Molecular Dynamics, Ltd. v. Spectrum Dynamics Med. Ltd.
This text of 143 F.4th 70 (Molecular Dynamics, Ltd. v. Spectrum Dynamics Med. Ltd.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term, 2024 (Argued: May 14, 2025 Decided: July 2, 2025) Docket No. 24-2209-cv
MOLECULAR DYNAMICS, LTD., SDBM LIMITED, CHAUNCEY CAPITAL CORP., Petitioners-Appellants,
v.
SPECTRUM DYNAMICS MEDICAL LIMITED, BIOSENSORS INTERNATIONAL GROUP LTD., Respondents-Appellees. 1
Before: SACK, WESLEY, AND ROBINSON, Circuit Judges.
Petitioners-Appellants were on the losing end of an arbitration held in Geneva, Switzerland, which resulted in the award of a substantial monetary sum, declaratory relief, and costs and attorneys’ fees to Respondents-Appellees. In accord with an agreement between the parties that New York courts would have exclusive jurisdiction over all matters concerning the arbitration, Petitioners-Appellants filed a petition to vacate the arbitral awards in the U.S. District Court for the Southern District of New York. The district court (Katherine P. Failla, Judge) denied the petition, concluding that it lacked subject- matter jurisdiction to vacate the Swiss-made awards under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention” or the “Convention”) because, in the district court’s view, the awards may only be vacated in the country where they were made, Switzerland.
1The Clerk of Court is respectfully directed to amend the official caption as set forth above. Although the original case caption listed one of the Petitioners-Appellants as “SBDM Limited,” the parties’ briefs and exhibits contained in the appendices all refer to that party as “SDBM Limited,” as the caption now reflects. 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
Plaintiffs-Appellants appealed to this Court, urging that the New York Convention does not command that all vacatur proceedings take place in the country that produced an award, and that the parties were free to contract for a non-Swiss forum to adjudicate issues arising from the arbitration.
We conclude, albeit on a basis different from that relied upon by the district court, that the court correctly determined that it lacked subject-matter jurisdiction over the petition to vacate. Chapter 2 of the Federal Arbitration Act endows a district court with subject-matter jurisdiction over “[a]n action or proceeding falling under the [New York] Convention.” 9 U.S.C. § 203. The New York Convention concerns itself chiefly with the recognition and enforcement of arbitral awards in countries other than that in which an award was made. In what little it says about vacatur proceedings, it does not contemplate the species of action at bar, a petition to vacate a foreign-made arbitral award. Accordingly, we cannot conclude that Petitioners-Appellants’ action “fall[s] under” the Convention, as required to avail the grant of subject-matter jurisdiction to federal district court contained in 9 U.S.C. § 203. We therefore AFFIRM the judgment of the district court.
CHARLOTTE V. BAIGENT (Scott M. Danner, Patrick J. Woods, on the brief), Holwell Shuster & Goldberg LLP, New York, NY, for Petitioners-Appellants;
DAVID N. CINOTTI (Sean J. Mack, Dominique Kilmartin, on the brief), Pashman Stein Walder Hayden P.C., Hackensack, NJ, for Respondent-Appellee Spectrum Dynamics Medical Limited.
FREDERICK L. WHITMER, Kilpatrick Townsend & Stockton LLP, New York, NY, for Respondent-Appellee Biosensors International Group Ltd.
2 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
SACK, Circuit Judge:
Petitioners-Appellants were on the losing end of an arbitration held in
Geneva, Switzerland, which resulted in the award of a substantial monetary
sum, declaratory relief, and costs and attorneys’ fees to Respondents-Appellees.
In accord with an agreement between the parties that New York courts would
have exclusive jurisdiction over all matters concerning the arbitration,
Petitioners-Appellants filed a petition to vacate the arbitral awards in the U.S.
District Court for the Southern District of New York. The district court
(Katherine P. Failla, Judge) denied the petition, concluding that it lacked subject-
matter jurisdiction to vacate the Swiss-made awards under the Convention on
the Recognition and Enforcement of Foreign Arbitral Awards (the “New York
Convention” or the “Convention”) because, in the district court’s view, the
awards may only be vacated in the country where they were made, Switzerland.
Plaintiffs-Appellants appealed to this Court, urging that the New York
Convention does not command that all vacatur proceedings take place in the
country that produced an award, and that the parties were free to contract for a
non-Swiss forum to adjudicate issues arising from the arbitration.
3 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
We conclude, albeit on a basis different from that relied upon by the
district court, that the court correctly determined that it lacked subject-matter
jurisdiction over the petition to vacate. Chapter 2 of the Federal Arbitration Act
(the “FAA”) endows a district court with subject-matter jurisdiction over “[a]n
action or proceeding falling under the [New York] Convention.” 9 U.S.C. § 203.
The New York Convention concerns itself chiefly with the recognition and
enforcement of arbitral awards in countries other than that in which an award
was made. In what little it says about vacatur proceedings, it does not
contemplate the species of action at bar, a petition to vacate a foreign-made
arbitral award. Accordingly, we cannot conclude that Petitioners-Appellants’
action “fall[s] under” the Convention, as required to avail the grant of subject-
matter jurisdiction to federal district court contained in 9 U.S.C. § 203. We
therefore AFFIRM the judgment of the district court.
4 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
BACKGROUND
I. Factual Background 2
A. The Joint Venture
This dispute arises from a failed joint venture in medical-imaging
technology, Molecular Dynamics Ltd. (“Molecular Dynamics”). Molecular
Dynamics was formed in October 2013 by Respondent-Appellee Biosensors
International Group Ltd. (“Biosensors”) and Petitioners-Appellants SDBM
Limited (“SDBM”) and Chauncey Capital Corp. (“Chauncey”). The joint venture
was created through a series of contracts between Biosensors, SDBM, and
Chauncey, including a Joint Venture and Investor Agreement (the “JV
Agreement”) and a License Agreement, among several others (collectively, the
“Agreements”). Although Respondent-Appellee Spectrum Dynamics Medical
Limited (“Spectrum”) is not a party to the Agreements, in January 2017 it
acquired all of Biosensors’ rights and liabilities under the Agreements.
Under the JV Agreement, Molecular Dynamics and Biosensors were to
share intellectual property to develop parallel but noncompeting medical-
imaging technologies for use in different fields of medicine. As set forth in the
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24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term, 2024 (Argued: May 14, 2025 Decided: July 2, 2025) Docket No. 24-2209-cv
MOLECULAR DYNAMICS, LTD., SDBM LIMITED, CHAUNCEY CAPITAL CORP., Petitioners-Appellants,
v.
SPECTRUM DYNAMICS MEDICAL LIMITED, BIOSENSORS INTERNATIONAL GROUP LTD., Respondents-Appellees. 1
Before: SACK, WESLEY, AND ROBINSON, Circuit Judges.
