[00:00:02] Speaker 00:
The next case on calendar is epicenter loss recovery versus Burford capital 24-721.

[00:00:08] Speaker 00:
Each side will have 15 minutes in this case.

[00:00:30] Speaker 03:
Good morning, Your Honors.

[00:00:31] Speaker 03:
May it please the Court, Ryan Baker, Waymaker, LLP, on behalf of Appellant, Epicenter Loss Recovery, LLC.

[00:00:39] Speaker 03:
The District Court, in this case, entered an order in January of 2019 granting a 12-B-1 motion on jurisdiction in order to compel arbitration and send this case to the LCIA in the UK for arbitration.

[00:00:54] Speaker 03:
And considering the case, the District Court applied a standard that is

[00:01:00] Speaker 03:
been clarified by the Supreme Court and the Ninth Circuit no longer applies, if it ever did.

[00:01:06] Speaker 03:
And I'd just like to cite a couple of the district court's references in the standard that it actually articulated.

[00:01:12] Speaker 03:
There are four different instances where the district court simply applies the wrong standard, and I think that set a foundation that just misguided the court's entire analysis here.

[00:01:21] Speaker 03:
The court essentially, in saying, and this is excerpts of record 12 and 13, where the court articulates the standard of review,

[00:01:30] Speaker 03:
As a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.

[00:01:38] Speaker 03:
Further down at lines 23 and 24 of page 12, due regard to federal policy in favor of arbitration by resolving ambiguities as to the scope in favor of.

[00:01:49] Speaker 03:
Next page.

[00:01:50] Speaker 00:
Sorry, could I interrupt you?

[00:01:51] Speaker 00:
So you're talking a lot about what the district court said, but isn't this an issue we would review de novo?

[00:01:57] Speaker 03:
Yes, exactly.

[00:01:58] Speaker 00:
So maybe just skip to why you think there shouldn't have been arbitration here.

[00:02:02] Speaker 03:
Yes.

[00:02:02] Speaker 03:
So your honor, thank you.

[00:02:04] Speaker 03:
So although the district court set out the standard improperly, the standard has been clarified by the Supreme Court.

[00:02:10] Speaker 03:
And it was clarified by Justice Kagan in the Morgan case.

[00:02:13] Speaker 03:
And what Justice Kagan articulated is that although for decades there has been a thumb on the scale across the country in favor of arbitration, that, if it ever should have applied, does not apply today.

[00:02:24] Speaker 03:
Arbitration is a creature of contract.

[00:02:27] Speaker 03:
and evaluated as a matter of contract.

[00:02:29] Speaker 03:
And in this case, looking at the consolation of contracts, which have various terms going one way and the other, there's simply no basis to import the arbitration clause from one agreement into a separate agreement, which is the note, which was the basis of plaintiff's three claims in the second amended complaint that was the basis of the court's dismissal.

[00:02:50] Speaker 00:
So this depends on us not thinking that the subject two language incorporated the other contract, which had the

[00:02:56] Speaker 00:
than arbitration clause with the delegation.

[00:02:59] Speaker 03:
Yeah, so I contend that if you look at each of the three contracts, and there are three that are most relevant here, they are a forward purchase agreement.

[00:03:08] Speaker 03:
That agreement was a litigation funding agreement, basically.

[00:03:10] Speaker 03:
It was amended several times.

[00:03:12] Speaker 03:
I think there were four versions of that contract.

[00:03:14] Speaker 03:
Each one of those forward purchase contracts had an arbitration clause.

[00:03:18] Speaker 03:
And that arbitration clause applied said choice of laws, English law.

[00:03:22] Speaker 03:
Then there's an inter-creditor agreement.

[00:03:25] Speaker 03:
That was signed along with the last Ford Purchase Agreement because what had happened in the case at that point is the parties realized now we have a tangible real estate asset that's the subject that's going to be used to sell this case as opposed to cash.

[00:03:38] Speaker 03:
Before everything was cash, cash, cash.

[00:03:40] Speaker 03:
We have a real estate deal now so we need to issue a note and some other documents.

[00:03:45] Speaker 03:
They redid the Ford Purchase Agreement and they also had an inter-creditor agreement.

[00:03:49] Speaker 03:
So this is the agreement that the appellees point to that they claim governs everything here

[00:03:55] Speaker 03:
But if you dissect the contracts and if you read the plain language without the objective, I did want to at least flag the last case that's cited, where the district court is saying, unless there's unmistakably clear evidence to the contrary, we're going to essentially find a waiver of the party's Article III rights and ship the case off to arbitration.

[00:04:17] Speaker 03:
I contend that

[00:04:18] Speaker 03:
this court here, that's what it did.

[00:04:20] Speaker 03:
It was looking for a way to find arbitration and that's what it was able to do.

[00:04:23] Speaker 00:
It doesn't really matter what the district court was doing because you have to convince us that the subject two doesn't incorporate the arbitration clause in the delegation provision.

[00:04:30] Speaker 03:
So that's right.

[00:04:31] Speaker 03:
So let's look at the contracts.

[00:04:33] Speaker 03:
So the note as we've articulated, the note is the basis of the three claims at issue here.

[00:04:39] Speaker 03:
There was a

[00:04:40] Speaker 03:
First, the declaratory relief claim in the Second Amendment complaint.

[00:04:43] Speaker 03:
Then there was a breach of the implied covenant.

[00:04:47] Speaker 03:
And then finally, there was an interference claim that was against Burford only, which Burford is not a signatory to any of these agreements.

[00:04:53] Speaker 03:
Looking at the note, the note was issued.

[00:04:56] Speaker 03:
And again, I go back to what I was trying to say before about the inter-creditor agreement.

[00:05:00] Speaker 03:
The purpose of that was that the lawyer, the law firm of Simpson-Thatcher needed to get paid.

[00:05:06] Speaker 03:
So once there was a real estate asset, there was this whole batch of this constellation of new contracts that were articulated and signed, each of which has competing provisions, frankly, and dueling provisions.

[00:05:18] Speaker 03:
And while the appellees here want to say, even if I assume they're going to argue, even if you look at this under the new standard, which Justice Kagan has made clear and this court has adopted in the Michaels case, I think it's, I'll come back to that.

