            IN THE UNITED STATES COURT OF APPEALS
                     FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                     Fifth Circuit

                                                  FILED
                                                                            June 9, 2009

                                       No. 08-20247                    Charles R. Fulbruge III
                                                                               Clerk

SAIPEM AMERICA

                                                   Plaintiff - Appellant
v.

WELLINGTON UNDERWRITING AGENCIES LIMITED; XCHANGING
CLAIMS SERVICES; HOUSTON CASUALTY COMPANY; NAVIGATORS
INSURANCE SERVICES OF NEW YORK; INTERNATIONAL INSURANCE
COMPANY OF HANNOVER, LONDON; AXIS SPECIALTY LIMITED OF
BERMUDA; GREAT LAKES REINSURANCE (UK) PLC; NOBLE ENERGY
MEDITERRANEAN, LTD

                                                   Defendants - Appellees




                   Appeal from the United States District Court
                        for the Southern District of Texas
                              USDC No. 4:07-cv-3080


Before O’CONNOR * , Associate Justice (Ret.), and WIENER and STEWART,
Circuit Judges.

PER CURIAM **



       *
        The Honorable Sandra Day O’Connor, Associate Justice of the United States Supreme
Court, (Ret.), sitting by designation, pursuant to 28 U.S.C. § 294(a).
       **
         Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
                                 No. 08-20247

      The appeal arose from damage caused to an offshore platform while it was
being transported from Texas to an offshore location in Israel. The parties
presented this dispute to arbitration. The arbitration tribunal found Saipem
America, Inc. (“Saipem”) directly liable for negligent misrepresentation, awarded
the Underwriters more than $1 million in actual damages and $399,000 in
attorneys’ fees, and split the costs of arbitration equally between the parties.
Saipem brought suit in federal district court seeking to vacate the arbitration
award. The district court affirmed the award. For the reasons discussed herein,
we AFFIRM.


I.    FACTUAL AND PROCEDURAL BACKGROUND
      The underlying facts of this case are not in dispute.            Samedan
Mediterranean Sea (“Samedan”), later known as Noble Energy Mediterranean,
Ltd. (hereinafter “Samedan”), contracted with Heerema Marine Contractors
Nederland B.V. (“Heerema”) for the transportation and installation of Samedan’s
offshore platform from Texas to Israel. The contract between Heerema and
Samedan required Heerema to obtain insurance for the load-out, transportation,
and installation of the platform. Heerema obtained the required insurance from
several underwriters (“Underwriters”), naming Heerema and Samedan as
principal assureds.
      While in transport in December 2002, the platform received extensive
damage when the platform’s main crane broke free from its boom rest. The
company responsible for towage and installation of the platform also sustained
damages. Heerema and Samedan filed insurance claims with the Underwriters
for the damage. The Underwriters then made claims against Saipem, asserting
that Saipem was liable for the platform damage based on two contracts: one

                                       2
                                    No. 08-20247

contract was between Saipem and Samedan under which Saipem was to serve
as Samedan’s Certified Verification Agent (“CVA”) and the other contract was
a marine warranty surveyor subcontract between Saipem and Heerema under
which Saipem was to serve as a marine warranty surveyor. Samedan also made
claims against Saipem because of the insurance policy’s deductible; Heerema did
not bring a claim against Saipem.
      The subcontract between Saipem and Heerema (the “Subcontract”)
provides the following regarding arbitration:
      Any dispute arising out of or in connection with this Subcontract
      which cannot be amicably settled shall be referred to arbitration in
      The Hague, The Netherlands, in accordance with the Rules of the
      International Chamber of Commerce currently in force. Any
      settlement agreement or arbitral award shall be final and binding
      upon Parties.
      Pursuant to the Subcontract’s arbitration provision, Samedan and the
Underwriters requested arbitration.1 They argued that Saipem’s performance
as CVA and marine warranty surveyor was inadequate and breached the
contract with Samedan and the Subcontract with Heerema. Samedan and the
Underwriters sought declarations that Saipem breached its contracts and
fiduciary duties with them and with Heerema; that Saipem was negligent,
professionally or otherwise; and that Saipem was guilty of negligent
misrepresentation.     The negligent misrepresentation claim was based on
Saipem’s issuance of a certificate of approval that the platform could be safely
towed from Texas to Israel. All parties sought attorneys’ fees.



      1
         Samedan and the Underwriters acknowledge that they requested arbitration, but
they contend that they requested arbitration only after they were compelled to do so by
Saipem after suit was filed in Nueces County District Court.

