Preventing Reverse-Preemption of the United States
FORDHAM INTERNATIONAL LAW JOURNAL [Vol.
Fordham International Law Journal
0 Fordham University School of Law
Copyright c 2013 by the authors. Fordham International Law Journal is produced by The Berkeley Electronic Press (bepress). http://ir.lawnet.fordham.edu/ilj
INTRODUCTION. ............................ ....... 942
I. A BROKEN TRAFFIC-LIGHT: THE INTERSECTION OF
US FOREIGN RELATIONS LAV, US INSURANCE
LAW, AND US ARBITRATION POLICY. ............. 945
A. US Foreign Relations Law: Self-Execution of
International Agreements ................ ..... 946
J.D. Candidate, 2013, Fordhain University School of Law; B.A. International
Political Economy, magna cum laude, Phi Beta Kappa, Fordham College at Rose Hill,
Fordhan University 2011. 1 would like to thank my parents, Joseph and Susan
Colasurdo, my brothers, Casey and Chase Colasurdo, and my family and friends for
their support while writing this Note. I would also like to thank Professors Harold
Moore and Yuliya Guseva for their guidance. Finally, I would like to thank Alex
Paslawsky for her assistance, as well as the rest of the staff and editorial board of the
III. ARTICLE II OF THE NEW YORK CONVENTION
SHOULD BE TREATED AS SELF-EXECUTING, OR
THE MF ACT'S SCOPE SHOULD BE LIMITED TO
DOMESTIC COMMERCE LEGISLATION ..... ...... 971
A. The Views of the Second Circuit, and the Majority
and Dissent of the Fifth Circuit are Untenable.......... 972
B. Article II of the N.Y. Convention is Self-Executing ..... 973
C. The MF Act Does Not Allow States to Abrogate
International Agreements Which Have Been
Rendered Judicially Enforceable ................................ 973
CONCLUSION ..................................... 974
In an address to the World Economic Forum in 1999, Kofi
Annan noted that "[g]lobalization is a fact of life. But . .. we
have underestimated its fragility. The problem is this. The
spread of markets outpaces the ability of societies and their
political systems to adjust to them, let alone to guide the course
they take." I The evidence of economic globalization is
undeniable, as parties from various countries increasingly
engage in global commerce2 Given the increase of international
trade, it is plain that "[g] ood, bad, and ugly-the effects of our
supposedly 'flattened' world are undeniable."
As a safeguard in the globalized economy, parties to
international commercial agreements have increasingly relied
1. Kofi Annan, U.N. Scc'y Gen., Address to the World Economic Forum (Jan. 31,
2. See Vidya S. A. Kumar, A Critical iethodology of Globalization:Politics of the 21st
Century?, 10 INo.J. GLOBAL LLGAL STUD. 87. 97 (2003) (noting the economic evidence
of globalization, such as the growth in global trade, foreign direct investment, capital
flows (i.e. portfolio investments), global production and consumption, global
competition. and increasingly liberal international trade policies); James C. Moore.
Economic Globalization and Its Impact Upon the Legal Projession, 79 N.N. ST. B.]. 35, 35
(2007) (defining economic globalization as "increasing integration of large segments
of the economies of the nations of the world into a few cconomies-sone might even
say a single econony-so that many goods and services may be supplied and sold
throughout the world rather than just within the producer's nation statc").
3. The GlobalizationIndex 2007, FOREIGN POL'Y. Nov.-Dec. 2007. at 68 (discussing
the expansion of the global econorny).
upon arbitration as the preferred mechanism for international
dispute resolution.4 The United States, as a signatory to the
United Nations Convention on the Recognition and the
Enforcement of Foreign Arbitral Awards (the "N.Y. Convention"
or the "Convention"), 5 has an international obligation to
enforce international arbitration agreements, as well as
international arbitral awards rendered by tribunals in other
signatory countries.6 In line with US foreign policy, Congress
also enacted the Federal Arbitration Act ("FAA"), which
provides for liberal enforcement of domestic arbitral
agreements and awards. 7 In addition to Congress, the state
legislature plays pivotal role in defining US domestic policy."8
Most states have followed the federal government's lead
and enacted statutes broadly enforcing arbitral agreements and
awards.9 At least eleven states, however, have passed statutes
4. Jennifer Iagwell, Enforcement ofArbitration Agreements: The Severabilt Doctrine in
the lnternationalArena-Republic of Nicaragua v. Standard Fruit Co., 937 F.2d 469 (9th
Cir. 1991), 22 GA.J. 1NT'L & ComP. L. 487, 504 (1992) ("The inclusion of an arbitration
clause in an international commercial contract is now almost universal practice."); see
alsoJanet A. Rosen, Arbitration UnderPrivateInternationalLaw: The Doctrine of Separability
and Competence de la Competence, 17 FORDHAM 1NT'L LJ. 599, 601 (1994) ("Aibitration
clauses are now routinely included in international commercial contracts.").
5. Due to the differing mcanings of the term "state" in international and US
domestic contexts, "State" will be exclusively used to refer to states of the United States.
6. Convention on the Recognition and Enforcement of Foreign Arbitral Awvards,
June 10, 1958. 21 U.S.T. 2517. 330 U.N.T.S. 38 [hereinafter N.Y. Convention]. The N.Y.
Convention was drafted in 1958 to unity global standards by which arbitration
agreements and arbitral awards were enforced in the signatory countries. See Michael
Rosenhouse, Annotation, Confirmation of Foreign Arbitral Award Under Convention on
Recognition and Enforcement of Foreign Arbitial Awards, 194 A.L.R. FED. 291, I2 [a]
(2004); 1958: Convention on ti Recognition and Enforcement of Foreign
ArbitralAwardsthe "New York" Convention, UNITED NATIONS COMM'N ON INT'i TRADE LAW,
(lastvisitedJan. 29, 2013).
7. Federal Arbitration Act, 9 U.S.C. 1-16 (2006).
8. See U.S. CONST. ancnd. X ("The powers not delegated to the United States by
the Constitution, nor prohibited by it to the States, are reserved to the States
respectively, or to the people.").
9. Thomas J. Stipanowich, Punitive Damages in Arbitration Garrity v. Lyle Stuart,
Inc. Reconsidered, 66 B.U. L. REV. 953, 976 (1986) (explaining that most states have
enacted statutes modeled on the Uniform Arbitration Act, which is very similar to the
Federal Arbitration Act ("E4A")): Paul Turner, P ption The Uhited States Arbitration
Act. the Manifest Disregard of the Law Test rVaating an Arbitration Award, and State
Courts, 26 PLPP. L. RLV. 519, 519-20 (1999) (explaining that as of 1999. thirty-five states
have adopted tie Uniform Arbitration Act, while others have adopted statues
substantially similar to the Uniform Arbitration Act).
barring arbitration of insurance disputes."o Typically, under the
Supremacy Clause, state laws that frustrate federal laws are
preempted, and thus rendered invalid. 11 The
McCarranFerguson Act (the "MF Act"), however, removes the insurance
industry from normal Supremacy Clause preemption analysis.
The MF Act allows states to reverse-preempt federal laws
tangentially related to insurance, with legislation directly
regulating the insurance industry.", Thus, the MF Act reverses
Supremacy Clause preemption, and gives the states the supreme
authority to tax and regulate the US insurance industry.14
Three federal appellate courts have been asked whether the
MF Act allows a state to reverse-preempt the obligation to
enforce arbitration agreements in international insurance
disputes. In 1995, the Second Circuit held that the MF Act
allows states to reverse-preempt the obligation to enforce
arbitration agreements in international insurance contracts.15 In
2009, however, the Fifth Circuit diverged and applied the N.Y.
Convention to an international insurance contract, despite
contrary state law.lb In 2012, the Fourth Circuit joined the Fifth
Circuit in enforcing arbitration agreements under the N.Y.
Convention notwithstanding the MF Act.1 In sum, the three
Circuits have created a split in outcome and theory, which
should be addressed by the Supreme Court.
20131 REVTERSE-PREEMPTIONAND THE V Y. CONXVENTION 945
The three majority opinions have based their analysis on
the premise that the N.Y. Convention is a non-self-executing
treaty. Fifth Circuit Judge Edith Clement reached an alternative
conclusion. Her concurrence in Safety National Casualty Corp v.
Certain Underoriters concludes that Article II of the N.Y.
Convention is a self-executing provision, and thus falls outside
the scope of the MF Act.J8 Judge Clement's unique conclusion is
important because it avoids placing the United States in default
of an international obligation, without reaching and attempting
to unilaterally solve difficult constitutional questions.'9
This Note navigates, rather than wades into, the "murky
waters" of self-execution analysis to demonstrate the validity of
Judge Clement's argument. 0 Part I of this Note explores
background materials relating to foreign relations law, state and
federal insurance regulation, as well as an overview of the history
of international arbitration. Part II of this Note explores the
differing views presented by the judges of the Second, Fourth,
and Fifth Circuits. Part III compares the differing theories, and
concludes that the Supreme Court should either hold that
Article II of the N.Y. Convention is self-executing, or that the
states lack the authority to abrogate implemented international
agreements through the MF Act.
1.A BROKEN TRAFFIC LIGHT: THE INTERSECTION OF US
FOREIGNREL4TIONS L4W, US INS URANCE L4AW AND US
This Part begins by explaining US foreign relations law with
respect to the execution status of treaties. Specifically, this Part
discusses the distinction between self-executing and
non-selfexecutimg treaties in light of Foster v. Neilson and its progeny.
This Part then explores regulation of the insurance industry in
the United States, with emphasis on how state legislatures have
become virtually supreme authorities in this area. This Part then
tracks the movement toward global acceptance of arbitration,
and the adoption of the N.Y. Convention and the FAA. Finally,
this Part sets out the issue presented by the circuit split and asks
whether it is possible to avoid placing the United States in
default of the N.Y. Convention.
A. US ForeignRelations Law: Self-Execution ofInternational
The Constitution mentions the word "treaty" four times.
First, the Constitution prohibits individual states from entering
into treaties.21 Second, it grants the President the power to enter
into treaties, with the advice and consent of the Senate.2 Third,
it gives the judicial branch the power to interpret treaties
entered into by the United States, as they arise in cases or
controversies2 Finally, it provides that
This Constitution, and the Laws of the United States which
shall be made in pursuance thereof; and all treaties made, or
which shall be made, under the authority of the United States, shall
be the supreme law of the land; and the judges in every state
shall be bound thereby, anything in the constitution or laws
of any state to the contrary notwithstanding. 24
Together, these constitutional provisions give the federal
government considerable and supreme authority over
21. U.S. CONST. art. 1, § 10.
22. Id. art. 11, 2.
23. Id. art. III, 2.
24. Id. art. VI, cl. 2 (emphasis added).
25. In 1937, Justice Southerland expanded on the supreine role of the federal
government with respect to international agreements, stating that
"[p] lainly, the external powers of the United States are to be exercised without
regard to states laws or policies . . . . And while this rule in respect of treatics is
established by the express language of cl. 2, Art. VI, of the Constitution, the same rule
would result in the case of all international compacts and agreements from the very fact
that complete power over international affairs is in the national government and is not
and cannot be sub'ect to any curtailment or interference on the part of the several
states. In respect of all international negotiations and compacts, and in respect of our
foreign relations generally, state lines disappear. As to such purposes the Statc[s] . . .
do not exist." United States v. Belmont, 301 U.S. 324, 331(1937) (citations omitted).