[00:05:37] Speaker 01:
So your client's position is that the current dispute is not subject to arbitration.

[00:05:43] Speaker 01:
Is that right?

[00:05:45] Speaker 03:
That's correct, Your Honor.

[00:05:45] Speaker 03:
Mike, we contend that if the court, which this court will do a de novo analysis, looking at the contracts, there are provisions going every which way among the three contracts that are at issue.

[00:05:55] Speaker 03:
And while the appellees want to point to the intercreditor agreement, because there is language on the note that says it is subject to any conflict between this instrument and the intercreditor agreement,

[00:06:06] Speaker 03:
the intercreditor agreement shall control.

[00:06:08] Speaker 03:
That's there.

[00:06:10] Speaker 03:
We can't avoid that.

[00:06:11] Speaker 03:
However, I want to point out to the court that that same language is also in the forward purchase agreement.

[00:06:17] Speaker 03:
The forward purchase agreement, which that contract is excerpts of record, the language that I'm going to point to, it starts at ER 292.

[00:06:27] Speaker 03:
But at ER 298, section 5.2, which talks about payments to the law firm,

[00:06:34] Speaker 03:
of Simpson-Thatcher, which was the whole point of the intercreditor agreement to make sure they got paid if there was a satisfaction of the note.

[00:06:41] Speaker 03:
Okay, you all understand you're signing this note.

[00:06:43] Speaker 03:
Simpson-Thatcher is not a party to the note.

[00:06:45] Speaker 03:
But everybody agrees that if there's a payment here, okay, the lawyers also have to get paid pursuant to the intercreditor agreement.

[00:06:50] Speaker 03:
That was the point.

[00:06:51] Speaker 03:
That was the point of that agreement.

[00:06:53] Speaker 03:
So now the appellees are here saying, no, no, no, every technical difference, any difference at all, you've got to defer to the intercreditor agreement.

[00:07:00] Speaker 02:
Okay, counsel, I'm looking at the note.

[00:07:02] Speaker 02:
So the note is really what's at issue here, right?

[00:07:04] Speaker 02:
And it's the introductory, it's the heading to this note.

[00:07:09] Speaker 02:
So, explain to me why those last two sentences don't bind you to the remedies in the inter-creditor agreement.

[00:07:18] Speaker 03:
Well, the second to last sentence, which is each holder, and I assume that I'm looking at the same thing as your honor, each holder of this instrument, by its acceptance hereof, irrevocably agrees to be bound by the provisions of the inter-creditor agreement.

[00:07:31] Speaker 03:
Well, the holder of the note is the party that's going to get paid.

[00:07:35] Speaker 03:
The holder of the note in this case is defined as

[00:07:39] Speaker 03:
Ganymede.

[00:07:40] Speaker 03:
So Ganymede, if it gets the money, it has to acknowledge the inter-creditor agreement and pay the lawyers.

[00:07:45] Speaker 03:
That's the point of that sentence.

[00:07:48] Speaker 03:
The next sentence, in the event of any conflict between this instrument and the inter-creditor agreement, the inter-creditor agreement shall control.

[00:07:54] Speaker 02:
I don't understand that argument at all.

[00:07:58] Speaker 03:
So Your Honor, this is what I was trying to explain.

[00:08:01] Speaker 03:
Unfortunately, if I had a whiteboard, I would use it.

[00:08:05] Speaker 03:
It's my fault, of course.

[00:08:07] Speaker 03:
The Section 5, so if to the extent that we're arguing, that Apollius, you're arguing, that sentence that says the inter-creditor agreement prevails if there's a conflict, what does that mean?

[00:08:19] Speaker 02:
So I want to point out to the court that… Okay, but we don't even have to get to the question of the conflict, do we?

[00:08:23] Speaker 02:
Because each holder of the instrument agrees to be bound by the provisions of the agreement.

[00:08:29] Speaker 02:
That includes an arbitration clause.

[00:08:31] Speaker 03:
Well, it does, but in this contract, that inter-creditor agreement does include an arbitration clause.

[00:08:36] Speaker 03:
That's correct.

[00:08:38] Speaker 03:
So the question is whether or not this language requires the application of every single conflict.

[00:08:42] Speaker 03:
And going through the, if you compare the note to the intercreditor agreement, to the forward purchase agreement, and what I was trying to get out earlier is the forward purchase agreement also has the same language.

[00:08:54] Speaker 00:
This agreement is subject to the terms and conditions of the... I think this is ER 298 that you were pointing us to before, but the first sentence of 5.2 is just, this agreement is subject to the terms and conditions of the intercreditor agreement, just period.

[00:09:08] Speaker 00:
It seems like that sends us to the arbitration clause.

[00:09:11] Speaker 00:
I'm really struggling with how it doesn't.

[00:09:13] Speaker 03:
Okay, Your Honor.

[00:09:14] Speaker 03:
I'm making a bit of a subtle point here, but if you'll just humor me for a moment.

[00:09:19] Speaker 03:
The reason this matters, I think, is Your Honor and the Montserrat Energy dissent identifies a lot of issues that happen in arbitration.

[00:09:27] Speaker 03:
I understand Your Honor didn't agree with the majority there to vacate the award.

[00:09:32] Speaker 03:
But arbitration can be a perilous endeavor.

[00:09:35] Speaker 03:
Arbitration oversees, especially, and while they want to argue that, well, especially international arbitration still applies, it's even more perilous.

[00:09:42] Speaker 03:
And this is, I'm not getting into the merits of what happened in the arbitration because that's not before the court, but this is an example of why this matters.

[00:09:49] Speaker 03:
And so going back to 5.2.

[00:09:51] Speaker 00:
My intent was definitely about why this matters, but once you agree, you agree.

[00:09:55] Speaker 00:
And so we still have to get to whether you agree, which it seems like you did.

[00:09:58] Speaker 03:
Well, Your Honor, I don't think we did.

[00:10:00] Speaker 03:
We agreed to the terms of the note that are in the note.

[00:10:03] Speaker 03:
And the note, of course, does refer to court jury trials.

[00:10:06] Speaker 03:
So it's not just for injunctive relief.

[00:10:08] Speaker 03:
It doesn't limit anything to collections.

