litigation pending arbitration this case which is now set for trial beginning september eleventh of this year involves a highly specialized underwater tether chain that was custom made this pursuant to contractual specifications originally set forth by petrobras there are two contracts in the case each of which contains a broad arbitration provision petrobras contract with its prime insurers successfully convince the panel of this court to override their own choice of law and hold that louisiana law governor even though petrobras had raised the choice of law for the first time on appeal then on  case on the underlying contract contracts the reason is because the louisiana courts have held red a bishan arises from the breach of a contractual duty and what  is saying alleging that the tether chain manufactured by this and i contain is pursuing to its specifications had a defect that rendered it useless for its intended purpose but as we have shown under wheezy a lot to resolve that issue one needs to look at the underlying specifications because those occasions will tell the decision maker whether or not there is in fact a defect and the put another way t specifications will tell the decision maker what is the thing that was being made here and whether that thing was useless for its intended purpose now petra bust in what we believe is an effort at art pleading has said no we're not relying on the contracts we're only relying on the world representations that this annika damus allegedly made after the contracts were executed that it would not weld over any defects found in the chains and that if the material defects were found it would scrap the chains but those statements and that argument does not divorce petra process claim from the underlying agreements because in order to know or to decide whether or not there wasn't back a defect that was welded over or whether or not there was a material defect that should have required scrapping the chain one needs to look again at the contractual specifications this is not an ordinary change this is i believe the largest diameter underwater chain ever constructed heechul length of this  chain is almost as tall as a person and weighs more than a thousand pounds this is not an off the shelf product this is a highly specialized chain and the specifications as we set forth in our brief are very detailed as to brosnan wanted in this chamber and i would add your honour's that after the briefing of this case was closed petra boss actually in the trial court made statements stating that it would in fact if this case proceeds to trial rely on the provisions of the the purchase agreement to prove that there was in fact a read of the tory defect and we'd be glad to submit those statements to the court the court i think it is clear that the district court did err in applying state laws to be federal law federal common law to determine an arbiter billet of the the case the supreme court in arthur andersen said it state law that determines whether a non signatory is bound to arbitrate under a provision of an arbitration agreement and this court in cases like crawford todd has held that arthur andersen has effectively over rule it said modified its earlier decisions which had applied federal law one of those decisions is notable a key decision that the district court relied on so that the court previously this court did apply federal law supreme court has now held that state law applies then if you look at state law i think that's where we find the district court's error and the state law here is both the law of arbiter building under  and the law read a bishop and again in the snyder case which is a louisiana precedent the court said that a claim for arbitration arises from the breach of arises from the breach of a contractual duty so it's not necessarily contractual action itself but it arises from the breach of a contractual duty and we have stated cases like on make good engineering sales where the courts have held that the mere fact that there was a failure in the product doesn't mean there was a red atory defect where the defs where that the product was manufactured under them the buyer's specifications in the court said no there wasn't because the reason for the crack was that the the manufacturer used the process that the buyer had specified rather than using reinforced steel so to hear petro boces case is they say that they are relying on these oral statements that it's an i q danus allegedly made that it would not weld over defects and if the material defect were found it would scrap the chain but you can't analyze that that contention without looking at the contractual specifications because it is only pursuant to those specifications that you can determine whether or not there was a defect so in fact and again as i pointed out we find that in the ongoing trial court proceedings which are set for trial now in september petrobras has in fact made statements has submitted expert testimony that it will in fact rely on the interaction specifications to prove its case we have this and i can name this will also be relying on the contractual specifications we will be contending in part that the chain was manufactured and welded pursuant to the specifications that petra bos itself sets forth under the law that we see and even a non signatory to a contract can avoid the contract the arbitration provisions if they claim it is asserting whether or not it's a breach of contract claim  bishan claim or statutory claim necessarily relies on the terms of the contract and that's the case here notwithstanding their attempts at art for pleading now one other thing i would like to point out is that the trial of this case is now scheduled for september eleventh you terms that return i know we would hope that we don't need to hear that again ok we would hope your honour's and i obviously that is our where now but we would hope that the court might be able to resolve this case so they give guidance for the district court and the parties prior to that day even if it might or could mean a decision with an opinion to follow otherwise there might be some action needed to take to to further be further is plead the bases on the louisiana law for the reservation claim and that's exactly what petra prize has done it did judge hitler apply federal common law or state law regarding our appt ability you heard what mr franklin yes oh yes well you can read you can read the noble case because i think it's extremely on point there's no discussion in the mobile as to whether it's federal common law as opposed  clear it says emphatically that a party a plaintiff that is not a signatory to an arbitration agreement such as petrobras does not does not have to plead the terms of the contract out of which the manufacturer's liability might arise what do you