20131 REIERSE-PREEMPTIONAND THE V Y. CONVENTION 947
While the Constitution dictates that all treaties entered into
by the United States are to be treated as the supreme law of the
land, the Supreme Court has long recognized that there are two
types of treaties: self-executing treaties and non-self-executing
treaties26 The difference between the two is traced to Justice
Marshall's opinion in Foster v. Neilson?.27 In this case, the Court
held that a treaty that operates of itself by addressing the judicial
branch, should be regarded as the equivalent of an act of the
federal legislature28 In contrast, if the treaty addresses itself to
the political branches, it is to be regarded as a contract that
must be executed before becoming operative in US courts.2 In
Foster,the Court concluded that the disputed treaty was
non-selfexecuting, relying in part on the fact that Congress had
apparently assumed as much by passing implementing
legislation. Although the Court later reversed itself and held
that the treaty was self-executing, after reading the Spanish
version of the text, the reasoning remains good law?.
Generally, US courts consider treaties to be
non-selfexecuting if any of three conditions are met: (
) the treaty's text
indicates that it will not become operative without
implementing legislation; (
) the Senate mentions during its
26. See Foster v. Neilson, 27 U.S. 253, 314 (1828) (discussing the difference
between treaties that operate of themselves, and trcatics that need implementing
legislation to operate). But see Safety Nat'l Cas. Corp. v. Certain Underwriters, 587 F.3d
714, 739 n.10 (5th Cir. 2009) (Elrod, J., dissenting) (noting that there is an unpopular
interpretation of the words "all treatics made" in the supremacy clause which indicate
that the Constitution should not "recognize two species of treaty").
27. Foster. 27 U.S. at 314 (establishing the difference between sclf-executing and
28. Id. (noting that a treaty is "to be regarded in courts of justice as equivalent to
an act of the lkgislature, whenever it operates of itself without the aid of any legislative
29. Id. ("But when the terms of the stipulation import a contract, when either of
the parties engages to perform a particular act, the treaty addresses itself to the
political, not the judicial department; and the legislature must execute the contract
before it can become a rule for the Court.").
30. Medellin v. Texas, 522 U.S. 491, 514 (2008) (discussing the origin of treaty
execution law); RLSTATLMLNT (THIRD) OF FORLIGN RLLATIONS LAW OF THL UNITLD
STATES § 111 reporter's note 5 (1965) [hereinafter RESTATEMENT] (citing Foster, 27
U.S. 253) (explaining the history of treaty execution law).
31. United States v. Perchcnan, 32 U.S. 51, 52 (1833) (noting that the treaty
would have been treated differently in Fosterv. Neilson if the Spanish version had been
brought to the attention of the court); see Medellin, 522 U.S. at 514 (Citing this reversal
as evidence that the text of the treaty is controlling over other factors for treaty
advice and consent that implementing legislation is required for
the treaty to become operative; or (
) the Constitution requires
implementing legislation. 2 The execution status of the treaty in
another nation is not controlling in the United States. 3 Finally,
and to complicate matters, case law tends to show that a single
treaty can contain both self-executing and non-self-executing
In 2008, the Supreme Court decided Medellin v. Texas, its
most recent opinion with respect to the execution status of a
treaty.35 The Court was asked to determine whether judgments
of the International Court of Justice ("ICJ") were immediately
binding upon US courts. 6 Reaffirming the conservative
majority's dedication to textualist construction, Justice Roberts
declared that "[t]he interpretation of a treaty, like the
32. RESTATEMENT §I 11(4) (laying out the three elements); U nited States v.
Noriega, 808 F. Supp. 791, 798 (S.D. Fla. 1992) (noting scholarly agreement with the
three leiments of the Restatement (Third) of Foreign Relations Law ("Restatennt")).
Senatorial declaration that an international agreement needs implementing legislation
has rendered many treatics and executive agreements non-self-executing. For example,
the Uruguay Round Agreements, which establish the World Trade Organization. have
been rendered non-self-executing by senatorial declaration. See j. GRTMME T, CONG
RESEARCH SERV., RS22154, WoRLD1) TRADE ORGANIZATION (WTO) DECTSTONS AND THEIR
EFFLCT IN U.S. LAw 2 (2011); Patrick C. Reed, Relationship of WTO Obligations to US.
International Trade Law: InternationalistVision Meets Domestic Reality, 38 GEO.J. INT[' I
209, 214-15 (2007). The Uruguay Round Agreements Act implemented the Uruguay
Round Agreements. Uruguay Round Agrecements Act. 19 U.S.C. § 3512(a) (2006).
33. RESTATEMENT § Ill crt. H. ("Whether an agreement is or is not
selfexecuting in the law of another state party to the agrecmcnt is not controlling for the
34. Id. ("If an international agreement or one of its provisions is
non-selfexecuting. the United States is under an international obligation to adjust its laws and
institutions as may be necessary to give effect to the agreement"); see Whitney v.
Robertson, 124 U.S. 190, 194 (1888) ("When the stipulations are not self-executing,
they can only be enforced pursuant to legislation to cary them into effect, and such
legislation is as much subject to modification and repeal by congress as lcgislation upon
any other subject. If the treaty contains stipulations which are self-executing . .. they
have the force and effect of a legislative cnactincnt."); Medellin, 552 U.S. at 514 ("Given
our obligation to interpret treaty provisions to determine whether they are
selfexecuting, we have to confess that we do think it rather important to look to the treaty
language to see what it has to say about the issue.").
35. Medellin, 552 U.S. 491.
36. Id. at 498 (posing the question, "[Is the ICj's judgment in Avena directly
enforceable as domestic law in a state court in the United Statcs?"). The International
Court of JusLice ("ICJ") is "the principal judicial organ of the United Nations." U.N.
Charter art. 92.
20131 REIERSE-PREEMPTIONAND THE
. Y. CONXVENTION 949
interpretation of a statute, begins with its text."3 7 For guidance,
the Court looked to Article 94 of the United Nations Charter,
which governs the legal effect of ICJ opinions. " The Article
provides that "[e] ach Member of the United Nations undertakes
to comply with the decision of the [ICJ] in any case to which it is
a party." 0 The Court noted that the words "undertakes to
comply" indicate that ICJ opinions create an international
commitment for the political branches to comply with the ICJ
opinion, but they do not create an immediate legal effect in
United States courts.4() Notably, the words "shall" and "must" are
absent from the provision, and it lacks an explicit directive to
the courts of UN Members.4 '
Finally, the Court explained that the UN Charter grants
aggrieved nations a diplomatic remedy against another nation
that ignores an ICJ judgment.42 The remedy, a referral to the
United Nations Security Council for a measure to effectuate a
judgment, is subject to the United States' "unqualified right to
exercise its veto," which effectively makes the United States
judgment-proof within the UN System.4 The Court notes that
both the President and the Senate were "undoubtedly aware" of
this option. 44 To give ICJ judgments automatic effect in US
courts would frustrate this political safeguard.45
Therefore, the text of the treaty is of particular importance
with respect to its execution status.4b To this end, the Court
stated that the textualist standard is based on "clarity" and seeks
to find "explicit textual expression about self-execution" in the
"language of the treaty. "'< Given this controversial standard, this
Note will emphasize the text of the N.Y. Convention in the hope
of finding a solution based on "clarity" derived from "explicit
textual expression" by the drafters of the convention.4 8
B. The States'Roles in InsuranceRegulation
The execution status of the N.Y. Convention could play a
significant role in how courts evaluate an insurance dispute over
a contract containing an executory arbitration agreement. * The
complexity of this issue is exacerbated by the divergent roles of
government in the US federalist system. 5o While foreign
relations are conducted at the federal level, many legislative
areas are left to the states for regional regulation."1 Like US
foreign relations law, the framework for US insurance law is also
based on the Constitution, which vests limited legislative
46. See id. at 514 ("Given our obligation to interpret treaty provisions to
determine whether they are selcf-executing, we have to confess that we do think it rather
important to look to the treaty language to see what it has to say about the issue.");
RESTATEMENT I111(4) (stating that the text of a treaty is one of three wvays to ascertain
its execution status).
47. edellin, 552 U.S. at 514.
48. Cmpae Mdellin, 552 U.S. 491 (using textualism to focus on the UN Charter's
wording, or lack thereof), with id. at 549 (Breyer, J., dissenting) (using purposivisn and
explaining that "text and [drafting] history, along with subject mattcr and related
characteristics wvill help our courts determine whether" a treaty is self-executing or
not).Justice Bryer stressed that the Court has found many treatics to be self-executing,
without such "clear" textual expression. See id. He further suggests that only a minority
of treaties speak directly to the courts bec ause domestic status law varies by country,
and it is unlikely that the drafters will be able to keep track of the differences. Id. Thus,
it appears that there is consensus that the text of treaty is relevant, but the degree to
which it is controlling is hotly contested.
49. See ESAB Grp. v. Zurich Ins. PLC, 685 F.3d 376, 386-88 (4th (ir. 2012)
(discussing the implications of execution status and reverse-precmlption).
50. See id. at 380-83 (discussing how insurance has been relegated to state
regulation, while arbitration and foreign relations laws have been federalized).
51. See U.S. ConIst. amend X (granting the states the authority to regulate
anything not reserved to the federal government). But see United States v. Pink, 315
U.S. 203. 233 (1942) ("No State can rewrite our foreign policy to conform to its own
domestic policies. Power over external affairs is not shared by the States: it is vested in
the national government exclusively.").
authority, known as its "enumerated powers" to the federal
bicameral congress.5 2 The framers of the Constitution explained
Congress' role in the federalist system by noting that "the
powers delegated by the proposed Constitution to the federal
government are few and defined. State governments' powers,
however, are numerous and indefinite."51 One of Congress'
enumerated powers is the power to regulate "[c]ommerce with
foreign Nations, and among the several States, and with the
Indian Tribes."54 In 1869, the Supreme Court clarified that
"[i]ssuing a policy of insurance is not a transaction of
commerce."5 As such, it was the states, rather than the federal
government that largely controlled insurance regulation for
nearly a century.6
In 1944, however, the Supreme Court in United States v.
