Aydin Corporation v. Union of India

RYMER, Circuit Judge:

In 1976, Aydin contracted to sell equipment to the government of India. The agreement called for the parties to submit any dispute arising out of it to arbitration. India claimed that Aydin violated the contract and in 1986 commenced arbitration proceedings in India. Aydin then filed this suit, seeking a declaration that any award from the pending arbitral proceeding in India would be unenforceable against it in the United States. The district court dismissed for want for jurisdiction, holding that Aydin’s claim was not ripe for review. We affirm.

The existence of subject matter jurisdiction is a question of law we review de novo. Kruso v. International Tel. & Tel. Corp., 872 F.2d 1416 , 1421 (9th Cir.1989), cert. denied, — U.S. -, 110 S.Ct. 3217 , 110 L.Ed.2d 664 (1990).

“Jurisdiction to award declaratory relief exists only in ‘a case of actual controversy.’ ” Wickland Oil Terminals v. Asarco, Inc., 792 F.2d 887, 893 (9th Cir.1986) (citing 28 U.S.C. § 2201 (a)); see Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 272 , 61 S.Ct. 510, 512 , 85 L.Ed. 826, *528 828 (1941) (district court is “without power to grant declaratory relief unless such a controversy exists”). “The ‘actual controversy’ requirement of the Act is the same as the ‘case or controversy’ requirement of Article III of the United States Constitution. Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 239-40 , 57 S.Ct. 461, 463 , 81 L.Ed. 617 [, 620-21] (1937). Thus, the Act requires no more stringent showing of justici-ability than the constitution does.” Societe de Conditionnement en Aluminium v. Hunter Eng’g Co., 655 F.2d 938, 942 (9th Cir.1981).

In order for a case to be justiciable under Article III of the Constitution, it must be ripe for review. See generally Hillblom v. United States, 896 F.2d 426, 430-31 (9th Cir.1990) (reviewing ripeness cases). Under the strictest interpretation of the ripeness doctrine, all declaratory judgment claims would be suspect, because declaratory relief involves plaintiffs seeking to clarify their rights or obligations before an affirmative remedy is needed. The Supreme Court has rejected that strict conception, upheld the constitutionality of the Federal Declaratory Judgment Act, Aetna, 300 U.S. at 228 , 57 S.Ct. at 462 , 81 L.Ed. at 618 , and recognized that “[t]he difference between an abstract question and a ‘controversy’ contemplated by the ... Act is necessarily one of degree.” Maryland Casualty, 312 U.S. at 273 , 61 S.Ct. at 512 , 85 L.Ed. at 828-29 ; see also Babbitt v. United Farm Workers Nat’l Union, 442 U.S. 289, 297 , 99 S.Ct. 2301, 2308 , 60 L.Ed.2d 895, 906 (1979). Article III requires that there be a “substantial controversy ... of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” Maryland Casualty, 312 U.S. at 273 , 61 S.Ct. at 512 , 85 L.Ed. at 829 (emphasis added) (citing Aetna, 300 U.S. at 239-42 , 57 S.Ct. at 463-64 , 81 L.Ed. at 620-22 ); see generally Societe de Conditionnement, 655 F.2d at 942-43 (discussing controversy requirement and declaratory judgments). The question in this case, then, is whether the enforceability in United States courts of a foreign arbitral award that has yet to be awarded is “of sufficient immediacy and reality” such that it is ripe for review.

We hold that it is not. The future existence and enforcement in the United States of an Indian award against Aydin is speculative. Aydin may prevail in the Indian arbitration, leaving no award to enforce. See Pacific Gas and Elec. Co. v. State Energy Resources Conservation & Dev. Comm’n, 461 U.S. 190, 203 , 103 S.Ct. 1713, 1721 , 75 L.Ed.2d 752, 764 (1983) (“because ‘we cannot know whether the Energy Commission will ever find a nuclear plant’s storage capacity to be inadequate,’ judicial consideration of this provision should await further developments”). Even if India prevails in the arbitration, it may be content to stand pat with its Indian judgment. The possible injury to Aydin is not “ ‘certainly impending,’ ” Regional Rail Reorganization Act Cases, 419 U.S. 102, 143 , 95 S.Ct. 335, 358 , 42 L.Ed.2d 320, 353 (1974) (quoting Pennsylvania v. West Virginia, 262 U.S. 553, 593 , 43 S.Ct. 658 , 67 L.Ed. 1117, 1130 (1923)), and Aydin’s assertion that “it cannot be questioned” that the district court will ultimately be called to pass upon this controversy is unsupported. “[R]ipeness is peculiarly a question of timing,” Rail Act Cases, 419 U.S. at 140 , 95 S.Ct. at 357 , 42 L.Ed.2d at 351 , and given the speculative and remote course of events that stands between Aydin and its contemplated injury, we conclude that this case’s time has not yet come.

Aydin expressly admits that it does not seek to avoid arbitration, does not contend that the arbitration clause in the agreement fails to encompass the underlying dispute, nor does it claim that it is not obligated to arbitrate in India, under Indian law. 1 Unlike a typical declaratory judg *529 ment plaintiff who is uncertain of rights and obligations under a contract and seeks judicial guidance in determining what the appropriate next step should be, Aydin points to no uncertainty in its contract’s arbitration clause. The declaration Aydin seeks would do nothing to clarify Aydin’s contractual obligations.

We do not doubt that Aydin would find a favorable declaration helpful; it might use such a pronouncement to persuade India to settle the dispute or forego the pending arbitration, saving Aydin the expense and inconvenience of appearing in proceedings on another continent. But it is not the function of the federal courts to crystallize the litigation strategies of parties whenever asked to do so. Practical usefulness to litigants or not, the Constitution confines the power of the federal courts to issue declaratory judgments to disputes that are sufficiently immediate and real. This dispute has not yet reached that stage.

Because the district court correctly concluded that this action is not ripe for review, its judgment is

AFFIRMED.

. Given these admissions, we do not see how our colleague thinks we have missed a claim. Aydin concedes it must arbitrate in India; it merely quibbles with the details of how the arbitration happens to be unfolding.

Thomas v. Union Carbide Agricultural Products Co., 473 U.S. 568, 580 , 105 S.Ct. 3325, 3332 , 87 L.Ed.2d 409, 419 (1985), to which Judge Kozinski analogizes, is distinguishable. In that case, the plaintiffs argued that a Congressional scheme compelling arbitration was unconstitu *529 tional and that they therefore should never have had to arbitrate in the first place. We have no such claim here. In our case, Aydin admits that it is contractually obligated to arbitrate in India, unlike the Thomas plaintiffs, who contended they had no valid obligation to arbitrate their claims at all.