[00:10:09] Speaker 03:
It doesn't say that.

[00:10:10] Speaker 03:
So if you just look at the four corners of the note, obviously, there's language in there that at least renders an ambiguity.

[00:10:18] Speaker 03:
And the court needed to go into a deeper analysis.

[00:10:20] Speaker 03:
And Your Honors are doing that here.

[00:10:21] Speaker 03:
So if I can finish the 5.2, I'm going back to ER 298.

[00:10:24] Speaker 03:
In the event of any conflict, the inter-creditor agreement shall control.

[00:10:30] Speaker 03:
And it actually identifies

[00:10:31] Speaker 03:
without limitation with respect to relative priority of the payments due to STBN purchaser.

[00:10:37] Speaker 03:
So the point, again, of the conflict was to make sure the money went the right place.

[00:10:41] Speaker 03:
And the other piece I want to point out is there is a arbitration clause in the forward purchase agreement.

[00:10:47] Speaker 03:
These are sophisticated parties.

[00:10:49] Speaker 03:
If they wanted an arbitration clause, they knew how to do it.

[00:10:52] Speaker 03:
All of the agreements but one have an arbitration clause.

[00:10:56] Speaker 03:
Importantly, the arbitration clause in the forward purchase agreement, which is at ER 301,

[00:11:02] Speaker 03:
Provides for the English choice of law.

[00:11:05] Speaker 03:
Well, the are the inter creditor agreement says Arizona law.

[00:11:08] Speaker 03:
So there's a conflict.

[00:11:09] Speaker 03:
So I contend that the ministerial differences between these documents aren't what that provision meant that that provision that legend at the top of the note is directed towards the payment and the distribution of assets.

[00:11:20] Speaker 03:
It's not to override every technical term their differences among the agreements and the way the payments flow and the

[00:11:26] Speaker 03:
interest rates that apply and who gets paid first.

[00:11:29] Speaker 03:
In some of those instances, if it's a flow of money, so it would have to go obviously to the inter-creditor agreement, but these other more ministerial decisions are not necessarily governed, you don't just get to bootstrap into that arbitration clause, because again, you have to look at the whole constellation of contracts.

[00:11:45] Speaker 03:
Your Honor, I wanted to reserve three minutes for rebuttal.

[00:11:49] Speaker 00:
Thank you.

[00:12:06] Speaker 04:
May it please the court, I'm Michael Houston of Perkins Coie for the defendants, Burford Capital and Ganymede.

[00:12:12] Speaker 04:
This case, as Mr. Baker said, involves two sophisticated entities who were experienced in both commercial contracting and with the legal system.

[00:12:20] Speaker 04:
The parties agreed through a series of closely integrated agreements, entered on the same day, all of which expressly cross-reference each other.

[00:12:29] Speaker 04:
that any disputes arising between them would be resolved through arbitration in London and that the London Tribunal would determine any disputes about the scope of arbitration.

[00:12:40] Speaker 04:
So epicenter agreed that under the plain terms of the convention as incorporated by the Federal Arbitration Act, it would seek judicial review of any decision of the London Arbitrable Tribunal in the

[00:12:53] Speaker 04:
in a court in England, the seat where the arbitration occurred.

[00:12:57] Speaker 04:
When Epicenter filed this dispute in Arizona in 2018, the district court looked at these agreements and properly sent the case to arbitration in accord with the party's contracts.

[00:13:07] Speaker 04:
That arbitration occurred in London over a 12-day period.

[00:13:11] Speaker 04:
The panel of three arbitrators, including the arbitrator that was selected by Epicenter, unanimously concluded that none of Epicenter's claims in this lawsuit had any merit.

[00:13:22] Speaker 00:
So say we agree with you that it was proper to send the case to arbitration.

[00:13:28] Speaker 00:
I'm not sure the district court was right to dismiss the case at this point, though, because I don't see that you ever asked for recognition or enforcement of the award.

[00:13:37] Speaker 00:
Am I right about that?

[00:13:38] Speaker 04:
You are right, Your Honor.

[00:13:39] Speaker 04:
We have not yet sought enforcement of the award.

[00:13:41] Speaker 04:
Of course, we wouldn't normally seek that in the federal district court at this point.

[00:13:46] Speaker 04:
We have not done that yet.

[00:13:47] Speaker 04:
So why was it proper to dismiss the case?

[00:13:51] Speaker 04:
Because the case was brought by epicenter.

[00:13:54] Speaker 04:
Epicenter was seeking resolution of its substantive claims brought under Arizona law.

[00:13:59] Speaker 04:
The district court correctly recognized that those claims have now been determined

[00:14:04] Speaker 04:
by the London Arbitrable Tribunal and at this point the only thing that remains is either epicenter needs to object to the arbitration if it can plausibly do so but if it can do so.

[00:14:16] Speaker 00:
I thought that only happens once you seek enforcement and recognition and that would be their sort of defense to that and at that point they could say well there was some problem under the convention or whatever but we haven't had that yet so we don't have

[00:14:29] Speaker 00:
an enforced arbitration judgment that would be an estoppel yet.

[00:14:33] Speaker 00:
So I'm confused how the case is over entirely.

[00:14:36] Speaker 00:
I mean, it seems like you'll get there, but you haven't done it yet.

[00:14:38] Speaker 04:
Two points, Your Honor, two points.

[00:14:40] Speaker 04:
The first is epicenter's substantive claims.

[00:14:44] Speaker 04:
Those are over.

[00:14:45] Speaker 00:
If epicenter believes... Well, but only if there's estoppel, right?

[00:14:48] Speaker 00:
What is the... I mean, it was sent to arbitration, but there are some rare circumstances where an arbitration award isn't enforced.

[00:14:55] Speaker 00:
And no one's litigated that yet.

[00:14:56] Speaker 04:
Yes, you're right, your honor, but those are a defense.

[00:14:59] Speaker 04:
So that would arise in a proceeding that we initiated seeking enforcement.

[00:15:04] Speaker 04:
So if and when we seek enforcement of the Arbitrable Award in the United States, at that point, epicenter will come in with its defenses if it has been.

[00:15:14] Speaker 00:
I agree.

[00:15:14] Speaker 00:
I agree.

