August 08, 2017 Practice Points

Lack of Subject-Matter Jurisdiction Dooms Appeal

By Karl Bayer

Ruling that there was no subject-matter jurisdiction, the Fifth Circuit dismissed an appeal from an order confirming the selection of a panel of arbitrators. Bordelon Marine, LLC v. Bibby Subsea ROV, LLC, No. 16-30847 (5th Cir. Apr. 14, 2017).

In Bordelon, Bordelon and Bibby, were ordered to arbitrate a contract dispute related to the charter of an offshore vessel. The two companies disagreed over the appointment of the arbitrators who would consider the case. Bordelon filed a “Motion to Re-Open Case to Enforce the Method of Appointment of Arbitrators,” with the trial court and Bibby responded by asking the court to confirm the arbitrability of the matter and compel Bordelon to engage in arbitration before the arbitrators were selected. The trial court granted Bibby’s request and denied Bordelon’s. Bordelon appealed.

The Fifth Circuit focused on whether it had jurisdiction to consider the case. Bordelon unsuccessfully argued that the court had jurisdiction because the lower court’s order was a final decision. Bordelon also argued that its motion in the trial court was an appealable petition to compel arbitration under section 4 of the Federal Arbitration Act (FAA). The appellate court disagreed with that argument as well:

The district court resolved the dispute under section 5 . . . [W]e reject Bordelon’s attempt to re-characterize the district court’s section 5 order appointing arbitrators as an order denying Bordelon’s motion under section 4. Indeed, the district court unquestionably did not deny arbitration; it ordered arbitration in this case. Bordelon’s argument is not based on a failure of the district court to order arbitration but on a failure, in Bordelon’s view, to select arbitrators in a way Bordelon views as correct—a section 5 issue. Section 16(a)(1)(B) does not provide for an appeal of an interlocutory order granting or denying a motion under section 5. Because the order that Bordelon appeals is not a “den[ial of] a petition under section 4,” appellate jurisdiction does not exist under section 16(a)(1)(B).

Because nothing in 28 U.S.C. §§ 1291 or 1292 permits an appeal, and there was no certification by the district court under either section 1292 or Federal Rule of Civil Procedure 54(b), the court dismissed Bordelon's appeal for lack of subject-matter jurisdiction.

Karl Bayer is the founder of Karl Bayer Dispute Resolution in Austin, Texas.

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