FILED

U.S. COURT OF APPEALS

ELEVENTH CIRCUIT

 JULY 14, 2008

THOMAS K. KAHN

CLERK

 [PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

_______________________

No. 07-10284 

_______________________

D. C. Docket No. 06-80966-CV-DTKH

INTERNATIONAL UNDERWRITERS AG 

& LIBERTY RE-INSURANCE CORPORATION, S.A., 

Plaintiff-Counter-Defendant-Appellant, 

versus

TRIPLE I: INTERNATIONAL INVESTMENTS, INC., 

Defendant-Counterclaimant-Appellee.

______________________

Appeal from the United States District Court

for the Southern District of Florida

______________________

 (July 14, 2008)

Before BIRCH and FAY, Circuit Judges, and HINKLE,* District Judge.

HINKLE, District Judge:

___________________________

*Honorable Robert L. Hinkle, United States District Chief Judge for the Northern District

of Florida, sitting by designation.
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This appeal raises the issue of the arbitrability of specific claims arising

from a commercial venture gone bad. The object of the venture was the

construction of a cement plant in Nigeria. The parties to this appeal are the owner

who proposed to build the plant and the surety who agreed to issue a financial

guarantee bond as collateral for a loan that would fund the project. The owner

asserts the proposed loan was a sham. The owner sued the surety (and others) for

fraud and on other theories. The surety moved to compel arbitration not based on

any arbitration clause in its principal agreement with the owner — the agreement

said nothing about arbitration — but instead based on an arbitration clause in an

escrow agreement through which the bond documents were to be delivered and the

surety’s fee was to be paid. The district court denied the motion. We affirm.

I. Facts

Appellee Triple I: International Investments, Inc. (“Triple I”) wished to

build a cement plant in Nigeria. It needed a $520 million loan. Financial advisors

purportedly found a lender (Japan Venture Fund Group (“Japan Venture”)) and an

issuer of a financial guarantee bond (appellant International Underwriters AG &

Liberty Re-Insurance Corporation, S.A. (“International”)). 

Triple I and International agreed that Triple I would pay International a fee

of $10.4 million for issuing the bond and that International would refund all but

$200 of the fee if the bond was not used. International confirmed the agreement in
3

its written bond commitment. There was no agreement to arbitrate.

Triple I and International eventually agreed that the $10.4 million fee would

be payable half in advance and half after Triple I’s receipt of the loan proceeds. 

The parties intended to close the transactions remotely, not in person. To facilitate

that approach, they engaged an escrow agent (W. E. Fielding and Associates

(“WEF”)) and entered a written escrow agreement. Among the terms were that

International would tender to WEF the $5.2 million payable to International in

advance, that International would tender to WEF the appropriate bond documents,

and that — upon confirmation that Japan Venture had funded the loan — WEF

would disburse the $5.2 million to International. The escrow agreement included

a clause calling for arbitration of “any dispute arising pursuant to or in any way

related to this Agreement or the transactions contemplated hereby.” Escrow

Agreement, R.1.1.8 ¶12. 

Triple I tendered the $5.2 million to WEF. International tendered the bond

documents to WEF. Japan Venture never funded the loan, but WEF disbursed the

$5.2 million to International. Triple I demanded return of the fee, but International

balked. Triple I thus was out $5.2 million.

International filed a lawsuit in which it denied that Triple I was entitled to a

refund of the entire $5.2 million but also sought to “interplead” that amount for a

determination by the court of the parties’ respective rights. Triple I
4

counterclaimed. In due course International voluntarily dismissed its complaint,

and Triple I twice amended its counterclaim. In the second amended

counterclaim, Triple I asserted that the whole deal was a sham from the outset. 

Triple I named 11 counterclaim defendants, including International. Triple I

sought recovery against all of the counterclaim defendants for fraud and under the

Racketeer Influenced and Corrupt Organizations Act. Triple I also sought

recovery against International for breach of the contract for issuance of the

financial guarantee bond and on a related theory of promissory estoppel. Triple I

expressly did not seek recovery against International or the other counterclaim

defendants for breach of the escrow agreement:

By this Second Amended Counterclaim, [Triple I] hereby

makes no claim against International or the Additional Counterclaim

Defendants for breach of the Escrow Agreement or based upon the

escrow transaction contemplated in the Escrow Agreement.

Second Amended Counterclaim, R.1.32.7 ¶35.

International moved to compel arbitration based on the arbitration clause in

the escrow agreement. The district court denied the motion. International filed

this appeal.

