as part of the FAA); Abbott Laboratories v. Baxter International, /nc., 2002 WL 467147, *6 (N.D.
Ill. 2002) (referring to Chapter 2 as part of FAA). For the purposes of this opinion, in accordance
with the most recent Seventh Circuit case, “FAA” will be used to refer only to Chapter 1 of Title 9.
The FAA “does not provide an independent basis for fecleral question jurisdiction.” Moses
H. Cone Mem’l Hosp. v. Mercury Const. Corp., 460 U.S. 1,25, 1.32 (1983); International Insurance
Co., 293 F.3d at 395-96 (stating that although the FAA could not be a basis for subject matter
jurisdiction, the Panama Convention codified at 9 U.S.C. § 301 et. seq. which incorporated 9 U.S.C.
§ 205, provided a jurisdictional basis). However, the Convention implementing legislation in
Chapter 2 of Title 9 does provide a basis for subject matter jurisdiction. 9 U.S.C. §§ 201-208.
Section 203 provides:
An action or proceeding falling under the Convention shall be deemed to arise under
the laws and treaties of the United States. The district courts of the United States
(including the courts enumerated in section 460 of title 28) shall have original
jurisdiction over such an action or proceeding, regardless of the amount in
controversy.
Section 205 provides:
Where the subject matter of an action or proceeding pending in a State court relates
to an arbitration agreement or award falling under the Convention, the defendant or
the defendants may, at any time before the trial thereof; remove such action or
proceeding to the district court of the United States fr the district and division
embracing the place where the action or proceeding is pending. .. .

Section 208 provides that the FAA will apply to arbitration agreements under the Convention to the

extent that there is no conflict with the Convention.



Whether the FAA or the IICAA should apply in this case is a potential issue that might arise.
Section 208 of the Convention implementing legislation states that the FAA is to be applied when
not in conflict with the Convention. However, the issue of whether or not the FAA conflicts with
the I[CAA, or the issue of which of those statutes should be applied in this case is not the same issue
as whether or not this court has subject matter jurisdiction. As stated above, Wilson brought this
motion to remand under 28 U.S.C. § 1447(c) which does not direct this court to remand to state court
if the state court would be a better choice or if state law migh! end up being applied in this case.

Section 1447(c) directs this court to remand if it lacks subject matter jurisdiction which it does not.

CONCLUSION
Based on the foregoing analysis, this court has subject matter jurisdiction and therefore

Plaintiffs motion to remand to the Circuit Court of Cook County, Illinois is denied.

Charles P. Kocoras
Chief Judge
United States District Court

Dated: _September 12, 2002



that determination. Defendants have chosen not to address the diversity issue and have instead

focused on the “federal question” subject matter jurisdictional prong.

I. International Convention and FAA

Title 9 of the United States Code, entitled “Arbitration”, consists of three chapters:
1) General provisions, 2) Convention on the Recognition and Enforcement of Foreign Arbitral
Awards, and 3) Inter-American Convention on International Commercial Arbitration. Defendants
argue that the court has “federal question” jurisdiction under Chapter 2 which implements the
Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“Convention”), 330
U.N. Treaty Ser. 38. 3 U.S.T. 2517, T.LA.S. No. 6997,

We note that the although Chapter 2 is part of the Federal A-bitration Act (“FAA”), 9 U.S.C.
§ 1 et seq., some federal courts have used the term “Federal Arb:tration Act” to encompass only
Chapter 1 of Title 9. See e.g. International Insurance Co. v. Cuja Nacional De Ahorro ¥ Seguro,
293 F.3d 392, 395-96 (7th Cir. 2002) (stating that although the FA.\ could not be a basis for subject
matter jurisdiction, the Panama Convention codified at 9 U.S.C. § 301 et seg. which incorporated
9US.C. § 203, provided a jurisdictional basis); Daihatsu Motor Co., Ltd. v. Terrain Vehicles, Inc.,
13 F.3d 196, 198 (7th Cir. 1993) (stating that the Convention was incorporated into “Chapter 2 of
Title 9” and that “Chapter | is the Federal Arbitration Act,” citing it as §§ 1-16 ); Beiser v. Weyler,
et. al, 284 F.3d 665, 666 (Sth Cir. 2002) (discussing Convention separately and delineating FAA as
§§ 1-16); But see Jain v. Mere, 51 F.3d 686, 688-89 (7th Cir. 1995) (referring to Convention
implementing legislation as “Chapter 2” of the FAA); Republic of Nicaragua v. Standard Fruit Co.