Petitioners-Appellants were on the losing end of an arbitration held in Geneva, Switzerland, which resulted in the award of a substantial monetary sum, declaratory relief, and costs and attorneys’ fees to Respondents-Appellees. In accord with an agreement between the parties that New York courts would have exclusive jurisdiction over all matters concerning the arbitration, Petitioners-Appellants filed a petition to vacate the arbitral awards in the U.S. District Court for the Southern District of New York. The district court (Katherine P. Failla, Judge) denied the petition, concluding that it lacked subject- matter jurisdiction to vacate the Swiss-made awards under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention” or the “Convention”) because, in the district court’s view, the awards may only be vacated in the country where they were made, Switzerland.
1The Clerk of Court is respectfully directed to amend the official caption as set forth above. Although the original case caption listed one of the Petitioners-Appellants as “SBDM Limited,” the parties’ briefs and exhibits contained in the appendices all refer to that party as “SDBM Limited,” as the caption now reflects. 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
Plaintiffs-Appellants appealed to this Court, urging that the New York Convention does not command that all vacatur proceedings take place in the country that produced an award, and that the parties were free to contract for a non-Swiss forum to adjudicate issues arising from the arbitration.
We conclude, albeit on a basis different from that relied upon by the district court, that the court correctly determined that it lacked subject-matter jurisdiction over the petition to vacate. Chapter 2 of the Federal Arbitration Act endows a district court with subject-matter jurisdiction over “[a]n action or proceeding falling under the [New York] Convention.” 9 U.S.C. § 203. The New York Convention concerns itself chiefly with the recognition and enforcement of arbitral awards in countries other than that in which an award was made. In what little it says about vacatur proceedings, it does not contemplate the species of action at bar, a petition to vacate a foreign-made arbitral award. Accordingly, we cannot conclude that Petitioners-Appellants’ action “fall[s] under” the Convention, as required to avail the grant of subject-matter jurisdiction to federal district court contained in 9 U.S.C. § 203. We therefore AFFIRM the judgment of the district court.
CHARLOTTE V. BAIGENT (Scott M. Danner, Patrick J. Woods, on the brief), Holwell Shuster & Goldberg LLP, New York, NY, for Petitioners-Appellants;
DAVID N. CINOTTI (Sean J. Mack, Dominique Kilmartin, on the brief), Pashman Stein Walder Hayden P.C., Hackensack, NJ, for Respondent-Appellee Spectrum Dynamics Medical Limited.
FREDERICK L. WHITMER, Kilpatrick Townsend & Stockton LLP, New York, NY, for Respondent-Appellee Biosensors International Group Ltd.
2 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
SACK, Circuit Judge:
Petitioners-Appellants were on the losing end of an arbitration held in
Geneva, Switzerland, which resulted in the award of a substantial monetary
sum, declaratory relief, and costs and attorneys’ fees to Respondents-Appellees.
In accord with an agreement between the parties that New York courts would
have exclusive jurisdiction over all matters concerning the arbitration,
Petitioners-Appellants filed a petition to vacate the arbitral awards in the U.S.
District Court for the Southern District of New York. The district court
(Katherine P. Failla, Judge) denied the petition, concluding that it lacked subject-
matter jurisdiction to vacate the Swiss-made awards under the Convention on
the Recognition and Enforcement of Foreign Arbitral Awards (the “New York
Convention” or the “Convention”) because, in the district court’s view, the
awards may only be vacated in the country where they were made, Switzerland.
Plaintiffs-Appellants appealed to this Court, urging that the New York
Convention does not command that all vacatur proceedings take place in the
country that produced an award, and that the parties were free to contract for a
non-Swiss forum to adjudicate issues arising from the arbitration.
3 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
We conclude, albeit on a basis different from that relied upon by the
district court, that the court correctly determined that it lacked subject-matter
jurisdiction over the petition to vacate. Chapter 2 of the Federal Arbitration Act
(the “FAA”) endows a district court with subject-matter jurisdiction over “[a]n
action or proceeding falling under the [New York] Convention.” 9 U.S.C. § 203.
The New York Convention concerns itself chiefly with the recognition and
enforcement of arbitral awards in countries other than that in which an award
was made. In what little it says about vacatur proceedings, it does not
contemplate the species of action at bar, a petition to vacate a foreign-made
arbitral award. Accordingly, we cannot conclude that Petitioners-Appellants’
action “fall[s] under” the Convention, as required to avail the grant of subject-
matter jurisdiction to federal district court contained in 9 U.S.C. § 203. We
therefore AFFIRM the judgment of the district court.
4 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
BACKGROUND
I. Factual Background 2
A. The Joint Venture
This dispute arises from a failed joint venture in medical-imaging
technology, Molecular Dynamics Ltd. (“Molecular Dynamics”). Molecular
Dynamics was formed in October 2013 by Respondent-Appellee Biosensors
International Group Ltd. (“Biosensors”) and Petitioners-Appellants SDBM
Limited (“SDBM”) and Chauncey Capital Corp. (“Chauncey”). The joint venture
was created through a series of contracts between Biosensors, SDBM, and
Chauncey, including a Joint Venture and Investor Agreement (the “JV
Agreement”) and a License Agreement, among several others (collectively, the
“Agreements”). Although Respondent-Appellee Spectrum Dynamics Medical
Limited (“Spectrum”) is not a party to the Agreements, in January 2017 it
acquired all of Biosensors’ rights and liabilities under the Agreements.
Under the JV Agreement, Molecular Dynamics and Biosensors were to
share intellectual property to develop parallel but noncompeting medical-
imaging technologies for use in different fields of medicine. As set forth in the
2To the extent that this opinion references facts contained in the sealed record, those portions of the record are unsealed.
5 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
License Agreement, Molecular Dynamics was to develop medical cameras for
whole-body imaging, with specified applications in oncology. It was not to
exceed this limited scope of business without the written approval of Biosensors,
SDBM, and Chauncey. Biosensors, on the other hand, was permitted by the
License Agreement to develop medical cameras for organ-specific imaging, and
for applications to cardiology and medical specialties other than oncology. Other
provisions of the Agreements spelled out loan and financing obligations.
Trouble arose in 2015 when Biosensors accused Molecular Dynamics of
developing a camera focused on cardiology, in breach of the JV and License
Agreements. In light of its view that Molecular Dynamics was acting beyond the
scope of the Agreements, Biosensors refused to provide additional loans to
Molecular Dynamics as called for by the Agreements. Biosensors and Molecular
Dynamics met to resolve Biosensors’ concerns but without success.
The relationship between Biosensors and Molecular Dynamics continued
to sour over the next few years and by early 2017, owing in part to Biosensors’
refusal to make further loans to Molecular Dynamics, Molecular Dynamics had
ceased operations, becoming a shell company. In August 2017, Spectrum, which
by that point had acquired Biosensors’ rights and liabilities under the
6 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
Agreements, sent a notice to Molecular Dynamics that it was terminating the
License Agreement because of Molecular Dynamics’ alleged breach. Spectrum
also demanded that Molecular Dynamics repay Spectrum the $7.5 million that
Biosensors had loaned to the joint venture, with interest. Molecular Dynamics
countered that Biosensors had breached the Agreements and its fiduciary
obligations to the joint venture, causing Molecular Dynamics more than $100
million in damages. Molecular Dynamics also demanded that Biosensors cease
and desist from developing a whole-body camera, which it was prohibited from
doing by the License Agreement.
