Green Enterprises, LLC v. Hiscox Syndicates Limited at Lloyd's of London ( 2023 )

United States Court of Appeals
For the First Circuit
No. 21-1542
GREEN ENTERPRISES, LLC,
Plaintiff, Appellant,
v.
HISCOX SYNDICATES LIMITED AT LLOYD'S OF LONDON; XL CATLIN
LLOYD'S SYNDICATE 2003; AMLIN LLOYD'S SYNDICATE 2001; CANOPIUS
LLOYD'S SYNDICATE 4444; NOA LLOYD'S SYNDICATE 3902; BLENHEIM
LLOYD'S SYNDICATE 5886; BRIT LLOYD'S SYNDICATE 2987/2988,
Defendants, Appellees,
DUAL CORPORATE RISKS LIMITED; CORRIE BAUCKHAM BATTS LIMITED;
LIMEBRIDGE, LLC; WILFREDO FIGUEROA NAZARIO;
INSURANCE COMPANIES A, B, C, D,
Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Jay A. García-Gregory, U.S. District Judge]
Before
Kayatta, Howard, and Gelpí,
Circuit Judges.
José A. Andreu-Collazo, with whom José A. Andréu-Fuentes,
José J. Lamas-Rivera, José R. Olmo-Rodríguez, and Andreu & Sagardia
were on brief, for appellant.
Gregory L. Mast, with whom Paul L. Fields, Jr., Taryn M.
Kadar, Fields Howell LLP, Fernando Sabater-Clavel, Luis J. Clas
Wiscovitch, and Saldaña, Carvajal & Vélez-Rivé, P.S.C. were on
brief, for appellees.
May 19, 2023
KAYATTA, Circuit Judge. Green Enterprises, LLC
("Green"), a Puerto Rican recycling company, filed an insurance
claim after a fire destroyed one of its plants. The underwriters
of Green's insurance policy, all syndicates at Lloyd's of London
("Underwriters"), denied the claim, prompting Green to initiate
this lawsuit. Pointing to an arbitration clause in the insurance
policy,1 the district court declined to decide the parties'
coverage dispute and granted Underwriters' motion to compel
arbitration. Green then timely filed this appeal.
As we will explain, this appeal presents a question of
first impression in this circuit that turns on the interactions
among Puerto Rico law, two federal statutes, and a multilateral
1 The arbitration clause provides:
If the Insured and the Underwriters fail to
agree in whole or in part regarding any aspect
of this Policy, each party shall, within ten
(10) days after the demand in writing by
either party, appoint a competent and
disinterested arbitrator and the two chosen
shall before commencing the arbitration select
a competent and disinterested umpire. The
arbitrators together shall determine such
matters in which the Insured and the
Underwriters shall so fail to agree and shall
make an award thereon, and if they fail to
agree, they will submit their differences to
the umpire and the award in writing of any
two, duly verified, shall determine the same.
The Parties to such arbitration shall pay the
arbitrators respectively appointed by them and
bear equally the expenses of the arbitration
and the charges of the umpire.
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treaty to which the United States is a party. For the following
reasons, we affirm the judgment of the district court granting
Underwriters' motion to compel arbitration and dismissing Green's
claims without prejudice.
I.
We "review de novo an order compelling arbitration
where" -- as here -- "the appeal involves solely legal issues as
to the enforceability of an arbitration clause." Pelletier v.
Yellow Transp., Inc., 549 F.3d 578, 580 (1st Cir. 2008).
Our analysis begins with the McCarran-Ferguson Act, Pub.
L. No. 79-15, 59 Stat. 33 (1945) (codified at 15 U.S.C. §§ 1011–
1015). Generally, a federal statute preempts any state law with
which the federal statute directly conflicts. See PLIVA, Inc. v.
Mensing, 564 U.S. 604, 617–18 (2011). The McCarran-Ferguson Act
largely flips this general rule on its head as applied to conflicts
between state laws regulating insurance and most acts of Congress.
It states: "No Act of Congress shall be construed to invalidate,
impair, or supersede any law enacted by any State for the purpose
of regulating the business of insurance . . . unless such Act
specifically relates to the business of insurance." 15 U.S.C.
§ 1012(b).
The parties assume (and therefore so shall we) that
Article 11.190 of the Puerto Rico Insurance Code, P.R. Laws Ann.
tit. 26, § 1119, is the type of state law favored by the McCarran-
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Ferguson Act; that is, it is a state2 law enacted for the purpose
of regulating the business of insurance. It prohibits and declares
void any agreement that "[d]epriv[es] the insured of right of
access to the courts for determination of his rights under [an
insurance] policy in event of dispute." Id. In this manner, it
renders unenforceable any provision in an insurance policy that
would channel the resolution of a coverage dispute to a forum other
than the courts. See Berrocales v. Tribunal Superior, 2 P.R.
Offic. Trans. 281, 284 (1974).
