Opinion ID: 176081
Heading Depth: 1
Heading Rank: 2

Heading: The China National decision

Text: Our decision in China National Metal Products Import/Export Co. v. Apex Digital, Inc., 379 F.3d 796 (9th Cir.2004), requires that we respect the arbitrator's interpretation of an ambiguous contractual provision. Indeed, it also provides further support for the conclusion that the arbitration clause here is ambiguous. The arbitration clause in China National provided that all disputes arising from or in connection with the contract would be submitted to a specified forum, the China International Economic and Trade Arbitration Commission (CIETAC), for arbitration in Beijing, Shenzhen, or Shanghai, at the Claimant's option. China National, 379 F.3d at 800. Just as the parties here argue over who qualifies as defendant, the parties in China National debated who qualified as claimant under their arbitration clause. At stake was the right to determine where arbitration would take place. Apex first commenced arbitration against China National in Shanghai. Days later, China National brought its own claims against Apex in a separate arbitration in Beijing. Id. at 798-99. Apex argued that only it, as the party that first initiated arbitration, was a claimant, and that its selection of Shanghai as the arbitral forum required China National to bring its claims, which arose largely out of the same set of facts, as counterclaims in the ongoing Shanghai arbitration. Id. at 801. China National countered that [i]t too was a rightful claimant with respect to its claims against Apex and that it therefore retained the right, under the arbitration clause, to pick a forum for its own claims. Id. After considering its own rules, CIETAC decided in favor of China National's position and let the claims proceed separately before separate panels. The Beijing panel entered an award in favor of China National and against Apex. China National brought an action in federal district court to confirm the Beijing panel's award, the court confirmed the award, and Apex appealed, arguing that only one proceeding, the Shanghai arbitration, should have taken place. We rejected the challenge and affirmed the confirmation order. Id. at 797-98. We held that [b]oth positions are arguable, and in the face of an assertion that there can be two claimants, the text of the arbitration clause alone is indeterminate and does not resolve the matter. Id. at 801. The parties' disagreement in this case over who is a defendanta respondent to an initial claim only, or both an initial respondent and a party who responds to counterclaimsmatches the China National debate over the meaning of the contractual term claimant. See id. (describing how the parties argued claimant should be interpreted). And the arbitration clause here is equally indeterminate with respect to the dispositive interpretive question of the precise meaning of defendant. Because China National dealt with an analogous contractual ambiguity, it controls our decision here and requires us to affirm. China National established that an arbitrator does not impermissibly trump specific terms of the parties' [agreement] by turning to its own rules when, as here, an arbitral clause [does] not resolve the parties' dispute itself. [4] Id. In our case the arbitrator applied JAMS rules and the Federal and California Rules of Civil Procedure because the parties' agreement left a dispute about counterclaims unresolved. The application of extrinsic procedural rules did not contradict the parties' agreement, but merely supplemented it. The arbitrator thus did not violate Article V, section 1(d) of the New York Convention, and the judgment of the district court confirming the arbitration award should be affirmed. The majority opinion tries to distinguish China National on several grounds, but none are persuasive. It points out that the parties in China National adopted CIETAC rules in their arbitration agreement, so the gap-filling application of those rules by CIETAC did not trump the specific terms of the parties' agreement. Maj. op. at 842; see China National, 379 F.3d at 801. But it was the arbitration panel, not our court, that interpreted CIETAC rules and made the decision as to where the arbitration could proceed. The majority opinion in this case overrides the arbitrator's decision. While the parties in this case did not specify a choice of forum or a choice of procedural law to address issues their arbitration clause did not resolve, they subsequently did expressly agree on JAMS as a forum. Moreover, while the election of default procedural rules in China National may have strengthened the argument that applying those rules did not violate the parties' agreement, a choice of law was not necessary to China National's result. CIETAC did not trump specific terms of the parties' purchase orders by turning to its own rules because the arbitral clause did not resolve the parties' dispute itself,  379 F.3d at 801 (emphasis added), not because the CIETAC rules used to fill a gap in the arbitration clause were incorporated by reference into the contract. Rules entirely extrinsic to an agreement, such as the JAMS rules and Federal and California Rules of Civil Procedure applied in this case, do not automatically conflict with that agreement. China National makes clear that it is the presence of a gap in an arbitration clause, not the specification of default rules for filling such a gap, that makes an arbitrator's reference to extrinsic rules appropriate. A gapthat is, a dispute between the parties that the text of the arbitration clause alone does not resolveexists as much in this case as it did in China National. Reference to outside procedural rules was appropriate here, even though the rules employed were not specified in advance by the parties. The majority opinion also attempts to differentiate this case from China National by highlighting the fact that the arbitration clause at issue here, once properly interpreted, mandates a particular forum (the defendant's side), while the clause in China National gave one party a choice among three Chinese cities. Maj. op. at 842-43. That distinction is beside the point. The parties debated the meaning of claimant in China National because its definition determined which party got to choose among Beijing, Shenzhen, and Shanghai. The winner of the interpretive debate received the right to select a city instead of, as in this case, a predetermined forum that the victorious party would prefer. But that detail does not disturb the parallel contractual analysis that underlies the two cases. Both cases are fundamentally about how contractual terms, claimant and defendant, respectively, should be interpreted when the contracts themselves do not resolve the parties' disputes. Because I conclude that the judgment on the merits should be affirmed, I would reach the issue of whether the district court exceeded the scope of our earlier limited remand to correct its failure to enter a judgment. I would affirm the district court's belatedly entered judgment. Because the court's oversight was its failure to enter any judgment at all, it was empowered to correct its mistake by entering a judgment that included any relief, including pre- and post-judgment interest, that could have been included in the judgment in the first instance. A court is allowed, under Federal Rule of Civil Procedure 60(a), to make corrections to effectuate what it originally intended to do. Robi v. Five Platters, Inc., 918 F.2d 1439, 1445 (9th Cir.1990). I would affirm.