FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

PORTLAND GENERAL ELECTRIC

COMPANY,

Plaintiff-Appellee,

v.

LIBERTY MUTUAL INSURANCE

COMPANY; ZURICH AMERICAN

INSURANCE COMPANY,

Defendants-Appellants.

No. 16-35628

D.C. No.

3:16-cv-00495-HZ

OPINION

Appeal from the United States District Court

for the District of Oregon

Marco A. Hernandez, District Judge, Presiding

Argued and Submitted May 8, 2017

Portland, Oregon

Filed July 10, 2017

Before: Jay S. Bybee and Andrew D. Hurwitz, Circuit

Judges, and Jed S. Rakoff,* Senior District Judge.

Opinion by Judge Rakoff

* The Honorable Jed S. Rakoff, Senior United States District Judge

for the Southern District of New York, sitting by designation.
2 PGE V. LMIC

SUMMARY**

Arbitration

The panel vacated the district court’s judgment entering

a preliminary injunction prohibiting sureties from pursuing

claims against Portland General Electric Company (“PGE”)

in arbitration and denying a mandatory stay of the judicial

proceedings under § 3 of the Federal Arbitration Act, and

remanded for further proceedings; and dismissed for lack of

appellate jurisdiction the sureties’ appeal from the order

denying their motion for a discretionary stay. 

The appeal involves the interplay of three related

contracts: a Construction Contract entered by PGE and

several contracting companies to build an Oregon power

plant; a performance Bond in which appellants/sureties

Liberty Mutual Insurance Company and Zurich American

Insurance Company issued a bond to PGE as required by the

Construction Contract; and a Guaranty of performance issued

to PGE by its parent company, Abengoa S.A. The Guaranty

provided that the parties submit any disputes to binding

arbitration to be conducted by the International Chamber of

Commerce (“ICC”) under its procedural rules and Oregon

substantive law.

PGE filed this diversity action against the sureties,

alleging breach of the Bond and bad faith; and PGE sought a

preliminary injunction prohibiting the sureties from

arbitrating their claims against PGE. 

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.
PGE V. LMIC 3

The panel held that the incorporation of the ICC Rules

into an arbitration agreement constituted clear and

unmistakable evidence of a delegation of gateway issues of

arbitrability to the arbitrator. 

The panel rejected PGE’s contention that the ICC Rules

did not govern the present dispute because the Bond lacked

an arbitration clause. The panel held that the following were

questions of the scope of the arbitration agreement in the

Guaranty, and delegated to the arbitrators: whether Abengoa

properly joined the sureties to the arbitration pursuant to the

Guaranty and the ICC Rules; whether the sureties’ claim

against PGE met the Guaranty’s test of “aris[ing] out of or in

connection with an agreement with a subcontractor or [the]

Guaranty,” and whether PGE had therefore agreed to arbitrate

its disputes against the sureties. The panel concluded that the

district court erred in enjoining the sureties from participating

in the ICC arbitration, and preventing the arbitral tribunal

from addressing the scope of the arbitration.

COUNSEL

Eric D. Miller (argued), Perkins Coie LLP, Seattle,

Washington; David Bledsoe, Perkins Coie LLP, Portland,

Oregon; for Plaintiff-Appellee.

John Spencer Stewart (argued), Mario R. Nicholas, Thomas

Ardell Larkin, and Jan D. Sokol, Stewart Sokol & Larkin

LLC, Portland, Oregon, for Defendant-Appellants.

Nathan D. O’Malley (argued) and Sara H. Kornblatt, Gibbs

Giden Locher Turner Senet & Wittbrodt LLP, Los Angeles,

California, for Amicus Curiae Abengoa.
4 PGE V. LMIC

OPINION

RAKOFF, Senior District Judge:

If two parties enter a contract that both requires

arbitration of their disputes and allows impleader of a third

party, must a party that did not initiate the impleader arbitrate

a dispute that arises out of the same transaction at issue in the

arbitration with the impleaded third party? We hold, on the

facts of this case, that this question is really a question about

the scope of the arbitration clause for the arbitrator to decide. 

Since, instead, the district court undertook to decide that

question, we vacate and remand.