In October 2017, Spectrum introduced a medical camera called the Veriton.
Molecular Dynamics maintained that the Veriton violated the terms of the
License Agreement because it is a whole-body camera.
B. The Parties’ Arbitration, Forum Selection, and Choice-of-Law Agreements
The License Agreement—which, all parties agree, gives rise to the present
proceedings, see Appellants’ Br. at 7; Appellees’ Br. at 17—contains arbitration,
forum selection, and choice-of-law clauses. It states that the License Agreement
“shall be governed by and construed in accordance with the laws of the State of
7 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
New York without regard to principles of conflicts of law.” Confidential App’x
at 44. It further provides:
Except for matters relating to injunctive relief, each Party hereto agrees that it shall bring any action or proceeding in respect of any claim arising out of or related to this Agreement or the transactions contained in or contemplated by this Agreement, exclusively to arbitration in accordance with the Swiss Rules of International Arbitration of the Swiss Chambers’ Arbitration Institution in force on the date on which the Notice of Arbitration is submitted in accordance with these Rules (the “Chosen Arbitration”)…. The seat of the Chosen Arbitration shall be Geneva, Switzerland, unless the parties agree to another location. The proceedings of the Chosen Arbitration shall be conducted in English.
Id.
All of the Agreements contain virtually identical provisions stating that they
are to be construed in accordance with New York law without regard to principles
of conflicts of law, and that any disputes relating to the Agreements are to be
resolved through arbitration seated in Geneva, Switzerland under “the Swiss
Rules of International Arbitration of the Swiss Chambers’ Arbitration Institution.”
Id. at 38-39. The License Agreement also contains a clause that provides:
On matters of injunctive relief, the parties agree that the courts of New York, New York shall have non-exclusive jurisdiction and are competent courts for the purposes thereof, and on matters of concerning the Chosen
8 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
Arbitration, the courts of New York, New York will have exclusive jurisdiction thereupon. 3
Id. at 44-45.
The License Agreement is the only one of the Agreements that contains
such a provision.
C. The Parties’ Arbitration in Switzerland
In April 2018, Spectrum initiated an arbitration (the “Arbitration”) against
Molecular Dynamics, SDBM and Chauncey (together, “Petitioners-Appellants”)
before the Swiss Arbitration Centre in Geneva, Switzerland. Spectrum, as
Biosensors’ successor in interest, sought repayment of Biosensors’ $7.5 million
loan to Molecular Dynamics, with interest, and a declaration that Spectrum
lawfully terminated the License Agreement and was free to develop and market
the Veriton whole-body camera and other future medical-imaging technologies.
Petitioners-Appellants counterclaimed for breach of contract and breach of
fiduciary duty, seeking $173.8 million in damages. Petitioners-Appellants also
moved to join Biosensors as a respondent to the counterclaim, which motion the
3A typographical error appears in the original License Agreement (“on matters of concerning the Chosen Arbitration . . .”). All parties and the district court seem to agree that it is an error and that the intended language is “on matters concerning the Chosen Arbitration . . . .” Hereafter, this opinion reproduces the language as “on matters [] concerning the Chosen Arbitration . . . .” 9 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
tribunal granted. All parties agreed that Geneva was the legal seat of the
arbitration, that the Swiss Federal Statute on Private International Law supplied
the procedural rules for the Arbitration, and that the Agreements are governed
by New York law.
A seven-day hearing took place before a three-member arbitration panel in
September and October 2020, at the close of which all parties confirmed that the
tribunal had observed the requirements of due process. The panel’s three
members were Philip Allen Lacovara, chosen by Spectrum and Biosensors
(together, “Respondents-Appellees”); Joel Adler, chosen by Petitioners-
Appellants; and presiding arbitrator Albert Jan van den Berg, chosen by
Lacovara and Adler. On March 17, 2021, after receiving post-hearing written
submissions, the tribunal declared the proceedings closed.
In August 2021, while a draft award was circulating among members of
the panel, Petitioners-Appellants made an application to reopen proceedings,
claiming they had discovered new evidence regarding the Veriton camera. The
tribunal denied the application. The following month, Petitioners-Appellants
accused one of the panel members, presiding arbitrator van den Berg, of bias and
conflicts of interest and later asked that he resign. Van den Berg withdrew from
10 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
the panel. Petitioners-Appellants then filed a challenge against the panel
member they had selected, Adler, but they later withdrew that challenge. In
December 2021, the tribunal appointed Jennifer Kirby as the new presiding
arbitrator. Petitioners-Appellants expressed concerns that Kirby’s potential
exposure to the draft award that had been circulating before van den Berg’s
resignation could affect her ability to form an independent opinion of the case.
Kirby assured the parties that she would not review or rely on the earlier draft
award in developing her own draft. In May 2022, Petitioners-Appellants again
sought to reopen the proceedings to submit additional evidence, which the
tribunal again denied.
On May 18, 2022, the tribunal issued a 125-page Partial Award. The Partial
Award found for Spectrum on its claims, rejected Petitioners-Appellants’
counterclaims, and awarded Respondents-Appellees their costs and attorneys’
fees. The Partial Award included a finding that Molecular Dynamics breached
the License Agreement by developing a camera focused on cardiology, which
was within Biosensors’ exclusive field of use. This breach by Molecular
Dynamics discharged Biosensors from its obligations under the License
Agreement, freeing it to develop Veriton and other whole-body cameras.
11 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
Spectrum was entitled to repayment of the $7.5 million loan that Biosensors
made to Molecular Dynamics, with interest, and Respondents-Appellees were
entitled to approximately $6.9 million in costs and attorneys’ fees. On July 8,
2022, the tribunal issued a Final Award granting additional costs and attorneys’
fees to Respondents-Appellees.
II. Procedural Background
In June 2022, Petitioners-Appellants initiated this action in the United
States District Court for the Southern District of New York by filing a petition to
vacate the Partial Award. After the tribunal issued the July 2022 Final Award,
Petitioners-Appellants filed an amended petition (the “Petition”) to vacate both
the Partial and Final Awards (together, the “Awards”).
The Petition sought vacatur of the Awards pursuant to Section 10 of the
FAA, 9 U.S.C. § 10, and the New York Convention. It asserted that “Respondents
consented to [the district court’s] jurisdiction over them by agreeing to a forum
selection clause vesting exclusive jurisdiction over ‘matters’ ‘concerning’ the
Arbitration in ‘the courts of New York, New York.’” Confidential App’x at 177 ¶
10.