[00:15:15] Speaker 00:
But until you've done that and you win, which it seems from what we know now, I don't see why you wouldn't.

[00:15:20] Speaker 00:
But until you do that and win, you don't have a judgment that

[00:15:25] Speaker 00:
As stops their current state law claims.

[00:15:27] Speaker 04:
Well, I think we they are not in the point is they are not entitled to relief From the federal district court the relief that they pleaded in their complaint They can't get it because the claims have been decided in England and only a English court is capable of reviewing that the proper thing to do pending arbitration while the case goes to arbitration is to

[00:15:47] Speaker 00:
keep it in abeyance, not dismiss it.

[00:15:49] Speaker 04:
That's right.

[00:15:49] Speaker 00:
And until you get enforcement, aren't we still in that situation that like essentially the case is out in arbitration?

[00:15:56] Speaker 04:
No, because the arbitration has been resolved.

[00:15:59] Speaker 04:
And so now that we have come back to the federal district court, what we're saying is there's no possibility that epicenter can get relief on the claims that it pleaded in the complaint.

[00:16:08] Speaker 04:
It can't do it.

[00:16:09] Speaker 04:
Only an English court would be capable of reviewing the substantive determinations of the arbitrable.

[00:16:14] Speaker 01:
Why not move to enforce the award?

[00:16:16] Speaker 04:
Well, we may, Your Honor.

[00:16:18] Speaker 04:
We just haven't done so at this point.

[00:16:21] Speaker 04:
Why?

[00:16:21] Speaker 04:
Well, I think that's a business judgment that my client is considering, but we haven't yet taken that step.

[00:16:27] Speaker 00:
But so do you have any case that says that you can dismiss before you have taken that step?

[00:16:32] Speaker 04:
Yes, I think so.

[00:16:33] Speaker 04:
I think so, Your Honor.

[00:16:34] Speaker 04:
I mean, I think that what we are doing in this lawsuit is very similar to what the Fifth Circuit did in Gulf Petro, what the Second Circuit did in SOXploration, what the Eleventh Circuit

[00:16:43] Speaker 00:
Okay, the Supreme Court sort of recently said that the proper thing to do is to hold the case in abeyance, though, instead of dismissing.

[00:16:51] Speaker 04:
That's right, Your Honor, but that is that the Supreme Court in that case was talking about pending a determining pending the conduct of the arbitration proceeding.

[00:17:01] Speaker 04:
We've had the arbitration proceeding.

[00:17:03] Speaker 04:
It's over.

[00:17:04] Speaker 04:
There's a final judgment.

[00:17:05] Speaker 00:
Do you have any case since the Supreme Court said the proper thing to do while cases and arbitration is to keep it in abeyance that says

[00:17:12] Speaker 00:
without enforcing the award, we still count it as done.

[00:17:16] Speaker 04:
Not since the Supreme Court's decision there, Your Honor, I don't.

[00:17:20] Speaker 04:
But I guess I just want to say, I don't know what sense it makes to just leave the case open on the district court's docket forever.

[00:17:28] Speaker 04:
I mean, our point was to say,

[00:17:30] Speaker 04:
Our point is simply the reason why we move to dismiss is simply to say the substantive claims that epicenter pleaded in our complaint It can never get relief on those and that's just true it because the the only Litigation if there's going to be any more litigation between isn't that intention with the Supreme Court?

[00:17:48] Speaker 00:
I mean once once there is enforcement of an arbitration clause and you're sending the case to arbitration if that's done properly and

[00:17:58] Speaker 00:
You're never going to be able to have relief in state court if it's supposed to be an arbitration.

[00:18:02] Speaker 00:
But yet we're supposed to keep it open in state court until everything is resolved.

[00:18:05] Speaker 04:
Until the arbitration is resolved, Your Honor.

[00:18:07] Speaker 04:
But the arbitration has been resolved.

[00:18:09] Speaker 04:
And the point of the Supreme Court's decision in that case, I think, was to say that you might have a situation where you go to the arbitrable panel

[00:18:17] Speaker 04:
And Epicenter makes an argument very much like the one that it might want to, that it tries to make in its brief in this case, which is actually the dispute that I have is outside the scope of the arbitration.

[00:18:27] Speaker 04:
That's an issue that is delegated to the arbitrator to resolve, but the arbitrator might agree.

[00:18:32] Speaker 04:
Now, of course, I just want to be clear.

[00:18:33] Speaker 04:
Epicenter actually argued precisely the opposite to the real London Tribunal in this case.

[00:18:38] Speaker 04:
It acknowledged and conceded the court, the tribunal's jurisdiction, but

[00:18:42] Speaker 04:
The point of the Supreme Court's decision was to recognize that although a case gets sent to arbitration, it might get sent back.

[00:18:49] Speaker 04:
And in that circumstance, we want to leave the district court docket open for the purpose of resolving the claims when they come back.

[00:18:56] Speaker 04:
But here, that's not going to happen because the arbitration is completed.

[00:18:59] Speaker 04:
And the only court in the world that's capable of supervising the judgment entered by the London Arbitrable Tribunal is a court in the United Kingdom.

[00:19:10] Speaker 01:
So I think- I understand your opponent's argument to be that the present dispute is not subject to arbitration.

[00:19:18] Speaker 01:
Right?

[00:19:19] Speaker 01:
That's their argument.

[00:19:20] Speaker 04:
That is their argument, Your Honor.

[00:19:21] Speaker 04:
And that's an argument that sounds in scope.

[00:19:25] Speaker 04:
What epicenter is arguing, I think, fair, charitably construed is, yes, although we agreed to arbitration in the intercreditor agreement and in the forward purchase agreement, the specific kind of claim that we want to raise here is outside the scope of that arbitration agreement.

[00:19:41] Speaker 04:
That's the type of argument that this court, the last time it heard the appeal in this case, said,

[00:19:47] Speaker 04:
that we need to leave the case open so that epicenter can take that argument to the london tribunal that is charged by the party's contract with deciding it when we actually got to the london arbitrable tribunal epicenter decided precisely the opposite they said we are abandoning any attempt to contest this tribunal's jurisdiction and we are acknowledging that this tribunal has authority to resolve all of the claims so i think

[00:20:13] Speaker 04:
Your honor is correctly characterizing the argument that they want to make in their brief in this court, but it's just utterly inconsistent with the express argument that they made to the tribunal.

