recognized that Chapter 1 of
the FAA permits a nonsignatory to rely on state-law equitable
estoppel doctrines to enforce an arbitration agreement. 556
U. S., at 631–632.
B
The New York Convention is a multilateral
treaty that addresses international arbitration. 21
U. S. T. 2517, T. I. A. S. No. 6997. It
focuses almost entirely on arbitral awards. Article I(1) describes
the Convention as applying only to “the recognition and enforcement
of arbitral awards.”
Id., at 2519. Articles III, IV, and V
contain recognition and enforcement obligations related to arbitral
awards for contracting states and for parties seeking the
enforcement of arbitral awards.
Id., at 2519–2520. Article
VI addresses when an award can be set aside or suspended.
Id., at 2520. And Article VII(1) states that the “Convention
shall not . . . deprive any interested party of any right
he may have to avail himself of an arbitral award in the manner and
to the extent allowed by the law or the treaties of the country
where such award is sought to be relied upon.”
Id., at
2520–2521.
Only one article of the Convention addresses
arbitration agreements—Article II. That article contains only three
provisions, each one sentence long. Article II(1) requires “[e]ach
Contracting State [to] recognize an agreement in writing under
which the parties undertake to submit to arbitration all or any
differences which have arisen or which may arise between them in
respect of a defined legal relationship, whether contractual or
not, concerning a subject matter capable of settlement by
arbitration.”
Id., at 2519. Article II(2) provides that
“[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.”
Ibid.
Finally, Article II(3) states that “[t]he court of a Contracting
State, when seized of an action in a matter in respect of which the
parties have made an agreement within the meaning of this article,
shall, at the request of one of the parties, refer the parties to
arbitration, unless it finds that the said agreement is null and
void, inoperative or incapable of being performed.”
Ibid.
C
In 1970, the United States acceded to the New
York Convention, and Congress enacted implementing legislation in
Chapter 2 of the FAA. See 84Stat. 692, 9 U. S. C.
§§201–208. Chapter 2 grants federal courts jurisdiction over
actions governed by the Convention, §203; establishes venue for
such actions, §204; authorizes removal from state court, §205; and
empowers courts to compel arbitration, §206. Chapter 2 also states
that “Chapter 1 applies to actions and proceedings brought under
this chapter to the extent that [Chapter 1] is not in conflict with
this chapter or the Convention.” §208.
III
We must determine whether the equitable
estoppel doctrines permitted under Chapter 1 of the FAA, see
supra, at 3–4, “conflict with . . . the
Convention.” §208. Applying familiar tools of treaty
interpretation, we conclude that they do not conflict.
A
“The interpretation of a treaty, like the
interpretation of a statute, begins with its text.”
Medellín
v.
Texas,
552 U.S.
491, 506 (2008). The text of the New York Convention does not
address whether nonsignatories may enforce arbitration agreements
under domestic doctrines such as equitable estoppel. The Convention
is simply silent on the issue of nonsignatory enforcement, and in
general, “a matter not covered is to be treated as not covered”—a
principle “so obvious that it seems absurd to recite it,” A. Scalia
& B. Garner, Reading Law: The Interpretation of Legal Texts 93
(2012).
This silence is dispositive here because nothing
in the text of the Convention could be read to otherwise prohibit
the application of domestic equitable estoppel doctrines. Only one
Article of the Convention addresses arbitration agreements—Article
II—and only one provision of Article II addresses the enforcement
of those agreements—Article II(3). The text of Article II(3) states
that courts of a contracting state “shall . . . refer the
parties to arbitration” when the parties to an action entered into
a written agreement to arbitrate and one of the parties requests
referral to arbitration. The provision, however, does not restrict
contracting states from applying domestic law to refer parties to
arbitration in other circumstances. That is, Article II(3) provides
that arbitration agreements must be enforced in certain
circumstances, but it does not prevent the application of domestic
laws that are more generous in enforcing arbitration agreements.
Article II(3) contains no exclusionary language; it does not state
that arbitration agreements shall be enforced
only in the
identified circumstances. Given that the Convention was drafted
against the backdrop of domestic law, it would be unnatural to read
Article II(3) to displace domestic doctrines in the absence of
exclusionary language. Cf.
Marx v.
General Revenue
Corp.,
568 U.S.
371, 380–384 (2013).