II. Standard of Review

We review de novo a district court’s decision on whether a dispute is

covered by an arbitration agreement. See, e.g., Employers Ins. of Wausau v. Bright
5

Metal Specialties, Inc., 251 F.3d 1316, 1321 (11th Cir. 2001).

III. Merits

A dispute ordinarily is arbitrable if the parties have agreed to arbitrate it. As

we have said:

Absent some violation of public policy, a federal court must

refer to arbitration any controversies covered by the provisions of an

arbitration clause. Chastain v. Robinson-Humphrey Co., 957 F.2d

851, 854 (11th Cir.1992). Whether a party has agreed to arbitrate an

issue is a matter of contract interpretation: “[A] party cannot be

required to submit to arbitration any dispute which he has not agreed

so to submit.” United Steelworkers of America v. Warrior & Gulf

Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409

(1960).

Telecom Italia, SpA v. Wholesale Telecom Corp., 248 F.3d 1109, 1114 (11th Cir.

2001). The canons of construction run in favor of arbitration. See, e.g., Moses H.

Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S. Ct. 927,

74 L. Ed. 2d 765 (1983) (“any doubts concerning the scope of arbitrable issues

should be resolved in favor of arbitration”).

Triple I and International entered an agreement under which International

was to issue a financial guarantee bond and Triple I was to pay International a fee. 

According to the second amended counterclaim, International never intended to

perform; the entire undertaking was a sham. The principal substantive issue

between Triple I and International is whether that is so.

If Triple I and International had included an arbitration clause in the
6

agreement for issuance of the bond — requiring, for example, arbitration of

disputes arising from the agreement, or related to the agreement — it would be

clear that Triple I’s claims against International would be arbitrable. But the

agreement for issuance of the bond did not include an arbitration provision. The

failure to include any reference to arbitration as part of the parties’ primary

agreement is substantial evidence of their intent not to require arbitration of claims

like those now at issue.

Triple I and International were, however, parties to the separate escrow

agreement. The escrow agreement included an arbitration clause. Still, the clause

did not purport to require arbitration of disputes that were separate from and

unrelated to the escrow arrangement. Instead, as one might expect from the

context, the clause said the parties would arbitrate “any dispute arising pursuant to

or in any way related to this Agreement [that is, the escrow agreement] or the

transactions contemplated hereby.”

The escrow agreement addressed the narrow issue of the mechanics for

exchanging documents and funds as part of the broader agreement for issuance of

a financial guarantee bond. In this context, a dispute “arising pursuant to or in any

way related to” the escrow agreement includes a dispute over the terms or

performance of the escrow agreement. A dispute arising pursuant to or in any way

related to “the transactions contemplated” by the escrow agreement includes a
 Before filing the second amended counterclaim, Triple I asserted a claim against WEF 1

for breach of the escrow agreement. WEF moved to compel arbitration of that claim, and Triple

I immediately agreed to arbitrate. International now says that this judicially estops Triple I from

asserting that its claims against International are not arbitrable. But there is nothing inconsistent

about Triple I’s positions. To the contrary, Triple I’s position that the claim against WEF was

arbitrable but the claims against International are not is a fully consistent — indeed correct —

reading of the contracts at issue. 

7

dispute over the terms or performance of the escrow transactions — the tendering

of the documents and funds and their later delivery. Thus when Triple I made a

claim against WEF for failure to perform as required by the escrow agreement,

WEF was entitled to compel arbitration, as International readily admitted. 

1

But the same is not true of Triple I’s claims against International for fraud

and for breach of the agreement for issuance of a financial guarantee bond. We

assume, for purposes of this appeal, that the fraud and breach occurred as alleged. 

See Telecom Italia, SpA v. Wholesale Telecom Corp., 248 F.3d 1109, 1111 (11th

Cir. 2001) (assuming that the facts alleged in the relevant pleading were true for

purposes of an appeal over arbitrability). Triple I’s allegation is that

International’s undertaking was a sham from the outset. At the outset, and indeed

when International issued its bond commitment, there was no escrow agreement. 

The parties entered the escrow agreement only later, as a means of exchanging the

deliverables to which they had separately agreed. The “transactions

contemplated” by the escrow agreement did not include an already-underway

fraudulent scheme that the perpetrators undoubtedly would have been more than
8

willing to carry out without any escrow transaction at all.

In arguing the contrary, International emphasizes that the arbitration clause

refers to “transactions” — plural. But the reference is not just to “transactions,”

but to “transactions contemplated hereby,” that is, transactions contemplated by

the escrow agreement. The transactions that the escrow agreement contemplated

were the escrow transactions — the tendering of documents, the tendering of

funds, and their later delivery. There were several escrow transactions, and the

use of the plural thus was proper.