[00:20:24] Speaker 04:
And I don't think under principles of estoppel that they can tell the tribunal, you have authority to resolve these claims.

[00:20:30] Speaker 04:
And in reliance, the parties expended millions of dollars on that arbitration.

[00:20:36] Speaker 04:
and then come back to this court and say, actually, we've changed our mind.

[00:20:39] Speaker 04:
We no longer think that the tribunal had any authority to adjudicate these claims.

[00:20:43] Speaker 01:
That's like you're suggesting that they argue that the district court in this circumstance had the authority to modify the award.

[00:20:54] Speaker 04:
No, Your Honor, I'm sorry.

[00:20:55] Speaker 04:
If I suggested that, I don't mean to suggest it at all.

[00:20:58] Speaker 04:
The district court, now that we have an arbitration that is fully complete, that took place in England, under the terms of the convention as in- Fully complete, but unconfirmed.

[00:21:08] Speaker 04:
unconfirmed in the United States.

[00:21:10] Speaker 04:
That's what we would do, right?

[00:21:11] Speaker 04:
We would take a judge, a foreign arbitrable decision.

[00:21:14] Speaker 04:
We would take it to the United States if we want an attempt to convert it into a U.S.

[00:21:19] Speaker 04:
court judgment.

[00:21:20] Speaker 04:
We have not initiated the sort of offensive proceedings to do that.

[00:21:24] Speaker 01:
If the district court

[00:21:26] Speaker 01:
Did Judge Fumituiwa have that authority?

[00:21:29] Speaker 01:
Could she have confirmed the award?

[00:21:31] Speaker 01:
So I believe we could... I'm not sure whether you would ask for it, but did she possess the authority to confirm the award?

[00:21:42] Speaker 04:
Not independently of a request from us to do so your honor I don't think so you know we as the party who holds the arbitration decision in our favor it's up to us at that point to take that arbitration decision to a court in the United States.

[00:21:57] Speaker 04:
and seek, affirmatively request from the court, the relief of entry, confirmation of that award.

[00:22:03] Speaker 04:
And if we did so, epicenter would then have only very, very limited defenses to that, as the court is aware, that are spelled out in Article 5 of the convention, none of which on their face apply here.

[00:22:14] Speaker 00:
Let's just hypothetically say that one of them did apply, and they managed to show that under the convention, this award shouldn't be approved, or whatever the word is, recognized.

[00:22:25] Speaker 00:
So then what happens then?

[00:22:27] Speaker 04:
Well, at that point, so that would be in a separate legal proceeding.

[00:22:31] Speaker 04:
We would initiate, we'd come to court and say we want confirmation of our award.

[00:22:34] Speaker 04:
They would come in and say, no, one of these defenses in Article 5 applies.

[00:22:39] Speaker 04:
I take it that it's a hypothetical.

[00:22:40] Speaker 04:
I mean, I don't even think they've arguably... I understand.

[00:22:43] Speaker 00:
We're not going to say you can see that.

[00:22:44] Speaker 00:
Just hypothetically, they find one of these things, rare things under the convention, they somehow show that it happens.

[00:22:49] Speaker 04:
Right in that situation, your honor, we as the holder of the award or would not be entitled to a judgment in the United States confirming that award.

[00:22:58] Speaker 04:
We couldn't take it to the sheriff and foreclose on it or something like that.

[00:23:02] Speaker 04:
And so we've got this arbitral award, but we can't in that situation convert it

[00:23:07] Speaker 04:
into a judgment from a United States court.

[00:23:10] Speaker 04:
But all of this is going to happen later in a separate legal proceeding.

[00:23:14] Speaker 00:
So why does it show though that their current claims, which there is federal, sorry, you know,

[00:23:20] Speaker 00:
I think we're properly in federal court, right?

[00:23:21] Speaker 00:
I guess it's diversity, whatever the racist was.

[00:23:24] Speaker 00:
So why does it mean that they have to be gone from federal court?

[00:23:29] Speaker 04:
Because they will never be entitled to relief on the claims that they pleaded in their complaint.

[00:23:37] Speaker 04:
And the answer, the reason why that is the case is because those claims were sent and were decided

[00:23:44] Speaker 04:
in an arbitrable tribunal in London and under the convention only an English court is capable at that point of reviewing whether the decision of the London Tribunal adjudicating those claims.

[00:23:58] Speaker 04:
So there's just no more, there's never going to be a situation in which the US Federal District Court has authority

[00:24:05] Speaker 04:
to decide the substantive claims that were originally pleaded in the plaintiff's complaint.

[00:24:11] Speaker 04:
Those claims, per the terms of the convention and the FAA, have been finally resolved.

[00:24:16] Speaker 04:
They've been resolved adversely to epicenter.

[00:24:21] Speaker 00:
judgment, at least for US purposes, gets vacated under one of these rare things of the convention.

[00:24:27] Speaker 04:
Respectfully, Your Honour, I don't think that's right.

[00:24:29] Speaker 04:
That's not what would happen.

[00:24:30] Speaker 04:
What would happen is, in that situation, the hypothetical where there's a valid defence to enforcement

[00:24:36] Speaker 04:
We can't enforce the arbitration award.

[00:24:40] Speaker 04:
We can't convert that into a judgment, a money judgment in our favor that we would seek to foreclose on or something, the way any other litigant who wins a judgment would.

[00:24:48] Speaker 04:
But it doesn't mean that epicenters' original claims spring back to life.

[00:24:54] Speaker 04:
Indeed, the convention presides precisely the opposite.

[00:24:57] Speaker 04:
The whole point of the convention is to say that where you've had a completed foreign arbitration proceeding, that's final with respect to the claims that were adjudicated by the panel and only a court in the seat, quote, which is obviously England, is capable of adjudicating epicenter's entitlement on the claims.

[00:25:19] Speaker 02:
And they had 28 days to do so and didn't do so.

[00:25:22] Speaker 04:
That is correct, Your Honor.

[00:25:22] Speaker 02:
So as a real life matter, it's too late.