This interpretation is especially appropriate in
the context of Article II. Far from displacing domestic law, the
provisions of Article II contemplate the use of domestic doctrines
to fill gaps in the Convention. For example, Article II(1) refers
to disputes “capable of settlement by arbitration,” but it does not
identify what disputes are arbitrable, leaving that matter to
domestic law.
Mitsubishi Motors Corp. v.
Soler
Chrysler-Plymouth,
Inc.,
473 U.S.
614, 639, n. 21 (1985). Similarly, Article II(3) states that it
does not apply to agreements that are “null and void, inoperative
or incapable of being performed,” but it fails to define those
terms. Again, the Convention requires courts to rely on domestic
law to fill the gaps; it does not set out a comprehensive regime
that displaces domestic law.
In sum, the only provision of the Convention
that addresses the enforcement of arbitration agreements is Article
II(3). We do not read the nonexclusive language of that provision
to set a ceiling that tacitly precludes the use of domestic law to
enforce arbitration agreements. Thus, nothing in the text of the
Convention “conflict[s] with” the application of domestic equitable
estoppel doctrines permitted under Chapter 1 of the FAA. 9
U. S. C. §208.
B
“Because a treaty ratified by the United
States is ‘an agreement among sovereign powers,’ we have also
considered as ‘aids to its interpretation’ the negotiation and
drafting history of the treaty as well as ‘the postratification
understanding’ of signatory nations.”
Medellín, 552
U. S., at 507 (quoting
Zicherman v.
Korean Air Lines
Co.,
516 U.S.
217, 226 (1996)). These aids confirm our interpretation of the
Convention’s text.
1
Our precedents have looked to the “negotiating
and drafting history” of a treaty as an aid in determining the
shared understanding of the treaty.
Id., at 226. Invoking
this interpretive aid, Outokumpu argues that the Convention’s
drafting history establishes a “rule of consent” that “displace[s]
varying local laws.” Brief for Respondents 27. We are unpersuaded.
For one, nothing in the text of the Convention imposes a “rule of
consent” that displaces domestic law—let alone a rule that allows
some domestic-law doctrines and not others, as Outokumpu proposes.
The only time the Convention uses the word “consent” is in Article
X(3), which addresses ratification and accession procedures.
Moreover, the statements relied on by Outokumpu do not address the
specific question whether the Convention prohibits the application
of domestic law that would allow nonsignatories to compel
arbitration. Cherry-picked “generalization[s]” from the negotiating
and drafting history cannot be used to create a rule that finds no
support in the treaty’s text.
Zicherman, 516 U. S., at
227.
To the extent the drafting history sheds any
light on the meaning of the Convention, it shows only that the
drafters sought to impose baseline requirements on contracting
states. As this Court has recognized, “[i]n their discussion of
[Article II], the delegates to the Convention voiced frequent
concern that courts of signatory countries . . . should
not be permitted to decline enforcement of such agreements on the
basis of parochial views of their desirability or in a manner that
would diminish the mutually binding nature of the agreements.”
Scherk, 417 U. S., at 520, n. 15 (citing G. Haight,
Convention on the Recognition and Enforcement of Foreign Arbitral
Awards: Summary Analysis of Record of United Nations Conference,
May/June 1958, pp. 24–28 (1958)). Nothing in the drafting history
suggests that the Convention sought to prevent contracting states
from applying domestic law that permits nonsignatories to enforce
arbitration agreements in additional circumstances.
2
“[T]he postratification understanding” of
other contracting states may also serve as an aid to our
interpretation of a treaty’s meaning.
Medellín, 552 U. S.,
at 507 (internal quotation marks omitted). To discern this
understanding, we have looked to the “[d]ecisions of the courts of
other Convention signatories,”
El Al Israel Airlines,
Ltd. v.
Tsui Yuan Tseng,
525
U.S. 155, 175 (1999), as well as the “postratification conduct”
of the governments of contracting states,
Zicherman, 516
U. S., at 227.
Here, the weight of authority from contracting
states indicates that the New York Convention does not prohibit the
application of domestic law addressing the enforcement of
arbitration agreements. The courts of numerous contracting states
permit enforcement of arbitration agreements by entities who did
not sign an agreement. See 1 G. Born, International Commercial
Arbitration §10.02, pp. 1418–1484 (2d ed. 2014) (compiling cases).