v. Standard Fruit Co., 937 F.2d 469, 478, n.13 (9th Cir. 1991) (Stating that Convention was enacted

-3-



II. Whether Arbitration Falls Under Convention

The main issue therefore becomes whether the arbitration agreement between Wilson and
Baker & McKenzie falls under the Convention. An agreement falls under the Convention if the
agreement arises out ofa legal relationship, is commercial in nature, and is not entirely between U.S.
citizens, except that an agreement between U.S. citizens will full under the Convention if the
agrecment: 1) involves property located outside the U.S., 2) involves performance or enforcement
outside the U.S., or 3) otherwise has some “reasonable relatior: with one or more foreign states.”
9US.C. § 202. This case involves the arbitration of a partnership agreement which is commercial
innature. See e.g. Williams v. Katten, Muchin & Zavis, 837 F. Supp. 1430, 1437-38 (N.D. Ill. 1993)
(stating that the partnership agreement “necessarily involve{d] commerce” and therefore was
commercial in nature under the FAA). Also, Wilson who is a purty to the partnership agreement is
acitizen of Great Britain. Thus, all the requirements of Section 202 are satisfied and the arbitration

between Wilson and Baker & McKenzie falls under the Convention.

III. Whether FAA Can Be Applied to Pre-award Appeal

Wilson fails to address why the arbitration in this case c.o¢s not fall under the Convention.
His argument denying that the court has subject matter jurisdiction consists merely of a restatement
of his arguments made in his answer to the motion to dismiss. However, as will be explained below,
a motion to dismiss and a motion to remand are not synonymous, :ind the same arguments will not
apply to both.

Wilson argues that the FAA cannot be applied in this case because there is no provision in

the FAA that allows for a pre-award challenge to an arbitrator on the basis of his lacking impartiality.

-5-



Manute Order Beem (06°97)

United States District Court, Northern District of Hlinois

Name of Assigned Judge
or Magistrate Judge

Charles P, Kocoras

Sitting Judge if (ther
than Assigned Judge

CASE NUMBER 02 C 4100 DATE 9/12/2002
CASE Wilson vs. American Arbitration Association
TITLE
[In the following box (a) indicate the party filing the motion, ¢-g., plainti td *feridant, 3rd party plaintiff, and (b) state briefly the nature

MOTION: of the motion being presented. ]

DOCKET ENTRY:

qa) oO Filed motion of [ usc listing in “Motion” box above.]

(2) a) Brief in support of motion duc

(3) Oo Answer brief to motion due _ . Reply to answer brief due

(4) oO Ruling/Hearingon___ set for at _

(5) Oo Status hearing[held/continued to] [set for/re-set for] on set for at

(6) oO Pretrial conference[held/continued to] [set for/re-set for]on set for at

(7) oO Trial[set for/re-set for] on _ at

(8) oO [Bench/Jury trial] [Hearing| held/continued to at

o a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

COFRCP4(m) Local Rule 41.1 OFRCP41(a\(1) OO FRCP41(a)(2).

(10) +4 [Other docket entry] Ruling held. ENTER MEMORANDIJM OPINION: This Court has subject
matter jurisdiction and therefore Plaintiff's motion (Doc 15-1) to remand to the Circuit Court of Cook
County, Illinois is denied. Defendant is given to September 26. 2(002 to file reply in support of its motion
(Doc 9-1) to dismiss. Ruling on said motion to dismiss set fo: October 17, 2002 at 9:30 a.m.

adi ff [For further detail see order attached to the original minute order. ]

