The Ninth Circuit Court of Appeals has determined that because the defendants raised an affirmative defense related to an arbitral award falling under an international Convention, a district court had removal jurisdiction. Infuturia Global Ltd. v. Sequus Pharm., Inc. No. 09-16378 (9th Cir., decided February 7, 2011). The issue arose in a dispute over medical licensing rights between companies that were citizens of the British Virgin Islands, Israel and California. The technology at issue was developed in Israel “using liposomes as a vehicle for delivering pharmaceuticals to the human body.” The licensing agreement included a provision requiring the arbitration of any dispute “connected in any way to the implementation of [the] Agreement.”
Legal proceedings arising from the agreement were instituted in a California state court, which granted a stay pending arbitration in Israel. When the arbitration concluded, the state court lifted the stay and the defendants filed a notice of removal to federal court. The district court determined that removal was proper because the litigation related to the arbitration provision which falls under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. At issue on appeal was whether removal was improper because the defendants were not parties to the foreign arbitration agreement. The Ninth Circuit adopted a broader reading of the “related to” language of 9 U.S.C. § 205, than urged by the plaintiff and affirmed the lower court.