12 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
The Petition alleged four bases for vacatur of the Awards, consistent with
the grounds for vacatur enumerated in the FAA, 9 U.S.C. § 10(a): (1) that
Respondents-Appellees suppressed evidence and caused their witnesses to
perjure themselves in the Arbitration, thereby procuring an award by fraud or
“undue” means; (2) that the chair of the tribunal resigned after allegations of
partiality and that his replacement “did not adequately remedy the taint caused
by the evidently partial chair’s prior participation;” (3) that the tribunal refused
to reopen the proceedings to hear newly discovered material evidence,
prejudicing Petitioners-Appellants; and (4) that the Awards manifestly disregard
New York law. Confidential App’x at 179-80. Finally, the Petition urged that to
the extent Swiss law applied to the vacatur proceeding, “the grounds for setting
aside an arbitral award under Swiss law are equally supportive of vacatur
because those grounds are substantially the same as those embodied in the
FAA.” Id. at 180. Respondents-Appellees opposed the Petition.
The district court issued an Opinion and Order concluding that it lacked
subject-matter jurisdiction to hear the vacatur petition and dismissed the case.
See Molecular Dynamics, Ltd. v. Spectrum Dynamics Med. Ltd., No. 22 Civ. 5167,
2024 WL 3523414 (S.D.N.Y. July 23, 2024). The court reasoned that under the
13 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
New York Convention, only courts of the country where an arbitral award is
made—here, Switzerland—are empowered to vacate the award. Id. at *6-7.
Courts in other countries are permitted only to refuse enforcement of a foreign-
made award, and only if certain conditions are met. Id. at *6. Despite the
provision of the License Agreement stipulating to exclusive jurisdiction in New
York for “matters [] concerning the Chosen Arbitration,” the district court
rejected Petitioners-Appellants’ argument that the New York Convention may be
circumvented by contract to allow for vacatur proceedings outside the country
that produced an award. Id. at *10. This timely appeal followed.
STANDARD OF REVIEW
We note at the outset that this appeal is about subject-matter jurisdiction,
by which we mean the district court’s competence to hear a particular species of
case. See Platinum-Montaur Life Scis., LLC v. Navidea Biopharmaceuticals, Inc., 943
F.3d 613, 617 (2d Cir. 2019). As the Supreme Court has observed, “jurisdiction is
a word of many, too many meanings.” Biden v. Texas, 597 U.S. 785, 801 (2022). 4
There is subject-matter jurisdiction, of course, but there is also “jurisdiction” in a
more general sense, referring to a court’s power to “grant a particular remedy.”
4In quotations from caselaw and the parties’ briefing, this opinion omits all internal quotation marks, footnotes, and citations, and accepts all alterations, unless otherwise noted. 14 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
Id. That range of meanings stretches even wider in the context of the New York
Convention, which, as explained below, contemplates certain countries having
“primary jurisdiction” and others having “secondary jurisdiction.” See CBF
Indústria de Gusa S/A v. AMCI Holdings, Inc., 850 F.3d 58, 71 (2d Cir. 2017).
A confusion of those different meanings can, as it does here, obfuscate the
question at the heart of a case. The parties’ briefs and the district court opinion
seem to toggle between definitions, sometimes speaking to whether the New
York Convention allows the district court to grant the relief that Petitioners-
Appellants seek—vacatur of the Swiss-made arbitral award—and at other times
speaking to the district court’s ability even to hear the case, that is, whether it has
subject-matter jurisdiction over the petition to vacate. The former question is a
merits question, “something to be litigated and determined.” Reddy v. Buttar, 38
F.4th 393, 399 (4th Cir. 2022). But the latter question “go[es] to the power of the
court to make the determination” in the first place. Id. (emphasis in original).
For the reasons that follow, we conclude that this appeal implicates the
district court’s power to make a determination on Petitioners-Appellants’
petition to vacate, i.e., its subject-matter jurisdiction. And because subject-matter
jurisdiction is a “threshold question,” it must be answered before any treatment
15 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
of a case’s merits can be undertaken. See United States v. Prevezon Holdings Ltd.,
839 F.3d 227, 235 (2d Cir. 2016). We review questions of subject-matter
jurisdiction de novo and “are not limited in our right to refer to any material in
the record.” Platinum-Montaur Life Scis., 943 F.3d at 616. Although we agree with
the district court that it lacked subject-matter jurisdiction to hear this case, we
reach that conclusion by a different path. 5
DISCUSSION
I. The New York Convention
The New York Convention, drafted in New York under United Nations
sponsorship and opened for signature in 1958, reflects “the rapid expansion of
international trade following World War II” and the desire “to provide a
workable mechanism for the swift resolution of . . . day-to-day disputes” arising
from global business. Bergesen v. Joseph Muller Corp., 710 F.2d 928, 929 (2d Cir.
1983); see Convention on the Recognition and Enforcement of Foreign Arbitral
Awards, June 10, 1958, 21 U.S.T. 2517, T.I.A.S. No. 6997 (hereafter, “N.Y.
Convention”). Then, as now, “[i]nternational merchants often prefer[red]
5We note also that none of the parties squarely advance the position on subject-matter jurisdiction that we adopt here. We, of course, “have the duty to determine whether subject matter jurisdiction exists even if the issue is not presented by the parties.” Saint John Marine Co. v. United States, 92 F.3d 39, 43 (2d Cir. 1996). 16 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
arbitration over litigation because it is faster, less expensive and more flexible.”
Bergesen, 710 F.2d at 929. But international protocols predating the Convention
“had not proved effective in securing enforcement of arbitral awards.” Id. So,
the “goal of the Convention, and the principal purpose underlying American
adoption and implementation of it, was to encourage the recognition and
enforcement of commercial arbitration agreements in international contracts and
to unify the standards by which agreements to arbitrate are observed and arbitral
awards are enforced in the signatory countries.” Scherk v. Alberto-Culver Co., 417
U.S. 506, 520 n.15 (1974). The United States acceded to the New York Convention
in 1970. See GE Energy Power Conversion France SAS, Corp. v. Outokumpu Stainless
USA, LLC, 590 U.S. 432, 439 (2020). As of this year, 172 nations are parties to the
Convention. See Contracting States, New York Convention,
https://www.newyorkconvention.org/contracting-states (last visited June 13,
2025).
A. Recognition and Enforcement of Arbitral Awards under the Convention
The New York Convention expressly recognizes two classes of cases to
which it “shall apply.” N.Y. Convention, art. I(1). First, it applies to “the
recognition and enforcement of arbitral awards made in the territory of a State
other than the State where the recognition and enforcement of such awards are 17 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
sought, and arising out of differences between persons, whether physical or
legal.” Id. This class of cases includes both arbitral awards made in a foreign
country that a party seeks to recognize and enforce in the United States, and
arbitral awards made in the United States that a party seeks to recognize and
enforce in a foreign country. 6 CBF Indústria, 850 F.3d at 70. We have referred to
the former category—arbitral awards made in a foreign country that a party
seeks to recognize and enforce in the United States—as “foreign arbitral awards.”
Second, the Convention applies “to arbitral awards not considered as
domestic awards in the State where their recognition and enforcement are
sought.” N.Y. Convention, art. I(1). We have called such awards “nondomestic
arbitral awards.” 7 See CBF Indústria, 850 F.3d at 73. The Convention’s language
6An arbitral award is “made” in the country of the arbitral seat, “the jurisdiction designated by the parties or by an entity empowered to do so on their behalf to be the juridical home of the arbitration.” Restatement (Third) of the U.S. Law of Int’l Commercial Arbitration § 1-1 (oo) (Oct. 2024 Update); see also CBF Indústria de Gusa S/A v. AMCI Holdings, Inc., 850 F.3d 58, 70 (2d Cir. 2017).