BACKGROUND

This appeal concerns the interplay of three related

contracts. In the first (the “Construction Contract”), entered

into in June 2013, appellee Portland General Electric

Company (“PGE”) hired several related contracting

companies (collectively, the “Contractor”) to build an Oregon

power plant. The Construction Contract allows PGE to

terminate the agreement upon the Contractor’s default. A

“Disputes” provision requires the parties to attempt to

mediate any disputes, but if mediation fails, “each Party shall

have the right to take whatever legal actions that they may

choose.” A “Choice of Law; Jurisdiction” provision states

that the agreement is governed by Oregon substantive law

and that the parties “consent to the exclusive jurisdiction of

any U.S. federal court with jurisdiction over Oregon.” The
PGE V. LMIC 5

contract passingly mentions arbitration twice, but does not

require it.1

The Construction Contract requires the Contractor to

obtain a performance bond. Appellants Liberty Mutual

Insurance Company and Zurich American Insurance

Company (collectively, the “Sureties”) issued the required

bond (the “Bond”) to PGE. The Bond incorporates the

Construction Contract by reference and states that “[a]ny

proceeding, legal or equitable, under this Bond may be

instituted in any court of competent jurisdiction in the

location in which the work or part of the work is located, and

in any court(s) to which the Parties to the Construction

Contract have agreed will have jurisdiction over disputes

thereunder.” The Bond is silent as to arbitration.

The Construction Contract also requires the Contractor to

obtain a guaranty of performance from a parent company,

Abengoa S.A. (“Abengoa”). Abengoa issued a guaranty to

PGE (the “Guaranty”), in which both parties consented to

submit any disputes “in connection with this Guaranty” to

binding arbitration. Of particular relevance here, the

Guaranty specifies that the arbitration is to be conducted by

the International Chamber of Commerce (“ICC”) under its

procedural rules and Oregon substantive law, and that “[o]nce

the arbitration proceeding is commenced hereunder, either

1 A “Responsibilities of Contractor” provision gives PGE the right to

audit the Contractor; PGE must “treat such audit data as confidential, but

shall not be precluded from using such audit data in any legal proceedings

(including without limitation mediation or arbitration) arising under this

Agreement.” A “Costs and Attorney Fees” provision states: “In any

litigation arising out of this Agreement, including arbitration and any case

or proceeding under the Bankruptcy Code or any successor statute, the

prevailing Party shall be entitled to recover [reasonable expenses].”
6 PGE V. LMIC

Party may implead any other person or entity (with such

person or entity’s consent) in, and/or raise any claim against,

any other person or entity provided such claim arises out of

or in connection with an agreement with a Subcontractor or

this Guaranty.”

On December 18, 2015, PGE declared the Contractor in

default and terminated the Construction Contract. Abengoa

filed a Request for Arbitration with the ICC on December 31,

2015, naming PGE as “respondent” and the Contractor as an

“impleaded” party. Abengoa contended that the Contractor

had not defaulted, that PGE’s termination of the Construction

Contract was wrongful, and that Abengoa owed PGE nothing

under the Guaranty. The Contractor sought similar relief.

On March 2, 2016, Abengoa filed a Request for Joinder

in the arbitration, seeking to include the Sureties, who, under

the Bond, would be liable to PGE if the Contractor had

defaulted. Abengoa invoked both the impleader provision in

the Guaranty and Article 7 of the ICC Rules.2 Abengoa also

sought a declaration that the Sureties owed PGE nothing

under the Bond. The Sureties consented to the arbitration and

2 Article 7, titled “Joinder of Additional Parties,” states in relevant

part:

A party wishing to join an additional party to the

arbitration shall submit its request for arbitration

against the additional party (the “Request for Joinder”)

to the Secretariat. . . . Any such joinder shall be subject

to the provisions of Articles 6(3)–6(7) [governing the

interpretation of arbitration agreements] and 9

[governing claims arising out of more than one

contract].

ICC Rules, Article 7(1).
PGE V. LMIC 7

sought similar relief. On March 9, 2016, the Sureties sent

PGE a letter denying liability under the Bond.

