PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 13-2739

_____________

In re Nortel Networks Inc., et al.,

Debtors

JOINT ADMINISTRATORS FOR NORTEL NETWORKS 

UK LIMITED AND CERTAIN OF ITS AFFILIATES 

LOCATED IN THE REGION KNOWN AS EMEA,

Appellants

_____________

On Appeal from the United States Bankruptcy Court

for the District of Delaware

(Case No. 09-10138)

Bankruptcy Judge: Honorable Kevin Gross

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Argued: October 8, 2013

Before: FUENTES, GREENBERG, and BARRY, Circuit 

Judges

(Opinion Filed: December 06, 2013)
2

Edwin J. Harron

Robert S. Brady

John T. Dorsey

Jaime Luton Chapman

Young Conaway Stargatt & Taylor, LLP

Rodney Square

1000 North King Street

Wilmington, Delaware 19801

Derek J.T. Adler [Argued]

Amera Z. Chowhan

Gabrielle Glemann

Charles H. Huberty

Hughes Hubbard & Reed LLP

One Battery Park Plaza

New York, New York 10004

Attorneys for Appellants Joint Administrators for Nortel 

Networks UK Limited and Certain of its Affiliates Located in 

the Region Known as EMEA. 

Howard S. Zelbo [Argued]

James L. Bromley

Lisa M. Schweitzer

Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza

New York, New York 10006

Derek C. Abbott

Ann C. Cordo

Morris, Nichols, Arsht & Tunnell LLP,

1201 North Market Street, 18th Floor

P.O. Box 1347

Wilmington, Delaware 19801

Attorneys for Appellees Nortel Networks Inc., et al.
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Fred Hodara

David Botter

Abid Qureshi

Akin Gump Strauss Hauer & Feld LLP

One Bryant Park

New York, New York 10036

Patricia A. Millett [Argued]

Akin Gump Strauss Hauer & Feld LLP

1333 New Hampshire Ave., N.W.

Suite 400

Washington, D.C. 20036

L. Rachel Lerman

Akin Gump Strauss Hauer & Feld LLP

2029 Century Park East

Suite 2400

Los Angeles, California 90067

Attorneys for Appellee The Official Committee of Unsecured 

Creditors of Nortel Networks Inc., et. al. 

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OPINION OF THE COURT

_____________

FUENTES, Circuit Judge.

After the multinational telecommunications firm Nortel

Networks declared bankruptcy in 2009, various debtors 

comprising the Nortel brand auctioned their business lines 

and intellectual property. They raised $7.5 billion. Since the 

auctions, the selling debtors have disputed whether or not 

they had previously agreed to allocate the auction funds
4

through arbitration. As it stands, the debtors have $7.5 billion 

and no agreed-upon method for dividing it.

The U.S. Bankruptcy Court for the District of Delaware 

determined that the parties did not agree to arbitrate their 

disputes about allocation. Because the contract at the center 

of this controversy does not reflect the parties’ intent to 

arbitrate disputes about the auction funds, we will not compel 

the parties to do so. We therefore affirm.

We do not consider the Joint Administrators’ related, but 

distinct, challenge to the Bankruptcy Court’s decision to 

allocate the contested funds. A panel of this Court declined to

certify that question for appeal. In any event, the Bankruptcy 

Court has not yet held the hearing to allocate the funds, so

review would be premature.

I. Background of the Case

A. The Facts

In early 2009, Nortel entities around the world declared 

bankruptcy and filed petitions in U.S., Canadian, English, and 

French courts to begin insolvency proceedings. See In re 

Nortel Networks, Inc., 669 F.3d 128, 130-31 (3d Cir. 2011) 

(summarizing history of the Nortel bankruptcy). The 

following day, the U.S. Bankruptcy Court for the District of 

Delaware and the Superior Court of Ontario, Canada, each 

approved a cross-border protocol for coordinating U.S. and 

Canadian proceedings. 