7We have observed that “[t]hese types of awards are sometimes referred to as Bergesen awards or U.S. Convention awards.” CBF Indústria, 850 F.3d at 73; see Bergesen v. Joseph Muller Corp., 710 F.2d 928 (2d Cir. 1983) (holding that the New York Convention applies to a U.S.-made arbitral award between two foreign entities). But this nomenclature appears limited to commentary contained in the Restatement (Third) of the U.S. Law of International Commercial Arbitration. A survey of the caselaw discloses that while a handful of district courts have used the term “U.S. Convention award” when quoting the Restatement, see, e.g., Soleimani v. Andonian, 21 Civ.
18 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
on nondomestic arbitral awards is somewhat indefinite. “[I]t was apparently left
to each [signatory] state to define which awards were to be considered
nondomestic.” Bergesen, 710 F.2d at 933. Under United States law, a
“nondomestic arbitral award” is one “that is ‘made’ in the United States because
the parties agreed to arbitrate before an arbitrator in the United States” but
which is either “made within the legal framework of another country, e.g.,
pronounced in accordance with foreign law,” or “decided under the laws of the
United States but involves either entities that are not U.S. citizens or . . . involves
property located abroad, or envisages performance or enforcement abroad, or
has some other reasonable relation with one or more foreign states.” CBF
Indústria, 850 F.3d at 73. Stated more succinctly, the Convention applies to the
recognition and enforcement in the United States of arbitral awards that, despite
having been made in the United States, have some significant foreign nexus—
what we call nondomestic arbitral awards.
The Convention provides that it applies to “the recognition and
enforcement” of foreign arbitral awards, and to nondomestic arbitral awards “in
1018, 2022 WL 748246, at *7 (S.D.N.Y. Mar. 10, 2022), no court has used the term “Bergesen award” to describe a nondomestic arbitral award. In keeping with our earlier decisions, “we will use the term nondomestic arbitral award for the sake of precision.” CBF Indústria, 850 F.3d at 73. 19 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
the State where their recognition and enforcement are sought.” N.Y.
Convention, art I(1). The Convention, in other words, describes the two types of
arbitral awards to which it applies by reference to recognition-and-enforcement
proceedings. 8 This is consistent with “the intended purpose of the treaty,” which
is “to encourage the recognition and enforcement of international arbitration
awards.” Bergesen, 710 F.2d at 932 (emphasis added).
B. Primary and Secondary Jurisdictions under the Convention
The Convention’s directives on the recognition and enforcement of arbitral
awards yield only to the limited exceptions spelled out in Article V. Article V
provides that the “[r]ecognition and enforcement of [an] award may be refused,
at the request of the party against whom it is invoked, only if that party furnishes
8 “Recognition and enforcement” is a term of art in the New York Convention. “Recognition” is the determination by a court that an arbitral award is binding and entitled to preclusive effect; “enforcement” is the reduction to a judgment of a foreign arbitral award. See Restatement (Third) of the U.S. Law of Int’l Commercial Arbitration §1.1(nn), (m); see also Corporación AIC, SA v. Hidroeléctrica Santa Rita S.A., 66 F.4th 876, 882 n.2 (11th Cir. 2023) (“Strictly speaking, recognition and enforcement are distinct legal concepts.”). Under the Convention, “recognition” and “enforcement” occur together, as a single process. See N.Y. Convention, arts. I, III, IV, V. The consolidation of “recognition” and “enforcement” into a single proceeding was, indeed, “the entire purpose of the New York Convention.” CBF Indústria, 850 F.3d at 72. Its predecessor treaty, the Geneva Convention, “required an award first to be recognized in the rendering state before it could be enforced abroad.” Id. at 73. This cumbersome two-step, known as the “double exequatur” requirement, forced the prevailing party in an arbitration to engage in at least two separate judicial proceedings: one in the country where the award was made and another in the country (or countries) where the party sought to enforce the award. See id.
20 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
to the competent authority where the recognition and enforcement is sought,
proof that” one of several exigencies has transpired. Relevant here, Article
V(1)(e) permits a court to refuse recognition and enforcement of an award where
that award “has been set aside or suspended by a competent authority of the
country in which, or under the law of which, that award was made.”
Interpreting Article V(1)(e), courts in the United States have expounded a
framework that distinguishes between “primary” and “secondary” jurisdictions.
See Restatement (Third) of the U.S. Law of Int’l Commercial Arbitration § 1.3.
“[T]he country in which, or under the arbitration law of which, an award was
made is said to have primary jurisdiction over the arbitration award.” 9 Karaha
Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 500 F.3d 111,
115 n.1 (2d Cir. 2007) (emphasis in original). The country with primary
jurisdiction is also sometimes referred to as the “legal seat” of the arbitration. See
9Article V(1)(e)’s language “under the law of which” is widely understood to refer to “the regimen or scheme of arbitral procedural law under which the arbitration was conducted, and not the substantive law . . . which was applied in the case.” Int'l Standard Elec. Corp. v. Bridas Sociedad Anonima Petrolera, Indus. y Comercial, 745 F. Supp. 172, 178 (S.D.N.Y. 1990); see also Yusuf Ahmed Alghanim & Sons v. Toys "R" Us, Inc., 126 F.3d 15, 21 n.3 (2d Cir. 1997); Goldgroup Res., Inc. v. DynaResource de Mexico, S.A. de C.V., 994 F.3d 1181, 1192 (10th Cir. 2021); Belize Soc. Dev. Ltd. v. Gov’t of Belize, 668 F.3d 724, 731 (D.C. Cir. 2012); Steel Corp. of Philippines v. Int’l Steel Servs., Inc., 354 F. App’x 689, 692 (3d Cir. 2009) (summary order); Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 364 F.3d 274, 289 (5th Cir. 2004); M & C Corp. v. Erwin Behr GmbH & Co., KG, 87 F.3d 844, 849 (6th Cir. 1996).
21 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
Corporación AIC, SA v. Hidroeléctrica Santa Rita S.A., 66 F.4th 876, 883 (11th Cir.
2023).