South-Eastern UnderoritersAss'n reversed its prior precedent, and
declared that the business of insurance fell within the scope of
the commerce clause. 57 Noting that "[n]o commercial
enterprise of any kind which conducts its activities across state
lines has been held to be wholly beyond the regulatory power of
Congress under the Commerce Clause," the Court extended the
congressional authority to regulate commerce to the insurance
industry. 58 By extension, the Supreme Court applied the
Sherman Act, a federal antitrust statute, to the insurance
As a result, states and the insurance lobby began to fear that
the federal government was not only willing, but able, to
threaten the states' role in insurance regulation.6co Within a year
of the 1944 decision, Congress responded by enacting the MF
Act.6' The statute begins by reassuring that the "continued
regulation and taxation by the several States of the business of
insurance is in the public interest." 62 The MF Act then
establishes the doctrine of reverse-preemption by stating that
"[n]o Act of Congress shall be construed to invalidate, impair,
or supersede any law enacted by any State for the purpose of
regulating the business of insurance . . . unless such Act
specifically relates to the business of insurance."61
Therefore, under the MF Act, a state statute can
reversepreempt a federal statute or policy if three elements are met.64
First, a court must determine if there is a state statute that was
enacted "for the purpose of regulating the business of
insurance."65 Second, there must be a federal statute that does
not "specifically relate to the business of insurance."66 Finally,
the application of this federal statute would "invalidate, impair
or supersede" the state insurance statute.67
Under the Obama Administration, the federal government
has made two incursions into the realm of insurance regulation.
Notably, the Patient Protection and Affordable Care Act
("ACA") of 2010 represents a deliberate attempt by the federal
60. LUSDep't of Treasury v. Fabe, 508 1U.S49.1, 499-500 (1993) (characterizing
United States v. S.E. UnderwritersAss'n as a "threat to state power to tax and regulate the
61. Id. at 500 ("To allay those fears, Congress moved quickly to restore the
supremacy of the States in the realm of insurance regulation. It enacted the
McCarranFerguson Act within a year.").
62. 15 U.S.C. 1011 (2006).
63. 15 U.S.C. 1012(b).
64. Fabe, 508 LU.S. at 501 (1993) (laying out a three part test for MF Act
66. Id. (noting that the parties stipulated that the federal bankruptcy statute in
question was not specifically related to the business of insurance). The MF Act,
however, does note that the Sherman Act, the Clayton Act. and the Federal Trade
Commissioning Act will preempt state statutes, despite the fact that they do not
specifically regulate the business of insurance. § 1012(b).
67. Fabe, 508 U.S. at 501 (1993) (noting that the parties stipulated that the federal
bankruptcy statute, if applied, would impede the state policy).
government to regulate the business of medical insurance.68 The
Dodd-Frank Wall Street Reform and Consumer Protection Act
("Dodd-Frank Act") is another deliberate attempt at insurance
regulation. 0 In the wake of the fall of AIG in 2008, a few
commentators called for the repeal of the MF Act. 70 Congress,
reluctant to take insurance industry regulation away from the
states, however, ignored those calls. 1 This may have been due to
the fact that state-regulated insurance companies fared far
better than commercial banking and investment banking
companies.7 2 In any case, the Dodd-Frank Act succeeded in
creating a Federal Insurance Office, which monitors the US
insurance industry, and makes recommendations to the
Financial Stability Oversight Council, in a non-voting capacity.
Although in recent years the federal government appears to be
68. Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119
(2010); see Christopher B. Scrak. State Challenges to the Patient Protection and Affordable
Care Act: The Casefor a New Federalistjurisprudence9, IND. HEALTH L. REV. 311, 316-17
(2012) (describing the shift of power to the federal govrinment for regulation of
medical insurance); Troy J. Occhsner & Magda Schaler-Hayncs, Keeping it Simple: Health
Plan Benefit Standardiation and Regulatory Choice Under theAffordable CareAct, 74 NB. L.
REV. 241, 243 (2011) ("The Affordable Care Act reflects a distinct move towards
greater standardization."). After much political controversy, the Supreme Court held
that the individual mandate was constitutional under the Taxing and Spending Clause,
while the Act's Medicaid expansion exceeded Congress' spending powers. National
Fedcration of Independent Business v. Schelius, 132 S.Ct. 2566 (2012).
69. Dodd-Frank Wall Street Reform and Consumer protection Act, Pub. L. No.
111-203 [hereinafter the Dodd-Frank Act].
70. See NICK PEARSON & GEOFFRLY ETHERINGTON, THE DODD-FRANK ACT: THE
U.S. GOVERNMENT TU-RNS ITS ATTENTION TO INSURANCE REGULATION 4 (Bloomberg
Law Reports 2010) (noting that these calls never resulted in repeal).
71. See PEARSON & ETHLRINGTON, supra note 70, at 4 ("[A]bsent some early calls
for broad federal regulation of insurance companies and the repeal of the
McCarranFerguson Act by a few legislators, Congress was rcluctant to overturn state regulation of
the insurance industry."); BAIRD WEBEL, CONG. RESEARCH SERV., R41372, THE
DODDFRANK WALL STREET REFORM ACT: INSURANCE PROVISIONs 2 (2010) (explaining that,
although it is contested, many argue that AIG's failure is best understood as a failure of
the federal government to properly regulate the derivatives and securities markets).
72. See PEARSON & ETHERINGTON, supra note 70, at 2 (explaining that insurance
companies generally remained solvent and avoided excessive risk during 2008 and
2009, which is not true of the other branches of the financial services industry); EVLBEL,
supra note 71, at I ("Generally good performance of insurers through the crisis,
however, has also provided additional arguments for those seeking to retain the
statebased insurance system.").
73. See 31 U.S.C. §313 (2006).
increasingly willing to regulate insurance companies,
governments still reign supreme in insurance regulation.
C. The History ofArbitration,Domestic and International
While US policy makers have sought to relegate the
insurance industry to state-level regulation and taxation, they
have sought do the opposite with US arbitration policy. 7 US
policy makers have sought to federalize and liberalize the
nation's arbitration policies. 76 This divergence in policy is
complicated by an international commercial trend favoring
arbitration as the preferred dispute resolution mechanism in the
The development of modern US arbitration policy tracks a
global movement toward the acceptance of international
arbitration, typified by the French jurisprudence in the area.78
Following this global trend, the United States in 1925 enacted
Chapter 1 of the FAA, which sets forth a liberal enforcement
74. See Van R. Mayhall III, A BrieJ Chroncle Of Insurance Regulation in the United
States, Part II: From MlcCarran-Ferguson To Dodd-Frank INSU RANC, RFGUTATORY LAW
(May 23, 2011),
http://www.insuranceregulatoiylaw.coln/2011/05/brief-chronide-ofinsurance-iregulation_23.html (detailing the history of federal government
"encroach[mentsj upon the state regulatory system" For the insurance industryl);
PLARSON & ETHLRINGTON, supra note 70, at 4 ("[A] Ilthough we are not at the end of
state regulation, the enactment of the Dodd-Frank Act is the end of the beginning of
federal efforts to regulate insurance. Uncharted territorylies ahead.").
75. ESAB Grp. v. Zurich Ins. PLC, 685 F.3d 376, 380 (2012) (highlighting the
different congressional approaches to insurance and arbitration).
76. Id. ("While Congress acted to preserve the states' dominance in insurance
regulation, it lLoved to federalize policy regarding arbitration ... establishing a liberal
77. See Richard R. Ryan, Enforcement of Foreign Arbitration Agreements and Awards in
Insurance Coverage Disputes, MCCULLOUGH, CAMPELL & LANL,
http:/,/Nw.mcandl.com/arbitration.html (last visited Jan. 2, 2013) ("On an
increasingly international stage many insurance contracts now provide for arbitration
of coverage disputes."); Mtuch Ado About Nothing? Arbitration Clauses in Insurance and
Reinsurance Contracts: Are they Still Effective?, CROMEIL & MORING LP,
http://ww,.crowell.com/NewsEvens/AlertsNewsltters/Financial-Lines-DirectorsOfficers-Management-Liability-Alert/Much-Ado-About-Nothing-Arbitration-(lauses-inInsurance-and-Reinsuran ce-Contracts-Are-They-Still-Effective (jun. 9, 2009) (stating
that it is rare to find an international insurance contract without an arbitration clause).
78. See ESAB Grp., 685 F.3d at 380 (explaining domestic and international efforts
to liberalize arbitration policy); Arthur T. von Mehren, Jnterational Commeal
Arbitration: The Contributionof the FrenchJurisprudence,46 LA. L. RL. 1045, 1048 (1986)
(noting that the French trend was "ccrtainly the line of developmlent [followed] il the
policy for domestic arbitral agreements. The United States also
signed and ratified the N.Y. Convention, and passed Chapter 2
of the Federal Arbitration Act (the "Convention Act"), which
collectively set forth a liberal enforcement policy for
international arbitral agreements .8
Though arbitration predates national court systems, the
introduction of national courts relegated arbitration to a
subservient role among litigation-oriented dispute resolution
mechanisms.8 ' L'Alliance v. Prunier, an 1843 decision of the
French Cour de Cassation, exemplifies the historical judicial
hostility toward arbitration.8 2 The PrunierCourt nullified a clause
comnpromissoire because it neither specified the names of the
arbitrators to be used in case of an eventual dispute, nor
specified the subject matter of the dispute, should such a
dispute arise. 8 Because naming arbitrators in a clause
comnpromissoire was very difficult, and it was almost impossible to
divine the nature of a dispute before it arose with the requisite
specificity desired by French courts, domestic and international
arbitration in France was virtually impossible.84 The Cour de
79. Fedral Aibitration Act, 9 U.S.C. 1-16 (2006).
80. See N.Y. Convention, supra note 6; Federal Arbitration Act, 9 U.S.C. § 201-07.
81. Tibor Vrady, The Standing of Arbitration Within the Legal System. in IAw/ &
REALITY: EsSAYs ON NATIONAL AND INTLRNATIONAL PROCLDLRAL LAW 351 (Mathildc
Sumampouw et al. eds., 1995) ("Arbitration is an institution which preceded courts; yet
shortly after the appearance of the latter, arbitration assumed the position of the
younger (and weaker) brother."); Georgios I. Zekos, Is the Arbitration Fairness Act of
2007 the Right WayforJ fustice o a WWrong Turn , 6 RUTGERS CONFLICT RESOL.J. 69 (2008)
("It isworth noting that private arbitration predates the public court system.").
82. Cour de cassation [Cass.] [supreme court for judicial matters], civ., July 10,
1843, 1). 1843.1.343, S. 1843I..561 (Fr.). The Cour de Cassation is the highest court in
thc French Judiciary. See THE COUR DE CASSATION, About the Court,
http://www.courdecassation.fr/about thc-court 9256.htinl (last visited May 16, 2013).
