DiMercurio v. Sphere Drake

• Court: Court of Appeals for the First Circuit
• Decided: January 31, 2000
• Docket: 99-1470
• Status: Published

Opinion

USCA1 Opinion

                 United States Court of Appeals

                     For the First Circuit


No. 99-1470



                      FRANCESCO DIMERCURIO,



                      Plaintiff, Appellant,



                                v.



              SPHERE DRAKE, INSURANCE PLC. NO 1 A/C,



                       Defendant, Appellee.


APPEAL FROM THE UNITED STATES DISTRICT COURT



                FOR THE DISTRICT OF MASSACHUSETTS



           [Hon. Joseph L. Tauro, U.S. District Judge]


Before



                      Selya, Circuit Judge,

                 Coffin, Senior Circuit Judge,

                   and Boudin, Circuit Judge.


Joseph M. Orlando with whom Vita A. Palazzolo was on brief for

appellant.

     Richard H. Pettingell for appellee.


January 31, 2000


COFFIN, Senior Circuit Judge. This case requires us to

evaluate the validity of an arbitration provision contained in an

insurance policy issued by London-based appellee Sphere Drake

Insurance PLC for coverage on a Massachusetts fishing boat. 

Appellant Francesco DiMercurio, a fisherman who was injured when

the boat sank, claims that the arbitration clause is unenforceable

for various reasons, among them that Massachusetts law voids

provisions in insurance policies that deprive the commonwealth's

courts of jurisdiction over the insurer.  See Mass. Gen. Laws ch.

175,  3, 22.  The district court upheld the  validity of the

arbitration clause, and we affirm.

                      I. Factual Background

     The parties' dispute originated with the sinking in July 1994

of the F/V CAPE COD, a commercial shipping vessel owned by a

Gloucester, Massachusetts company, Rosalie & Matteo Corporation. 

Appellant DiMercurio, a fisherman, suffered injuries in the

incident and filed a claim for damages against Rosalie & Matteo. 

Rosalie & Matteo's insurer, Sphere Drake, denied the claim and

voided the policy on the ground that the insured had never obtained

a condition survey that was a prerequisite for coverage.

     DiMercurio subsequently filed a personal injury suit against

Rosalie & Matteo, but the company, whose only asset had been the

F/V CAPE COD, defaulted.  In March 1997, the district court awarded

DiMercurio $350,000.  A month later, Rosalie & Matteo assigned to

DiMercurio all rights it had against Sphere Drake under the

insurance policy.

     DiMercurio then took his claim directly to Sphere Drake,

demanding that the insurer pay the $350,000 judgment.  Sphere Drake

denied the demand and sought to invoke the arbitration process

specified in the policy, which called for arbitration of all

coverage disputes in London.  DiMercurio responded by filing this

action, in which he challenges the validity of the arbitration

provision and seeks recovery of his damages award.

     The district court granted summary judgment for Sphere Drake,

concluding that the arbitration clause was enforceable and that the

parties' dispute over coverage must be resolved pursuant to its

procedures.  This appeal followed.

                          II. Discussion

     DiMercurio's primary argument on appeal is that the

arbitration provision is unenforceable because it effectively

deprives the Massachusetts courts of jurisdiction in contravention

of Massachusetts General Laws chapter 175,  22, which voids "any

condition, stipulation or agreement [in an insurance policy]

depriving the courts of the commonwealth of jurisdiction of actions

against [the insurer]."  He alternatively asserts that the

provision is invalid on grounds of unconscionability, primarily due

to lack of mutuality of obligation.  We explain below why we find

neither of these contentions to have merit.

     A. Standard of Review

     We review the district court's grant of summary judgment de

novo.  See Bridges v. MacLean Stevens Studios, Inc., No. 99-1126,

slip op. at 4 (lst Cir. Jan. 6, 2000).  At issue is the validity of

a contract provision   the arbitration clause   and our task is to

ascertain the intentions of the parties, consistent with state law

principles and with due regard for the federal policy favoring

arbitration.  See Brennan v. King, 139 F.3d 258, 264 (lst Cir.