In so providing, P.R. Article 11.190 directly conflicts
with the command in Chapter II of the Federal Arbitration Act (FAA)
that courts enforce arbitration agreements between U.S. citizens
and non-citizens. 9 U.S.C. §§ 201, 202, 206. Chapter II of the
FAA is an act of Congress of general applicability that does not
specifically relate to the business of insurance. See Convention
Act, Pub. L. No. 91-368, 84 Stat. 692 (1970). So if the McCarran-
Ferguson Act applied, we would construe Chapter II of the FAA so
as not to supersede a state insurance law such as P.R.
Article 11.190. See Humana Inc. v. Forsyth, 525 U.S. 299, 306–07
(1999). As a result, P.R. Article 11.190 -- which voids any
provision in an insurance policy that deprives the insured of
2 The McCarran-Ferguson Act specifically defines "State" to
include Puerto Rico. 15 U.S.C. § 1015.
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access to the courts -- would reverse-preempt the FAA's general
mandate to enforce arbitration agreements.
Given the foregoing, Underwriters do not rely on
Chapter II of the FAA to sustain an order referring this coverage
dispute to arbitration. Instead, Underwriters seek to rely on the
Convention on the Recognition and Enforcement of Foreign Arbitral
Awards, June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 3 (the
"Convention") -- the multilateral treaty that Chapter II of the
FAA "implement[s]." See GE Energy Power Conversion Fr. SAS, Corp.
v. Outokumpu Stainless USA, LLC, 140 S. Ct. 1637, 1644 (2020); 9
U.S.C. § 201 ("[The Convention] shall be enforced in United States
courts in accordance with this chapter."). Article II(3) of the
Convention provides:
The 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.
The United States acceded to the Convention in September
1970, and Chapter II of the FAA became effective once the
Convention entered into force for the United States later that
same year. See Convention Act § 4; Convention, 21 U.S.T. 2517.
The parties agree that Green's arbitration agreement -- within a
commercial insurance policy issued by foreign underwriters to a
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domestic United States insured -- is the type of agreement
addressed by the Convention.
The parties also agree that because the Convention is a
treaty rather than an "Act of Congress," it is not subject to the
limiting construction favoring state insurance law to which any
such act is subject by virtue of the McCarran-Ferguson Act. Their
principal dispute on appeal trains instead on whether and to what
extent the Convention is "self-executing"; that is, is directly
enforceable as domestic law, "without the aid of any legislative
provision," so as to preempt the application of P.R. Article 11.190
in this lawsuit.3 Medellín v. Texas, 552 U.S. 491, 505 (2008)
(quoting Foster v. Neilson, 27 U.S. 253, 254 (1829), overruled on
other grounds by United States v. Percheman, 32 U.S. 51 (1833)).
To that issue, we devote the next section of this opinion.
II.
A.
The Supreme Court "has long recognized the distinction
between [self-executing] treaties that automatically have effect
as domestic law, and [non-self-executing treaties] that -- while
they constitute international law commitments -- do not by
3Underwriters also assert that, even if the Convention were
non-self-executing, they would prevail because the McCarran-
Ferguson Act does not apply to legislatively implemented treaties.
As described below, we need not address that argument to decide
this case.
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themselves function as binding federal law." Medellín, 552 U.S.
at 504. "[A] treaty is 'equivalent to an act of the legislature,'
and hence self-executing, when it 'operates of itself without the
aid of any legislative provision.'" Id. at 505 (quoting Foster,
27 U.S. at 254). "When, in contrast, '[treaty] stipulations are
not self-executing they can only be enforced pursuant to
legislation to carry them into effect.'" Id. (alteration in
original) (quoting Whitney v. Robertson, 124 U.S. 190, 194 (1888)).
In Medellín, the Supreme Court held that Article 94 of
the United Nations Charter did not give decisions of the
International Court of Justice immediate domestic legal effect.
Id. at 508–09. The Court's "interpretation of [the] treaty, like
the interpretation of a statute, beg[an] with its text." Id. at
506. Article 94 provides, "Each Member of the United Nations
undertakes to comply with the decision of the International Court
of Justice in any case to which it is a party." U.N. Charter
art. 94, ¶ 1. The Court, focusing on the text, concluded that
Article 94 was not self-executing because it "is not a directive
to domestic courts" and "does not provide that the United States
'shall' or 'must' comply with an ICJ decision, nor indicate that
the Senate that ratified the U.N. Charter intended to vest ICJ
decisions with immediate legal effect in domestic courts."
Medellín, 552 U.S. at 508. "Instead," the Court explained, "[t]he
words of Article 94 . . . call upon governments to take certain
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action," and "the U.N. Charter reads like 'a compact between
independent nations' that 'depends for the enforcement of its
provisions on the interest and the honor of the governments which
are parties to it.'" Id. at 508–09 (alterations in original)
(first quoting Comm. of U.S. Citizens Living in Nicar. v. Reagan,
859 F.2d 929, 938 (D.C. Cir. 1988); then quoting Edye v. Robertson,
112 U.S. 580, 598 (1884)). A non-self-executing treaty provision,
like Article 94, "addresses itself to the political, not the
judicial department; and the legislature must execute the contract
before it can become a rule for the Court." Id. at 516 (quoting
Foster, 27 U.S. at 314); see also Bond v. United States, 572 U.S.