83. Cour de cassation [Cass.] [supreme court for judicial matters], civ., July 10,
1843, D. 1843.1.343, S. 1843.1.561 (Fr.) (finding that thc names of thc arbitrators and
thc dispute were required to be in the arbitration agreement by the French Civil
Code). A clause compromissoire is a prior agreement to arbitrate found in the contract
before the dispute arises, whereas a compronis is an agreement to arbitrate once the
arbitration agreement has already been signed. See Joseph M. Matthews, Are Florida
Courts Really Parochial When It Cones to Arbitration?A Rebuttal, 8 1 FLA. B.. 28, 32 n. 16
(2007) (defining the French terms); Jean-Fran<ois Poudrct & S6bastien Besson.
COMPARATIvLV LAw OF INTERNATIONAL ARBITRATION 150 (2d cd. 2007) (defining thc
84. See Arthur von Mehren, InternationalCommercialArbitration:The Contrbution of
the French Jurisprudence,46 LA. L. RLV. 1045. 1048 (1986) (characterizing Lthe Pruier
rule as harmful to French international commerce); Arthur von Mehren, Theory and
Cassation realized that the Prunier rule was disastrous to French
international commerce and gradually created a distinct legal
regime for international commercial arbitration.85 First, the
French courts began to enforce clause corpromissoires, where the
parties had agreed to a foreign substantive law that recognized
arbitration agreements.8 Then, the Cour de Cassation began
recognizing and enforcing arbitration agreements, so long as
they met the broad standard of "involv[ing] the interests of
Much like the French courts following Prunier,the English
courts did "little or nothing to prevent or make irksome the
breach of [arbitration] agreements when they were still
executory."" Nineteenth century US courts largely adopted the
policy of the English courts to refrain from ordering specific
performance or imposing a stay of court proceedings on the
basis of executory arbitration agreements.," In 1925, however,
the US view of arbitration changed with the enactment of the
FAA, which established a liberal national policy of enforcing
domestic arbitration agreements arising from maritime and
commercial transactions. o In the domestic realm, the FAA
provides that "[a] written [contractual] provision . . . to settle
[disputes] by arbitration . . . shall be valid, irrevocable, and
Practice of Adjudicatory Authority in Rivate Intenational Law: A Conparative Stude of the
Doctrine, Policies and Practices of Common and CivilLaw Systems, in RECUTL F,DES COURS:
COLLLCTLD COURSES OF THL HAGUE ACDLMY OF INTLRNATIONAL LAW 270, (1996)
(characterizing the Prunier rule as unexpected and sensational for doctrinal and
85. See von Mchren, supra notC 84, at 1048 (noting that the Pruniercase Icad to a
movernent in the nineteenth century by the French courts to create a "distinct and
special lkgal reginic for arbitration in matters of international connerce"); see also
GARY B. BORN, INTERNATIONAL COMMERCIAL ARBITRATION 564 (Kluwer Law
International 2009) ("[The] historic mistrust of the arbitral process gradually eroded
in the United States, France and other democracies over the course of thc 20th
86. (our d'appel [CA] [regional court of appeal], Paris, jan. 11, 1865,
D.1865.II.188, S.1866.II.147 (Fr.).
87. Cour de Cassation [Cass.] [suprene court for judicial matters], Civ., Feb. 16,
1930, S.1933.I.41 (Fr.).
88. Kulukundis Shipping Co., S.A. v. Antorg Trading Corp., 126 F.2d 978. 982 (2d
89 Id at 984 (describing the English judicial treatment of arbitration and its
similarity to early American arbitration j urisprudence).
90. Federal Arbitration Act, 9 U.S.C. 1-16 (2006); ESAB Grp. v. Zurich Ins.
P1LC, 685 F.3d 376, 380-81 (4th Cir. 2012) (describing the history of the FAA).
enforceable, save upon such grounds as exist at law or in equity
for the revocation of any contract." "
Many states followed the federal government's lead, and
enacted statutes favoring arbitration.92 While the state policies to
enforce arbitration were likewise liberal, many states enacted
provisions barring arbitration of insurance disputes." South
Carolina, for example, provided that its liberal enforcement rule
would "not apply to . . . any insured or beneficiary under any
insurance policy." 94 Vermont also declared that its liberal
enforcement rules would "not apply to . . . arbitration
agreements contained in a contract of insurance."9
Since the enactment of Chapter 1 of the FAA and the MF
Act, state and federal courts have held that state-level
antiarbitration statutes reverse-preempt the FAA through the MF
Act.96 The courts noted that state anti-arbitration statutes relate
to the "business of insurance," when they specifically exempt
insurance disputes from a general policy to enforce arbitration
91. 9 U.S.C. 2 (2006).
92. See, e.g., S.C. CODE ANN. § 15-48-10(a) (2012) (establishing that written
arbitration agreements are "valid. enforceable and irrevocable, save upon such grounds
as exist at law or in equity for the revocation of any contract").
93. See Peter A. Halprin & John G. Nevius, Will Policyholdersbe Compelled to Arbitrate
International Coverage Disputes?, ANDLRSON KILL & OLICK, P.C., (Feb./Mar. 2010),
(noting the number of states barring arbitration of insurance disputes); Fourth Circuit
Issues ImportantDecision on Enforceability ofArbitrationAgreenents in InternationalInsurance
Contracts, WHLKIE FARR & GALLAGHER LLI (Jul. 30, 2012),
urthCircuit IssuesImportantDcision.pdf (naming Alabama, Arkansas, Hawaii,
Kansas, Kentucky, Louisiana, Massachusetts, Missouri, Nebraska, Oklahoma, South
Carolina, South Dakota, Vermont. Virginia, and Washington as states that bar
94. S.C. Code Ann. § 15-48-10(b) (4) (2012).
95. Vt. Stat. Ann. tit. 12§ 5653 (2012).
96. See, e.g., Standard Sec. Life Ins. Co. of N.Y. v. West. 267 F.3d 821, 824 (8th Cir.
2001) (reverse-preempting the FAA with the Missouri Arbitration Act's bar to insurance
arbitration): Mut. Reinsurance Bureau v. Great Plains Mut. Ins. Co., 969 F.2d 931, 934
(10th (ir. 1992) (allowing the Kansas Arbitration Act to reverse-preenpt the FAA); Am.
Health & Life Ins. Co. v. Heyward, 272 F. Supp. 2d 578, 581-83 (D.S.C. 2003)
(reversepreempting the FAA with the South Carolina statutc); Cox v. Woodmen of the World
Ins. Co., 347 S.C. 460, 556 S.E.2d 397. 399-402 (2001) (allowing the South Carolina
statute to reverse-preempt the FAA).
agreements.9 Because the FAA is an "Act of Congress," that
does not "specifically relate to the business of insurance," and its
application would frustrate the state statutes barring arbitration
of insurance disputes, it is reverse-preempted through the MF
While the United States was molding its domestic
arbitration policy, international actors gradually created a
globalized, cohesive, and liberal policy of enforcing arbitration
agreements. 9 In the early 1950s, the newly established
Economic and Social Council of the United Nations responded
to a request from the International Chamber of Commerce to
create a convention on the "recognition and enforcement of
foreign arbitral awards and, further, 'to consider, if time
permits, other possible measures for increasing the effectiveness
of arbitration in the settlement of private law disputes' .' "1
Forty-five nations, including the United States, joined the
drafting conference of what would become the N.Y.
97. Am. Health & Life Ins. Co.. 272 F. Supp. 2d at 582 ("S.C.Codc 15-48-10(b) (4)
was enacted ... for the purposes of regulating the business of insurance' because it
exempts insurance contracts from arbitration.").
98. Id. at 581 n.1, 582 (reverse-preempting the FAA in domestic insurance
disputes). Unlike the FAA, the Dodd-Frank Wall Street Reform and Consumer
Protection Act and the Patient Protection and Affordable Care Act both deliberately
regulate the business of insurance, and are exempt from the MF Act's
99. Leonard v.. Quigley, Accession by the United States to the UnitedNations Convention
on the Recognition and Enforcement of Foreign ArbitralAwards, 70 YALE L.J. 1049, 1059-60
(1961) (providing background on international efforts to find a -multilateral solution"
to the enforcemnent issues); see Rachadi D. Kent, Legislative Thieats to the Historically
StrongRelationshipbetween Domestic and InternationalArbitratonin the US., 4 WORLD ARB.
& MEDIATION REV. 107, 107 (2010) ("Many of the important steps in the development
of a vibrant arbit ation culture in the U.S.-including passage of the [Federal
Arbitration Act] itself-were preceded by major international efforts to encourage
development of an effective system for the resolution of cross-border commercial
disputes. These efforts include the adoption of . . . the New York Convention in
100. Quigley, supra note 99, at 1059-60 (quoting U.N. E.S.C., 21 st Sess., Ist mtg.
at 6, U.N. Doc. E/CONF.26/SR.1 (May 3, 1956)); see Kofi Annan, Sec'y Gen. of the
U.N., Opening Address Cornncnorating the Successful Conclusion of the 1938 United
Nations Conference on International Commercial Arbitration (June 10, 1998), reprinted
in ENFORCING ARBITRATION AWARDS UNDER THE NEW YORK CONVENTION: EPERIENCE
& PROSPECTS, at 1-3 U.N. Sales No. E.99.V.2. (1999).
10 1. Quigley, supra note 99, at 1060.
The N.Y. Convention obligates signatories to (
written international arbitration agreements; and (
awards issued by arbitrators in foreign nations. 102 Article II of the
N.Y. Convention provides that
[e]ach Contracting State shall recognize an agreement in
writing under which the parties undertake to submit to
arbitration . . . . [and] [t]he court of a Contracting State,
when seized of an action in a matter in respect of which the
parties have made an agreement within the meaning of this
article, shall, at the request of one of the parties, refer the
parties to arbitration. unless it finds that the said agreement
is null and void, inoperative or incapable of being
performed. 0 3
Article III of the N.Y. Convention provides that:
[e]ach Contracting State shall recognize arbitral awards as
binding and enforce them in accordance with the rules of
procedure of the territory where the award is relied upon,
under the conditions laid down in the following articles.
There shall not be imposed substantially more onerous
conditions or higher fees or charges on the recognition or
enforcement of arbitral awards to which this Convention
applies than are imposed on the recognition or
enforcement of domestic arbitral awards.0 4
Subject to few exceptions, these two provisions demonstrate the
obligations that countries take by becoming signatories.