1998).  The parties identify no significant factual dispute,

disagreeing instead over the legal significance of the undisputed

record.  We therefore proceed to address those questions of law.

     B. Enforceability of an International Arbitration Clause

     An arbitration provision in an international commercial

agreement such as the London-issued insurance policy in this case

is governed by Chapter Two of the Federal Arbitration Act ("FAA"),

9 U.S.C.  201-208, which implemented the United Nations

Convention on the Recognition and Enforcement of Foreign Arbitral

Awards ("the Convention"), ratified by the United States, September

30, 1970, 21 U.S.T. 2517, T.I.A.S. No. 6997 (reprinted following 9

U.S.C. 201).  A court in the United States faced with a request to

refer a dispute governed by Chapter Two to arbitration performs a

"very limited inquiry" into whether an arbitration agreement exists

and falls within the Convention's coverage.  See Ledee v. Ceramiche

Ragno, 684 F.2d 184, 186 (lst Cir. 1984).   An agreement that

satisfies the prerequisites, as does the provision in the Sphere

Drake policy, is enforceable under the Convention unless it is

"null and void, inoperative or incapable of being performed."  Art.

II, Sec. 3.  It is at that second stage of inquiry that DiMercurio

contends the Sphere Drake provision fails.

     C. Arbitration and Jurisdiction 

     DiMercurio argues that the arbitration provision in the Sphere

Drake policy is "null and void" under section 22 of the

Massachusetts General Laws, which bars any condition in an

insurance policy that deprives Massachusetts courts of

jurisdiction.  The arbitration provision does just that, he

maintains, by requiring that his dispute be taken out of the

commonwealth's courts.  He further argues that the general federal

policy in favor of arbitration, as expressed through the FAA, does

not trump section 22 because the McCarran-Ferguson Act, 15 U.S.C.

 1012(b), explicitly protects state laws regulating "the business

of insurance" from preemption by federal legislation.  See Allied-

Bruce Terminix Cos., Inc. v. Dobson, 513 U.S. 265, 272 (1995)

("state courts cannot apply state statutes that invalidate

arbitration agreements") (citing Southland Corp. v. Keating, 465

U.S. 1, 15-16 (1984)).

     Whatever the reach of the McCarran-Ferguson Act, it is

relevant here only if state law voids the Sphere Drake arbitration

provision as an "agreement depriving the courts of the commonwealth

of jurisdiction."  The district court ruled that this was not such

an agreement, rejecting the view that arbitration ousts a court of

jurisdiction.  The court relied in large part on our own case law

stating precisely that conclusion.  See Vimar Seguros Y Reaseguros,

S.A. v. M/V SKY REEFER, 29 F.3d 727, 733 (lst Cir. 1994)("[A]n

agreement to arbitrate does not deprive a federal court of its

jurisdiction over the underlying dispute."), aff'd, 515 U.S. 528

(1995);  Morales Rivera v. Sea Land of Puerto Rico, Inc., 418 F.2d

725, 726 (lst Cir. 1969) (holding that arbitration clauses are "not

destructive of jurisdiction"); see also Vimar Seguros, 515 U.S. at

542 (O'Connor, J., concurring) ("Foreign arbitration clauses of the

kind presented here do not divest domestic courts of jurisdiction,

unlike true foreign forum selection clauses . . . .").  

     DiMercurio challenges this precedent. He claims that language

in the FAA and in other case law indicates that, but for the FAA,

courts are ousted of jurisdiction by arbitration provisions.  