By contrast, “[a]ll other signatory States [to the Convention] are secondary
jurisdictions.” Karaha Bodas, 500 F.3d at 115 n.1 (emphasis in original). To
illustrate, if an arbitral award is made in Canada pursuant to Canadian arbitral
law, then Canada—and, by extension, its courts—has primary jurisdiction over
that award, even if the arbitrator applied, say, Connecticut law to questions of
contract interpretation. Every other country that is party to the Convention has
only secondary jurisdiction over the award. 10
The distinction between primary and secondary jurisdictions is material
because review of an arbitral award by a court in the primary jurisdiction is
governed by a “very different regime[]” than review of an arbitral award by a
court in a secondary jurisdiction. See Yusuf Ahmed Alghanim & Sons v. Toys "R"
10Parties to an arbitration agreement could, in theory, designate country X as the venue for arbitration while designating country Y’s arbitration law as the governing procedural authority. In that scenario, country Y would have primary jurisdiction as “the state that supplied the arbitral law under which the award was made.” See Yusuf Ahmed Alghanim & Sons, 126 F.3d at 21 n.3. But the fission of arbitral venue and procedure appears to be an exceedingly rare practice and no party to this appeal claims that it occurred here. See, e.g., id. (“Although most courts and commentators assume that Article V(1)(e) [of the Convention] is applicable to the state in which the award is rendered, we note that Article V(1)(e) specifically contemplates the possibility that an award could be rendered in one state, but under the arbitral law of another state . . . . This situation may be so rare as to be a ‘dead letter.’”). 22 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
Us, Inc., 126 F.3d 15, 23 (2d Cir. 1997). Article V(1)(e) “specifically contemplates
that the state [having primary jurisdiction] will be free to set aside or modify an
award in accordance with its domestic arbitral law and its full panoply of express
and implied grounds for relief.” Id. Accordingly, “a party may seek to vacate or
set aside an award” in a court of the primary jurisdiction, and the petition to
vacate will be “governed by [that state’s] domestic law.” Id.; see also, e.g.,
Scandinavian Reinsurance Co. v. Saint Paul Fire & Marine Ins. Co., 668 F.3d 60, 71
(2d Cir. 2012) (“Because the Award in the St. Paul Arbitration was entered in the
United States . . . the domestic provisions of the FAA also apply [to the motion to
vacate], as is permitted by Articles V(1)(e) and V(2) of the New York
Convention.” (emphasis added)).
But in a secondary jurisdiction, a court may only decline to enforce an
arbitral award and may do so based “only on the limited grounds specified in
Article V [of the Convention].” Karaha Bodas, 500 F.3d at 115 n.1. While courts of
primary jurisdiction “have much broader discretion to set aside an award,”
Article V delimits the bases on which courts of secondary jurisdiction “may
refuse enforcement” of an arbitral award, assuming “the party contesting
23 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
enforcement provides proof sufficient to meet one of the bases for refusal.” 11 Id.;
see also Corporación AIC, 66 F.4th at 883 (“Under the New York Convention, only
courts in the primary jurisdiction can vacate an arbitral award.”). And the legal
11 Those bases for refusal are:
(a) The parties to the [arbitration] agreement . . . were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or
(b) The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case; or
(c) The award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced; or
(d) The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or
(e) The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.
N.Y. Convention, art. V(1). A court in a country of secondary jurisdiction may also refuse recognition and enforcement of an award if it concludes that “[t]he subject matter of the difference is not capable of settlement by arbitration under the law of that country” or “[t]he recognition or enforcement of the award would be contrary to the public policy of that country.” Id., art. V(2).
24 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
effect of a secondary jurisdiction’s denial of recognition and enforcement is
limited to that jurisdiction. See Corporación AIC, 66 F.4th at 884. Conversely,
pursuant to Article V(1)(e), vacatur of an award by the primary jurisdiction “has
legal consequences internationally, as it is a ground on which recognition and
enforcement of the vacated award may be refused by a court in a secondary
jurisdiction.” Id. at 883; see also Zeiler v. Deitsch, 500 F.3d 157, 165 n.6 (2d Cir.
2007) (noting that vacatur in the primary jurisdiction “can affect the remaining
force of an unconfirmed award outside [the primary jurisdiction], if a party seeks
to confirm and enforce the award under the Convention abroad”).
This limitation on the power of courts of secondary jurisdiction necessarily
implies a limitation on the parties that appear before them. In a secondary
jurisdiction, “[p]arties can only contest whether that [jurisdiction] should enforce
the arbitral award,” Karaha Bodas, 500 F.3d at 115 n.1, meaning that the party that
prevailed in arbitration must first initiate a recognition-and-enforcement action
before the losing party may contest the award. Under Article V, only after an
award has been “invoked” against a party may that party urge the court to refuse
recognition and enforcement. See, e.g., Lindo v. NCL (Bahamas), Ltd., 652 F.3d
1257, 1263 (11th Cir. 2011) (“Article V applies at the award-enforcement stage.”);
25 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
Estate of Ke v. Yu, 105 F.4th 648, 654 (4th Cir. 2024) (“[I]n response [to a
recognition-and-enforcement action], the party against whom the foreign award
was entered may argue for a refusal of confirmation and enforcement.”
(emphasis added)). The New York Convention therefore envisions a mostly
limited, reactive role for the losing party in an arbitration.
The text of the Convention brooks a single departure from this
presumption. Article V(1)(e) acknowledges that an award may be “set aside or
suspended by a competent authority” of the primary jurisdiction. Relatedly,
Article VI provides that “[i]f an application for the setting aside or suspension of
[an] award has been made to a competent authority” of the primary jurisdiction,
a court in a secondary jurisdiction may stay recognition-and-enforcement
proceedings pending a decision on the vacatur application. Because we think it
highly unlikely that the winner in arbitration would apply “for the setting aside
or suspension of the award,” we read these provisions of the Convention to
imply that the losing party may initiate vacatur proceedings in the primary
jurisdiction. 12 And, as we have said, such a proceeding may avail itself of the
12We use “losing party” here as shorthand for the party resisting compliance with the terms of an arbitral award. We recognize that the rare arbitral award may “split the baby” such that neither party feels it has fully prevailed. Even rarer, we suspect, there may be circumstances in which the losing party in an arbitration is the party that seeks recognition and enforcement of
26 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
primary jurisdiction’s “domestic arbitral law and its full panoply of express and
implied grounds for relief.” Yusuf Ahmed Alghanim & Sons, 126 F.3d at 23. Thus,
despite the Convention’s general emphasis on recognition-and-enforcement
proceedings—proceedings initiated by the winner in arbitration—Articles V and
VI admit a discrete carve-out for vacatur proceedings in the primary jurisdiction
initiated by the losing party. 13
C. Implementation of the Convention in the Federal Arbitration Act
Shortly after the United States acceded to the New York Convention in
1970, Congress enacted implementing legislation as Chapter 2 of the Federal
Arbitration Act (“FAA”). 14 See GE Energy Power Conversion France SAS, 590 U.S.
the award in a secondary jurisdiction, perhaps to hasten the dispute’s conclusion with the finality of a court judgment. But because voluntary compliance with an arbitral award would seemingly obviate the need for any enforcement proceeding under the New York Convention, we think it fair to assume that the party resisting compliance in an action brought under the Convention will almost always be the party that was defeated in arbitration.
13Federal arbitration law uses the terms “vacate” and “vacatur” to describe when an award is invalidated. See, e.g., 9 U.S.C. § 10. The New York Convention uses the terms “set aside” and “suspend,” and some foreign jurisdictions use the term “annul.” For consistency, we will use “vacate” and “vacatur” unless quoting the Convention, but we note that “[s]et aside, suspend, and annul under the New York Convention are . . . generally interchangeable with vacatur under the FAA.” Corporación AIC, 66 F.4th at 882-83; see also Restatement (Third) U.S. Law of Int’l Comm. Arb. § 1.1, cmt. pp (“In general, the Restatement treats the terms ‘vacate,’ ‘set aside,’ and ‘annul’ as synonymous.”).