In 1958, the N.Y. Convention was adopted by the Drafting
Committee.105 President Nixon, however, only proclaimed the
United State's accession to the N.Y. Convention in 1970, after
receiving the advice and consent of the Senate in 1968.1 o The
delay was attributed to a sense in the Senate and the executive
branch that certain provisions of the US Code had to be
102. ESAB Grp. v. Zurich Ins. PL(, 685 F.3d 376. 381 (4th Cir. 2012).
103. N.Y. Convention, supranote 6, art. II, 21 U.S.T. 2517, 330 U.N.T.S. 3., art. II
(emphasis added); see supra notes 28. 41 and accompanying text (noting the
importance of the words "the court").
104. Id. art. III.
105. See ESAB Grp., 685 F.3d at 381 (noting that the N.Y.Convention was "crafted
during a 1958 United Nations conference").
106. I. (discussing the history of US accession to the N.Y. Convention).
amended before adopting the N.Y. Convention.o 7 Congress had
recently enacted the Convention Act, which provided that the
"[N.Y. Convention] shall be enforced in United States courts in
accordance with this chapter." 18 The Convention Act gave
federal district courts the power of jurisdiction over the
Convention, and the ability to order arbitrations and appoint
After the adoption of the N.Y. Convention and the
Convention Act in the United States, US courts continued to
favor the enforcement of arbitration agreements in
international commercial disputes. Justice Blackmun's 1985
opinion in iitsubishiMotors Corp. v. Soler Chrysler-Plymouth, Inc.
widely expanded the role of international arbitration1.1 0 The
case concerned a dispute between a Japanese-Swiss joint venture
and a Puerto Rican car dealership."' The contract between the
parties contained a provision that mandated that "[a]Ill disputes,
controversies or differences which may arise . . . out of or in
relation to . . . this agreement or for breach thereof, shall be
finally settled in Japan in accordance with the rules and
regulations of the Japan Commercial Arbitration Association."1 12
In addition to numerous contractual breaches, the dealership
asserted Sherman Act counterclaims against the joint venture." 3
Justice Blackmun enforced the arbitration agreement
broadly, noting that "[t]here is no reason to depart from [the
federal policy of enforcing arbitration agreements] where a
party bound by an arbitration agreement raises claims founded
on statutory rights."I14 Further, he ordered district courts "to
107. See id. at 381-82 (noting, for example, that "a representative of the State
Department's Office of the Legal Advisor requested changes to the US Code 'to insure
the coverage of the [FAA] extends to all cases arising under the treaty and some
changes in Federal civil procedure to take care of related venue and jurisdictional
requirement probleins"' (quoting S. Exec. Rep. No. 90-10, at 6 (1968) (statement of
Richard D. Kearney, Ambassador. Office of the Legal Adviser); S. Exec. Rep. No. 90-10,
at 1 (1968) ("[T]he American delegation . . . felt certain provisions of the
[C]onvention were in conflict with some of [the United States'] domestic laws.").
108. 9 U.S.C. 201-07 (2006).
110. Mitsubishi Motors Corp. v. Soler Chrysler-Plyinlouth, Ic., 473 U.S. 614
111. Id. at 616-17 (describing the facts of the case).
112. Id. at 617.
113. Id. at 620 (listing the Sherman Act coultLerclaims).
114. Id. at 626.
20131 REIERSE-PREEMPTIONAND THE V Y. CONXVENTION 961
subordinate domestic notions of arbitrability to the
international policy favoring commercial arbitration."11 Justice
Blackmun noted that
[t]he Sherman Act is designed to promote the national
interest in a competitive economy; thus, the plaintiff
asserting his rights under the Act has been likened to a
private attorney-general who protects the public's interest.
The treble-damages provision wielded by the private litigant
is a chief tool in the antitrust enforcement scheme . . . .
The importance of the private damages remedy, however,
does not compel the conclusion that it may not be sought
outside an American court.
In this spirit, he concluded, "national courts will need to
'shake off the old judicial hostility to arbitration,'" as well as the
"unwillingness to cede jurisdiction of a claim arising under
domestic law to a foreign or transnational tribunal." 17
Thus, there is a breadth of law controlling the potential
reverse-preemption of the N.Y. Convention. Primarily, US
foreign relations law, and the framework needed to classify
Article 11 of the N.Y. Convention as self-executing or
non-selfexecuting, is particularly relevant to whether there is an "Act of
Congress" for the states to reverse-preempt." Secondarily, this
issue sits between two policy trends. In the United States, federal
policy has relegated insurance regulation to the state
governments. At the same time, federal policy has tracked a
global movement to federalize and standardize arbitration law.
II. THE NEXUS OF THE X Y. CONVENTIOA, THE
CON VENTIOA ACT. THE MF ACT AAD STATE AATI
ARBITRA TIOA STA TUTES
Despite the line of cases, including Mistubishi, favoring the
enforcement of arbitration agreements, US Circuit Courts have
disagreed over how and if the MF Act should be applied to the
115. Id. at 639.
1I16. Id. at 635 (internal citations omitted).
117. Id. at 638 (quoting Kulukundis Shipping Co. v. Amtorg Trading Corp., 126
F.2d 978, 985 (2d Cir. 1942)).
118. See supranotes 32-48 (discussing the self-execution framework).
N.Y. Convention and the Convention Act.119 The remainder of
this Note reconciles the national policy favoring international
arbitration, and the potential reverse-preemption of US
obligations under the N.Y. Convention.
This Part outlines the three prevailing judicial views on how
the MF Act should be applied to the N.Y. Convention and the
Convention Act. The views are expressed in three circuit court
decisions. The first, Stephens v. American InternationalInsurance
Co., concerned a Kentucky statute barring arbitration of
insurance disputes.12o The second, Safety NationalCasualty Corp v.
Certain Underwriters, concerned a Louisiana statute barring
arbitration of insurance disputes.121 Finally, the third, ESAB
Group, Inc. v. Zurich Insurance PLC, considered a South Carolina
statute barring arbitration of insurance disputes.22
A. Stephens v. American International Ins. Co. In 1995, the Second Circuit held in a brief opinion in
Stephens v. American International Insurance Co. that state-level
statutes barring arbitration of insurance disputes
reverse119. Comnpare Stephens v. American Int'1 Ins. Co., 66 F.3d 41, 45-46 (2d Cir. 1995)
(holding that the Convention Act may be reverse-preempted through the MIF Act), with
Safety Nat'1 Cas. Corp. v. Certain Underwriters, 587 F.3d 714, 717 (5th Cir. 2009)
(concluding that the N.Y. Convention cannot be reverse preempted through the MF
Act). and ESAB Grp. v. Zurich Ins. PLC 685 F.3d 376, 390 (4th (ir. 2012) (explaining
that the MF Act can only reverse-preempt domestic commerce legislation, so the
Convention Act lies outside of its scope).
120. American Int' Ins. Co., 66 F.3d 41; see Ky. Rev. Stat. Ann. § 304.33-010(6)
(West 1994) (" [A]II conflicting contractual provisions contained in any contract
between the insurer ... and any third party, including, but not limited to, the choice of
law or arbitration provisions, shall be deeined subordinated to the provisions of this
121. Safety Nat'1 Cas. Corp., 587 F.3d at 717; see La. Rev. Stat. Ann. 22:868 (2013)
("A. No insurance contract ... shall contain any condition, stipulation or agreement:
) depriving the courts of this state of the jurisdiction of action against the insurer; C.
Any such condition, stipulation or agreement in violation of this section shall be void,
[without] voiding ... the other provisions of the contract."). The Fifth Circuit noted
that although, from the statute's text, it is questionable that arbitration agreements are
voided, the Louisiana courts have held that such agreements are unenforceable. Safety
Nat'1 Cas. Corp., 587 F.3d at 719 (citing Doucet v. Dental Health Plans Mgnt. Corp., 412
So.2d 1383, 1384 (La. 182)).
122. ESAB Grp., 685 F.3d 376: see S.C. Code Ann. § 15-48-10(b)(4) (1976)
(providing that the South Carolina policy of liberally enforcing arbitration agreements
does "not apply to ... any insured or beneficiary under any insurance policy").
20131 REIERSE-PREEMPTIONAND THE V Y. CONXVENTION 963
preempt the Convention Act through the MF Act."
the MF Act test, the court held that reinsurance was a practice
within the "business of insurance" and that the Kentucky statute
was enacted to regulate such activity. 124 Then, citing Foster v.
Neilson, the court declared that the N.Y. Convention was
nonself-executing, without any analysis of the text of the treaty, and
held that the "[c]onvention itself is inapplicable in this
instance."12 5 In the second case, the Court considered whether
the Foreign Sovereign Immunities Act ("FSIA") was
reversepreempted by a state law compelling foreign insurers to post
security before participating in a lawsuit. '26 In one of two
alternate holdings, the Court held that courts must apply federal
law whenever it clearly intends to displace all state laws to the
contrary, despite the MF Act.1 27 Because the second alternate
holding was based on the premise that international law
preempted the state statute before either the MF Act or the FSLA
was passed, the court reasoned that it need not reconsider
American International Insurance Co.'28
While the Second Circuit has not vet overruled its decision
in American International Insurance, its precedent has been
rejected in other circuits. 12 Nonetheless, other judges have
between the Second Circuit and several district courts as of 2005).
advocated for the Court's reasoning and disposition in American
International Insurance, and it remains controlling law in the
B. Safety National Casualty Corp. v. Certain Underwriters
Over a decade later, in 2009, the Fifth Circuit was presented
with the same question. After a complicated procedural history,
the District Court for Middle District of Louisiana held that a
Louisiana statute reverse-preempted the N.Y. Convention
through the MF Act. The District Court, however, certified an
immediate interlocutory appeal pursuant to 28 U.S.C.
§ 1292(b)."1 The Fifth Circuit initially reversed the district
court, before granting a re-hearing en banc to evaluate this
1. The Majority Opinion: Upholding the Treaty
The Fifth Circuit's analysis began with the text of the
relevant statutes and treaty.'I" The Court assumed that the state
statute regulated the "business of insurance" and that, for the
purposes of the MF Act, neither the N.Y. Convention nor the
Convention Act regulated the "business of insurance."1"4 The
court's analysis was limited to whether the state statute, through
the MF Act, could override the N.Y. Convention's obligation to
enforce arbitration agreements. 3
As such, the Fifth Circuit turned to the question of whether
Article 11 of the N.Y. Convention was self-executing. Noting that
the Article's execution status was "unclear," the Court's opinion
punted the issue, and instead turned to whether a
non-selfexecuting treaty and its implementing legislation are Within the
scope of the MF Act. 6The Court held that a non-self-executing
treaty's implementing legislation was outside the scope of the
MF Act because Congress did not wish to include any treaty
within the scope of the term "Act of Congress." 117 Thus, the N.Y.
Convention superseded the contrary state law."