844, 856 (2014) (applying Medellín to hold as non-self-executing
the Chemical Weapons Convention, which "provides that '[e]ach
State Party shall, in accordance with its constitutional
processes, adopt the necessary measures to implement its
obligations under this Convention'" (alteration in original)
(quoting Chemical Weapons Convention art. VII(1), Jan. 13, 1993,
S. Treaty Doc. No. 103-21, 1974 U.N.T.S. 317)).
In contrast, the text of the Convention makes plain that
Article II(3) provides a clear "directive to domestic courts."
Medellín, 552 U.S. at 508. Article II(3) by its express terms
directly commands courts to channel arbitrable disputes to
arbitration: "The court . . . shall . . . refer the parties to
arbitration . . . ." As the Ninth Circuit described, "This
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provision is addressed directly to domestic courts, mandates that
domestic courts 'shall' enforce arbitration agreements, and
'leaves no discretion to the political branches of the federal
government whether to make enforceable the agreement-enforcing
rule it prescribes.'" CLMS Mgmt. Servs. Ltd. P'ship v. Amwins
Brokerage of Ga., LLC, 8 F.4th 1007, 1013 (9th Cir. 2021) (quoting
Safety Nat'l Cas. Corp. v. Certain Underwriters at Lloyd's, London,
587 F.3d 714, 735 (5th Cir. 2009) (en banc) (Clement, J.,
concurring)), cert. denied, 142 S. Ct. 862 (2022). Based on this
characterization, that court then concluded, "A straightforward
application of the textual analysis outlined in Medellín compels
the conclusion that Article II, Section 3 is self-
executing . . . ." Id.The Second Circuit reached the opposite conclusion in
Stephens v. American International Insurance Co., 66 F.3d 41, 45
(2d Cir. 1995). But Stephens predated Medellín, offered no
analysis of the text of Article II(3), and contained little
explanation for why it concluded that the Convention was in
relevant part non-self-executing.4 By contrast, and with the
4 Presented with the same question, the Fourth and Fifth
Circuits declined to answer whether Article II(3) is self-
executing. Those courts instead concluded that, even assuming
Article II(3) is non-self-executing, the McCarran-Ferguson Act
does not apply to Chapter II of the FAA. See ESAB Grp., Inc. v.
Zurich Ins. PLC, 685 F.3d 376, 388 (4th Cir. 2012); Safety Nat'l
Cas. Corp., 587 F.3d at 731.
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benefit of Medellín, we find that the text of Article II(3)
manifests precisely the type of directive to United States courts
that is a hallmark of a self-executing treaty provision.
B.
Green offers no developed rebuttal to the foregoing
conclusion that the text of Article II(3), if read by itself,
plainly constitutes a command to domestic courts. Green argues,
instead, that we need to widen the scope of our textual inquiry to
consider the fact that other sections of the Convention contain no
such command and are non-self-executing.5 Green reasons that
because these other sections in the same treaty address the
arbitration of disputes in one manner or another, and are non-
self-executing, we should conclude that Article II(3) is also non-
self-executing notwithstanding its clear direction to courts to
refer disputes to arbitration. Green points to four such sections.
First, Article I(3), which gives contracting nations6
discretion to limit the treaty's application to commercial
relationships:
[Any Contracting State] may . . . declare that
it will apply the Convention only to
differences arising out of legal
5 Underwriters do not dispute that the other provisions to
which Green points are non-self-executing, and we assume the same
without deciding that matter.
6 We use the term "contracting nation," rather than
"contracting state" as used in the Convention, to avoid any
confusion with state law given the subject of this opinion.
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relationships, whether contractual or not,
which are considered as commercial under the
national law of the State making such
declaration.
Second, Article II(1), which requires contracting
nations -- rather than courts -- to recognize arbitral agreements:
Each Contracting State shall 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.
Third, Article III, which requires contracting
nations -- again, rather than courts themselves -- to recognize
and enforce arbitral awards:
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.
Finally, Article V(2), which gives contracting nations
discretion to refuse enforcement of arbitral awards in certain
circumstance:
Recognition and enforcement of an arbitral
award may also be refused if the competent
authority in the country where recognition and
enforcement is sought finds that: (a) The
subject matter of the difference is not
capable of settlement by arbitration under the
law of that country; or (b) The recognition or
enforcement of the award would be contrary to
the public policy of that country.
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To begin, we reject Green's "all or nothing" argument
that the inclusion of these non-self-executing provisions
necessarily renders the entire Convention non-self-executing.
Although Green is correct that "there is no controlling precedent"
on this question, we see no reason why the United States could not
enter into a treaty that commands court action on one matter while
leaving it to Congress to legislate such a command on a related
subject matter. We thus join the Ninth and Fifth Circuits in
concluding that a treaty can have both self-executing and non-
self-executing provisions. Lidas, Inc. v. United States, 238 F.3d
1076, 1080 (9th Cir. 2001) ("[I]t is far from uncommon for a treaty
to contain both self-executing and non-self-executing
provisions."); United States v. Postal, 589 F.2d 862, 884 n.35
(5th Cir. 1979) ("A treaty need not be wholly self-executing or
wholly executory. Therefore, a self-executing interpretation of
article 22 [of the High Seas Convention] would not necessarily
call for a similar interpretation of article 6." (citation
omitted)); see also Restatement (Fourth) of Foreign Relations Law
of the United States § 310 cmt. b (Am. L. Inst. 2018) ("Courts
often speak to whether a treaty as a whole is self-executing, but
the inquiry is best understood as requiring an assessment of
whether the particular treaty provision at issue is self-
executing.").