Although he acknowledges that the FAA was intended to confirm a

court's jurisdiction while permitting enforcement of arbitration

agreements, he maintains that any jurisdiction-reviving impact of

the FAA is negated in this instance by the combined force of

section 22 of the Massachusetts General Laws' chapter 175 and the

McCarran-Ferguson Act.  In other words, section 22 invalidates

arbitration agreements because they divest a court of jurisdiction,

and the McCarran-Ferguson Act prevents the FAA, and its policy

favoring arbitration, from preempting section 22.  He contends that

our prior decisions holding that arbitration does not negate

jurisdiction fail to take into account this relationship among the

federal and state statutes, and thus are not dispositive.  In

addition, he invokes as further support for his position decisions

holding that a case referred to arbitration under the Convention

should be dismissed for lack of subject-matter jurisdiction.

     DiMercurio's thesis unquestionably has historical support. 

The prevailing attitude of the courts toward arbitration before

passage of the FAA was one of disapproval, and this typically was

couched as an objection to being ousted of their jurisdiction.  See

Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 220 n.6 (1985)

(explaining history of court refusal to enforce arbitration

agreements on the ground that they ousted courts of jurisdiction);

see also Allied-Bruce Terminix Cos., 513 U.S. at 270-71 (similar). 

Section 4 of the FAA appears to adopt the ouster concept by

referring to the jurisdiction courts would have "save for" an

arbitration agreement.  Similarly, in American Sugar Refining Co.

v. The Anaconda, 138 F.2d 765 (5th Cir. 1943), aff'd, 322 U.S. 42

(1944), the Fifth Circuit states that, prior to enactment of the

FAA, an agreement to arbitrate would not be enforced in United

States courts because "parties may not by private agreement oust

the jurisdiction of the courts."  Id. at 766.  The court then

continued:

          The act was passed not to oust the jurisdiction of the

     courts but to provide for maintaining their jurisdiction

     while at the same time recognizing arbitration agreements

     as affirmative defenses and providing a forum for their 

     specific enforcement.



Id. at 766-67.  See also, e.g., Kurt Orban Co. v. S/S CLYMENIA, 318

F. Supp. 1387, 1390 (S.D.N.Y. 1970) (quoting above language from

The Anaconda).

     DiMercurio asserts that such language demonstrates that the

FAA was necessary to give back to courts jurisdiction that

otherwise is usurped by an arbitration provision.  Thus, if the FAA

is rendered inapplicable here by the McCarran-Ferguson Act,

DiMercurio maintains that the Massachusetts courts remain "ousted

of jurisdiction" by the Sphere Drake arbitration provision, in

violation of section 22.

     Our problem with this argument is that the prevailing attitude

has changed.  While some of the authority on which DiMercurio

relies may reflect his view that arbitration without the

restorative effect of the FAA unlawfully ousts a court of

jurisdiction, that view has lost much, if not all, of the

legitimacy it once may have had.  See Mitsubishi Motors Corp. v.

Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626-27 (1985) ("[W]e

are well past the time when judicial suspicion of the desirability

of arbitration and of the competence of arbitral tribunals

inhibited the development of arbitration as an alternative means of

dispute resolution.").  Agreements to arbitrate are now typically

viewed as contractual arrangements for resolving disputes rather

than as an appropriation of a court's jurisdiction.  See, e.g.,

Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 57 (1995)

(FAA aims "`to ensure the enforceability, according to their terms,

of private agreements to arbitrate'") (quoting Volt Information

Sciences, Inc. v. Board of Trustees of Leland Stanford Junior

Univ., 489 U.S. 468, 476 (1989)); Dean Witter Reynolds, 470 U.S. at

219-20 (purpose of FAA was "to place an arbitration agreement `upon

the same footing as other contracts, where it belongs'");

Bercovitch v. Baldwin School, Inc., 133 F.3d 141, 147-48 (lst Cir.

1998) (same); Morales Rivera, 418 F.2d at 726 (agreements to

arbitrate are not destructive of jurisdiction, but "[t]hey are,

precisely, agreements, and as such may be pleaded as a personal

defense"); Cranston Teachers Ass'n v. Cranston School Comm., 386

A.2d 176, 178 (R.I. 1978) (arbitration agreement does not implicate

court's "power to adjudicate the dispute" but "raises the distinct

question whether the court should have exercised that power"); cf.