The United States identifies at least one contracting state with
domestic legislation illustrating a similar understanding. See
Brief for United States as
Amicus Curiae 28 (discussing
Peru’s national legislation). And GE Energy points to a
recommendation issued by the United Nations Commission on
International Trade Law that, although not directly addressing
Article II(3), adopts a nonexclusive interpretation of Article
II(1) and (2). Report of the United Nations Commission on
International Trade Law on the Work of Its Thirty-Ninth Session,
Recommendation Regarding the Interpretation of Article II,
Paragraph 2, and Article VII, Paragraph 1, of the Convention on the
Recognition and Enforcement of Foreign Arbitral Awards ¶¶1, 2,
U. N. Doc. A/61/17, annex II (July 7, 2006) (UN
recommendation).
These sources, while generally pointing in one
direction, are not without their faults. The court decisions,
domestic legislation, and UN recommendation relied on by the
parties occurred decades after the finalization of the New York
Convention’s text in 1958. This diminishes the value of these
sources as evidence of the original shared understanding of the
treaty’s meaning. Moreover, unlike the actions and decisions of
signatory nations, we have not previously relied on UN
recommendations to discern the meaning of treaties. See also
Yang v.
Majestic Blue Fisheries, LLC, 876 F.3d 996,
1000–1001 (CA9 2017) (declining to give weight to the 2006 UN
recommendation). But to the extent this evidence is given any
weight, it confirms our interpretation of the Convention’s
text.
3
Finally, the parties dispute whether the
Executive’s interpretation of the New York Convention should affect
our analysis. The United States claims that we should apply a
“ ‘canon of deference’ ” and give “ ‘ “great
weight” ’ ” to an interpretation set forth by the
Executive in an
amicus brief submitted to the D. C.
Circuit in 2014. Brief for United States as
Amicus Curiae 30
(quoting
Abbott v.
Abbott,
560 U.S.
1, 15 (2010)); see also Brief for United States as
Amicus
Curiae in No. 13–7004 (CADC), pp. 7, 9. GE Energy echoes
this request. Outokumpu, on the other hand, argues that the
Executive’s noncontemporaneous interpretation sheds no light on the
meaning of the treaty, asserting that the Executive expressed the
“opposite . . . view at the time of the Convention’s
adoption.” Brief for Respondents 33. Outokumpu asserts that this
Court has repeatedly rejected executive interpretations that
contradict the treaty’s text or the political branches’ previous
understanding of a treaty.
Id., at 34–35 (citing,
e.g., Chan v.
Korean Air Lines,
Ltd.,
490 U.S.
122, 136 (1989) (Brennan, J., concurring in judgment);
Perkins v.
Elg,
307 U.S.
325, 328, 337–349 (1939)).
We have never provided a full explanation of the
basis for our practice of giving weight to the Executive’s
interpretation of a treaty. Nor have we delineated the limitations
of this practice, if any. But we need not resolve these issues
today. Our textual analysis aligns with the Executive’s
interpretation so there is no need to determine whether the
Executive’s understanding is entitled to “weight” or “deference.”
Cf.
Edelman v.
Lynchburg College,
535 U.S.
106, 114–115, n. 8 (2002) (“[T]here is no need to resolve
deference issues when there is no need for deference”).
IV
The Court of Appeals did not analyze whether
Article II(3) of the New York Convention conflicts with equitable
estoppel. Instead, the court held that Article II(1) and (2)
include a “requirement that the parties
actually sign an
agreement to arbitrate their disputes in order to compel
arbitration.” 902 F. 3d, at 1326. But those provisions address
the recognition of arbitration agreements, not who is bound by a
recognized agreement. Article II(1) simply requires contracting
states to “recognize an agreement in writing,” and Article II(2)
defines the term “agreement in writing.” Here, the three agreements
at issue were both written and signed.[
3] Only Article II(3) speaks to who may request referral
under those agreements, and it does not prohibit the application of
domestic law. See
supra, at 6–7.
Because the Court of Appeals concluded that the
Convention prohibits enforcement by nonsignatories, the court did
not determine whether GE Energy could enforce the arbitration
clauses under principles of equitable estoppel or which body of law
governs that determination. Those questions can be addressed on
remand. We hold only that the New York Convention does not conflict
with the enforcement of arbitration agreements by nonsignatories
under domestic-law equitable estoppel doctrines.
* * *
For the foregoing reasons, we reverse the
judgment of the Court of Appeals and remand the case for further
proceedings consistent with this opinion.
It is so ordered.