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Of course, this holding does not foreclose Green's
claim; the fact that a treaty can have both self-executing and
non-self-executing provisions does not by itself compel the
conclusion that Article II(3), specifically, is self-executing.
Green therefore separately argues that even if Article II(3)
appears from its text to be self-executing, it simply cannot
function on a standalone basis without the sections that are non-
self-executing, and thus Article II(3) itself cannot be considered
self-executing.
As to Articles I(3) and V(2), we see no reason why
Article II(3)'s command to courts could not stand by itself without
legislation implementing those other two articles. Each simply
grants contracting nations the option of limiting the scope of
enforcement of arbitral agreements and awards. Courts of a
contracting nation need not hold off on enforcing Article II(3)
until the political branch has affirmatively decided whether or
not to enact such limitations; a court asked to refer a dispute to
arbitration must only determine whether any relevant limitations
have yet been enacted.
Similarly, we see no reason why the assumed non-self-
executing status of Article II(1) must carry over to
Article II(3). Green points to the fact that Article II(3) does
not directly define which "agreements" are judicially enforceable
under that provision, instead referring to "agreement[s] within
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the meaning of this article." The relevant definition appears in
Article II(1), which requires contracting nations 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." Green, in turn, asserts that
Article II(1) left it to the contracting nations to determine which
"subject matter [is] capable of settlement by arbitration" for
purposes of the Convention, and thus, without implementing
legislation, courts cannot know which "agreements" should be
enforced.7 But courts tasked with enforcing Article II(3) can
simply look to the plain text of Article II(1) to understand what
types of agreements fall "within the meaning of this article" --
and that remains true regardless of whether any legislation has
been enacted to "recognize" such agreements.
7 Green does not argue that insurance disputes generally
constitute a subject that is not "capable of settlement by
arbitration" under the Convention, and any such argument would be
meritless. See Mitsubishi Motors Corp. v. Soler Chrysler-
Plymouth, Inc., 473 U.S. 614, 639 n.21 (1985) ("Congress may
specify categories of claims it wishes to reserve for decision by
our own courts without contravening this Nation's obligations
under the Convention. But we decline to subvert the spirit of the
United States' accession to the Convention by recognizing subject-
matter exceptions where Congress has not expressly directed the
courts to do so.").
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Green also cites the Supreme Court's statement in GE
Energy that the "Convention was drafted against the backdrop of
domestic law," and "the provisions of Article II contemplate the
use of domestic doctrines to fill gaps in the Convention." 140 S.
Ct. at 1645. The Court specifically lists Article II(1) as an
example of such a gap, explaining that that provision "does not
identify what disputes are [capable of settlement by arbitration],
leaving that matter to domestic law." Id. Green reads this to
mean that implementing legislation affirmatively defining which
matters are "capable of settlement by arbitration" for purposes of
the Convention is necessary to "fill the gap[]." See id.Green's conclusion, however, rests on the assumption
that the "domestic law" the Court references includes only
legislation enacted with the purpose of implementing the
Convention. That assumption is plainly incompatible with the
Court's statement, in the course of the same analysis, that the
"Convention was drafted against the backdrop of domestic law."
Id. (emphasis added). The "domestic law" that defines which
matters are "capable of settlement by arbitration" includes the
body of law regarding arbitrability predating accession to the
Convention -- namely Chapter I of the FAA, 9 U.S.C. §§ 1–16, and
the case law interpreting it. Chapter I, which was enacted in
1925, provides that commercial arbitration agreements are
generally enforceable, with a few exceptions not relevant here.
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See Fraga v. Premium Retail Servs., Inc., 61 F.4th 228, 233 (1st
Cir. 2023). Accordingly, even in the absence of any specific
implementing legislation, Article II(3) could have still operated
immediately upon the Convention's entry into force. Courts tasked
with its enforcement would simply look to existing doctrines for
guidance in determining which matters are arbitrable in the
international context -- just as a court enforcing the self-
executing extradition treaty at issue in United States v. Rauscher,
119 U.S. 407 (1886), discussed further below, would have relied
upon existing definitions of certain crimes that served as grounds
for extradition but were left undefined by the treaty. See id. at
410–11, 417–19.
That courts might need to look to previously enacted
legislation (and the case law interpreting it) when carrying out
a treaty's terms does not render a treaty non-self-executing, and
Green does not argue otherwise. This conclusion may appear, at
first, to sit in tension with the Supreme Court's holding in
Medellín that a treaty is self-executing "when it 'operates of
itself without the aid of any legislative provision.'" Medellín,
552 U.S. at 505 (quoting Foster, 27 U.S. at 254); see also id. at
505–06 ("Only '[i]f the treaty contains stipulations which are
self-executing, that is, require no legislation to make them
operative, [will] they have the force and effect of a legislative
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enactment.'" (alterations in original) (quoting Whitney, 124 U.S.
at 194)).