14Several of our sister Circuits have referred to the legislation implementing the New York Convention, now codified at Chapter 2 of Title 9 of the U.S. Code, as the “Convention Act.” See, e.g., CLMS Mgmt. Servs. Ltd. P’ship v. Amwins Brokerage of Ga., LLC, 8 F.4th 1007, 1011 (9th Cir.
27 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
at 439; 9 U.S.C. §§ 201-208. “[T]he FAA and the New York Convention work in
tandem, and they have overlapping coverage to the extent that they do not
conflict.” Sole Resort, S.A. de C.V. v. Allure Resorts Mgmt., LLC, 450 F.3d 100, 102
n.1 (2d Cir. 2006). We therefore read the Convention and the FAA together,
rather than separately and apart, to determine how the two sources of law
coalesce.
II. Subject-Matter Jurisdiction
This brings us to the issue of subject-matter jurisdiction. Petitioners-
Appellants argue that one of the FAA’s provisions implementing the New York
Convention, 9 U.S.C. § 203, provides the district court with the necessary grant of
subject-matter jurisdiction over their petition to vacate the Swiss-made Awards
under the FAA’s statutory grounds for vacatur contained in 9 U.S.C. § 10. 15 We
disagree, concluding that the district court lacked subject-matter jurisdiction to
hear this case.
2021); Suazo v. NCL (Bahamas), Ltd., 822 F.3d 543, 545 (11th Cir. 2016); Francisco v. Stolt Achievement MT, 293 F.3d 270, 272 (5th Cir. 2002). We refer to it simply as Chapter 2 of the FAA.
15Petitioners-Appellants do not allege any alternative basis for the district court’s exercise of subject-matter jurisdiction. 28 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
First, however, we recite the unremarkable but foundational principle of
our system of federal courts that they are “courts of limited jurisdiction,”
possessing “only that power authorized by Constitution and statute.” Exxon
Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552 (2005). In deference to these
strict parameters, “[t]here is always a presumption against jurisdiction” in the
federal courts. Garanti Finansal Kiralama A.S. v. Aqua Marine & Trading Inc., 697
F.3d 59, 64 (2d Cir. 2012). “[T]he district courts may not exercise jurisdiction
absent a statutory basis,” Exxon Mobil, 545 U.S. at 552, and accordingly, “parties
may not confer subject matter jurisdiction on the court by consent,” Cable
Television Ass’n of N.Y., Inc. v. Finneran, 954 F.2d 91, 94 (2d Cir. 1992). With these
tenets in mind, we consider whether Chapter 2 of the FAA, read alongside the
New York Convention that it implements, affords the district court the requisite
statutory basis for subject-matter jurisdiction here.
“The FAA is ‘something of an anomaly in the realm of federal legislation:
It bestows no federal jurisdiction but rather requires for access to a federal forum
an independent jurisdictional basis over the parties’ dispute.’” Landau v.
Eisenberg, 922 F.3d 495, 497 (2d Cir. 2019) (quoting Vaden v. Discover Bank, 556
U.S. 49, 59 (2009)). One such “independent jurisdictional basis” is found at 9
29 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
U.S.C. § 203: “An action or proceeding falling under the Convention shall be
deemed to arise under the laws and treaties of the United States. The district
courts of the United States . . . shall have original jurisdiction over such an action
or proceeding, regardless of the amount in controversy.” 16
Therefore, to determine whether the district court “shall have original
jurisdiction” over the present action, we must decide whether it is an action that
“fall[s] under the Convention.” We conclude that it is not.
We start with the Convention itself. By its plain text, it “shall apply to the
recognition and enforcement of arbitral awards made in the territory of a State other
than the State where the recognition and enforcement of such awards are
sought” (i.e., foreign arbitral awards) and “to arbitral awards not considered as
domestic awards in the State where their recognition and enforcement are sought”
(i.e., nondomestic arbitral awards). N.Y. Convention, art. I (emphasis added).
Petitioners-Appellants’ vacatur action does not fall within either of those classes.
While the case does involve foreign arbitral awards made in Switzerland,
16The grant of subject-matter jurisdiction in 9 U.S.C. § 203 mirrors the grant of federal-question jurisdiction in 28 U.S.C. § 1331, which provides that “[t]he district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” See Reddy v. Buttar, 38 F.4th 393, 398 (4th Cir. 2022).
30 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
Petitioners-Appellants do not seek the recognition and enforcement of those
awards in these proceedings. To the contrary, they initiated this action in federal
court to vacate the Awards, not to recognize and enforce them. Nor does this
appeal involve a nondomestic arbitral award, which we have generally defined
to mean a U.S.-made award with some substantial foreign nexus. See CBF
Indústria, 850 F.3d at 73. No party contends otherwise.
To be sure, the Convention also applies to “necessary ancillary proceedings
that ensure the proper functioning of the underlying arbitration.” Jones Day v.
Orrick, Herrington & Sutcliffe, LLP, 42 F. 4th 1131, 1139 (9th Cir. 2022) (emphasis in
original); see also Republic of Ecuador v. Chevron Corp., 638 F.3d 384, 391 n.6 (2d Cir.
2011) (explaining that “the Convention should be interpreted broadly to
effectuate its recognition and enforcement purposes” (emphasis added)). For
example, federal courts have subject-matter jurisdiction to enforce summonses
compelling witnesses to appear at an arbitration hearing, Jones Day, 42 F.4th at
1134, 1139; to attach property to “ensur[e] that assets from which an arbitration
award would be satisfied are secured while arbitration is pending,” Stemcor USA
Inc. v. CIA Siderurgica do Para Cosipar, 927 F.3d 906, 910 (5th Cir. 2019) (quoting
China Nat. Metal Prods. Imp./Exp. Co. v. Apex Digital, Inc., 155 F. Supp. 2d 1174,
31 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
1180 (C.D. Cal. 2001)); and to issue preliminary injunctions sought during the
pendency of an underlying arbitration, Borden, Inc. v. Meiji Milk Prods. Co., 919
F.2d 822, 825–26 (2d Cir. 1990). These sorts of proceedings that are consistent
with the Convention’s “provisions and its spirit” of ensuring enforcement of
international commercial arbitration agreements also fall under the Convention.
Id. at 826.
And, as explained above, the Convention does address vacatur proceedings
initiated by the losing party in arbitration, but it specifically envisions that they
will be decided by a “competent authority of the country in which, or under the
law of which, that award was made.” N.Y. Convention, art. V(1)(e); see also id.,
art. VI. Beyond this limited carve-out, however, the Convention is silent on
vacatur. Petitioners-Appellants interpret this silence as permissive, concluding
from it that “parties can designate a single forum for post-award proceedings
including vacatur, other than the default primary jurisdiction.” Appellants’ Br.
at 13.