As a transnational company with numerous subsidiaries

located in multiple jurisdictions, Nortel’s insolvency posed 

challenges of coordination and timing. Among them, multiple 

Nortel entities owned the business lines and intellectual 

property that comprised the global Nortel brand. Thus, any
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plan to sell or reorganize Nortel property would have to 

accommodate multiple, and possibly conflicting, interests. At 

the same time, the value of Nortel’s business and intellectual 

property stood to diminish over time. Therefore, any plan to 

sell or reorganize Nortel’s assets had to be formed quickly in 

order to maximize Nortel’s value. The debtors faced a 

conflict between their mutual interest in quick sales and their

individualized interests in receiving a big share of each sale. 

Enter the Interim Funding and Settlement Agreement

(“Interim Funding Agreement”). Broadly speaking, the 

Interim Funding Agreement “provides for the parties’ 

cooperation in the global sales of Nortel’s business units and 

agreement that the proceeds of any sale will be held in escrow 

until the parties either reach a consensual allocation or obtain 

a binding procedure for the allocation pursuant to an agreed

upon protocol.” Nortel, 669 F.3d at 131. The agreement thus 

created a framework for Nortel debtors to sell assets without 

first agreeing how to allocate the proceeds of any sale among 

the relevant debtors.

Nortel debtors from the United States, Canada, Europe, 

the Middle East, and Africa entered into the Interim Funding 

Agreement on June 9, 2009. The debtors reduced the crux of 

their sales arrangement to Section 12 of the agreement, 

captioned “Entry into Sale Transactions.” That section 

outlines a sale and escrow framework:

 Section 12(a) states that sales and auctions “shall not be 

conditioned upon” an agreement between the sellers to 

allocate sale proceeds or an agreement on the procedure

for allocating sale proceeds. App’x 1560, ¶ 12(a).

 Section 12(b) states that the sale proceeds shall be 

deposited into escrow and not released “in advance of 

either (i) agreement of all of the Selling Debtors or (ii) in 
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the case where the Selling Debtors fail to reach 

agreement, determination by the relevant dispute 

resolver(s) under the terms of the Protocol (as defined 

below) applicable to the Sale Proceeds, and subject in 

each case to payment of the agreed or determined amount 

of allocation of Sale Proceeds to all Selling Debtors.”

App’x 1560, ¶ 12(b).

 Section 12(c) states that the parties shall “negotiate in 

good faith and attempt to reach agreement on a timely 

basis on a protocol for resolving disputes concerning the 

allocation of Sale Proceeds.” App’x 1560, ¶ 12(c).

 Section 12(d) states that, after a sale, the parties shall 

“negotiate in good faith and on a timely basis to attempt to 

reach agreement regarding the allocation of the Sale 

Proceeds . . . , failing which the Interim Sales Protocol 

shall apply to determine the allocation of the relevant Sale 

Proceeds.” App’x 1560, ¶ 12(d).

Section 12 does not use the words “arbitrators” or

“arbitration,” or identify any arbitral association.

Separate from Section 12, the Interim Funding Agreement

contains choice-of-law and forum-selection clauses. The 

parties placed these clauses in Section 16, captioned 

“Governing Law and Jurisdiction.” App’x 1563-64. Section 

16(a) specifies that the laws of the State of New York govern 

the agreement except as to Section 17, which concerns the 

personal liability of the representatives of the European, 

Middle Eastern, and African debtors. Section 16(b) states that 

the parties agree “to the non-exclusive jurisdiction of the US 

and Canadian Courts (in a joint hearing conducted under the 

Cross-Border Protocol adopted by such Court, as it may be in 

effect from time to time), for purposes of all legal 

proceedings to the extent relating to the matters agreed” in the 
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Interim Funding Agreement. App’x 1564, ¶ 16(b). No part of 

Section 16 discusses arbitrators, arbitration, or arbitral 

associations. 

The Bankruptcy Court and the Ontario Superior Court 

held a cross-border hearing on the Interim Funding 

Agreement on June 29, 2009. Both courts approved the 

agreement. For its part, the Bankruptcy Court “authorized” 

the U.S. debtors to “enter into the Interim Funding Agreement 

pursuant to section 363 of the Bankruptcy Code and 

Bankruptcy Rule 9019.” App’x 358, ¶ 2. In its order, the 

Bankruptcy Court also stated that nothing in the order “shall 

constitute a Protocol for determining the allocation of 

proceeds” and that “no proceeds from a Sale Transaction may 

be allocated . . . unless such allocation is in accordance with a 

Protocol approved by this Court.” App’x 359, ¶ 8. Neither the 

Bankruptcy Court’s nor the Superior Court’s order referenced

arbitration, arbitrators, or arbitral associations.