However, the "legislative provision" the Court mentioned
there most clearly refers to implementing legislation intended to
give substantive meaning and domestic force to a treaty's terms,
not -- as is relevant here -- existing legislation, enacted
entirely independently from the treaty's negotiation or accession
process, that establishes the general background principles
against which a treaty is drafted. In Medellín, the Court held
that Article 94 of the U.N. Charter is non-self-executing in part
because it is "a commitment on the part of U.N. members to take
future action through their political branches." See id. at 508
(emphasis added) (quoting Brief for the United States as Amicus
Curiae at 34, Medellín v. Dretke, 544 U.S. 660 (2005) (No. 04-
5928), 2010 WL 3375626). Similarly, in Foster -- the case from
which Medellín quoted the "aid of any legislative provision"
passage -- the Court characterized non-self-executing treaties as
"pledg[ing] the faith of the United States to pass acts which shall
ratify and confirm [the treaty's terms]." 27 U.S. at 314. In
contrast, when "the Executive determines that a treaty should have
domestic effect of its own force, that determination may be
implemented . . . by ensuring that it contains language plainly
providing for domestic enforceability." Medellín, 552 U.S. at
526; cf. id. at 508 ("[Article 94 does not] indicate that the
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Senate that ratified the U.N. Charter intended to vest ICJ
decisions with immediate legal effect in domestic courts."). The
question whether a treaty provision can operate "without the aid
of any legislative provision" thus focuses on whether the provision
constitutes a call for political action or instead is intended for
immediate and direct judicial application. And as discussed,
Article II(3) falls into the latter category: It is simply a
command to courts to enforce certain arbitration agreements, using
principles already established through pre-existing legislation
and case law.8
This understanding of Article II(3) is consistent with
Asakura v. City of Seattle, 265 U.S. 332 (1924), and United States
v. Rauscher, 119 U.S. 407 (1886). In each case, the Court held
that a treaty provision was self-executing even though the parties
to the treaty retained certain political discretion and courts
tasked with enforcing the treaty were required to look to domestic
law. In Asakura, a United States-Japan "friendly relations" treaty
provided that the citizens of each country "shall have liberty to
enter, travel and reside in the territories of the other to carry
on trade . . . and generally to do anything incident to or
8 Of course, we do not suggest that courts enforcing
Article II(3) should not also look to legislation enacted during
or at any time after the accession process when answering questions
of arbitrability -- we merely conclude that such legislation was
not necessary for enforcement of Article II(3) at the time the
Convention entered into force for the United States.
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necessary for trade upon the same terms as native citizens or
subjects, submitting themselves to the laws and regulations there
established." 265 U.S. at 340 (quoting Treaty of Commerce and
Navigation, Japan-U.S., art. I, Apr. 5, 1911, 37 Stat. 1504).
Although the substantive "terms" of carrying on trade in each
country were clearly within each country's discretion and integral
to the resolution of any alleged treaty violation, the provision
calling for the equal enforcement of those terms was nonetheless
self-executing. See id. at 341.
In Rauscher, a United States-Great Britain extradition
treaty provided for the extradition from one country of someone
charged in the other country with any of seven listed crimes (e.g.,
murder or robbery), but only if "such evidence of criminality as,
according to the laws of the place where the fugitive . . . [was]
found, would justify his apprehension and commitment for trial if
the crime" had been committed in that place. 119 U.S. at 411(quoting Treaty of Aug. 9, 1842, Gr. Brit.-U.S., art. X, 8 Stat.
572). "[T]he laws of the place where the fugitive . . . [was]
found" were plainly within the discretion of the political and
legal bodies of each country, and courts tasked with enforcing the
treaty would need to look to such laws, but this did not cause the
Court to hesitate in concluding that the treaty was self-executing.
See id. at 417–19. Here too, many questions of arbitrability are
left to the contracting nations, see GE Energy, 140 S. Ct. at 1645,
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but Article II(3)'s command to courts to enforce an arbitration
agreement is self-executing.9
The issue is closer with Article III, which calls for
the recognition and enforcement of arbitral awards. Recall that
Article II(3) commands only that courts refer covered disputes to
arbitration; i.e., it effectively eliminates access to courts for
the resolution of arbitrable disputes as long as at least one party
insists on adhering to the parties' agreement to arbitrate. But
Article II(3) is silent as to decisions and awards made by
arbitrators, the enforcement of which is the primary focus of the
rest of the Convention's substantive provisions, including
Article III. See GE Energy, 140 S. Ct. at 1644. This brings us
to the final thrust of Green's purely textual argument --
contending that Article II(3) (commanding courts to refer disputes
to arbitration) and Article III (commanding contracting nations to
enforce the awards that emerge as a result of the referrals) are
"symbiotically interdependent." Hence, reasons Green, because
9We distinguish this situation from one in which a
hypothetical treaty provided the following: Article I -- "The
contracting nations shall each establish a new code for regulating
the enforcement of international arbitration agreements"; and
Article II -- "The courts of each contracting nation shall apply
the code adopted pursuant to Article I to the citizens of each
contracting nation on the same terms." In that scenario, courts
enforcing Article II would have no code to apply until the
"political department" took action in compliance with Article I.