Central Contracting Co. v. Maryland Cas. Co., 367 F.2d 341, 345 (3d

Cir. 1966) (a forum selection clause does not oust the jurisdiction

of the courts; "in effect it merely constitutes a stipulation in

which the parties join in asking the court to give effect to their

agreement by declining to exercise jurisdiction").

     Indeed, despite the language in section 4 of the FAA quoted by

DiMercurio suggesting that an arbitration clause affects

jurisdiction, the House Report accompanying the act indicates that

the drafters understood that the problem was not really

jurisdictional, but rather that the jurisdiction concept was an

illogical remnant of ancient English law.  See H.R. Rep. No. 96,

68th Cong., lst Sess., 1-2 (1924).   The Supreme Court has

observed that the "preeminent concern of Congress in passing the

Act was to enforce private agreements into which parties had

entered," see Dean Witter Reynolds, 470 U.S. at 219, and the

statutory obligation of courts to do so appears to have opened the

door to erosion of the inherited concern about ouster of

jurisdiction.  See generally Bernhardt v. Polygraphic Co. of

America, Inc., 350 U.S. 198, 209-12 (1956) (Frankfurter, J.,

concurring) (discussing possible change in the "traditional

judicial hostility against ousting courts, as the phrase ran, of

their jurisdiction," and noting, "Law does change with times and

circumstances, and not merely through legislative reforms.")

(footnote omitted).

     We think it of some note that section 204 of the FAA's Chapter

Two, which was enacted nearly half a century after the FAA was

first adopted, does not refer to the jurisdiction a court would

have "save for" an arbitration agreement, but instead states that

an action or proceeding "over which the district courts have

jurisdiction" may be brought "in any such court in which save for

the arbitration agreement an action or proceeding with respect to

the controversy between the parties could be brought . . . ." 9

U.S.C.  204 (emphasis added).

     The difference in language reflects the modern view that

arbitration agreements do not divest courts of jurisdiction, though

they prevent courts from resolving the merits of arbitrable

disputes.  Further evidence that Congress views the courts as

retaining ultimate authority over a case despite the referral to

arbitration is the provision in Chapter Two of the FAA allowing a

party to seek an order confirming the arbitrator's award.  See id.

 207.  DiMercurio complains that drawing a line between a court's

jurisdiction over a case and its authority to hear a case creates

a distinction without a difference.  We disagree.  It is neither

illogical nor meaningless for a court's jurisdiction to remain

intact and crucial to the overall arbitration scheme even while it

honors the parties' voluntary agreement to deal with the merits

outside the courtroom.  It is his concept of on-again, off-again,

on-again jurisdiction   since a court must have subject-matter

jurisdiction both to refer to arbitration and to confirm an

arbitration award   that strikes us as illogical.

     DiMercurio's alternative argument fares no better. To prove

that arbitration agreements governed by the Convention, in

particular, divest courts of jurisdiction, he invokes case law of

fairly recent vintage in which judges ordered dismissals for "lack

of subject matter jurisdiction" when faced with such agreements. 

See, e.g., Siderius, Inc. v. Compania de Acero del Pacifico, S.A.,

453 F. Supp. 22, 25 (S.D.N.Y. 1978); Ledee v. Ceramiche Ragno, 528

F. Supp. 243, 246 (D.P.R. 1981) (citing Siderius), aff'd, 684 F.2d

184 (lst Cir. 1982); see also Tennessee Imports, Inc. v. Filippi,

745 F. Supp. 1314, 1323 (M.D. Tenn. 1990) (noting split in

precedent over whether a court may retain jurisdiction under the

Convention after finding an enforceable agreement to arbitrate;

collecting cases).  The rationale for these dismissals is the

finality of the referral to arbitration under the Convention and

Chapter Two of the FAA, neither of which provides explicitly for a

stay of proceedings pending arbitration, as does the FAA's Chapter

One.  See Ledee, 528 F. Supp. at 246; Siderius, 453 F. Supp. at

25.  Cf. The Anaconda, 322 U.S. at 44 (noting that Chapter One's

stay provision "envisages action in a court on a cause of action

and does not oust the court's jurisdiction of the action, though

the parties have agreed to arbitrate").

