Opposition Brief — Vimar Seguros Y Reaseguros, SA v. M/V Sky Reefer

No. 94-623

IN THE

Supreme Court of the PE

OCTOBER TERM, 1994

VIMAR SEGUROS Y REASEGUROS, a

Petitioner,

Vv.

M/V SKY REEFER, HER ENGINES, ETC..,

AND M.H. MARITIMA, S.A.,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

RESPONDENT’S BRIEF IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

THomMas H. WALSH, JR.

Counsel of Record

JOHN J. FINN

BINGHAM, DANA & GOULD

150 Federal Street

Boston, Massachusetts 02110

(617) 951-8000

BATEMAN & SLADE, INC BOSTON, MASSACHUSETTS

QUESTION PRESENTED

Whether a foreign arbitration clause in a maritime bill of

lading is invalid under Section 3(8) of the Carriage of Goods

by Sea Act, 46 U.S.C. § 1303(8), or whether such a clause

is enforceable under the Federal Arbitration Act, 9 U.S.C. § |

et seq.

eer ee OR a ee eee

ii

PARTIES TO THE PROCEEDING

AND RULE 29.1 STATEMENT

This brief in opposition is filed on behalf of M.H. Maritima,

S.A., which is a subsidiary of Honma Senpaku Co., Ltd.

iii

Table of Contents.

Question presented

Parties to the proceeding and Rule 29.1 statement

Respondent’s brief in opposition to petition for a writ of

certiorari

Reasons for denying the petition

I. Granting the petition for a writ of certiorari prior

to a final adjudication would be premature

II. Certiorari is unnecessary because the First Circuit

correctly determined that the FAA requires en-

forcement of a foreign arbitration clause in a mari-

time vill of lading

Conclusion

Table of Authorities Cited.

CASES.

Firestone Tire and Rubber Co. v. Risjord, 449 U.S. 368

(1981)

Hughes Tool Co. v. Trans World Airlines , 409 U.S. 363

(1973)

Indianapolis v. Chase National Bank, 314 U.S. 63

(1941)

Kamberos v.G.T.E. Automatic Electric, Inc., 454 U.S.

1060 (1981)

Shearson/American Express, Inc. v. McMahon, 482

U.S. 220 (1987)

2n

3n

iV TABLE OF AUTHORITIES CITED (CONT'D)

State Establishment for Agricultural Product Trading v.

M/V Wesermunde, 838 F.2d 1576, cert. denied, 488

U.S. 916 (1988) 1, 5, 6n

The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) 5

United States v. Nixon, 418 U.S. 683 (1974) 3

Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer,

29 F.3d 727 (1994) 4,5

STATUTES AND RULES.

United States Code

9 U.S.C. § 1, et seq.

i

9 U.S.C. § 2 2

9 U.S.C. § 16(b) y

28 U.S.C. § 1291 3

28 U.S.C. § 1292(b) 2

46 U.S.C. § 1303(8) .

MISCELLANEOUS.

Robert L. Stern, Denial of Certiorari Despite a Conflict,

66 Harv. L. Rev. 465 (1953) 3n

William J. Brennan, Jr., Some Thoughts on the Supreme

Court's Workload, 66 Judicature 230 (1983) 4

John Paul Stevens, Some Thoughts on Judicial Restraint,

66 Judicature 177 (1982) 4

RESPONDENT’S BRIEF IN OPPOSITION TO

PETITION FOR A WRIT OF CERTIORARI

The Respondent, M.H. Maritima, S.A., respectfully re-

quests that this Court deny the petition for a writ of certiorari

seeking review of the interlocutory judgment and opinion of

the United States Court of Appeals for the First Circuit. That

opinion is reported at 29 F.3d 727 (1st Cir. 1994).

REASONS FOR DENYING THE PETITION

Vimar Seguros y Reaseguros, S.A. (“Vimar”) asks this

Court to review an opinion of the United States Court of

Appeals for the First Circuit which is undeniably interlocutory.

It would be premature for the Court to consider this case before

a final adjudication because the question presented could easily

become moot as the action progresses. Should Vimar contest

the validity of the arbitration clause on appeal from a final

judgment, the parties and Court may better analyze and review

that clause when the record includes the procedure for the arbi-

tration, the outcome of the arbitration, and the result of any

subsequent litigation.

Moreover, the mere existence of a conflict in decisions

between the First Circuit in this case and the Eleventh Circuit

in State Establishment for Agricultural Product Trading v.