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Article III by its terms does not appear to be self-executing,
neither can Article II(3).
We see several fatal flaws in this argument. To begin,
the notion that the two articles are interdependent, thus as goes
one so goes the other, does not itself tell us which way to go.
As discussed, Article II(3) gives its command directly to courts,
while Article III is addressed to "[e]ach Contracting State." But
a command that a contracting nation "recognize" and "enforce"
arbitration decisions could be seen, in substance, as a directive
to a nation's courts. Cf. Medellín, 552 U.S. at 508 (explaining
that the treaty "does not provide that the United States
'shall' . . . comply with an ICJ decision"). So if the two
articles must share a single classification, it is hardly clear
that non-self-executing would be the correct choice. More
fundamentally, even assuming that Article III is non-self-
executing (an issue we do not decide), that does not compel us to
conclude that Article II(3) cannot stand on its own. As the
Supreme Court observed in Medellín, "submitting to jurisdiction
and agreeing to be bound are two different things." 552 U.S. at
507. The same is true for referring a dispute to arbitration and
enforcing the award that results from that arbitration. Hence,
doubt about whether a nation's commitment to enforce arbitral
awards is self-executing provides an insufficient reason to deem
non-self-executing a treaty's express command to the nation's
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courts to refer covered disputes to arbitration. And for that
reason, Green's well-supported insistence that our textual
analysis of the Convention need consider the Convention as a whole
does not get Green where it needs to go in order to secure a
reversal of the district court's order referring this dispute to
arbitration.
We certainly acknowledge the difficulties that could
arise if a court granted a motion to compel arbitration but was
then unable to enforce the resulting award. But we need not
speculate how -- in a hypothetical world without any implementing
legislation -- a dispute over an arbitral award would be resolved
if the losing party refused to comply with the arbitrator's
decision. We do not have before us the enforcement of an award,
but rather a motion to compel arbitration. More importantly, in
the real world, section 207 of the FAA instructs federal courts to
confirm "arbitral award[s] falling under the Convention." 9 U.S.C
§ 207.10 And Green does not argue that Puerto Rico insurance law
10 While the Puerto Rico Commercial International Arbitration
Act allows courts to refuse enforcement of arbitral awards if
"[t]he subject matter of the dispute is not capable of settlement
by arbitration under the laws of Puerto Rico," P.R. Laws Ann.
tit. 32, § 3249a(1)(b)(i), that act does not specifically regulate
"the business of insurance," and thus would not reverse-preempt
the FAA under the McCarran-Ferguson Act in the event of any alleged
conflict. Additionally, the two limitations on enforcement
contained within Article V(2) of the Convention, as implemented
through section 207 of the FAA, would not operate to block
enforcement of an award here. First, as described supra in note 7,
insurance disputes are generally capable of settlement by
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conflicts with that section, nor could Green so argue. "When
federal law does not directly conflict with state regulation, and
when application of the federal law would not frustrate any
declared state policy . . . , the McCarran-Ferguson Act does not
preclude its application." Humana Inc., 525 U.S. at 310. Here,
Article II(3) of the Convention directly conflicts with and
preempts P.R. Article 11.190's proscription of insurance policy
clauses that "[d]epriv[e] the insured of right of access to the
courts." After the parties have been directed to arbitration
pursuant to Article II(3), P.R. Article 11.190 simply has no
application; its text cannot be read to conflict with the FAA's
call to enforce an award after the parties have already gone
through arbitration. Indeed, such a reading would be contrary to
the interests of insureds seeking coverage who are precluded by
the Convention from litigating their claims in courts in the first
insistence.
C.
Green turns next to the Convention's ratification
history and the associated enactment of Chapter II of the FAA to
support its reading of Article II(3). See Medellín, 552 U.S. at
507 ("Because a treaty ratified by the United States is 'an
arbitration. Second, public policy favors enforcement here. See
Mitsubishi Motors Corp., 473 U.S. at 631 ("[T]he emphatic federal
policy in favor of arbitral dispute resolution . . . applies with
special force in the field of international commerce.").
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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." (quoting Zicherman v. Korean Air Lines Co.,
516 U.S. 217, 226 (1996))). In 1968, when President Lyndon B.
Johnson submitted the Convention to the Senate for approval, he
explained in the letter of transmittal that "[c]hanges in title 9
(arbitration) of the United States Code will be required before
the United States becomes a party to the convention. The United
States instrument of accession to the convention will be executed
only after the necessary legislation is enacted." 114 Cong.
Rec. 10488 (1968). A Senate report regarding the Convention made
the same statement. See S. Exec. Rep. No. 90-10, at 2 (1968)
("Changes in the Federal Arbitration Act . . . will be required
before the United States becomes party to the convention.").
Green argues that deferring accession until after the
enactment of "the necessary legislation" is proof that the
Convention would have no domestic legal effect absent legislation.