     These cases are of limited help to DiMercurio, however, for

two reasons.  First, contrary to the notion of a "final" referral,

the parties may   as noted above   return to court for confirmation

of an arbitration award.  Moreover, Chapter Two of the FAA includes

a provision extending Chapter One "to actions and proceedings

brought under this chapter to the extent that that chapter is not

in conflict with this chapter or the Convention." 9 U.S.C.  208. 

Thus, the provision for a stay in section 3 of Chapter One may be

impliedly incorporated into Chapter Two, making international

arbitration agreements no more "final" than domestic ones.  See

Tennessee Imports, 745 F. Supp. at 1324.

     The second flaw in DiMercurio's reliance on dismissals for

lack of subject-matter jurisdiction is his failure to take into

account "the chameleon-like quality of the term `jurisdiction'" and

its "wide variety of meanings," Prou v. United States, No. 98-1854,

slip. op. at 13 (lst Cir. Dec. 17, 1999). We recently noted, as an

example, that a reference to "jurisdiction" embraces the very

different concepts of subject-matter jurisdiction and personal

jurisdiction, the former concerning the court's constitutional

power to hear a case and the latter relating to a litigant's waive-

able protection from suit in a particular forum.  See id. at 13-14. 

Here, as in Prou, yet another aspect of the word "jurisdiction" is

"of particular pertinence," namely,

          the unfortunate penchant of judges and legislators to use

     the term "jurisdiction" to describe the technically

     distinct notion of a court's authority to issue a

     specific type of remedy in a case in which the threshold

     requirements of subject-matter and personal jurisdiction

     are not open to question.



Id. at 14.



     The semantic imprecision, coupled with the favorable modern

attitude toward arbitration agreements, diminishes the force of

precedent indicating that an agreement to resolve disputes by

arbitration is destructive of subject-matter jurisdiction.  Because

the term "subject-matter jurisdiction" is "often misused," Cranston

Teachers Ass'n, 386 A.2d at 178, cases to the effect that a court

lacks authority to act in the face of a valid arbitration agreement

do not necessarily implicate "jurisdiction in the basic sense, but

[may] stand merely for the proposition that if either party

seasonably claims his right to arbitrate, the agreement must be

recognized."  Morales Rivera, 418 F.2d at 726; see also, e.g., J.J.

Ryan & Sons v. Rhone Poulenc Textile, S.A., 863 F.2d 315, 322 (4th

Cir. 1988) (remanding with instructions "to decline to exercise

jurisdiction over count one, other than to refer it to arbitration,

and then to dismiss this action" (emphasis added)). We therefore

give little weight to language dismissing arbitrable claims for

lack of "jurisdiction."

     Although our review of authorities strongly indicates that

DiMercurio's "ouster of jurisdiction" concept is for the most part

outmoded as applied to arbitration agreements, we cannot lay this

argument to rest without looking specifically at the Massachusetts

statute he invokes.  Given that section 22 of chapter 175 was

enacted in 1856, DiMercurio reasonably can argue that the statute

was intended, and therefore still must be construed, to bar

enforcement of arbitration agreements in insurance policies

governed by Massachusetts law.

     Massachusetts law in this area, however, also has developed

over time. As we shall explain, we are confident that the Sphere

Drake provision is fully enforceable under current Massachusetts

law.



     D. The Impact of the Arbitration Clause under Massachusetts

Law

     Despite the multi-faceted nature of the term "jurisdiction," 

it is more than likely that at the time section 22 was enacted in

1856, and for some time thereafter, the Massachusetts legislature's

concern about insurance policy provisions seeking to divest courts

of jurisdiction extended to  arbitration agreements like the one at

issue in this case.  The case law shows that Massachusetts'

attitude toward arbitration was within the mainstream for the time. 