                                          3
                                       No. 08-20247

       The arbitral tribunal concluded that Saipem’s contracts with both
Samedan and Heerema contain valid indemnity provisions, but the provisions
create a “circularity of indemnity” that effectively extinguished the Underwriters
subrogation claims against Saipem. The tribunal found that because Saipem
had no direct contractual relationship with the Underwriters, the Underwriters
could maintain a claim of negligent misrepresentation. The tribunal issued an
award finding Saipem liable for damage to the platform. As a result of its
finding on the negligent misrepresentation claim, the tribunal found Saipem
liable to the Underwriters for actual damages in the amount of $1,110,657,
attorneys’ fees and expenses in the amount of $399,000, and 50% of the costs of
arbitration in the amount of $105,000.2 The district court affirmed the award
in all respects. Saipem appeals.


II.    DISCUSSION
       A.     Standard of Review

       “This court reviews a district court’s confirmation of an arbitration award
de novo, using the same standards as the district court.” Am. Laser Vision, P.A.
v. Laser Vision Inst., L.L.C., 487 F.3d 255, 258 (5th Cir. 2007) (per curiam). Our
review of the arbitration award is “‘exceedingly deferential,’” and the award
must be upheld if it ‘“is rationally inferable from the letter or purpose of the
underlying agreement.’” Id. (quoting Kergosien v. Ocean Energy, Inc., 390 F.3d




       2
          The district court incorrectly states that the tribunal found Saipem liable for
$210,000 in costs, the total cost of the arbitration. Rather, the tribunal concluded that Saipem
should bear “50% of such costs.” Neither party has raised an issue on costs, and the district
court’s misstatement has no bearing on the issues on appeal.

                                               4
                                        No. 08-20247

346, 352 (5th Cir. 2004) and Nauru Phosphate Royalties, Inc. v. Drago Daic
Interests, Inc., 138 F.3d 160, 164-65 (5th Cir. 1998)).

       This court previously recognized both statutory and common law grounds
for vacating an arbitration award. 3 The parties dispute whether the Supreme
Court’s recent decision in Hall Street Associates, L.L.C. v. Mattel, Inc., 128 S. Ct.
1396 (2008), forecloses this court’s review of the arbitration award on
nonstatutory grounds. After oral argument, a panel of this court addressed that
question in Citigroup Global Markets, Inc. v. Bacon, 562 F.3d 349 (5th Cir.
2009). In Citgroup Global, the court stated that “manifest disregard of the law
as an independent, nonstatutory ground for setting aside an award must be
abandoned and rejected.” Id. at 358. The panel in Citigroup Global interpreted
Hall Street as restricting grounds for vacatur of an arbitration award under the
Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., exclusively to statutory
provisions, and it held that Hall Street effectively overruled Fifth Circuit
precedent holding that nonstatutory grounds may support vacatur of an
arbitration award. Id. at 350; see id. at 358 (“To the extent that our previous
precedent holds that nonstatutory grounds may support the vacatur of an




       3
         The common law grounds were based on awards that were contrary to public policy
or displayed a manifest disregard of the law. See Sarofim v. Trust Co. of the West, 440 F.3d
213, 216 (5th Cir. 2006) (citation omitted). A party who sought to vacate an arbitration award
based on a public policy had to demonstrate that the public policy was “‘explicit, well defined,
and dominant.’” Id. at 219 (quoting Prestige Ford v. Ford Deal Computer Servs., Inc., 324 F.3d
391, 396 (5th Cir. 2003)). To vacate an arbitration award under the manifest disregard
standard, (1) the tribunal’s “error must have been obvious and capable of being readily and
instantly perceived by the average person qualified to serve as an arbitrator,” (2) the arbitrator
must have appreciated the existence of a clearly governing principle but ignored it, and (3) the
award must result in a “significant injustice.” American Laser Vision, P.A., 487 F.3d at 259
(citations omitted).

                                                5
                                  No. 08-20247

arbitration award, it is hereby overruled.”). Accordingly, we may vacate the
arbitration award in this case only if a statutory ground supports the vacatur.

      Under 9 U.S.C. § 10(a)(4), this court may vacate an arbitration award
“where the arbitrators exceeded their powers, or so imperfectly executed them
that a mutual, final, and definite award upon the subject matter was not made.”
Under § 11(b), this court may modify an arbitration award “[w]here the
arbitrators have awarded upon a matter not submitted to them, unless it is a
matter not affecting the merits of the decision upon the matter submitted.” 9
U.S.C. § 11(b). We resolve any doubts concerning the scope of arbitration in
favor of arbitration. American Laser Vision, P.A., 487 F.3d at 259.