[00:25:25] Speaker 02:
The only thing they could do is come to the United States when you seek to confirm it.

[00:25:31] Speaker 02:
So until you seek to confirm it in the United States, assuming their assets are all here, which I assume is obvious, until you seek to confirm it, then nobody's going to pay anything.

[00:25:40] Speaker 02:
uh... you don't have a you don't have a judgment to be confirmed in the united states and that is enforceable once you decide to do that then they can come in and raise whatever claims under the convention to the district court that's exactly right it might be except i think i would say just they can raise whatever defenses they might have convention under the conventional five

[00:25:58] Speaker 04:
Yes, exactly right.

[00:25:59] Speaker 04:
Which, as the Court is aware, are extremely limited.

[00:26:01] Speaker 02:
And this because we're a secondary jurisdiction.

[00:26:03] Speaker 02:
UK is primary.

[00:26:04] Speaker 04:
Precisely right, Your Honor.

[00:26:06] Speaker 04:
I do want to spend just a moment, if I may.

[00:26:08] Speaker 04:
I mean, I know the Court already explored the way in which the agreements interact with each other.

[00:26:12] Speaker 04:
But I just think it's useful to explain for a moment.

[00:26:16] Speaker 04:
It is not just the fact that the very first line of the note, even before you come to the promissory note itself,

[00:26:25] Speaker 04:
the agreement puts up in bold language that this instrument and the rights and obligations evidenced hereby are subject to that certain subordination and inter creditor agreement that contains the obvious integration clause, excuse me, the arbitration agreement.

[00:26:40] Speaker 04:
And I think under decisions like progressive casualty and standard bent glass, this really couldn't be more clear as an attempt by sophisticated commercial parties to say that the note is subject to

[00:26:51] Speaker 04:
the provisions of the inter-creditor agreement, one of which is arbitration.

[00:26:55] Speaker 04:
But there's more.

[00:26:56] Speaker 04:
And that's the point I just want to emphasize for one more second.

[00:26:59] Speaker 04:
In the inter-creditor agreement, it expressly references at 3ER 316 that that means the senior debt documents that are discussed in the inter-creditor agreement include the note.

[00:27:10] Speaker 00:
And then I know my friend was spent... Can I just ask one more time about this dismissal thing?

[00:27:13] Speaker 00:
Because I think you're asking us to decide something novel.

[00:27:17] Speaker 00:
I think we have diversity jurisdiction and then also chapter two of the FAA gives us federal court jurisdiction because it's under the convention.

[00:27:25] Speaker 00:
Is there any rule in the FAA that says once there's a decision in the foreign arbitration that now the federal district court has no jurisdiction anymore?

[00:27:38] Speaker 04:
Yes, I do think there is and but it's by negative implication your honor so what it the article excuse me the FAA and the convention both speak in terms of what it is that the court in a secondary jurisdiction as judge by be pointed out we are has the power to do and the only thing that

[00:27:58] Speaker 04:
that a court in this situation has the power to do is enforce the award.

[00:28:04] Speaker 04:
In other words, respond to our request.

[00:28:06] Speaker 00:
Why is that jurisdiction instead of merits?

[00:28:09] Speaker 04:
Sure.

[00:28:09] Speaker 04:
I actually don't think it matters, Your Honor, because it does matter in the sense that.

[00:28:15] Speaker 00:
I mean, we have to decide if we're affirming a jurisdictional dismissal, right?

[00:28:20] Speaker 04:
I don't think so, Your Honor, because I think the court, we certainly have a dismissal.

[00:28:25] Speaker 02:
The judgment of the district court was that the action is- You haven't followed up, because I think the district court actually misspoke here.

[00:28:30] Speaker 02:
I don't think this is a 12B1.

[00:28:32] Speaker 02:
I think this is a 12B6.

[00:28:34] Speaker 02:
But it sort of gets you to the same place.

[00:28:35] Speaker 04:
It does.

[00:28:36] Speaker 04:
And it does.

[00:28:36] Speaker 04:
And that's exactly right.

[00:28:37] Speaker 04:
And I think it's worth just spending a moment to clarify that, because I don't want this court to enter a judgment that the Supreme Court would say, oh, well, it's actually not jurisdictional, and that makes a difference.

[00:28:47] Speaker 04:
We're not trying to get wrapped around the axle on that or have this court get a foot fault on that.

[00:28:52] Speaker 04:
I think the point, the difference between a jurisdictional dismissal and a dismissal on the merits really only matters if there's a defense along the lines of forfeiture under the Supreme Court's presence.

[00:29:05] Speaker 04:
But we've obviously asserted it.

[00:29:07] Speaker 04:
We've obviously moved for dismissal.

[00:29:10] Speaker 04:
So this was the point of the footnote in our brief.

[00:29:13] Speaker 04:
Courts have said that the right thing to do in this situation is dismiss for lack of jurisdiction.

[00:29:19] Speaker 04:
Judge Friedland, I totally take your point that under the Supreme Court's precedence about when something is and is not jurisdictional, there's like some reason for doubt about whether that's right.

[00:29:28] Speaker 04:
That's why I think the right answer from this court is to simply say that the case was properly dismissed.

[00:29:36] Speaker 04:
And I think it would be proper for the court to affirm because

[00:29:40] Speaker 04:
the plaintiffs cannot state a claim for relief on the merits even if the court had subject matter jurisdiction.

[00:29:49] Speaker 04:
So clearly dismissal is mandatory because the federal court does not have the power to enter the relief that is requested.

[00:29:58] Speaker 00:
That seems more plausible to me.

[00:29:59] Speaker 00:
I understand.

[00:30:00] Speaker 00:
So I don't see how there's the lacking jurisdiction, but maybe on the merits we could affirm dismissal.

[00:30:05] Speaker 04:
that's right and we were just fine with that you're right i i i think the court if the court wants to say they showed and you think we can just clarify

[00:30:14] Speaker 00:
There is jurisdiction, but it needs to be dismissed on the merits.

[00:30:19] Speaker 00:
We do that ourselves at this point.

[00:30:20] Speaker 04:
Yes, I think that's just fine.

[00:30:22] Speaker 04:
If the court wants to say the claims that Epicenter has asserted under Arizona law have to be dismissed because they are not entitled to the relief requested, and it should be a dismissal under 12b6 or effectively a summary judgment,

[00:30:36] Speaker 04:
That's just fine.