In Bauer v. International Waste Co., 201 Mass. 197 (1909), for

example, the Massachusetts Supreme Judicial Court considered an

arbitration clause in a commercial contract and concluded:

          [T]his was an attempt to leave to the arbitrator the

     decision whether there had been any violation of the

     agreement with the stipulation that his decision was to

     be final.  This is not an agreement as to some

     preliminary, subsidiary or ancillary matter in aid of an

     action at law or a suit in equity, but an attempt to

     wholly oust the courts of jurisdiction respecting the

     subject matter.  It is settled by a long line of

     authorities in this jurisdiction that such an agreement

     cannot be enforced.



Id. at 202-03 (emphasis added); see also Sanford v. Boston Edison

Co., 316 Mass. 631, 636 (1944) (arbitration provisions that

"contemplate the entire and final settlement of all controversies

to which they apply" are unenforceable because such provisions may

not be allowed to oust the court of jurisdiction).

     Just as the FAA changed the landscape with respect to

arbitration under federal law, however, the state's adoption in

1960 of the Uniform Arbitration Act for Commercial Disputes must be

viewed as an official change of outlook.  See Mass. Gen. Laws Ann.

ch. 251,  1-19.  Section 1 of the Massachusetts arbitration act

provides as follows:

               A written agreement to submit any existing

     controversy to arbitration or a provision in a written

     contract to submit to arbitration any controversy

     thereafter arising between the parties shall be valid,

     enforceable and irrevocable, save upon such grounds as

     exist at law or in equity for the revocation of any

     contract.  The provisions of this chapter shall not apply

     to collective bargaining agreements to arbitrate . . . . 

     

Id.  1 (emphasis added).



     This provision is telling in two important respects.  First,

it requires that arbitration agreements be enforced except in

circumstances that would invalidate any other contract.  This

endorsement of arbitration all but states explicitly that

Massachusetts no longer considers such agreements to oust courts of

jurisdiction. The few grounds listed to invalidate arbitration

clauses are consistent with the Convention's "null and void"

clause, which limits the bases upon which an international

arbitration agreement may be challenged to standard breach-of-

contract defenses:

               The parochial interests of the Commonwealth [of

     Puerto Rico], or of any state, cannot be the measure of

     how the "null and void" clause is interpreted. Indeed, by

     acceding to and implementing the treaty, the federal

     government has insisted that not even the parochial

     interests of the nation may be the measure of

     interpretation.  Rather, the clause must be interpreted

     to encompass only those situations   such as fraud,

     mistake, duress, and waiver   that can be applied

     neutrally on an international scale.



Ledee, 684 F.2d at 187 (rejecting provision in Puerto Rico Dealers

Act that invalidated, on public policy grounds, arbitration clauses

in dealers' contracts, and stating, "[A]n expansive interpretation

of the [null and void] clause would be antithetical to the goals of

the Convention."); see also Mitsubishi Motors, 473 U.S. at 629-31;

Scherk v. Alberto-Culver Co., 417 U.S. 506, 515-19 (1974) ("`We

cannot have trade and commerce in world markets and international

waters exclusively on our terms, governed by our laws, and resolved

in our courts.'" (quoting The Bremen v. Zapata Off-Shore Co., 407

U.S. 1, 9 (1972)).

     Second, section 1 makes  an explicit exception for arbitration

provisions in collective bargaining agreements, thereby implicitly

bringing arbitration provisions in insurance policies within its

reach.  Whether by restoring jurisdiction to the state courts, akin

to DiMercurio's theory concerning the FAA, or by redefining the

impact of arbitration, the Massachusetts arbitration act apparently

took arbitration agreements outside the scope of section 22's bar

on insurance policy provisions that divest courts of jurisdiction. 

Though we have found no precedent stating so explicitly, that

conclusion is borne out by cases and commentary.

