Rethinking Removal And “Relates To”: International Arbitration Disputes And The N.Y. Convention

To most, “The New York Convention” may sound like a gigantic conference center filled with people wearing “I heart NY” shirts and eating thin crust pizza, but for a small group of international commercial litigators, it sounds like a trump card to end all trump cards, a ticket into federal court and—eventually—out to arbitration.

The N.Y. Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“Convention”) is an obscure and infrequently utilized part of Chapter 2 of the Federal Arbitration Act implementing the United Nation’s Convention covering how to enforce and recognize foreign arbitral awards and agreements. One of the marvels of the Convention is that it contains special, extremely defendant-friendly removal provisions. Where these provisions come to life though is in how the courts construe and enforce them. Specifically, the Convention requires that a foreign arbitration agreement “relate to” the subject matter of the case for it to be removable, irrespective of diversity of citizenship or federal question jurisdiction. The Fifth Circuit originally crafted a standard in Marathon Oil v. Ruhrgas, A.G. interpreting the “relates to” requirement that struck the right balance to allow easy removal but maintain structure. Now, however, the Fifth Circuit has created a new standard in Beiser v. Weyler interpreting “relates to” so broadly that the gate into federal court is blown right off of its hinges. Alarmingly, more and more circuits are picking up the Fifth Circuit’s new test. Many circuits though have yet to adopt any test as these cases are very niche and come up only on occasion.

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