M/V Wesermunde, 838 F.2d 1576, cert. denied, 488 U.S. 916

(1988), does not warrant immediate review. Principles of judi-

cial restraint and the traditional practice of this Court suggest

that withholding review and intervention until lower courts

have the opportunity to resolve their differences is the more

prudent and efficient course.

Finally, a grant of certiorari is unnecessary because the

opinion of the First Circuit is correct. In the face of a statutory

2

conflict, the First Circuit correctly determined that Section 2

of the Federal Arbitration Act (“FAA”), 9 U.S.C. § 2, requires

the enforcement of foreign arbitration clauses in maritime bills

of lading notwithstanding Section 3(8) of the Carriage of Goods

by Sea Act (“COGSA”), 46 U.S.C. § 1303(8).

I. GRANTING THE PETITION FOR A WRIT OF CERTIORARI PRIOR

TO A FINAL ADJUDICATION WOULD BE PREMATURE.

This case arrived in the United States Court of Appeals for

the First Circuit by certification from the United States District

Court for the District of Massachusetts under the Interlocutory

Appeals Act, 28 U.S.C. § 1292(b). Certification provided the

only available route for review because, under the FAA, a

decision staying court action pending arbitration is an interlocu-

tory order which cannot be appealed absent certification. 9

U.S.C. § 16(b). This case remains at an interlocutory stage.

After the arbitration in Japan concludes, Vimar may no longer

wish to challenge the validity of the foreign arbitration clause.

Therefore, granting certiorari before a final judgment issues

would be premature.

A denial of certiorari now “[does] not establish the law of

the case or amount to res judicata on the points raised.” Hughes

Tool Co. v. Trans World Airlines, 409 U.S. 363, 365 n.1

(1973) (writ of certiorari as to default judgment dismissed as

improvidently granted and case remanded for ruling on dam-

ages; after final judgment and appeal, certiorari granted and

default judgment reversed based on immunity defense). There-

fore, dismissing this petition will neither deprive Vimar of any

rights nor prejudice its ability to raise the current issue again. '

‘The Court has in the past denied certiorari on interlocutory issues far more

basic than the enforceability of a foreign arbitration clause. In Indianapolis v.

Chase National Bank, 314 U.S. 63 (1941), the Court refused to grant certiorari

on an interlocutory order to review whether diversity jurisdiction was proper. After

3

Moreover, refusing to review this case now will save the

Court time and effort in the event that the issue becomes moot

after further proceedings at arbitration and in the lower courts,

thereby serving “the important purpose of pt omoting efficient

judicial administration.” Firestone Tire & Rubber Co. v. Ris-

jord, 449 U.S. 368, 374 (1981) (orders denying motions to

disqualify counsel are not appealable final decisions under 28

U.S.C. § 1291). A refusal to review at this time would further-

more be in accord with the “strong congressional policy against

piecemeal reviews, and against obstructing or impeding an

ongoing judicial proceeding by interlocutory appeals.” United

States v. Nixon, 418 U.S. 683, 690 (1974) (district court’s

order requiring President to comply with subpoena duces tecum

properly appealable as final order). That congressional policy

is affirmed in the FAA, which denies interlocutory review of

an order staying litigation pending arbitration, in the absence

of district court certification. 9 U.S.C. § 16(b).

At this time, only two circuit courts, the First and the

Eleventh, are in conflict. No other circuit courts have ruled

on the issue.’ It is not necessary for the Court to grant certiorari

in every instance where the lower courts differ.’ Justice Brennan

a final decision had been rendered and appealed, the Court reviewed the issue of

jurisdiction and found that the federal court had in fact lacked jurisdiction because

diversity was incomplete once the parties were realigned according to their true

interests.

*In its petition at page 14, footnote 12, Petitioner cites to several district court

opinions addressing the enforceability of foreign arbitration clauses. Far more of

these cases enforce such clauses than invalidate them, suggesting widespread sup-

port for the First Circuit's opinion.

‘Indeed, the Court does not invariably grant certiorari every time there is a

conflict in the appeals courts. See, e.g., Justice White's dissent from denial of

certiorari in Kamberos v. G.T.E. Automatic Electric, Inc., 454 U.S. 1060 (1981).

objecting io the denial of review of a Seventh Circuit opinion interpreting Title

VII which conflicted directly with a decision of the Fifth Circuit, and indirectly

with a decision of the Ninth Circuit. See also Robert L. Stern, Denial of Certiorari

Despite a Conflict, 66 Harv. L. Rev. 465 (1953), citing numerous cases wherein

certiorari was denied although the appeals courts were in conflict.