do with arthur andersen as it affects you know i don't believe i don't believe author anderson undercuts noble in this case because there's no showing as i say  any difference between federal common law on the one hand and louisiana law on the other that the law of direct benefits of stoppel is applicable in many many states across the country as it is in the federal courts on thirty eight tracks article twenty five twenty of the louisiana civil code paragraph twenty thirty nine excuse me of the authority amended complaint tracks article twenty five twenty four of the louisiana civil code and the paragraph forty of third in many complained tracks of twenty five forty five that's all that's all petra process is obliged to do in order to state redivision claims against that was signed by technically to one hand and by yes and they on the other now it is entirely true that there are specifications in the underlying he p c i contract but that makes no difference because it's in the civil code it to that extent it's statutory but it's within the contractual provisions s not a contractual revenue it is not burdened by the contract well that's that's a word game because the statute is the civil code and contract or harp provided for by the civil contractual revenue as they arise out of a contract if you go back and feeling onion of course but does that make a difference not why not because the code remedy exists as a matter of these yellow independent of the terms of the of the underlying contract and that is exactly what this court recognized in noble is quite specifically the court said it was sufficient for the pla signatory simply to sue on the misrepresentation to sue on the read of bishan at remedy in the code and in nots and not therefore plead any of the specifics of the contracts is not the base its claim on the manufacturer's contract with the distributor disclaims any reliance on such a contract and relies instead and entirely on the pre purchase representations of the defendant and whatever legal duties are imposed on a manufacturer by law code visions the second alternative prong of direct benefit of does not apply and that and sufficient that's all petrobras need to do in order to in order to avoid the arbitration agreement it has to disavow any any suit on the terms of the contract it has done so and then they can sue in the argument the argument is well there are these specifications in the contract that the purchase order between technique on the one hand and vicinity on the other of course this is a complicated  piece of machinery this is this is a product that is right with specifications but that doesn't interest the op which ability age if if this in a believes that there are merits of the case and to whether or not whether or not this isn't a commercial any defense to petra process claims confined as i say to the misrepresentations and to the retribution lawsuit is simply an effort to enforce the rope specifications that were included in the purchase order and the court this court said no it was not it was not the thrust  it was not it was not grounding its claim in the specifications it didn't have to do it all it had to do was was plead redivision and in this case the misrepresentations which is wh thank you for your honest like to start with the state versus federal law issue i got the implication of counsel's argument that they are asserting that noble somehow did not rely on federal common law i think that's not a tenable reading of the noble decision they're just saying is as as what i heard i think i heard it twice is there's they're saying that it doesn't matter because state and federal law are the same here that's what i heard ok that was a second but i just wanted to address the first one i think noble does rely on federal common law it cites gregson it relies on other precedence that the court gregson is one of the specific precedence of the court in crawford said had to doesn't mandate arbitration when that claim relies on underlying agreements that is inconsistent with louisiana law we cited the ruston case we did involve a repetition claim or a non signatory was stopped claim therefore it can never rely on the contract i think that's not correct while it is a statutory cause of action the courts in louisiana have made clear that its essence is arising from the breach of a contractual duty and where as here you have very specific contractual specifications those must as necessary must inform the decision makers here we would say it's the arbitrator's determination of whether or not a read  occurred noble itself i think is distinguishable frankly on its specs as well and noble and you had pre purchase represent patients that were basically advertising materials that informed the buyer what this off the shelf product was supposed to be and that's what they were relying on here we don't have them we have a very detailed as counsel agreed very detail specifications about what this one of a kind highly specialized custom made heather chain underwater to the chain was supposed to be and i kind of understood the argument maybe i got it wrong to be essentially that for purposes of arbitration or deciding arbitration we can ignore that we're going to rely on the specifications then when we get to trial that he said that goes to the merits of the case but that's the point of these arbitration decisions you have to look at what the merits of the case are going to be to determine whether or not the case should be sent to arbitration in the first place that puts the  before the horse here the merits of the case our own fact we're going to rely on the contractual specifications that invokes stop on your louisiana law and you can't say well we're going to argue for purposes of arbitration that oh we're not going to those those specifications are going to be involved and then we're going to turn around in a trial we're going to say you know we are going to look at those specifications we need to know right now that arbitration is again it's a federally favored did not apply louisiana law to determine that the claim although it is asserted in red bishan necessarily must rely on the contract with specifications in this case again this is not an off the shelf product as was the case in noble and as may be the case in other redivision claims this is about as highly specialized a product as you can possibly get no one has ever does have ever designed a tether chain of this type for use in underwater operations like this this is a one of the kind chain it was manufactured according to detail a contractual specifications those specifications necessarily informally the re that begs the question how do you know what's a defect you do by looking at the contractual specifications district court therefore air by refusing to state the case pending