But we think the silence supports a different conclusion. The Convention’s
“goal” and “the principal purpose underlying American adoption and
implementation of it, was to encourage the recognition and enforcement of
32 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
commercial arbitration agreements . . . and to unify the standards by which
agreements to arbitrate are observed and arbitral awards are enforced in the
signatory countries.” Scherk, 417 U.S. at 520 n.15 (emphasis added). The
Convention was not intended to provide a vehicle for the second-guessing and
invalidation by one jurisdiction of arbitral awards generated in another; it was
designed to enhance the portability of awards by streamlining the process by
which they could be recognized and enforced abroad. See CBF Indústria, 850 F.3d
at 72–73; see also Reddy, 38 F.4th at 398 (“Fundamentally, [the Convention] sets
forth standards for the observance and enforcement of arbitration awards and
requires signatory states to recognize and enforce such arbitration awards from other
states.” (emphasis added)). We do not think that the Convention’s general
silence on vacatur is a gap to be filled by domestic law or private contract, but a
clear indication that vacatur is not among the mechanisms that the Convention is
designed to regulate. By mentioning only vacatur proceedings held in the
primary jurisdiction, the Convention limits its scope to actions intended to
enforce, not invalidate, arbitral awards.
The Convention simply does not speak to the type of action Plaintiffs-
Appellants have brought. The Awards at issue here were made in and under the
33 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
arbitral law of Switzerland, the primary jurisdiction. Petitioners-Appellants’
vacatur action in a U.S. district court, a court of secondary jurisdiction, is not the
type of proceeding that the Convention addresses. Therefore, 9 U.S.C. § 203,
which provides the district court with subject-matter jurisdiction for “action[s] or
proceeding[s] falling under the Convention,” is not satisfied here. The text of the
Convention—which only describes vacatur by “a competent authority of the
country in which, or under the law of which, [an] award was made,” N.Y.
Convention, art. V(1)(e)—offers nothing for Petitioners-Appellants’ vacatur
action to “fall under.”
Petitioners-Appellants urge that the district court possesses subject-matter
jurisdiction based on another section of Chapter 2 of the FAA, 9 U.S.C. § 202.
That section states, “An arbitration agreement or arbitral award arising out of a
legal relationship, whether contractual or not, which is considered as commercial
… falls under the Convention.” Id. Taken out of context, this language might
well be read to sweep in the award at issue here, which “aris[es] out of a legal
relationship” and “is considered as commercial.”
But we do not read 9 U.S.C. § 202 in a vacuum. As with 9 U.S.C. § 203, we
consider it alongside the text of the Convention. See Sole Resort, 450 F.3d at 102
34 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
n.1. The language of Section 202 mirrors the language contained in Article I(3) of
the Convention, which provides that “[w]hen signing, ratifying or acceding to
this Convention, . . . any State may . . . declare that it will apply the Convention
only to differences arising out of legal relationships, whether contractual or not,
which are considered as commercial under the national law of the State making
such declaration.” Article I(3) “gives contracting nations discretion to limit the
[Convention’s] application to commercial relationships,” as opposed to, say,
arbitrations in the family law arena. Green Enters., LLC v. Hiscox Syndicates Ltd. at
Lloyd's of London, 68 F.4th 662, 668 (1st Cir. 2023). While the commercial-
relationship reservation of Article I(3) “has not been the subject of detailed
elaboration by courts in the United States,” Restatement (Third) U.S. Law of Int’l
Comm. Arb. § 1.1 n.e, “[w]e may logically speculate that it was to exclude
matrimonial and other domestic relations awards, political awards, and the like,”
Island Territory of Curacao v. Solitron Devices, Inc., 356 F. Supp. 1, 13 (S.D.N.Y.),
aff'd, 489 F.2d 1313 (2d Cir. 1973).
When the United States acceded to the Convention, it filed a declaration
that it intended to limit the Convention to legal, commercial relationships. See
Francisco v. Stolt Achievement MT, 293 F.3d 270, 275–76 (5th Cir. 2002) (citing 1970
35 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
Senate testimony by the chairman of a State Department advisory committee).
Congress subsequently codified that commitment at 9 U.S.C. § 202. Rogers v.
Royal Caribbean Cruise Line, 547 F.3d 1148, 1153 (9th Cir. 2008); see also Bautista v.
Star Cruises, 396 F.3d 1289, 1296 (11th Cir. 2005) (“When the United States
acceded to the Convention in 1970, it exercised its right to limit the Convention’s
application to commercial legal relationships as defined by the law of the United
States.”); Siderius, Inc. v. Compania de Acero del Pacifico, S.A., 453 F. Supp. 22, 24 n.1
(S.D.N.Y. 1978) (“The United States acceded to the Convention with the
reservations set forth in Article I, Section 3.”).
We therefore read 9 U.S.C. § 202 to establish that Congress accepted the
Convention’s invitation to limit its application to commercial disputes within the
classes of recognition and enforcement actions described in Article I(1), or
vacatur actions described in Article V(1)(e). But 9 U.S.C. § 202 does not set forth
additional classes of cases that “fall[] under the Convention,” because that
construction would expand the reach of the Convention to include classes of
cases beyond those to which the Convention, by its own terms, applies. See N.Y.
Convention, art I(1); art. V. Petitioners-Appellants’ construction of Section 202
would be a misreading of the statute because it would enlarge the treaty that
36 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
Chapter 2 of the FAA purports only to enforce. See 9 U.S.C. § 201 (“The
Convention on the Recognition and Enforcement of Foreign Arbitral Awards of
June 10, 1958, shall be enforced in United States courts in accordance with this
chapter.”).
*****
We understand Chapter 2 of the FAA along with the New York
Convention to convey to the federal courts subject-matter jurisdiction over
actions to recognize and enforce foreign or nondomestic arbitral awards, and to
actions to vacate awards made in or under the laws of the United States that also
have some significant foreign nexus, so long as the subject awards arise out of a
legal relationship and are commercial in nature. Because the present action does
not comport with the “provisions and . . . spirit” of the Convention, Borden, 919
F.2d at 826, and because Petitioners-Appellants offer no alternative ground for
the exercise of subject-matter jurisdiction, we conclude that the district court
lacked subject-matter jurisdiction.
We do not decide today whether, as Petitioners-Appellants urge, parties to
an international arbitration may, consistent with the New York Convention,
designate by contract one country as the arbitral seat and another as the venue
37 24-2209-cv Molecular Dynamics, Ltd., et al. v. Spectrum Dynamics Med. Ltd., et al.
for vacatur proceedings. We hold instead that the present action—a petition to
vacate a foreign arbitral award—does not “fall under” the Convention, and
therefore that 9 U.S.C. § 203 does not supply the necessary grant of subject-
matter jurisdiction to the district court.
CONCLUSION
For the foregoing reasons, we AFFIRM the judgment of the district court.
Related
Cite This Page — Counsel Stack
143 F.4th 70, Counsel Stack Legal Research, https://law.counselstack.com/opinion/molecular-dynamics-ltd-v-spectrum-dynamics-med-ltd-ca2-2025.