After the courts approved the Interim Funding Agreement, 

Nortel debtors held nine auctions. The auctions raised 

approximately $7.5 billion in proceeds. As agreed, the debtors

placed those proceeds into escrow. 

During and after the auctions, the debtors attempted to 

breathe life into the “Protocol” anticipated by the Interim 

Funding Agreement. Apparently the parties made substantial 

progress toward a protocol—even drafting a procedure for a 

three-person arbitral panel to resolve disputes over proceeds.

But despite numerous meetings and multiple rounds of 

mediation, the parties never executed that draft or any other. 

B. The Bankruptcy Proceedings

The failure of the parties to negotiate a protocol left the 

effort to disburse the escrow funds at a standstill. So the 
8

parties took the matter to the courts. The U.S. Nortel debtors

(“U.S. debtors”) and the U.S. Official Committee of 

Unsecured Creditors of Nortel Networks Inc. (“U.S. 

creditors”) moved the Bankruptcy Court to decide disputes 

about asset allocation. The Joint Administrators for the Nortel

debtors in the UK proceedings (“Joint Administrators”) then 

cross-moved to compel arbitration on behalf of Nortel debtors 

located in Europe, Africa, and the Middle East. The U.S. 

debtors and U.S. creditors (collectively, “U.S. parties”)

replied that the Interim Funding Agreement—the basis of the 

Joint Administrators’ cross-motion—did not contain an 

agreement to arbitrate.

In response to these filings, the Bankruptcy Court ruled 

that “the parties agreed that the Courts will make the 

allocation determination rather than an arbitrator or 

arbitrators.” App’x 8. A few weeks earlier, the Superior Court 

reached the same result in the Canadian proceeding; it, too, 

denied a parallel motion to compel arbitration. (The Court of 

Appeal for Ontario has since denied leave to appeal that 

decision, stating that “there is no ambiguity” in the contract 

and “no suggestion . . . that the parties must submit the 

allocation issue to arbitration.” Supplemental App’x 55, ¶¶ 7-

8.) The Bankruptcy Court then approved a cross-border 

judicial allocation protocol.

The Joint Administrators sought leave to appeal the 

Bankruptcy Court’s order regarding arbitration. Thereafter,

the Bankruptcy Court certified a direct appeal from its order 

regarding arbitration pursuant to 28 U.S.C. § 158(d)(2)(B).

This Court granted the petition to certify appeal of the 

arbitration issue on June 13, 2013. See In re Nortel Networks 

Inc., No. 13-8049 (3d Cir. June 13, 2013).
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The Joint Administrators separately moved the 

Bankruptcy Court for leave to appeal the Bankruptcy Court’s 

order approving the cross-border judicial allocation protocol.

The Bankruptcy Court denied the Joint Administrators’ 

request to certify the allocation issue for interlocutory appeal. 

This Court then denied the Joint Administrators’ petition to 

review the cross-border hearing dispute. See In re Nortel 

Networks Inc., No. 13-8055 (3d Cir. June 13, 2013). The Joint 

Administrators applied to the U.S. District Court for the 

District of Delaware pursuant to 9 U.S.C. § 16(a) and 28 

U.S.C. § 158(a). The District Court denied the Joint 

Administrators’ request for leave to appeal the cross-border 

issue. 

II. The Bankruptcy Court Correctly Denied the CrossMotion to Compel Arbitration.

This contract dispute begins and ends with the text of the 

Interim Funding Agreement. The language used by the parties 

in their agreement does not reveal an intent to arbitrate 

disputes about the allocation of the auction funds. Rather, the

parties used language that indicated they would negotiate the 

procedure by which to divide the funds. Reasoning that the 

arbitration of disputes arising out of bankruptcy proceedings

requires contractual consent—not the possibility of consent—

the Bankruptcy Court denied the Joint Administrators’ crossmotion to compel arbitration. 
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A. Legal Standards1

Arbitration “is a matter of consent, not coercion.” Volt 

Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 

489 U.S. 468, 479 (1989). “[A] party may not be compelled 

under the [Federal Arbitration Act] to submit to . . .

arbitration unless there is a contractual basis for concluding 

that the party agreed to do so.” Stolt-Nielsen S.A. v. 

