Preventing Reverse-Preemption of the United States

Fordham International Law Journal, Dec 2013

Conor Colasurdo

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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 - 2013 Article 2 Convention Conor Colasurdo* 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 FordhamInternationalLawjournal. 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 INTRODUCTION 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, 1999). 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, http://www.uncitral.org/uncitral/cn/uncitral-texts/arbitration/NYConvention.htil (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 ARBITRATION POLICY 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 Agreements 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 international agreements." 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: ( 1 ) the treaty's text indicates that it will not become operative without implementing legislation; ( 2 ) 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 non-scif-executing treatics). 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 provision"). 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 execution analysis). advice and consent that implementing legislation is required for the treaty to become operative; or ( 3 ) 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 provisions. 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 United States."). 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 industry.5 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 insurance industry"). 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 reversepreemption). 65. Id. 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. state 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 insurance industry. 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 federal policy.."). 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 United States"). 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 arbitration terms). 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 interstate commerce."8 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 practical reasons). 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 century."). 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 Cir. 1942). 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), http://wwv.andersonkill.con/webpdlext,/AKO-WAilIlPolicyholderse(,ornpelled.pdf (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), http://ww,.willkic.com/files/tbl-s29Publications%5(FikUpload5686%5C4157%5CFo 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 arbitration disputes). 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 Act.98 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. Convention.101 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 reversepreemption. 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 1958."). 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 ( 1 ) enforce written international arbitration agreements; and ( 2 ) enforce 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 arbitrators. 1Uo 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). 109. i. 110. Mitsubishi Motors Corp. v. Soler Chrysler-Plyinlouth, Ic., 473 U.S. 614 (1985). 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 subtitle."). 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: ( 2 ) 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." Applying 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 Second Circuit.",o 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 issue. 32 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) (citations omitted)). 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. Convention). 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.. dissenting). 145. See id. at 751 n.31 (concluding that neither party preserved the secf-execution issue). 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, reversepreempted.15 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 contracting state"). 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 foreign relations.' 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 courts. I75 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 regulation.17 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 LEGISLATION 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: ( 1 ) 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, ( 2 ) 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 international agreement.18 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 convoluted means. 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 COACLUSION 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 industry). 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 status). 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.").


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Conor Colasurdo. Preventing Reverse-Preemption of the United States, Fordham International Law Journal, 2013,