Two weeks later, on March 23, 2016, PGE filed this

diversity action in the District of Oregon against the Sureties,

alleging breach of the Bond and bad faith. PGE sought a

preliminary injunction prohibiting the Sureties from

arbitrating their claims against PGE, claiming that Abengoa

had improperly impleaded the Sureties. PGE also filed a

Jurisdictional Objection before the ICC, arguing that “the

entire arbitration is an improper and collusive effort

orchestrated by Abengoa and its subsidiaries to drag into

international arbitration claims that [PGE, the Sureties, and

the Contractor] have agreed to litigate before the Oregon

courts.”

In the district court, the Sureties opposed the motion to

enjoin arbitration, arguing, inter alia, that “[b]y virtue of

PGE’s selection of the ICC Rules, it has expressly agreed that

the arbitrator shall decide questions of arbitrability,” and that

it is up to the ICC tribunal to decide whether Abengoa validly

joined the Sureties and for what purposes. The Sureties then

moved to stay the litigation pending the resolution of the ICC

arbitration, invoking both the mandatory stay provision of the

Federal Arbitration Act (“FAA”), 9 U.S.C. § 3, and the

court’s inherent authority to manage its docket.

The district court refused to stay the litigation and granted

the preliminary injunction, finding that “the parties never

agreed to arbitrate this dispute.” The Sureties timely

appealed. This Court granted a stay of the district court

proceedings pending appeal.
8 PGE V. LMIC

DISCUSSION

PGE does not dispute the validity of the arbitration clause

in the Guaranty, but rather only its scope—PGE claims that

the impleader provision and its acceptance of the ICC

procedural rules do not extend to the resolution of its dispute

with the impleaded Sureties. We review de novo the district

court’s conclusion that it, rather than an arbitrator, should

decide arbitrability. Momot v. Mastro, 652 F.3d 982, 986

(9th Cir. 2011).

Generally, “the [FAA] establishes that, as a matter of

federal law, any doubts concerning the scope of arbitrable

issues should be resolved in favor of arbitration.” Moses H.

Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1,

24–25 (1983). Certain issues, however, are presumptively

reserved for the court. Howsam v. Dean Witter Reynolds,

Inc., 537 U.S. 79, 83 (2002). These include “gateway”

questions of arbitrability, such as “whether the parties have a

valid arbitration agreement or are bound by a given

arbitration clause, and whether an arbitration clause in a

concededly binding contract applies to a given controversy.” 

Momot, 652 F.3d at 987.

However, parties may delegate the adjudication of

gateway issues to the arbitrator if they “clearly and

unmistakably” agree to do so. Howsam, 537 U.S. at 83–84

(citation omitted). We have found such delegation when the

parties have incorporated by reference the rules of the

American Arbitration Association (“AAA”), which state in

relevant part that the “arbitrator shall have the power to rule

on his or her own jurisdiction, including any objections with

respect to the . . . validity of the arbitration agreement.” 

Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015)
PGE V. LMIC 9

(alteration in original). Although we have not opined on

whether the incorporation of the rules of the ICC into an

arbitration agreement also constitutes clear and unmistakable

evidence of a delegation of gateway issues to the arbitrator,

two of our sister circuits have held that the answer is yes. See

Shaw Grp. Inc. v. Triplefine Int’l Corp., 322 F.3d 115, 118

(2d Cir. 2003); Apollo Comput., Inc. v. Berg, 886 F.2d 469,

473–74 (1st Cir. 1989).

Because of the similarity between the ICC Rules and

those of the AAA, we now join those circuits. In relevant

part, the ICC Rules provide:

[I]f any party raises one or more pleas

concerning the existence, validity or scope of

the arbitration agreement or concerning

whether all of the claims made in the

arbitration may be determined together in a

single arbitration, the arbitration shall proceed

and any question of jurisdiction or of whether

the claims may be determined together in that

arbitration shall be decided directly by the

arbitral tribunal . . . .

ICC Rules, Article 6(3). This language makes clear that the

arbitrators are vested with the authority to determine

questions of arbitrability.

PGE nonetheless contends that the ICC Rules do not

govern the present dispute because the Bond lacks an

arbitration clause. Because PGE and the Sureties never

expressly agreed between themselves to delegate issues of

arbitrability to the tribunal, PGE argues, a court must decide
10 PGE V. LMIC

whether its dispute with the Sureties is subject to ICC

arbitration.