AnimalFeeds Int’l Corp., 559 U.S. 662, 684 (2010)

(discussing class arbitration). To determine whether the 

parties agreed to arbitrate a dispute, we employ state

principles of contract law. See Century Indem. Co. v. Certain 

Underwriters at Lloyd’s, London, 584 F.3d 513, 532 (3d Cir. 

2009). New York law governs the relevant parts of the 

Interim Funding Agreement. Thus, the agreement must be 

interpreted and enforced according to its plain meaning. See 

Greenfield v. Philles Records, Inc., 780 N.E.2d 166, 170

(N.Y. 2002). 

 

1

This Court has jurisdiction over the certified appeal of 

the order denying arbitration pursuant to 28 U.S.C. 

§ 158(d)(2)(B) and 9 U.S.C. § 16(a)(1)(B). We review a

bankruptcy court’s conclusions of law under a de novo 

standard and its findings of fact under a clearly erroneous 

standard. In re Mintze, 434 F.3d 222, 227 (3d Cir. 2006).

Because the Bankruptcy Court concluded as a matter of law 

that the Interim Funding Agreement did not contain an 

ambiguity and did not mandate arbitration, we exercise 

plenary review of the Bankruptcy Court’s order. See Kirleis v. 

Dickie, McCamey & Chilcote, P.C., 560 F.3d 156, 159 (3d 

Cir. 2009). 
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B. The Interim Funding Agreement

Two features of Section 12 of the Interim Funding 

Agreement lie beyond dispute. The first is that Section 12(a) 

divorces the sale of Nortel’s assets from an agreement 

between the sellers on how to divide the sale proceeds. 

Section 12(a) achieves this by stating that the debtors “shall 

not” condition their agreement to a particular sale on first

agreeing to asset allocation. See App’x 1560.

The second undisputed feature of Section 12 is that it does 

not include a protocol for resolving disputes concerning the 

allocation of sale proceeds. Section 12(c) spells this out: the 

parties agree to “negotiate in good faith and attempt to reach 

agreement . . . on a protocol for resolving disputes concerning 

the allocation of Sale Proceeds.” App’x 1560. The presence 

of an agreement to “negotiate” a protocol signals the absence 

of an agreement on that protocol. 

The agreement to a sales framework in Section 12(a) and 

the agreement to negotiate an allocation protocol in Section 

12(c) provide baselines for interpreting Section 12(b). The 

parties could have agreed to allocate the escrowed funds 

through arbitration. Or the parties could have agreed to 

negotiate the mechanism they would use to divide the 

escrowed funds without limiting themselves to arbitration. 

They could not have done both.

The text of the Interim Funding Agreement supports the 

second interpretation but not the first. Section 12—“Entry 

into Sale Transactions”—does not hint that the parties bound 

themselves to arbitrate. Considered as a whole, Section 12 

creates escrow accounts; it does not disburse them. In fact, 

Section 12 does not mention arbitrators, arbitration, or arbitral 

associations. Of course, parties may agree to arbitration 

without using the word “arbitration.” See, e.g., Chris 
12

O’Connell, Inc. v. Beacon Looms, Inc., 652 N.Y.S.2d 24, 25

(N.Y. App. Div. 1997) (“mediate” meant “arbitrate”); Penn 

Cent. Corp. v. Consol. Rail Corp., 441 N.Y.S.2d 266, 270

(N.Y. App. Div. 1981) (“appraisal” consistent with 

“arbitration”). But the absence of common signal words does 

not demonstrate that the parties agreed to take their disputes 

to a third party. It means the parties did not agree to 

arbitration in customary terms.