      B.      Negligence Claim

      Saipem argues that the tribunal exceeded its authority because its award
is solely for a claim for negligence, a claim upon which the contract has no
applicability or bearing, and therefore, it is not rationally inferable from the
contract. We must look to the contract and the parties’ submissions to the
tribunal to determine whether the parties agreed to submit an issue to the
arbitrator.   See Piggly Wiggly Operators’ Warehouse, Inc. v. Piggly Wiggly
Operators’ Warehouse Indep. Truck Drivers Union, Local No. 1, 611 F.2d 580,
584 (5th Cir. 1980) (“[O]nce the parties have gone beyond their promise to
arbitrate and have actually submitted an issue to an arbiter, we must look both
to their contract and to the submission of the issue to the arbitrator to determine
his authority.”). The parties agreed to and submitted Terms of Reference to the
arbitral tribunal, which provided, inter alia, a summary of the parties’ positions
and the relief requested by the parties.       Samedan and the Underwriters
submitted the claim of negligent misrepresentation before the tribunal, and

                                        6
                                   No. 08-20247

Saipem took the position that the negligence claims were barred.            Saipem
separately argued that it was not negligent, as it conducted its work in a
professional and diligent manner in accordance with industry practice.

      Further, the parties agreed to the following in the Terms of Reference:

      The Arbitral Tribunal is to resolve, by a preponderance of the
      evidence all issues of fact and law that shall arise from the claims
      and pleadings as duly submitted by the parties, including, but not
      limited to, the following issues as well as any additional issues of
      fact or law which the Arbitral Tribunal, in its own discretion, may
      deem necessary to decide upon for the purpose of rendering any
      Arbitral Award . . . .
Hence, the parties agreed that the tribunal could decide “any additional issues
. . . at its own discretion.” In light of the parties’ submissions and grant of broad
authority to the tribunal, we cannot find that the tribunal exceeded its
authority. See Piggly Wiggly Operators’ Warehouse, Inc., 611 F.2d at 584.

      Saipem relies upon Texas Civil Practice and Remedies Code § 171.048(c)
to argue that attorneys’ fees are specifically prohibited in this situation. In this
international commercial arbitration, § 171.048 does not apply.              Section
172.001(d) provides that “[e]xcept as provided by this subsection, this chapter
supersedes Subchapters B and C, Chapter 171, with respect to international
commercial arbitration and conciliation.”       T EX . C IV. P RAC. & R EM. C ODE §
172.001(d) (footnotes omitted).     Section 172.145 provides the tribunal with
discretion to award costs, and such costs may include legal fees and expenses.
§ 172.145(a) & (b)(1)(B). Therefore, statutory authority exists for the award of
attorneys’ fees in this case.




                                         7
                                  No. 08-20247

      Further, after placing these issues before the tribunal, Samedan and the
Underwriters requested, inter alia, “[a]n Award that all costs of the requested
arbitration be borne by [Saipem], including arbitrators’ fees, counselor’s fees and
related costs.” Saipem also requested “an award of the costs of the arbitration,
including its legal and expert fees and related costs.” Because the parties
submitted the issue of attorneys’ fees to the tribunal in the Terms of Reference,
the tribunal properly considered the issue. We find that the arbitrators did not
exceed their powers or award upon a matter not submitted to them.

      C.    Indemnity

      Saipem argues that the tribunal found that Saipem was entitled to
indemnity, but it failed to award Saipem indemnity. Essentially, Saipem argues
that the tribunal violated § 10(a)(4) by not issuing a mutual, final, and definite
award upon the subject matter.

      The tribunal stated the following regarding indemnity:

      We find and conclude that both the Samedan and Heerema
      contracts with [Saipem] contain valid indemnity provisions. . . .
      These indemnity provisions satisfy both the “express negligence”
      rule of Texas law and the “clear and unequivocal” test of United
      States maritime law. Such provisions create a “circularity of
      indemnity” that effectively extinguishes the [Underwriters’]
      subrogation claims against [Saipem]. . . .

Neither party has provided the contract between Samedan and Saipem, which
contains the other indemnity provision. At oral argument, Saipem confirmed
that it is not part of the record on appeal. We find no basis to vacate the award
based on the tribunal’s failure to award Saipem indemnity.           The arbitral
tribunal made detailed findings which are well-supported by governing law, and


                                        8
                                 No. 08-20247

it did not exceed its powers or so imperfectly execute them that a mutual, final,
and definite award was not made.

III.   CONCLUSION

       For the foregoing reasons, we AFFIRM the district court’s judgment
confirming the arbitration award.




                                       9