But one can just as easily view the deferral of accession as
evidence that the President viewed Article II(3) as self-
executing -- and thus making it prudent to have legislation in
place that would become operative once a treaty that contained
such a command to United States courts entered into force. See
Convention Act § 4. Simply put, if, as the text strongly suggests,
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the command to courts to refer cases to arbitration is self-
executing, one can easily see why the President and Congress might
have first wanted to attend to the details of how parties should
go about requesting such referral and what would follow when a
referral to arbitration was made. Supporting this reading is the
fact that most of Chapter II's provisions "address procedural and
logistical matters, such as federal courts' jurisdiction to hear
claims arising under the Convention and the proper venue for such
claims." CLMS Mgmt., 8 F.4th at 1014. Ambassador Richard D.
Kearney, a legal advisor for the State Department, testified before
the Senate Foreign Relations Committee that "[w]e will not submit
the U.S. ratification of the convention until this legislation
establishing adequate procedures has been approved by the
Congress," S. Exec. Rep. No. 90-10, at 6 (emphasis added), further
indicating that the Executive viewed legislation as attending to
logistical details rather than as a requirement for the
Convention's substantive legal force. See also id. at 5–6 ("The
Department of Justice . . . has suggested that implementing
legislation . . . is desirable . . . to insure the coverage of the
[FAA] extends to all cases arising under the treaty and . . . to
take care of related venue and jurisdictional requirement
problems.").
Furthermore, even if Congress and the Executive believed
that the enactment of Chapter II was necessary to give the
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Convention domestic force, such belief could simply have been
attributable to those provisions that we have assumed, for purposes
of this opinion, are non-self-executing. As described above, the
need for legislation to make those provisions operative would not
render Article II(3) non-self-executing.
Green additionally points to Senate testimony by
Ambassador Kearney regarding the impact of accession on state law:
"[O]ur purpose in adhering to the Convention is for the beneficial
effects it will produce for the foreign commerce of the United
States and not to make any changes with respect to matters that
are traditionally within the jurisdiction of the 50 states of the
Union." S. Rep. No. 91-702, at 6 (1970). From this statement,
Green concludes that the Executive understood the Convention to be
non-self-executing because, if it were self-executing, it would
have altered state law regarding arbitration of insurance
disputes. But Green takes the statement out of its necessary
context. Ambassador Kearney was explaining the Executive's
decision to file a declaration, in accordance with Article I(1),
to limit the Convention to commercial legal relationships so that
its terms would not apply to matters "traditionally within the
jurisdiction" of states, such as "family status." Id. He was
not, as is necessary for Green's argument, implicitly declaring
that the arbitrability of international insurance disputes was
beyond federal jurisdiction and would be unaffected by the
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Convention. Ambassador Kearney had earlier described that, even
prior to accession to the Convention, "the general subject of
arbitration [was] beyond doubt [already] completely within the
Federal jurisdiction if it concerns foreign or interstate
commerce." S. Exec. Rep. No. 90-10, at 8.
The Executive's more recent statements regarding the
Convention's status further undermine Green's argument. The
Supreme Court requested the views of the United States when
deciding whether to grant a petition for a writ of certiorari in
Safety National. Brief for the United States as Amicus Curiae at
1, La. Safety Ass'n of Timbermen -- Self Insurers Fund v. Certain
Underwriters at Lloyd's, London, 562 U.S. 827 (2010) (No. 09-945),
2010 WL 3375626. There, the Fifth Circuit had held that the
McCarran-Ferguson Act does not apply to the Convention and
Chapter II of the FAA, but it did not reach the issue of whether
Article II(3) is self-executing. Safety Nat'l, 587 F.3d at 731.
The United States, in an amicus brief opposing the
petition for certiorari, asserted that Article II in its entirety
is self-executing based on its plain text, specifically addressing
both Article II(1) and Article II(3). Brief for the United States
at 8–11. The brief further explained that, in the Executive's
view, the enactment of Chapter II is not evidence of non-self-
execution; rather, such enactment "is consistent with the approach
taken in the context of certain tax and extradition treaties that
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are self-executing but nevertheless are accompanied by
implementing legislation to facilitate their enforcement." Id. at
11.
The Supreme Court described in Medellín that "[i]t
is . . . well settled that the United States' interpretation of a
treaty 'is entitled to great weight.'" 552 U.S. at 513 (quoting
Sumitomo Shoji Am., Inc. v. Avagliano, 457 U.S. 176, 185 (1982)).
While the Court subsequently noted in GE Energy that it has "never
provided a full explanation of the basis for [its] practice of
giving weight to the Executive's interpretation of a treaty," the
Court nonetheless is yet to "delineate[] the limitations of this
practice, if any." 140 S. Ct. at 1647. The government's clear
view as expressed in its Safety National amicus brief thus lends
further support to our conclusion here.
Finally, Green points to dicta in Medellín regarding the
role of Chapter II in implementing the Convention. In holding
that Article 94 of the United Nations Charter is non-self-
executing and thus judgments of the International Court of Justice
are not binding, the Court described:
Congress is up to the task of implementing
non-self-executing treaties, even those
involving complex commercial disputes. The
judgments of a number of international
tribunals enjoy a different status because of
implementing legislation enacted by Congress.