The parties did not agree to arbitrate in other words, 

either. The Joint Administrators disagree, arguing that the 

parties agreed to arbitrate by using the words “dispute 

resolver(s)” in Section 12(b) of the Interim Funding 

Agreement. The Court gives the words “dispute resolver(s)” 

their plain meaning. See Greenfield, 780 N.E.2d at 170. The

noun “dispute” means “[t]he act of disputing or arguing 

against; active verbal contention, controversy, debate.”

Dispute, Oxford English Dictionary, 

http://www.oed.com/view/Entry/55213 (accessed Nov. 15, 

2013). The noun “resolver” means “[a] person who or thing 

which answers a question, solves a doubt or difficulty, effects 

a resolution of a conflict or dispute, etc.” Resolver, Oxford 

English Dictionary, http://www.oed.com/view/Entry/163739

(accessed Nov. 15, 2013). Thus, the plain meaning of 

“dispute resolver(s)” encompasses those persons or things 

that settle controversies. This includes arbitrators, as the Joint 

Administrators argue. But the words do not exclude courts. 

Indeed, as both parties acknowledge, courts have referred to 

themselves as dispute resolvers. See, e.g., Lewis v. Sullivan, 

279 F.3d 526, 528 (7th Cir. 2002) (“Federal courts are 

subsidized dispute-resolvers . . . .”). Therefore, the use of the

words “dispute resolver(s)” does not, standing alone, show 

that the Nortel entities intended to arbitrate their disputes. The 
13

words suggest a flexible concept that would permit, for 

example, arbitrators, courts, or mediators.

The context confirms that Section 12 does not imbue the 

words “dispute resolver(s)” with a narrower meaning than the 

words suggest for themselves. Recall that Section 12(b) 

forbids the release of escrowed funds in advance of either the 

parties’ agreement or the determination of the “relevant 

dispute resolver(s) under the terms of the Protocol.” App’x 

1560. As defined by Section 12(c), the “Protocol” is “a 

protocol for resolving disputes concerning the allocation of 

Sale Proceeds . . . , which Protocol shall provide binding

procedures for the allocation of Sales Proceeds.” App’x 1560.

Section 12(c) thus makes it possible to have a different 

“relevant dispute resolver” for different disputes, depending 

on the Protocol, or multiple dispute resolvers for one 

controversy and a single dispute resolver for another. The 

parties matched the breadth of the words “dispute resolver(s)” 

with an equally broad framework for negotiating a Protocol to 

determine how, and by whom, the parties would resolve 

allocation controversies. Nothing in the Interim Funding 

Agreement indicates that the “relevant dispute resolver[] 

under the terms of the Protocol” could not be a court.

Nonetheless, the Joint Administrators suggest that by 

contemplating a negotiated protocol, the parties revealed their 

intent to handle disagreements in a private forum. After all, 

the Joint Administrators reason, litigants must take a court’s

rules of procedure as they find them. This reasoning fails 

twice. First, the Joint Administrators ascribe too much 

rigidity to court procedures. Bankruptcy courts confront fluid 

legal and business problems. Consequently, bankruptcy 

courts must work with the parties before them to apply the 

bankruptcy framework to the demands and idiosyncrasies of 
14

each case. The Bankruptcy Court and the parties did just that

when, for example, they collaborated on a cross-border 

protocol. Second, the Joint Administrators’ interpretation 

presupposes the “dispute resolver” will implement the 

Protocol. But, as written, the Interim Funding Agreement

contemplates the Protocol will identify the “relevant dispute 

resolver(s)” for a given controversy. Negotiating a protocol 

therefore encompasses negotiations over dispute resolvers. By

agreeing to negotiate which disputes would be settled by 

which dispute resolver (or resolvers), the parties did not 

thereby restrict themselves to settling all disputes by the same 

method, or agree that the method would be arbitration. 

Because we conclude that the agreement contains no 

promise to arbitrate, our analysis ends at the text. “As a 

general rule, extrinsic evidence is inadmissible to alter or add 

a provision to a written agreement.” Schron v. Troutman 

Sanders LLP, 986 N.E.2d 430, 433 (N.Y. 2013). New York 

law permits resort to extrinsic evidence, such as negotiating 

history, when an agreement contains an ambiguity. See Brad 

H. v. City of New York, 951 N.E.2d 743, 746 (N.Y. 2011). But 

the disputed portions of the Interim Funding Agreement were 

not “written so imperfectly that [they are] susceptible to more 

than one reasonable interpretation.” See id. Therefore, no 

legal ambiguity exists. Indeed, we reject as unreasonable the 

Joint Administrators’ view that the Interim Funding 

Agreement could be read to exclude the possibility of court 

intervention. As demonstrated above, that reading finds no 

support in the parties’ agreement. 