Reading the arbitration clause to apply only to claims arising from or related

to the escrow agreement or the escrow transactions accords not only with the

language but also makes sense in context. The primary undertaking between

Triple I and International was for issuance of a financial guarantee bond. The

parties did not agree to arbitrate disputes arising from or related to that transaction. 

A financial guarantee bond of course could have been issued without any escrow

arrangement at all. That the parties chose to carry out the main agreement by

means of an escrow arrangement — and that the escrow agreement called for

arbitration of disputes arising from or related to the escrow agreement and escrow

transactions — hardly evinces an intent to arbitrate disputes arising from or related

to the main agreement. To hold otherwise would be to let the tail wag the dog.

International notes, though, that an arbitration clause in an agreement
9

sometimes can require arbitration of a dispute arising not from the agreement itself

but from another source, including another agreement. That is correct. But this

occurs only when the arbitration clause applies to the dispute at issue. That, in

turn, ordinarily is so only when the dog is wagging the tail. When an arbitration

clause in one agreement does not apply to claims arising from or related to a

different agreement, we have not required arbitration. 

As confirmation of this analysis, we address a case on which International

relies and then three decisions in which we did not require arbitration.

International relies on Blinco v. Green Tree Servicing LLC, 400 F.3d 1308

(11th Cir. 2005). That case involved a residential note and mortgage. The

husband signed a note that included a clause requiring arbitration of all disputes

“arising from or relating to this contract or the relationships which result from this

contract.” Blinco, 400 F.3d at 1310. The husband and wife signed a mortgage. 

The husband and wife brought a lawsuit against a successor to the note’s payee

alleging statutory violations relating to the servicing of the note and mortgage. 

Not surprisingly, we held the dispute covered by the arbitration clause (and,

separately, we held the clause binding not only on the husband but also on the

wife and the successor to the original payee). In holding the clause applicable to

this dispute, we said:

[I]t is difficult to understand how [the defendant] could be a servicer
10

if there were no Note, and more importantly, how [the defendant]

could face statutory servicer liability if there were no Note to service.

Blinco, 400 F.3d at 1311.

In Blinco, the central document in the parties’ relationship — the note —

included an arbitration clause. In the case at bar, in contrast, the central document

in the relationship between Triple I and International — the commitment for

issuance of a financial guarantee bond — did not include an arbitration clause. 

This is the difference between the tail and the dog. Moreover, the arbitration

clause in Blinco applied not only to disputes arising from or relating to the note,

but also to disputes arising from or relating to the relationships that resulted from

the note. There is no similar language in the arbitration clause at issue in the case

at bar, and in any event the relationship between Triple I and International did not

result from the escrow agreement. Finally, in Blinco it was “difficult to

understand” how the defendant could face statutory servicer liability in the

absence of a note to service. In the case at bar, in contrast, it is easy to understand

how Triple I could have been defrauded without an escrow agreement; Triple I

could simply have agreed to pay the fee in another manner. And it is easy to see

how International could have breached its agreement to issue a bond without an

escrow agreement; International could simply have failed to issue the bond.

Moreover, Blinco did not establish any rule that any dispute that could not
11

have arisen but for an agreement necessarily “arises from or relates to” the

agreement within the meaning of an arbitration clause. We disapproved any such

rule in Seaboard Coast Line R.R. Co. v. Trailer Train Co., 690 F.2d 1343 (11th

Cir. 1982). Trailer Train licensed certain rail cars to Seaboard and later, for tax

reasons, leased some of the same cars to Seaboard. The license agreement

included a clause requiring arbitration of any dispute arising under the agreement. 

The lease agreement, however, did not have an arbitration clause. Seaboard

moved to compel arbitration of its claim that Trailer Train failed to deliver

documents required by the lease agreement. The district court denied the motion,

and we affirmed. We said that the license and lease, though related, were

“separate and distinct,” and that the terms of one could not control a breach of the

other. Seaboard, 690 F.2d at 1352. We noted the federal policy favoring

arbitration but said the policy “cannot serve to stretch a contract beyond the scope

originally intended by the parties.” Id. And we quoted with approval the Second

Circuit’s statement in Necchi v. Necchi Sewing Machine Sales Corp., 348 F.2d

693, 698 (2d Cir. 1965), that a dispute does not “arise out of or in connection

with” a contract just because the dispute would not have arisen if the contract “had

never existed.” Seaboard, 690 F.2d at 1351. 

This same reasoning is fully applicable in the case at bar. The bond

commitment and escrow agreement at issue here, like the license and lease at issue
12

in Seaboard, were “separate and distinct.” And the quotation from Necchi puts to

rest International’s contention that Triple I’s claims must be arbitrable because

they could not have arisen had the escrow agreement not existed. Moreover, here,

unlike in Necchi, Triple I’s claims could have arisen even in the absence of any

escrow agreement.