The Fifth Circuit placed particular emphasis on the
meaning of the words "Act of Congress" in the MF Act. Further,
the Court noted that it was untenable to believe that when
Congress used "Act of Congress" in the MF Act, it intended that
phrase to exclude self-executing treaties, but to include treaty
provisions that are implemented through federal legislation.1 "
The Fifth Circuit then clarified that it was utilizing the N.Y.
Convention, rather than the Convention Act, to supersede the
contrary state law.140 Noting that the Convention Act "directs
[courts] to the treaty it implemented," the Court concluded that
the N.Y. Convention "requires that each signatory nation 'shall
recognize an agreement in writing under which the parties
undertake to submit to arbitration."' 14 1
136. Id. at 721-22 (noting that textually, Article II "expressly states that courts
shall' compel arbitration agreements," however also noting that the Supreme Court in
the dicta of Medellin v. Texas listed at least Article III, the article governing arbitral
awards, of the N.Y. Convention as a successfully impleincntcd non-seif-executing trcaty
provision) ("This reference in Medellin could be read to imply that the [N.Y.]
Convention in its entirety is not self-executing, although such a conclusion cannot be
drawn with any certainty fron the brief discussion in the Court's opinion."); see
Medellin v. Texas, 552 U.S. 491, 521 (2008) ("Congress is up to the task of
implementing non-self-executing treaties, even those involving complex commercial
disputcs. The judgments of a number of international tribunals enjoy a different status
because of implementing lkgislation enacted by Congress.") (cmphasis added)
137. Safety Nat'1 Cas. Corp., 587 F.3d at 718 ("We are persuaded that state law does
not reverse-preempt federal law in the present case . . . [because] Congress did not
intend to include a treaty within the scope of an 'Act of Congress.'").
138. Id. at 718 [T]hc [MF] Act does not apply to the [N.Y.] Convention.").
139. Id. at 723 ( [To] conclude that when Congress used 'Act of Congress' in the
McCarran-Ferguson Act, it intended that phrase to exclude self-executing treaty
provisions but to include trcaty provisions that are implemented by federal
legislation ... is untenable").
140. Id. at 724 (explaining that the legal issue falls under the N.Y. Convention
rather than the Convention Act because the Convention Act merely refers to the N.Y.
141. Id. at 725.
In its opinion, the Fifth Circuit explicitly acknowledged that
it was creating a circuit split with the Second Circuit.14 2 The Fifth
Circuit agreed that non-self-executing treaties needed
implementing legislation to become operative in United States
courts, but disagreed in that "Act of Congress" could be
extended to "a treaty implemented by an Act of Congress."'4 3 As
such, the Fifth Circuit became the first appellate court to
uphold the N.Y. Convention's obligations in the face of the MF
Act and contrary state law.
2. The Dissent: Agreement with the Second Circuit
The dissent, penned by Judge Elrod, in Saftyv National
characterized the majority's opinion as a "trail blazing holding
[that] also creates a circuit split with the Second Circuit."14 4 The
dissent concluded that whether the Convention was
selfexecuting or not was not before the Court, because neither
party preserved the issue for appeal. 145 As such, the court
considered the treaty non-self-executing, and proceeded with an
MF Act analysis. 146 The dissent questioned the wisdom of
framing the issue before the court as whether the N.Y.
Convention is an "Act of Congress" within the scope of the MF
Act, and instead focused on whether the Convention Act was an
"Act of Congress".14 7
The dissent explained that the majority's opinion
essentially boiled down to the view that "a treaty is a treaty" and
that once a non-self-executing treaty has been implemented, it is
142. Id. at 731 ("We are aware that our decision conflicts with that of the Second
Circuit in Stephens v. American International Insurance Co.").
143. Id. (implying that the main disagreecent with the Second Circuit's theory
was over which legal source is relevant to the term "Act of Congress": the
iniplemcnting kgislation or non-self-executing treaty).
144. Safety Nat'l Cas. Corp., 587 F.3d 714. 738 (5th Cir. 2009) (Elrod, J..
145. See id. at 751 n.31 (concluding that neither party preserved the secf-execution
146. See id. (concluding that the N.Y. Convention, for the purposes of this lawsuit,
was non-self-executing, and proceeding to ask whether the Convention Act, failing to
regulate the "business of insurance," would frustrate the state law that does regulate
the "business of insurance").
147. See id. at 738 ("[T]hc court's failure to ask the right question at the outset
inevitably Icads to ts ncorrect conclusion-tha[ the Convention itscif. a
non-selfexecuting treaty, preempts the Louisiana statute.").
20131 REVTERSE-PREEMPTIONAND THE
. Y. CONXVENTION 967
the equivalent of a self-executing treaty under the Supremacy
Clause.148 However, the dissent extrapolated that the
non-selfexecuting treaty, even when implemented by legislation that
merely references the treaty, remains "as inert as a model code,"
similarly incorporated by reference. 149 Ultimately, it
characterized the majority's treatment of the Convention Act as
"legal alchemy." 15o According to Judge Elrod, the majority's
treatment bestowed the benefit of a statute, the ability to
implement a non-self-executing treaty, but not detriment, the
subjugation to the MF Act.'5' For these reasons, the dissent
analyzed whether the Convention Act, rather than the N.Y.
Convention, can be reverse-preempted by a state statute through
the MF Act.J2 Like the Second Circuit, the dissent would have
held that the state statute barring arbitration was enacted to
"regulate the business of insurance;" and that the Convention
Act, which would frustrate the state legislation, was not enacted
to "regulate the business of insurance," and was, thus,
3. The Clement Concurrence: Article II is Self-Executing
Unlike the other judges of the Fifth Circuit, Judge Clement
was unconvinced by the arguments set forth in the majority and
dissenting opinions.154 For the supremacy question with respect
to non-self-executing treaties, Judge Clement mostly agreed with
the dissent's argument that the Convention Act, rather than the
N.Y. Convention, is the necessary authority to examine for MF
148. See id. at 740 ("Under this view, a non-self-executing treaty requires an
additional step to become binding, but once that step is passed-once the treaty is
iiplementecd-it is the Supremacy Clause cqui valent of a seif-executing treaty.").
149. Id. at 740-41 ("As a source of law, the implementing legislation is the alpha
and oiega of what may constitute a rule of decision in U.S. courts.").
150. Id. at 745 (criticizing the majority opinion).
151. See id. (explaining what is meant by "legal alchemy").
152. See id. at 741 ("[T]here can be no preemption in this case without construing
an Act of Congress the Convention Act rather than the trcaty.").
153. Id. at 752.
154. See id. at 733 (Clemneint, J., concurring) ("The opinions' contrasting
interpretations of the Supremacy Clause are unnecessary to decide the case because the
plain text of Article II of the Convention compels a finding of self-execution.").
Act analysis.1 5 She determined, however, that reaching such a
difficult constitutional question was unnecessary in light of an
alternative ground upon which the case may be disposed.)5
In light of Medellin v. Texas, Judge Clement saw Section 3 of
Article II of the N.Y. Convention as a directive to courts and not
to the political branches of the US government. 157 She
emphasized that a "court . . . shall . . . refer parties to
arbitration" when operating under the treaty.1 5 She found this
language consistent with the type of directive specifically
contemplated by the Medellin Court.'5
Judge Clement then turned to the dictum of Medellin,
which utilized the Convention Act as a positive example of
Congress' ability to pass legislation implementing a statute to
give effect to the judgments of international tribunals.16o1 She
then explained that because the Medellin Court was concerned
with the enforceability of a judgment of the ICJ, this sentence
merely implies that Congress is historically capable of affording
the awards of other international tribunals immediate domestic
legal effect through legislation.bl Notably, Article III, unlike
Article 11, fails to address courts.'62 Thus, the fact that Congress
perceived the need to fulfill its international obligation from
Article III to enforce arbitral awards, fails to speak to Article II's
155. See id. ("The dissent . . . persuasively refutes the majority's answer to the
constitutional question, but ... [n]cither opinion confronts the important antecedent
question whether Artidce II is in fact self-executing.").
156. See id. at 733 n.2 (challenging the dissent's view that the question of
selfexecution is not before the court, by explaining that "[i] n their opening brief to the
panel, [the defendant] contended that the treaty provision was self-executing").
157. See id. at 734 (examining Article II's directive to "the court[s] of a
158. Id. at 735.
159. See id. (contrasting Article II's language with the words "undertakes to
comply" as analyzed by the Supreme Court in Medellin).
160. See id. at 736 (citing Medellin v. Texas. 552 U.S. 491, 521 (2008)) (stressing
the difference between Judgments and agreements).
161. See id. (noting that the majority relied on this dictum to justify its finding that
the N.Y. Convention is non-self-executing as a whole, where Judge Cletentt interprets
the dictum as only applicable to Article III, and not Article II of the N.Y. Convention).
162. See id. ("Article III lacks an explicit directive to '[t]he court of a Contracting
State.'); see supra notes 105-06 and accompanying text (quoting Articles II and III of
the N.Y. Convention).
20131 REIERSE-PREEMPTIONAND THE V Y. CONXVENTION 969
self-execution status with its directive to courts regarding arbitral
Relying on Medellin, the State Department advocated for
this exact position when appealing Safety National to the
Supreme Court.164 The government compared the Convention
Act to legislation used to facilitate implementation of certain
extradition treaties, which are clearly self-executing.165 While the
State Department ultimately expressed the view that the
Supreme Court should deny the writ of certiorari, its opinion
was given substantial weight in previous decisions where the
execution status of a treaty has been at issue.'6
C. ESAB Group v. Zurich Insurance PLC: Perhaps,a New Direction
In 2012, the Fourth Circuit became the third circuit court
to be presented with this issue.bI Due to the issue's complexity,
the Fourth Circuit began by providing a helpful and instructive
overview of the relevant history and policies, as well as judicial
treatment of the issue thus far. 168 As a whole, the language used
in the decision reinforced the idea that "[it is important to]
preserv[e] the United States' ability to 'speak with one voice' in
regulating foreign commerce."' '
judges fron the Second and Fifth Circuits).
169. Id. at 379 (quoting Michelin Tire Corp v. Wages, 423 U.S. 276. 285 (1976))
(introducing the opinion with this theme).