[00:30:37] Speaker 04:
And I think the court can do that not while preserving, sort of leaving open the question in order to, you know, I think avoid a circuit split.

[00:30:45] Speaker 00:
I don't think we can leave open whether we have jurisdiction and the firm on the merits.

[00:30:48] Speaker 00:
So that part of your footnote, I don't agree with.

[00:30:50] Speaker 00:
But so you have to convince us we do have jurisdiction and can dismiss on the merits, I think, because otherwise we're back in the jurisdiction.

[00:30:56] Speaker 04:
this court clearly has a pellet jurisdiction your honor there's no there's no question about that but what i think you have a pellet jurisdiction to do in reviewing the district court's judgment of dismissal is say that judgment is affirmed and it is a it can be affirmed obviously on any grounds supported by the record so i don't think the court needs to decide whether in this situation where you have a complete

[00:31:16] Speaker 04:
completed foreign arbitration decision.

[00:31:18] Speaker 04:
The dismissal of the district court has to be for lack of jurisdiction or on the merits.

[00:31:23] Speaker 04:
Where we have properly and timely asserted the dismissal, it gets you to exactly the same place as I think Judge Bybee was saying.

[00:31:32] Speaker 00:
We've taken you over your time.

[00:31:34] Speaker 00:
Thank you for the helpful argument.

[00:31:35] Speaker 00:
Let's hear the rebuttal, please.

[00:31:40] Speaker 03:
Thank you, Your Honors.

[00:31:42] Speaker 03:
I understand Your Honors are focused on

[00:31:44] Speaker 03:
what sounds like the ultimate dismissal of the case, I want to take the court back to 2019 because, again, the appellant here contends that under the fresh look which is required by Morgan v. Sundance and Armstrong v. Michaels, that was the case I wasn't remembering, the full name of an analysis of plain language of the contracts shows at least that there is a significant ambiguity.

[00:32:07] Speaker 03:
So in the first instance,

[00:32:09] Speaker 03:
There's a question as to whether the case should have been sent to arbitration.

[00:32:11] Speaker 03:
There's even a greater question as to whether or not the delegation of the arbitrability of the claims should have been shipped over to the UK.

[00:32:18] Speaker 00:
That has to be a clear... We don't even need to get to the delegation issue if we just think you have an arbitration clause that sends it to arbitration, right?

[00:32:25] Speaker 03:
Well, I think you do because it's a two-step process.

[00:32:28] Speaker 00:
Well, if we're in the delegation clause, it's maybe two-step.

[00:32:31] Speaker 00:
But if we just think your arbitration clause that says it has to be arbitrated in London is part of this agreement by incorporation,

[00:32:38] Speaker 03:
Yes, if you if you if you incorporate the arbitration clause, which does have an LCIA reference, then correct.

[00:32:45] Speaker 03:
However, I contend that under the case law, it has to be a clear and unmistakable assent to allow the delegation of the decision of whether we use the delegation clause as the route.

[00:32:55] Speaker 03:
Well, so what I'm contending here is that it's not clear and unmistakable because it's a bank shot.

[00:33:01] Speaker 03:
It's a double bank shot.

[00:33:02] Speaker 03:
You've got you've got one contract the note that the plaintiff sued under.

[00:33:06] Speaker 03:
And then they're incorporating, the court's incorporating something from the LCIA, which I contend shouldn't be incorporated because the constellation of contracts goes every which way and it's unclear.

[00:33:15] Speaker 03:
It's not clear and unmistakable.

[00:33:17] Speaker 03:
So it's not proper to import that.

[00:33:18] Speaker 03:
Even if it is proper, there's still a question.

[00:33:20] Speaker 00:
Can I ask, if you, if you lose this, I know you don't want to lose this, but if, if we conclude that you agreed to arbitrate and so these claims need to be resolved in arbitration and that was proper, what about this dismissal?

[00:33:31] Speaker 00:
Do you care if we dismiss at that point even?

[00:33:35] Speaker 03:
I honestly don't think we care.

[00:33:36] Speaker 03:
I mean, to be honest, I want to refer to the counsel's argument about waiver.

[00:33:42] Speaker 03:
There was no waiver, and the reason we don't care is because we got sent over to the UK, had to pay a million dollars to even get in the door.

[00:33:49] Speaker 03:
A non-party, Mr. Gray, who's the principal of Epicenter, had to pay a million dollars or guarantee a million to get in the door, and he's being sued in Arizona court for that right now.

[00:33:58] Speaker 03:
And so the cost of that, and

[00:34:01] Speaker 03:
obviously the amount that's at issue here, the underlying award, $10 million plus.

[00:34:07] Speaker 03:
The cost of all of that has depleted him and so there's no really unless this case can come back and the court can take it at its root and say this should have never been sent off to arbitration.

[00:34:16] Speaker 03:
There's no more fight in epicenter loss recovery at this point.

[00:34:20] Speaker 03:
It's been fleeced by the LCIA.

[00:34:23] Speaker 00:
It's been... And so you don't care if it's dismissed with prejudice, without prejudice, for jurisdiction, for merits, whatever, you don't care?

[00:34:28] Speaker 03:
Well, I wouldn't say that it's that broad, Your Honor.

[00:34:32] Speaker 03:
I do think that the court obviously will perform a careful analysis there.

[00:34:36] Speaker 03:
However, at the point if the court finds that it was properly sent to arbitration,

[00:34:42] Speaker 03:
That's really the thrust of the argument here that we're asking the court to reconsider that decision in 2019, not to get it, not to deal with the convention, not to deal with what happened afterwards, or even frankly, the ultimate dismissal.

[00:34:53] Speaker 03:
And I will say one thing just to contradict or to counter my colleague's argument on waiver.

[00:34:59] Speaker 03:
At the time that Epicenter or the predecessors to Epicenter consented to arbitrate, filed their demand, the court here dismissed the case.

[00:35:09] Speaker 03:
So literally the predecessors to epicenter were up the creek without a paddle.

[00:35:13] Speaker 03:
They had nowhere else to go.