Although we do not look to extrinsic evidence to interpret 

the Interim Funding Agreement, we do note that the use of 

extrinsic evidence presents a special interpretative challenge

for court-approved agreements. Consider Rule 9019(a) of the 
15

Federal Rules of Bankruptcy Procedure, which empowers a 

bankruptcy judge to “approve a compromise or settlement,”

and Bankruptcy Rule 9019(c), which empowers a bankruptcy 

judge to “authorize” the parties to settle a controversy through 

“final and binding arbitration.” If the parties’ agreements 

could be discerned only by consulting extrinsic evidence, then

a bankruptcy court might unknowingly use its Rule 9019 

power to “approve” or “authorize” a contract with hidden 

promises. The Joint Administrators argue for just such a 

result by suggesting that the Bankruptcy Judge authorized 

arbitration when it approved the Interim Funding Agreement.

But how could a judge “authorize” arbitration within the

meaning of Rule 9019(c) if he or she did not recognize the 

parties had agreed to arbitrate? And how could creditors 

lodge their objections to arbitration if the agreement to 

arbitrate did not plainly appear on the face of the contract?

These difficult questions underscore the usefulness of 

reducing agreements to arbitrate to plain language that can be 

recognized and enforced by courts examining only the text of 

the agreement. Parties wishing to arbitrate should not hide 

their intent to do so in the shadows of the text.

III. The Court Declines to Review the Bankruptcy 

Court’s Order to Proceed to Joint Hearing.

Separate from the contractual dispute, the Joint 

Administrators challenge the Bankruptcy Court’s order to 

proceed with a joint hearing to determine allocation. A panel 

of this Court denied the Joint Administrators’ petition to 

certify this issue for appellate review pursuant to 28 U.S.C. 

§ 158(d)(2). See In re Nortel Networks Inc., No. 13-8055 (3d 

Cir. June 13, 2013) (order denying cross-petition for 

permission to appeal). The District Court denied the Joint 

Administrators’ separate motion for leave to take 
16

interlocutory appeal from the Bankruptcy Court’s order. In re 

Nortel Networks Inc., No. 13 Civ. 757, Doc. 31 (D. Del. July 

22, 2013) (Order Denying Motion for Leave to Appeal).

Notwithstanding these rulings, the Joint Administrators invite

us to consider the propriety of a joint hearing because the 

Bankruptcy Court decided to allocate the escrowed funds in 

the same order that it denied the motion to compel the 

arbitration of fund allocation.

We decline the invitation. Although this Court has 

jurisdiction over the “entire certified order” of the Bankruptcy 

Court, including the aspects of that order relating to a joint 

hearing, see Tristani ex rel. Karnes v. Richman, 652 F.3d 360, 

366 (3d Cir. 2011), the ripe conflict before us concerns 

whether or not the parties agreed to arbitrate. The Joint 

Administrators’ challenge to the joint hearing and its 

procedures would more appropriately follow the hearing, 

when the parties have developed the record and raised their 

procedural objections to the Bankruptcy Court.

IV. Conclusion

We affirm the U.S. Bankruptcy Court for the District of 

Delaware’s order denying the Joint Administrators’ crossmotion to compel arbitration. The Bankruptcy Court correctly 

determined that the plain language of the Interim Funding 

Agreement did not contain an arbitration clause. The Joint 

Administrators’ reliance on the words “dispute resolver(s)”

does not show otherwise. In context, the words “dispute 

resolver(s)” indicate that the parties allowed themselves 

latitude to select courts or arbitrators or others to adjudicate 

the parties’ disputes. To respect that contractual latitude, we 

reject the idea that the parties must arbitrate disputes over 

asset allocation.
17

The Court declines to reach the merits of the dispute about 

the joint hearing.