The court quickly found that the South Carolina law at
issue was enacted to regulate the business of insurance, and
turned to the question of self-execution.71 1 Briefly noting that
Article II at least textually appeared self-executing, the Court
nonetheless abided by an "emerging presumption against
finding treaties to be self-executing," because nothing in the
Convention Act or the legislative history differentiates between
Article 11 and the rest of the treaty.171 Instead, the Fourth Circuit
preserved the heart of the treaty by interpreting the MF Act in
light of its relation to the United States' ability to engage in
Citing American Insurance Association v. Garamendi, a 2003
Supreme Court decision, the Fourth Circuit held that the MF
Act was enacted to prevent the implied preemption through the
Supremacy Clause of domestic commerce regulation. 17
Garamendiconcerned the interaction between a state law and an
executive agreement, but the domestic congressional intent
informed the Fourth Circuit on how to proceed with another
instrument of foreign relations law, the N.Y. Convention.174 The
Court concluded that by enacting the MF Act, Congress did not
intend to give the states the power to abrogate international
agreements, and subsequently rendered them enforceable in US
20131 REVTERSE-PREEMPTIONAND THE V Y. CONXVENTION 971
The competing public policies in this area are likely the
source of the circuit disagreement. On the one hand, the
Second Circuit and the Fifth Circuit dissent favored state
supremacy in insurance regulation by rendering the N.Y.
Convention inapplicable in the face of state statutes barring
arbitration of insurance disputes. 176 On the other hand, the
majority and concurrence of the Fifth Circuit, and the Fourth
Circuit have favored the international public policy in favor of
arbitration, and all presented different theories for applying the
N.Y. Convention in spite of the MF Act and contrary state law.
The Fifth Circuit majority argued that self-executing treaties and
implemented non-self-executing treaties should be treated the
same under the Supremacy Clause.1 The concurrence in the
Fifth Circuit argued that Article 11 of the N.Y. Convention was
self-executing, and thus fell outside the scope of the MF Act.178
Finally, the Fourth Circuit argued that the MF Act's scope is
limited to domestic, rather than international, commerce
III. ARTICLE H OF THE NEW YORK CONVEN\TION\ SHOULD BE
TREA TED AS SELF-EXECUTING, OR THE MFA CT'S SCOPE
SHOULD BE LIMITED TO DOMESTIC COMMERCE
With respect to framing the issue, the Fourth Circuit is
correct that the end result must consider the United States'
ability to present a cohesive and uniform legal framework when
operating under foreign relations law.' s The dynamics of our
global economy, and the role of the United States within it,
depend on commercial parties' confidence that their interests
176. See supra notes 123-30 and 144-53 and accompanying text (discussing the
legal reasoning of the Second Circuit and the dissent of the Fifth Circuit).
177. See supra notes 133-43 and accompanying text (discussing the iajorit
opinion of the Fifth Circuit).
178. See supra notes 154-66 and accompanying text (discussing the concurring
opinion fron the Fifth Circuit).
179. See supra notes 167-79 and accompanying text (discussing the Fourth
Circuit's majority opinion).
180. See supra notes 169. 172 and accompanying text (describing the need to
speak with one voice in the execution of foreign policy).
will be protected, regardless of national borders.' For these
reasons, the Supreme Court should address this issue and strive
to adhere to the obligations of the United States under the N.Y.
Convention, regardless of the subject matter of the dispute.
This Part argues that the Supreme Court should reject the
analysis presented by the Second Circuit, and both the Fifth
Circuit Majority and Dissent. This part further concludes that
the Supreme Court should either: (
) adopt the view of the
concurrence in the Fifth Circuit that Article II of the N.Y.
Convention is self-executing, or in the alternative, (
) adopt the
view of the Fourth Circuit and limit the scope of the MF Act to
domestic commerce regulation.
A. The Views of the Second Circuit, and the iajority and Dissent of the
Fifth Circuitare Untenable
The Supreme Court should immediately reject the views of
the Second Circuit, and the dissent of the Fifth Circuit. Allowing
states to abrogate US international obligations is unwise. 1 8 2
Adopting this approach would frustrate the nation's ability to
speak with a unified voice with respect to foreign relations, and
essentially leave the United States in breach of a major
While the Fifth Circuit majority properly sets its goal as
enforcing the N.Y. Convention, its method remains flawed. The
"legal alchemy" of giving the Convention Act the benefits, but
none of the detriments, of a statute is impractical. 184
Additionally, giving any treaty Supremacy Clause status,
regardless of whether it's self-executing or not, ignores the
precedent of Foster and its progeny.18 The United States has
adopted the view that there is a fundamental difference between
181. See supranotes 1-7, 77 and accompanying text (discussing the important rok
arbitration plays in international commerce and the international insurance industry).
182. See supra notes 4. 169-72 and accompanying text (emphasizing the
importance of internationalism in the modern global economy).
183. See upra note 169-72 and accompanying text (noting the theme of globalism
throughout the Fourth Circuit's opinion).
184. See supra notes 148-50, 155-56 and accompanying text (discussing the
agreement among the concurring and dissenting judges of the Fifth Circuit that
viewing a treaty as a treaty regardless of execution status should be avoided).
185. See supra notes 26-31 and accompanying text (discussing the origin of treaty
execution law in the United States and Foster v. Neilson).
20131 REIERSE-PREEMPTIONAND THE V Y. CONXVENTION 973
self-executing and non-self-executing treaties, and this theory
does not comport with that stance.18b
B. Article H of the NY. Convention is Self-Executing
The ideal solution to this issue is to hold that Article II of
the N.Y. Convention is self-executing. First and foremost, case
law shows that certain provisions of a non-self-executing treaty
can be considered self-executing, and thus the Supreme Court
could limit its analysis solely to Ai ticle II. 7 Second, this
reasoning fulfills the goal of protecting US foreign relations
interests with respect to international commerce. 188 It also
provides an avenue that allows the Supreme Court to apply the
Medellin test, and textually demonstrate the difference between
self-executing and non-self-executing treaties.189 Article II gives
an explicit directive to US courts.19o It speaks in mandatory
language, rather than discretionary language.9' The difference
between Article II and Article III, with respect to the
governmental branches that they address, explains why Congress
sought to enact the Convention Act.1 92 Given all of the relevant
law, this option ensures the best outcome by the least
C. The MF Act Does Not Allow States to Abrogate International
Agreements hich Have Been RenderedJudiciallyEnforceable
Vhile the Fourth Circuit did not explicitly say so, it
presented a novel interpretation of this issue. Like the majority
186. See supra notes 26-31, 148-50, 155-56 and accompanying text (expressing
disagreement with the conflict between the Fifth Circuit's majority opinion, and the
Foster v. Neison progeny).
187. See supranote 34 and accompanying text.
188. See supra notes 4. 77. 169-72 and accompanying text (describing the
important rol of arbitrationin the global economry and the insurance industry).
189. See upra notes 35-48 and accompanying text (detailing Medellin v. Texas and
the rolk of textualism in treaty construction); see also supra notes 157-63 and
accompanying text (applying the Medellin test to Ai ticle 11 of the N.Y. Convention).
190. See supra note 102-04 and accompanying text (quoting and contrasting the
language of Articles II and III of the N.Y. Convention).
191. See supra note 41 and accompanying text (detailing the Medellin courCs
emphasis on words like "shall" and "must"); notes 157-63 and accompanying text
(applying the Medellin test).
192. See supra notes 159-62 and accompanying text (distinguishing from the
Mledellin dictum reference to the N.Y. Convention as an implemented treaty).
and concurrence of the Fifth Circuit, the court's finding
guarantees the United States' ability to speak with a unified
voice in international commerce." However, the Fourth Circuit
avoided a difficult constitutional question by framing the issue
in terms of the scope of the MF Act, rather than by focusing on
whether an implemented non-self-executing treaty should be
treated with Supremacy Clause status.194
Should the Supreme Court give way to the growing judicial
presumption against self-execution, it should adopt the Fourth
Circuit's garden-variety statutory construction. 195 Garamendi
already held that the MF Act could not allow a state to
reversepreempt an executive agreement because Congress intended
the MF Act to apply exclusively to domestic commerce
legislation.196 Accordingly, since neither the Convention Act nor
the N.Y. Convention can be considered "Acts of Congress"
enacted to regulate domestic commerce, they are outside the
scope of the MFAct.0 7
Given the increase in global trade and the increasingly
integrated world economy, the United States' compliance with
international legal and economic commitments is of paramount
importance. Accordingly, the Supreme Court should hold that
Article 11 of the N.Y. Convention is self-executing, and not an
"Act of Congress" within the scope of the MF Act. Should the
Court conform to the growing judicial presumption against
selfexecution, it should reiterate the Garamendiholding, and limit
the MF Act to "Act[s] of Congress" that regulate domestic
193. See supra notes 4, 77, 169-72 and accompanying text (asserting the
importance of a unified arbitration policy in the global economy and insurance
194. Compare supra notes 148-50 and accompanying text (criticizing the Fifth
Circuits interpretation of a treaty as a treaty, regardless of execution status), with supra
notes 173-79 and accompanying text (limiting the scope of the MF act to domestic
commerce legislation, without handling a treaty as a treaty, regardless of execution
195. See supranotes 173-79 and accompanying text (limiting the MF Act's scope
to domestic, rather than international, commerce legislation).
196. See supranotes 173, 174 (discussing Garamendi).
197. See supra note 175 (applying Garanendi'sholding to enforce the Convention
Act and the N.Y. Convention, despite the MF Act and contrary state law).
B. The States ' Roles in Insurance Regulation ............ 950 C. The History of Arbitration, Domestic and International ............................... 954 II. THE NEXUS OF THE N.Y. CONV7ENTION, THE CONV7ENTION ACT, THE MF ACT, AND STATE ANTI ARBITRATION STATUTES ............. 961 A. Stephens v. American InternationalIns. Co. ................. 962 B. Safety NationalCasualty Corp . v. Certain Undeywriters.... 964
1. The Majority Opinion: Upholding the Treaty.......964
2. The Dissent: Agreement with the Second Circuit.................. ............... 966
3. The Clement Concurrence: Article II is SelfExecuting.. .............................................................. 967 C. ESAB Group v . Zurich InsurancePLC: Perhaps, a New Direction ................................... 969 10. Peter A. Halprin & John G. Nevius, Will Policyholders be Compelled to Arbitrate International Coverage Disputes, EXFCUTIVE COL NS . MAG., Feb .-Mar. 2010 , at 3 ("At least eleven states have enacted laws that specifically refuse to allow the arbitration of insurance disputes. "). But see Memorandum from Richard Mancino & Joseph G. Davis of Willkie Faar & Gallagher LLP ( July 30 , 2012 ), available at http://Nwwvillkie.corn/ files/tbl s29Publications% 5(FilcUpload5686% (5C4157%5(FouirthCircuitIssucs Important Decision.pdf (suggesting that currently, there are fifteen states which bar insurance arbitration).
II. U.S. CONST. art. VI, cl. 2; Hillsborough County v . Automated Medical Laboratories , Inc., 471 U.S. 707 . 712 ( 1985 ) ("It is a familiar and well-cestablished principle that the Supremacy Clause , U.S. Const. , Art . VI, cl. 2, invalidates state laws that 'interfere wvith, or are contrary to,' federal law.") (citations omitted); Hamrnm v . Rock Hill , 379 U.S. 306 . 315 ( 1964 ).