4

has written of the Court’s “policy of letting tolerable conflicts

go unaddressed until more than two courts of appeals have

considered a question.” William J. Brennan, Jr., Some

Thoughts on the Supreme Court's Workload, 66 Judicature

230 (1983). Justice Stevens has pointed out that

experience with conflicting interpretations of federal

rules may help to illuminate an issue before it is

finally resolved and thus may play a constructive

role in the lawmaking process. The doctrine of judi-

cial restraint teaches us that patience in the judicial

resolution of conflicts may sometimes produce the

most desirable result.

John Paul Stevens, Some Thoughts on Judicial Restraint, 66

Judicature 177 (1982).

In keeping with these policies and principles, the Court

should deny the petition for certiorari in respect of this inter-

locutory order until the proceedings have finally concluded

and until other courts of appeals have the opportunity to address

the issue.

II. CERTIORARI IS UNNECESSARY BECAUSE THE FIRST CIRCUIT

CORRECTLY DETERMINED THAT THE FAA REQUIRES EN-

FORCEMENT OF A FOREIGN ARBITRATION CLAUSE IN A

MARITIME BILL OF LADING.

The First Circuit properly determined that the relevant pro-

visions of the FAA and COGSA appear to be in conflict but

that the clear language of the FAA mandates enforcement of

arbitration clauses such as the one at issue. Vimar Seguros y

Reaseguros, S.A. v. M/V Sky Reefer, 29 F.3d 727 (Ast Cir.

5

1994).* The First Circuit relied on well-established canons of

statutory interpretation to resolve the conflict. 29 F.3d at 732.

The court applied two basic rules of statutory construction:

firsc, that “a later enacted statute generally limits the scope of

an earlier statute if the two laws conflict,” 29 F.3d at 732,

and second, that “where two statutes conflict, regardless of

the priority of enactment, the specific statute ordinarily controls

the general.” /d. Both rules lead to the inescapable conclusion

that the FAA controls with respect to arbitration clauses be-

cause the FAA is both a more recently enacted and a more

specific statute. /d.

Policy concerns and the realities of the modern business

world support the First Circuit’s conclusion. International trade

requires respect for international trading partners. “The expan-

sion of American business and industry will hardly be encour-

aged if, notwithstanding solemn contracts, we insist on a paro-

chial concept that all disputes must be resolved under our laws

and in our courts.” The Bremen v. Zapata Ofj-Shore Co., 407

U.S. 1, 9 (1972) (enforcing foreign arbitration clause in

maritime contract not governed by COGSA). Furthermore,

Congress has expressed through the FAA a strong federal

policy favoring arbitration as a method of resolving disputes.

Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 29 F.3d

727, 730-31 (1st Cir. 1994), citing Shearson/American Ex-

press, Inc. v. McMahon, 482 U.S. 220, 226 (1987) (RICO

and securities claims subject to arbitration). Together, these

important concerns favor enforcement of the arbitration clause

at issue.

The First Circuit’s opinion here provides a thorough and

reasoned treatment of all the issues. No appeals court has

followed the Eleventh Circuit, although Wesermunde was de-

“For the purpose of this proceeding, the court assumed, as Petitioner argues,

that COGSA invalidates such clauses because of the possibility that they might

lessen a carrier's liability for damage to goods transported. 29 F.3d at 730.

6

cided six years ago.° If the Supreme Court stays its hand, other

courts of appeals may elect to follow the First Circuit over the

Eleventh, thereby smoothing out the wrinkles in the judicial

fabric. Certiorari is unnecessary because the difference of opin-

ion between the First and Eleventh Circuits does not approach

the level of an intolerable conflict and because the First Cir-

cuit’s order requiring that the arbitration clause be observed

is correct.

CONCLUSION

For the foregoing reasons, the petition for a writ of certiorari

should be denied.

Respectfully submitted,

THOMAS H. WALSH, JR.

Counsel of Record

JOHN J. FINN

BINGHAM, DANA & GOULD

150 Federal Street

Boston, Massachusetts 02110

(617) 951-8000

‘The Eleventh Circuit's decision in Wesermunde is devoid of any significant

analysis.