We disagree. Whether Abengoa properly joined the

Sureties to the arbitration pursuant to the Guaranty and the

ICC Rules, whether the Sureties’ claim against PGE meets

the Guaranty’s test of “aris[ing] out of or in connection with

an agreement with a Subcontractor or [the] Guaranty,”

3

and

3 A few circuits have held, or adopted variants of the rule, that “this

delegation applies only to claims that are at least arguably covered by the

agreement [to arbitrate].” Turi v. Main St. Adoption Servs., LLP, 633 F.3d

496, 507, 511 (6thCir. 2011); see Douglas v. Regions Bank, 757 F.3d 460,

464 (5th Cir. 2014); Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366, 1371

(Fed. Cir. 2006). But this approach is not universally followed. See

Belnap v. Iasis Healthcare, 844 F.3d 1272, 1292 (10thCir. 2017); see also

id. at 1290 (determining that “a majority of our sister circuits” reject any

variant of the “arguably covered” approach). Moreover, one of our own

opinions can be read to have rejected it, although it might have been in

dicta by which we would not be bound. See Oracle Am., Inc. v. Myriad

Grp. A.G., 724 F.3d 1069, 1076 (9th Cir. 2013).

We need not take a side in this circuit split, or determine if we already

have, because the Sureties’ claim against PGE is, at least, “arguably

covered” by the Construction Contract’s arbitrability clause. See Agere

Sys., Inc. v. Samsung Elecs. Co., 560 F.3d 337, 340 (5th Cir. 2009)

(declining to take a side for the same reason). The liability of both the

Sureties and Abengoa to PGE turns on the same issue: whether the

Contractor defaulted under the Construction Contract. In addition, the

Sureties and Abengoa have signed an indemnification agreement between

themselves. Cf. Mundi v. Union Sec. Life Ins. Co., 555 F.3d 1042, 1046

(9th Cir. 2009) (noting that nonsignatory to arbitration agreement may

compel signatory to arbitrate if the dispute is “intertwined with the

contract providing for arbitration” and there is a sufficiently close

“relationship among the parties” (quoting Sokol Holdings, Inc. v. BMB

Munai, Inc., 542 F.3d 354, 359–61 (2d Cir. 2008))). It is at least arguable

that the Sureties’ claim against PGE “arises out of or in connection with

an agreement with a Subcontractor or [the] Guaranty,” and regardless of
PGE V. LMIC 11

whether PGE has therefore agreed to arbitrate its dispute

against the Sureties, are questions of the scope of the

arbitration agreement in the Guaranty, delegated to the

arbitrators.

The district court thus erred in enjoining the Sureties from

participating in the ICC arbitration and denying at least a

temporarystay of the litigation under the FAA, preventing the

arbitral tribunal from addressing the scope of the arbitration. 

If the tribunal concludes that the arbitration agreement in the

Guaranty extends to PGE’s dispute with the Sureties, the

litigation should be stayed under the FAA pending the

outcome of the arbitration or dismissed. On the other hand,

if the tribunal concludes that PGE is not required under the

Guaranty to arbitrate its dispute with the Sureties, the district

court can then consider whether the litigation should proceed

or whether a discretionary stay is appropriate pending the

outcome of the arbitration. See Moses H. Cone, 460 U.S. at

20 n.23.

CONCLUSION

For the foregoing reasons, the judgment of the district

court entering a preliminary injunction prohibiting the

Sureties from pursuing claims against PGE in arbitration and

denying a mandatory stay of the judicial proceedings under

§ 3 of the FAA is VACATED and the matter is

REMANDED for further proceedings consistent with this

opinion. The Sureties’ appeal from the order denying their

motion for a discretionary stay is DISMISSED for lack of

which side of the circuit split the Ninth Circuit falls, it is therefore up to

the ICC to decide whether the Sureties’ claim falls within the scope of the

arbitration clause in the first instance.
12 PGE V. LMIC

appellate jurisdiction. See Reid v. Doe Run Res. Corp.,

701 F.3d 840, 844–45 (8th Cir. 2012); Invista S.A.R.L. v.

Rhodia, S.A., 625 F.3d 75, 87–88 (3d Cir. 2010). Each party

shall bear its own costs on appeal.