12. McCarran-Ferguson Act , 15 U.S.C. §§ 1011 - 15 ( 2006 ).
13. See United States Dep't of Treasury v . Fabe , 508 U.S. 491 , 499 - 500 ( 1993 ).
14. Id .
15. Stephens v. Am. Int'l is. Co., 66 F.3d 41 ( 2d Cir . 1995 ).
16. Safety Nat'1 Cas . Corp. v. Certain Underwriters. 587 F.3d 714 . 717 ( 5th Cir . 2009 ).
17. ESAB Grp. v. Zurich Ins., 685 F.3d 376 , 390 - 91 ( 4th Cir . 2012 ).
18. Safety Na' Cas. Corp., 587 F. 3d at 732 (Clement , J., concurring) ( holding that the N.Y. Convention cannot be reverse-preempted through the McCarran-Ferguson Act ("MF Act" )).
19. Id . (finding that "the conclusion that Article II is self-executing possesses the added benefit of avoiding a difficultconstitutional question" ).
20. The Fourth Circuit characterized the discussion of the law of selcf-executing treaties as "wad[ing] into ... murky waters." ESAB Gp., 685 F.3d at 387 . Likewise, the Court noted that this area of the law has "long confused courts and commentators." Id. (citing United States v . Postal,. 89 F.2d 852 . 876 ( 5th Cir . 1979 ); Curtis A . Bradicy , Intent, Presumptions,and Non-Selfxecta ing Treate, 102 AM .J. INT'L L . 540 , 540 ( 2008 )).
37. Medellin , 552 U.S. at 506 (citing Air France v. Saks , 470 U.S. 392 , 396 - 97 ( 1985 )).
38. Id . at 508 ( "The obligation on the part of signatory nations to comply with ICJ judgments derives ... from Article 94 of the United Nations Charter-the provision that specifically addresses the effect of I(J decisions.").
39. U.N. Charter art. 94 , para . 1.
40. Medellin , 552 U.S. at 508 ( contrasting this language wvith the language of directives).
41. Id . (using "shall" and "nusCt to demonstrate mandatory directive language).
42. Id . at 509 ( "The U.N. Charter's provision of an express diplomatic-that is, nonjudicial-renedy is itself evidence that ICJ judgments were not meant to be enforceable in domestic courts.").
43. Id . at 509-10 (relying in part on this remedy as evidence that Article 94 is nonsecf-executing); see Johan D . van de Vyver, The Environment: State Sovereignty, Human Rights, and Armed Conflict , 23 EMORY INTIL L. RL. 85 , 102 ( 2009 ) ("The Security Council is admittedly influenced in its decisions by political coisiderations. To add insult to injury, the veto power of the permanent members of the Council (China, France, Russia, the United Kingdom, and the United States) renders them practically immune from retributory action.").
44. Medellin , 552 U.S. at 509-10.
45. Id . at 510-11 ( explaining that letting ICJ Judgments become automatically enforceable in the United States would leave nothing to veto in the Security Council) .
52. U.S. CONST. art. I; see Elizabeth Sampson, Revisitig Miranda After Avena: The Inplications of Mexico v. United States of America for the Implementation of the Vienna Convention on ConsularRelations in the hited States . 29 Fr RDHAM INT'L LJ . 1068 , 1080 ( 2006 ) ("These powers are limited by the Constitution, enabling Congress to legislate only in areas in which it has authority.").
53. THL FLDLRALIST No. 45 , at 292- 93 (James Madison) (Clinton Rossiter ed ., 196 1) (arguing for the adoption of the US Constitution and for a federalist republic).
54. US. CONST. art. 1 , cl . 8.
55. Paul v. Virginia , 75 U.S. 168 , 183 ( 1869 ).
56. St . Paul Fire & Marine Ins . Co. v. Barry, 438 U.S. 531 , 539 ( 1978 ) ("[I1t had been assumed ... that the issuance of an insurance policy was not a transaction in interstatc commerce and that the States enjoyed a virtually exclusive domain over the insurance industry" ).
57. United States v. S.E. Underwriters Ass'n, 322 U.S. 533 553 ( 1944 ) (finding that insurance is considered commerce under the commerce clause ).
58. Id .
59. Id . at 556- 58 ( "We have been shown not one piece of reliable evidence that the Congress of 1890 intended to freeze the proscription of the Sherman Act within the mold of then current judicial decisions defining the commerce power.").
123. America Int'lns . Co., 66 F.3d at 45- 56 ( "Because the Kentucky Liquidation Act is a state statute cnacted 'for the purpose of regulating the business of insurance' and is 'designed to protect policyholders' under the M cCarran-Ferguson Act, it is not preempted by the Federal Aibitration Act.").
124. Id . at 44 (utilizing a three part test to show that this statute regulates the "business of insurance" ).
125. See id. at 45 (holding that "the Convention is not self-executing, and therefore, relies upon an Act of Congress for its implementation"); see supra notes 31- 35 (discussing Foster v . Neilson , 27 U.S. 253 ( 1828 )).
126. Stephens v. Nat' Distillers & Chemical Corp., 69 F.3d 1226 , 1227 ( 2d Cir . 1995 ) (framing the issue before the court as reconciling the demands of the seemingly inconsistent McCarran-Ferguson Act and the Foreign Sovereign Immunities Act) .
127. Id . at 1233.
128. Id . at 1233 n. 6 ("Because the decision in the case before us is fully supported by the fact that international law preempted the relevant state insurance law before the passage of both the McCarran-Ferguson Act and the [Foreign Sovereign Immunities Act]. we need not consider whether the alternative ground discussed above is in conflict wvith the holding of Anerican Distillers." (citations omitted)
129. See , e.g., Goshawk Dedicated v . Portsmouth Settlement Co . 1 , 466 F. Supp . 2d 1293 , 1304 n.9 (N.D. Ga . 2006 ) (declining to follow Amercan liternational Insurance because precedent in the Eleventh Circuit mandates enforcing the N.Y. Convention over all prior contrary laws): see also Pinnoak Res., LLC v . Certain UnderwritCrs at Lloyd's, 394 F. Supp . 2d 821 . 827 -28 (S.D.W. Va . 2005 ) (noting the split of authority
130. See infra notes 144-53 for a discussion of the dissent in Safety NationalCasualty Corp. v. Certain Lhaderwriters, which would have held in accordance with the Second Circuit .
131. Safety Nat'l Cas . Corp. v. Certain Undeiriters , 587 F.3d 714 , 717 - 18 ( 5th Cir . 2009 ) (discussing the procedural history of the case).
132. Safety Nat'l Cas . Corp. v. Certain Underwriters , 543 F.3d 744 ( 5th Cir . 2008 ), vacated and reh'gen banc granted,558 F .3d 588 ( 5th Cir . 2009 ).
133. Safety Nat'1 Cas . Corp., 587 F. 3d at 718-19 (examining the Louisiana antiinsurance-arbitration statute and the N .Y. Convention).
134. Id . at 720 ( "[W]c will assume, without deciding, that the Louisiana statute regulates the business of insurance.").
135. Id . at 720- 21 ( "We, therefore, limit our analysis to whether Louisiana law overrides the Convention's requirement that the prescnt dispute be submitted to arbiltraion because we construe an act of Congress to invalidae, impair, or supersede state law.").
163. See Safety Nat' Cas. Corp., 587 F.3d at 736 - 37 (Clement, J., concurring) (contrasting Article II and Article III).
164. See Brief for the United States as Amicus Curiac Supporting Respondents, Louisiana Safety Ass'n of Timberincn-Self Insurers Fund v . Certain Underwriters' , 130 S. Ct . 3311 ( 2010 ) (No. 09 - 945 ), 2010 WL 3375626 (U.S.) * 7 - 8 [hereinafter Arnicus Brief] (endorsing the Fifth Circuit's judgincnt in Safety National, but explaining that [t] he better view of the matter. however, is that Artice 11is self-cxecuting" ).
165. See id. at *Il n.l ( " [I] n relation to 28 extradition treaties that the 'legal procedures for extradition are governed by bo1th federal statute and sclf-executing treatics. Subject to a contrary treaty provision, existing federal law implemcnts aspects of thesoef tthrreeasattiiess ..'' ccttiing S. Exec . Rep. ~No. 12 , ( 2008 'S)~P
166. See , e.g., Medellin v . Texas , 552 U.S. 491 , 513 ( 2008 ) (citing Amicus Brief for the Executive Branch's view of treaty status and concluding that the government's view of a treatv's execution status is persuasive authority); Abbott v . Abbott , 560 U.S. 1 , 1993 ( 2010 ) (giving the Executive Branch's interpretation of treaty "great weight") . In its brief, the government clarified that "the State Department's view-as articulated in this brief-is that Article II is self-executing." Anicus Brief , supranote 164 at *11.
167. See generally ESAB Grp . v. Zurich Ins. PLC , 685 F.3d 376 ( 4th Cir . 2012 ).
168. Id . at 380-82, 385 - 86 ( detailing relevant case law and history of the MFIAct, the N.Y. Convention, the FAA, and the Convention Act and the various opinions of the
170. Id . at 386-88 (rejecting the contention that the South Carolina Law fails to regulate insurance and concluding that the case could be disposed of without deciding if Article II was self-executing) .
171. Id . at 387 ( citing Safety Nat'l Cas . Corp. v. Certain Underwriters , 587 F.3d 714 , 737 ( 5th Cir . 2009 ) (Clenent , J., concurring)) (noting that the legislative history of the Convention Act implies that Congress intended it to be , at least in part, implementing kgislation).
172. Id . at 388 ( " [E]ven assuming Artice 11 of the Convention is non-seifexecuting, the Convention Act, as implementing legislation of a treaty, does not fall within the scope of the McCarran-Ferguson Act.").
173. Id . at 388 , 389 (Citing and examining the facts and precedent set by Am. Ins. Ass'n v . Garamendi ,539 U.S. 396 , 428 ( 2003 )).
174. Id . at 389 ( "Although in Garmendi the Court was examining the interaction between state law and an executive agreement, the Courts statements regarding congressional intent guide our understanding of Congress's intent to limit the Act's scope"); see Edwvin M. Borchard . Treatiesand Executive Agreements A Repl, 54 YALE LJ . 616 , 628 629 ( 1945 ) (detailing the difference between treaties and exeutLive agreements, two types of international agreements entered into by the United States) .
175. ESAB Grp. v. Zurich Ins., 685 F3d 376 , 390 ( 4th Cir . 2012 ) ("Because the Supreme Court [in Garamncirdi] has made dcear that McCarran-Ferguson is limited to domestic affairs, we hold the Convention Act falls outside of its scope.").