     A widely used summary of Massachusetts law assessed the

current state of the commonwealth's view of arbitration as follows: 



               It was not until 1960 when Massachusetts adopted the

     Uniform Arbitration Act for Commercial Disputes that the

     old "ouster of jurisdiction doctrine," at least as it

     applied to arbitration, was finally put to rest.  Section 

     1 of the new Chapter 251 of the General Laws leaves

     little doubt of the Legislature's intent . . . .



               Since the enactment of the Uniform Act, our courts

     have given faithful adherence to its broad purposes and

     today construe arbitration clauses as broadly as the

     parties to the agreement in question intend.

     

19 Massachusetts Practice Evidence  102.6, at 45-46 (2d ed. 1998)

(footnotes omitted).  The Massachusetts courts have been equally

clear in affirming the state's support of arbitration provisions,

see O'Brien v. Hanover Ins. Co., 427 Mass. 194, 200, 692 N.E.2d 39,

43 (1998) (citation omitted) (referring to the "strong public

policy favoring arbitration as an expeditious  alternative to

litigation for settling commercial disputes"); Home Gas Corp. of

Mass., Inc. v. Walter's of Hadley, Inc., 403 Mass. 772, 774, 532

N.E.2d 681, 683 (1989) (same); Town of Danvers v. Wexler Constr.

Co., 12 Mass. App. Ct. 160, 163, 422 N.E.2d 782, 784 (1981), and

the cases addressing arbitration issues include those involving

such agreements in insurance policies, see, e.g., Spaneas v.

Travelers Indem. Co., 423 Mass. 352, 668 N.E.2d 325 (1996); Miles

v. Aetna Casualty and Surety Co., 412 Mass. 424, 589 N.E.2d 314

(1992); McGovern v. Middlesex Mut. Ins. Co., 359 Mass. 443, 269

N.E.2d 445 (1971).  These latter cases provide particularly

persuasive evidence of the enforceability of arbitration provisions

in Massachusetts insurance policies.

     The path of Massachusetts law, together with the analogous

history described in the previous section, leads us to the

conclusion that the Sphere Drake arbitration provision does not

divest the courts of jurisdiction over claims against the company.

Unless the clause is subject to a standard contractual challenge,

it is fully enforceable.  We thus turn to DiMercurio's contention

that the clause should be stricken because it is unconscionable.

     E. Unconscionability

     DiMercurio argues that the arbitration provision should not be

enforced against him because the contract does not impose a mutual

obligation to arbitrate on the insurer.  Although clause 53 of the

policy requires that all coverage disputes be arbitrated in London,

clause 28.1 permits the company to bring suit in any court of

competent jurisdiction for unpaid premiums "or other sum of

whatsoever nature due from the Assured."

     We adhere to our view that one-sided agreements to arbitrate

are not favored.  See McCarthy v. Azure, 22 F.3d 351, 361 (lst Cir.

1994).  In this instance, however, both parties are required to

arbitrate coverage disputes.  The fact that the company may proceed

in court to recover premiums or like fees   a proceeding that is

likely to be much more confined than a coverage dispute   does not

render the contract impermissibly unbalanced.  See Hannon v.

Original Gunite Aquatech Pools, Inc., 385 Mass. 813, 824, 434

N.E.2d 611, 618 (1982) (inclusion of a clause in a contract

allowing one party, but not the other, to demand arbitration is not

"unconscionable" per se). 

     Moreover, there is no evidence of undue power or deception on

the part of the insurer in the negotiation of the policy.  The

particular coverage was selected by Rosalie & Matteo's broker,

Marine Insurance Consultants International Limited, which was

familiar with the Sphere Drake policy forms, including the

arbitration provision.  As Rosalie & Matteo's assignee, DiMercurio

is bound by the terms and conditions to which the company agreed.

     We therefore affirm the district court's refusal to invalidate

the arbitration clause on grounds of unconscionability.

     For the foregoing reasons, the judgment of the district court

is affirmed.