A recent decision from the Fifth Circuit compels us to step outside the strict confines of insurance law. Ensco International Inc. v. Certain Underwriters at Lloyd’s and Insurance Co.’s Subscribing to Policy Nos. and Cover Notes PE0500247, LDC070105(B), LCD 070-105(a), and B0621ELOEN0105, 2009 WL 2450707 (5th Cir. August 12, 2009), addresses what is required to contractually waive the right to remove a case to federal court under the New York Convention. The Convention, 9 U.S.C. §§ 201-208, governs the enforcement of foreign arbitral awards.
Section 203 extends federal question jurisdiction to actions and proceedings that are subject to the Convention. Concomitantly, section 205 provides that a state court action that falls under the Convention is removable to federal court. In Ensco, Lloyd’s sought to remove to federal court an action brought by Ensco in Texas state court to confirm a London arbitral award. The sole issue on appeal was whether the insurance policy’s forum selection clause effected an enforceable waiver of the right of removal under the Convention. This seemingly banal issue cleaved the panel, engendering three separate opinions.
The forum selection clause in the insurance policy provided: “The proper and exclusive law of this insurance shall be Texas law. Any disputes arising under or in connection with it shall be subject to the exclusive jurisdiction of the Court of Dallas County, Texas.” 2009 WL 2450707, at *1. The district court granted Ensco’s motion to remand, finding that this clause effected a waiver of the right to remove. The Fifth Circuit affirmed.
“For a contractual clause to prevent a party from exercising its right to removal, the clause must give a ‘clear and unequivocal’ waiver of that right.” Id. The court was divided on whether waiver under the Convention required an explicit statement or rather whether waiver may be implicit in the contractual language. Judges Smith and Owen concluded that a waiver of removal must be explicit but that section 205 does not require that the clause contain the words “remove” or “removal” or a reference to the statute. 2009 WL 2450707, at **6-7. Judge Smith offered the most permissive interpretation of section 205, concluding that waiver of the statutory right of removal may be implicit in language that “clearly demonstrates the party’s intent to make that jurisdiction exclusive.” 2009 WL 2450707, at *6. In his dissent, Judge Jolly advanced a stringent test which conditions enforcement on an “express statement of waiver” that specifically references waiver of the statutory right of removal. 2009 WL 2450707, at *8.