[00:35:14] Speaker 03:
So what were they to do to continue to go over to LCA and say, no, we don't agree.

[00:35:17] Speaker 03:
You have jurisdiction.

[00:35:18] Speaker 03:
We're going to continue to do what just we're not going to participate.

[00:35:21] Speaker 03:
They had nowhere else to go.

[00:35:22] Speaker 03:
The court had ordered them to arbitrate and to the extent there's a further argument that they had agreed that the

[00:35:27] Speaker 03:
Appellants here had agreed to the delegation of claims.

[00:35:30] Speaker 03:
That was not clear and unmistakable.

[00:35:32] Speaker 03:
There was nothing voluntary there.

[00:35:33] Speaker 03:
So I contend that the court should revisit, based on the new standard articulated by the Supreme Court in this district, this circuit, and reevaluate the initial sending, the initial finding that there was a waiver of Article III rights.

[00:35:46] Speaker 03:
Because those are important.

[00:35:48] Speaker 00:
I think I need to cut you off.

[00:35:49] Speaker 00:
OK.

[00:35:49] Speaker 00:
Thank you.

[00:35:50] Speaker 00:
You have your argument.

[00:35:50] Speaker 03:
Thank you.

[00:35:51] Speaker 00:
Oh, sorry.

[00:35:51] Speaker 00:
We actually have a question.

[00:35:52] Speaker 00:
I'm sorry.

[00:35:53] Speaker 00:
Sorry.

[00:35:54] Speaker 01:
Your client's case rises or falls on whether your description of the dispute is subject to arbitration, correct?

[00:36:05] Speaker 03:
Yes.

[00:36:06] Speaker 01:
You are not contending that there's some dispute between the parties not covered by arbitration.

[00:36:16] Speaker 03:
Well, I guess let me just try to take that apart so I don't misspeak.

[00:36:20] Speaker 03:
Sure, take your time.

[00:36:23] Speaker 03:
First of all, that none of the claims should have been sent to arbitration.

[00:36:26] Speaker 03:
The case should not have been sent to arbitration in the first instance.

[00:36:28] Speaker 01:
Gotcha on that.

[00:36:29] Speaker 03:
None of the claims.

[00:36:30] Speaker 03:
But then there are further arguments that fall beneath that.

[00:36:32] Speaker 03:
There's delegability.

[00:36:33] Speaker 03:
There's also Burford as a party that wasn't a party to any of these contracts.

[00:36:38] Speaker 03:
There was a claim for interference against Burford.

[00:36:40] Speaker 03:
And that interference claim, by the way, presumes that Burford is a non-party to the contracts.

[00:36:44] Speaker 03:
That's the whole basis of interference.

[00:36:46] Speaker 03:
You have to be a non-privileged non-party to interfere with a contract or a future expectation.

[00:36:52] Speaker 03:
So to the extent that there are issues that are a little bit more nuanced in terms of whether or not all this, the Cole case is subject to arbitrability, I would just articulate those points.

[00:37:03] Speaker 02:
But once you've completed the arbitration, isn't the question of arbitrability one that's reserved to the English courts?

[00:37:10] Speaker 03:
Well, no, Your Honor, because this court, we contend this court still has jurisdiction to consider the January 19 order of the court.

[00:37:17] Speaker 03:
otherwise participating, it's not unlike any other trial.

[00:37:21] Speaker 03:
And the fact that it was abroad really is at no moment.

[00:37:23] Speaker 02:
So your claim is that even if it, even that it shouldn't have gone to arbitration, but if it had gone to arbitration, there were certain issues that the district court should have retained or said, I'm not referring these to arbitration.

[00:37:34] Speaker 02:
These cannot be arbitrated.

[00:37:36] Speaker 03:
Well, I would, I guess what I can tell you, Your Honor, is that this court has jurisdiction to revisit

[00:37:40] Speaker 03:
the district court's decision in January of 2019 to find in the first instance that an arbitration agreement had been reached that applied.

[00:37:47] Speaker 02:
Sure, but that's the first question, whether it goes to arbitration.

[00:37:50] Speaker 02:
There's a second question, which is does the question of arbitrability of all of the claims between the parties, is that reserved to the arbitrators in England?

[00:38:02] Speaker 02:
And that's the second question.

[00:38:03] Speaker 02:
Are you making any claim under that?

[00:38:05] Speaker 02:
I thought this was Judge Hawkins' question.

[00:38:08] Speaker 03:
Yes.

[00:38:08] Speaker 03:
So we argue that to the extent that the whole case… Which claims are subject to arbitration?

[00:38:13] Speaker 03:
Which claims are not subject to arbitration?

[00:38:15] Speaker 03:
Well, again, our first contention is that none of the claims were subject to arbitration.

[00:38:19] Speaker 03:
We understand that argument.

[00:38:20] Speaker 03:
Beneath that, if you dissect the claims, I think the most obvious claim that should not have been ever sent to arbitration is the claim for interference against Burford.

[00:38:30] Speaker 02:
Okay.

[00:38:31] Speaker 02:
Now, is there anything in the agreements that would suggest that some claims are not arbitrable?

[00:38:39] Speaker 02:
Because as I read the arbitration provision in the agreement, it looks like the questions of arbitrability are reserved under the London rules to the arbitration.

[00:38:52] Speaker 03:
Our contention is there had to be a clear and unmistakable consent to ship off the arbitrability question to London.

[00:39:01] Speaker 03:
there was not such consent because we are dealing with a document that's incorporated by reference in a confusing fashion when compared with the other documents doesn't necessarily clarify what the subject to conflict language in the legend means.

[00:39:15] Speaker 03:
And so therefore it was improper that the district court should have conducted the analysis of delegability of arbitrary to the arbitrator on each specific claim.

[00:39:28] Speaker ?:
Okay.

[00:39:28] Speaker 03:
Okay.

[00:39:29] Speaker 03:
All right.

[00:39:29] Speaker 00:
Any further questions?

[00:39:30] Speaker 00:
I'm good.

[00:39:31] Speaker 00:
Thank you both sides for helpful arguments.

[00:39:33] Speaker 00:
Thank you.

[00:39:33] Speaker 00:
Thank you, Your Honor.

[00:39:34] Speaker 00:
This case is submitted.