Admiralty
Arbitration
Final, Appealable Order
Jurisdiction of the Court of Appeals
Plaintiff Psara Energy Limited appeals the
district court’s January 2019 Order granting a motion to refer to arbitration
this suit filed against Defendant-Appellees.
We dismiss this appeal for lack of appellate
jurisdiction because the district court’s Order, which administratively closed
the case, is not a final, appealable order either as we have construed the
Federal Arbitration Act (“FAA”) or under any other theory.
(…) In conjunction with its lawsuit, Psara
sought and obtained a maritime attachment (…).
(…) The Advantage Defendants’ motions under
Supplemental Admiralty Rule E(4)(f) to vacate the respective attachments were
rejected, but the vessels were released upon the posting of substitute
security. In the case of the ADVANTAGE ARROW, the district court’s order
stated, “the court will address the ‘Motion to Vacate Attachment’ at a later
time.”
(…) The district court granted the motion to
refer to arbitration.
A preliminary, and here dispositive, issue is whether the district court’s order referring the suit to arbitration and administratively closing the case constitutes an appealable order. “If not, then this Court lacks jurisdiction and the appeal should be dismissed, which would pretermit any consideration of the merits of [the Appellant’s] appeal.” Mire v. Full Spectrum Lending, Inc., 389 F.3d 163, 165 (5th Cir. 2004).
Psara’s first theory turns on whether the district court’s order is final. Section 16 of the FAA “governs appellate review of arbitration orders.” Apache Bohai Corp., LDC v. Texaco China, B.V., 330 F.3d 307, 309 (5th Cir. 2003). The statute accomplishes Congress’s intent to favor arbitration “by authorizing immediate appeals from orders disfavoring arbitration and forbidding immediate appeals from orders favoring arbitration.” S. La. Cement, Inc. v. Van Aalst Bulk Handling, B.V., 383 F.3d 297, 300 (5th Cir. 2004). Thus, 9 U.S.C. § 16(a)(3) permits appeals taken from “a final decision with respect to an arbitration that is subject to this title,” but § 16(b)(3) explicitly denies appellate jurisdiction over nonfinal orders “compelling arbitration under section 206.” See also S. La. Cement, 383 F.3d at 300.
The Supreme Court has explained that a “final decision with respect to an arbitration” means “a decision that ends the litigation on the merits and leaves nothing more for the court to do but execute the judgment.” Green Tree Fin. Corp.–Ala. v. Randolph, 531 U.S. 79, 86 (2000) (quoting Dig. Equip. Corp. v. Desktop Direct, Inc., 511 U.S. 863, 867 (1994)). In Green Tree, because the district court “ordered the parties to proceed to arbitration, and dismissed all the claims before it,” the order constituted a final, appealable decision. Id. at 89. Crucially, the Supreme Court went on to state that “had the District Court entered a stay instead of a dismissal in this case, that order would not be appealable.” Id. at 87 n.2; see also Mire, 389 F.3d at 165.
Acknowledging the dichotomy expressed in Green Tree, this Circuit has repeatedly held that “an arbitration order entering a stay, as opposed to a dismissal, is not an appealable final order.” S. La. Cement, 383 F.3d at 300; see also Apache, 330 F.3d at 309 (“An arbitration order entering a stay, as opposed to a dismissal, is not an appealable final order.”); Cargill Ferrous Int’l v. SEA PHOENIX MV, 325 F.3d 695, 697, 701–02 (5th Cir.2003) (dismissing for lack of appellate jurisdiction because the stay pending arbitration was not “a final judgment by the district court”).
Nearly on point with this case, the court held in Mire that administratively closing a case “is the functional equivalent of a stay” and “thus not an appealable order under the FAA.” Mire, 389 F.3d at 167. This is because the entry of a stay, as opposed to a dismissal, indicates that “the district court perceives that it might have more to do than execute the judgement once arbitration has been completed.” Apache, 330 F.3d at 309 (quoting ATAC Corp. v. Arthur Treacher’s Inc., 280 F.3d 1091, 1099 (6th Cir. 2002)).
In contrast, “a district court order that compels arbitration and dismisses or closes a case outright possesses finality and confers jurisdiction on this court.” Sw. Elec. Power Co. v. Certain Underwriters at Lloyds of London, 772 F.3d 384, 387 (5th Cir. 2014).
(…) The effect of an administrative closure is no different from a simple stay, which district courts often use “to remove from their pending cases suits which are temporarily active elsewhere (such as before an arbitration panel) or stayed (such as where a bankruptcy is pending).” Mire, 389F.3d at 167. The court’s order staying and administratively closing the case pending arbitration was nonfinal for purposes of appellate review.
(…) We are obliged to consider whether appellate jurisdiction exists over the order compelling arbitration under 28 U.S.C. § 1292(a)(3), which confers jurisdiction over “interlocutory decrees of such district courts or the judges thereof determining the rights and liabilities of the parties to admiralty cases in which appeals from final decrees are allowed.” We hold this avenue is also closed to Psara. (…) compelling arbitration and determining the appointment of arbitrators “was not a determination of the rights and liabilities of the parties; rather, it merely settled ‘how and where the rights and liabilities would be determined. This holding is consistent with our precedent limiting the applicability of § 1292(a)(3) to orders determining the parties’ substantive rights and liabilities. These cases take a strict view of the statute’s language about “determining the rights and liabilities.”
(U.S. Court of Appeals for the Fifth Circuit,
January 9, 2020, Psara Energy, Ltd., v. Advantage Arrow Shipping, LLC, Docket
No. 19-40071)
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