Two other cases in which we did not require arbitration also deserve

mention. In Klay v. All Defendants, 389 F.3d 1191 (11th Cir. 2004), some of the

plaintiff physicians had entered contracts with the defendant health maintenance

organizations that included broad arbitration clauses. The physicians rendered

services covered by the contracts (as to which the physicians were therefore

among the HMO’s “participating providers”) but also rendered other services that

were not covered by the contracts (as to which the physicians were therefore

“nonparticipating providers”). We held that the physicians were not required to

arbitrate their claims based on services rendered outside the contracts, which were

referred to as “non-par claims.” In reaching that result, we relied on the context

and on the nature of the contracts and found even the broadest language in any of

the contracts insufficient to require arbitration:

Because we find that even the broadest arbitration clauses could not

compel arbitration of non-par claims in this instance, we need not

parse through the language used in each HMO’s arbitration

agreements.
13

Klay, 389 F.3d at 1201 n.11. In the case at bar, as in Klay, the parties agreed to an

arbitration clause as part of a contract, but that contract had a limited scope, and in

context the arbitration clause was not broad enough to extend to the claims at

issue, which arose independently of the contract with an arbitration clause.

Similarly, in Telecom Italia, SpA v. Wholesale Telecom Corp., 248 F.3d

1109 (11th Cir. 2001), there was an oral agreement between Telecom Italia, SpA

(“Telecom Italia”) and Wholesale Telecom Corporation (“WTC”), under which

Telecom Italia would use its switch in Rome to route calls for WTC to any place in

the world. Some of the calls originated in the United States. Telecom Italia did

not have legal authority to transport calls in the United States. At Telecom Italia’s

urging, WTC agreed to lease circuits from a Telecom Italia subsidiary, Telemedia

International U.S.A., Inc. (“TMI”), in order to get calls from the United States to

the switch in Rome. 

The oral agreement between WTC and Telecom Italia included no provision

for arbitration. The written lease between WTC and TMI, in contrast, included a

clause requiring arbitration of any dispute “arising out of or relating to” the lease. 

The relationships went sour. Telecom Italia and WTC filed claims against

one another. WTC filed a claim against TMI asserting tortious interference with

the oral agreement between WTC and Telecom Italia. TMI moved to compel

arbitration, asserting that the tortious interference claim arose from or related to
14

the lease; the lease was, after all, the only reason for TMI’s involvement in the

entire undertaking. But the district court denied the motion, and we affirmed. 

After reviewing our leading cases addressing clauses requiring the parties to

an agreement to arbitrate disputes “arising from” or “related to” the agreement, we

said:

It is possible to harmonize the results in these four cases by

focusing on whether the tort or breach in question was an immediate,

foreseeable result of the performance of contractual duties. Disputes

that are not related — with at least some directness — to performance

of duties specified by the contract do not count as disputes “arising

out of” the contract, and are not covered by the standard arbitration

clause. . . . However, where the dispute occurs as a fairly direct result

of the performance of contractual duties . . . , then the dispute can

fairly be said to arise out of or relate to the contract in question, and

arbitration is required.

Telecom Italia, 248 F.3d at 1116. Applying this standard, we concluded that

TMI’s alleged tortious interference with the WTC-Telecom Italia oral agreement

did not arise from or relate to the WTC-TMI lease, despite the overlap between the

contracts. In support of this conclusion, we said that TMI could have interfered

with the WTC-Telecom Italia agreement “even if TMI had no contractual

relationship with WTC.” Id.

In the case at bar, as in Telecom Italia, there is an obvious relationship

between the two contracts at issue. But here, as in Telecom Italia, International

could have breached its bond commitment and defrauded Triple I even if there had
15

been no escrow agreement at all. Triple I’s claims are not related — with at least

some directness — to the performance of duties specified in the escrow agreement. 

The escrow agreement’s arbitration clause does not apply to Triple I’s claims

against International.

IV. Conclusion

The principal agreement between Triple I and International was for issuance

of a financial guarantee bond in exchange for a fee. The agreement did not

include an arbitration provision. Triple I, International, and an escrow agent were

parties to a separate escrow agreement that included an arbitration clause. But the

terms and logical import of that clause did not extend to disputes arising not from

any failure to perform the escrow agreement but only from the failure to perform

— and fraudulent enticement into — the agreement for issuance of the bond. The

district court’s order denying the motion to compel arbitration of this dispute is

AFFIRMED.