See, e.g., 22 U.S.C. § 1650a(a) ("An award of
an arbitral tribunal rendered pursuant to
chapter IV of the [Convention on the
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Settlement of Investment Disputes] shall
create a right arising under a treaty of the
United States. The pecuniary obligations
imposed by such an award shall be enforced and
shall be given the same full faith and credit
as if the award were a final judgment of a
court of general jurisdiction of one of the
several States"); 9 U.S.C. §§ 201–208 ("The
[U.N.] Convention on the Recognition and
Enforcement of Foreign Arbitral Awards of
June 10, 1958, shall be enforced in United
States courts in accordance with this
chapter," § 201). Such language demonstrates
that Congress knows how to accord domestic
effect to international obligations when it
desires such a result.
Medellín, 552 U.S. at 521–22 (alterations in original) (citation
omitted). Green urges us to read this passage to mean that the
Convention in its entirety is non-self-executing. The Court,
however, cites Chapter II specifically in support of the
"different status" of "[t]he judgments of . . . international
tribunals." Id. at 521 (emphasis added). And, as the Court noted
in GE Energy, Article II stands out for addressing arbitration
agreements, unlike the rest of the Convention which "focuses almost
entirely on arbitral awards." 140 S. Ct. at 1644 (emphasis added).
So the Court's reference to Chapter II in Medellín can, at most,
be read to support the non-self-executing status of the
Convention's provisions that pertain to the enforcement of
arbitral awards, such as Article III. And we have already assumed,
for purposes of this opinion, that those provisions are non-self-
executing. See Safety Nat'l, 587 F.3d at 736 (Clement, J.,
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concurring) ("The Court's dictum cited [Chapter II of the FAA] as
an exemplar of Congress's ability to accord 'domestic effect' to
the judgments of similar international tribunals. . . . It was
therefore Article III, and not Article II, that the Medellín Court
was addressing.").
In sum, none of Green's arguments can overcome the self-
executing nature of the plain text of Article II(3). That article,
which is not an act of Congress, has the force of law and applies
directly to preempt Puerto Rico law. We need not address whether
Puerto Rico insurance law would reverse-preempt Chapter II of the
FAA were Article II(3) non-self-executing.
III.
As an alternative argument, Green posits that, assuming
Article II(3) is self-executing, the arbitration agreement here is
"incapable of being performed" under Article II(3)'s own terms.
Article II(3) allows a court to refuse enforcement of an
arbitration agreement if "it finds that the said agreement is null
and void, inoperative or incapable of being performed."
Separately, Article V(2)(b) allows contracting nations to refuse
enforcement of an arbitral award if such enforcement "would be
contrary to the public policy of that country." Putting these
provisions together, Green argues that if enforcing an arbitration
agreement would give rise to an award unenforceable under
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Article V(2)(b), then the arbitration agreement itself should be
deemed "incapable of being performed" under Article II(3).
Green asserts that the instant agreement falls into this
category because it would "contravene [the] public policy" --
codified in the McCarran-Ferguson Act -- of leaving insurance
regulation to the states. This policy-based argument runs headlong
into Ledee v. Ceramiche Ragno, 684 F.2d 184 (1st Cir. 1982), in
which we held that the "null and void" clause of Article II(3)
"must be interpreted to encompass only those situations -- such as
fraud, mistake, duress, and waiver -- that can be applied neutrally
on an international scale." Id. at 187. However, in Mitsubishi
Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985),
the Supreme Court noted that "public policy" could serve as the
basis for "condemning" an arbitration agreement covered by the
Convention, although it was not specifically addressing the "null
and void" clause. Id. at 637 n.19.
We need not decide whether Mitsubishi abrogated our
holding in Ledee, as Green's argument fails even if a court could
deem an arbitration agreement "incapable of being performed" on
policy grounds.11 The McCarran-Ferguson Act calls for reverse-
11 Green separately argues that such policy discretion
indicates that Article II(3) is non-self-executing. But, as
discussed above, limited discretion over Article II(3)'s
application does not render that provision non-self-executing, as
courts can turn to existing doctrines to "fill the gaps." See GE
Energy, 140 S. Ct. at 1645 ("Article II(3) states that it does not
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preemption only of "Acts of Congress"; any policy preference
expressed within it regarding state regulation of insurance does
not bear on the relationship between state law and a self-executing
treaty provision. And the policy considerations weigh strongly in
favor of enforcement here, as "the emphatic federal policy in favor
of arbitral dispute resolution . . . applies with special force in
the field of international commerce." Mitsubishi Motors Corp.,
473 U.S. at 631; see also id. at 629 ("[C]oncerns of international
comity, respect for the capacities of foreign and transnational
tribunals, and sensitivity to the need of the international
commercial system for predictability in the resolution of disputes
require that we enforce the parties' [arbitration] agreement, even
assuming that a contrary result would be forthcoming in a domestic
context.").
IV.
For the foregoing reasons, the judgment of the district
court is affirmed.
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."). Similarly, the Convention does not
define the precise procedure by which a party may obtain a court
order in compliance with Article II(3), yet that is hardly a reason
to view Article II(3) as anything other than a direct command that
courts -- using whatever domestic procedures apply -- refer
disputes to arbitration.
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