No notices required, advised in open court. Document
Number
No notives required vuinhe of notes
Notices mailed by judge’s staff.
Notified counsel by telephone
ao | Docketing to mail notices,
Mail AO 450 form. pues _ (oo
Copy to. {udge/magistrate judge. 4

date mailed novice

courtroom
deputy's
inidals

scl

~ Date/time received in
central Clerk’s Office

‘mailing deputy initials,



See e.g. 9 U.S.C. § 10. In accordance with Section 208 of Chapter ?, the FAA will be applied to this
dispute, and Wilson claims that there will be no provisions within the FAA that wil! be applicable
to this case. We acknowledge that whether or not the FAA provides a remedy for a pre-award
challenge to an arbitrator is a potential future issue in this case, but the question before us is limited
to jurisdiction. Wilson brought this motion to remand under 28 U.S.C. § 1447(c), which directs this

court to remand if it lacks subject matter jurisdiction which it does not.

IV. Whether Federal Court is the Proper Tribunal

Wilson also argues that the arbitration agreement does not fall under the Convention because
the Illinois International Commercial Arbitration Act, 710 ILCS 30/1-5 through 99-99 (“TICAA”),
and the partnership agreement between himself and Baker & McKenzie envision the Circuit Court
of Cook County as being the proper tribunal. For those reasons he argues that the State court is the
better choice and therefore this court should remand the case.

The IICAA specificaily provides a procedure for challenging an arbitrator “if circumstances
exist that give rise to justifiable doubts as to his or her impartiality or independence . . .” and if the
challenge is unsuccessful there can be an interlocutory appeal to the “Illinois circuit court of the
county in which the place of arbitration is located.” 710 ILCS 30/1-30, 10-15, 10-20, Wilson argues
that the IICAA should be applied in this case and that the IICA.. would be rendered meaningless if
this federal court were to decide the arbitrator challenge. Wilson also points out that the partnership
agrecment between Wilson and Baker & McKenzie provides that it is to be interpreted with

reference to Illinois law.



UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
In re Arbitration of:
BAKER & McKENZIE,
vs. Case No. 02 C 4100

MICHAEL E. WILSON,

Plaintiff.

MICHAEL E. WILSON,
DOCKETED

Plaintiff,
SEP y 3 2002

VS.

AMERICAN ARBITRATION ASSOCIATION, a/k/a
International Centre for Dispute Resolution,

Defendant.

we SS HS HS SH SH HS HS SS SH SH HS SS SS SS

MEMORANDUM OPINION
CHARLES P. KOCORAS, District Judge:

This matter comes before the court on Plaintiff Michael E. Wilson’s (“Wilson”) motion to
remand this proceeding to the Circuit Court of Cook County, Illinois. For the reasons set forth below
we deny the motion.

BACKGROUND
Wilson and Defendant Baker & McKenzie entered into arbitration concerning a partnership

agreement before Defendant American Arbitration Association (“A.\A”). Wilson alleges that he had



reason to believe that he could not get a fair and impartial hearing before the arbitrator and thus
sought to have him removed. According to Wilson, the AAA did not follow their required
procedures for reviewing a challenge to an arbitrator. This action was then filed by Wilson in the
Circuit Court of Cook County, Illinois seeking interlocutory review: of the arbitrator challenge. The
case was removed to federal court and thereafter Baker & McK.zn:ie was allowed to intervene as a
defendant. AAA filed a motion to dismiss and we have granted « motion to stay further briefing and

disposition of the motion to dismiss pending resolution of this mction to remand.

LEGAL STANDARD

A defendant may remove to federal court a case filed in sta:e court if there is federal subject
matter jurisdiction. 28 U.S.C. § 1441(a). A federal court will have subject matter jurisdiction if
there is “diversity of citizenship” under 28 U.S.C. § 1332(a) or if there is a “federal question”,
meariing that the action “aris[es] under the Constitution, laws, wr treaties of the United States.” 28
U.S.C. § 1331. If at any time after removal to federal court and before final judgment it becomes
apparent that the district court lacks subject matter jurisdiction, the district court must remand the
case to the state court from which it was removed. 28 U.S.C. § 1447(c); Powell v. Zoning Bd. of

Appeals, 1994 WL 130766, *1 (N.D. Ill. 1994).

DISCUSSION
Although Wilson argues that there is not complete diversity between Plaintiffs and

Defendants under 28 U.S.C. § 1332(a), he has not provided the court with sufficient facts to make