Apache Bohai Corp v. Texaco China BV

United States Court of Appeals
Fifth Circuit
F I L E D
April 30, 2003
Charles R. Fulbruge III
Clerk
REVISED MAY 2, 2003
In the
United States Court of Appeals
for the Fifth Circuit
_______________
m 02-20489
_______________
APACHE BOHAI CORPORATION, LDC,
Plaintiff-Appellant,
VERSUS
TEXACO CHINA, B.V.,
Defendant-Appellee.
__________________________
Appeal from the United States District Court
for the Southern District of Texas
_________________________
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *

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_______________
m 02-21158
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IN THE MATTER OF:
APACHE BOHAI CORPORATION, LDC,
Petitioner.
__________________________
Petition for Writ of Mandamus to
the United States District Court
for the Southern District of Texas
_________________________
Before GARWOOD, SMITH, and BARKSDALE,
Circuit Judges.
JERRY E. SMITH, Circuit Judge:
Apache Bohai Corporation, LDC (“Apache
Bohai”) appeals an order staying proceedings
in the district court and compelling arbitration
of its dispute with Texaco China, B.V. (“Tex-
aco”). Because this court’s jurisdiction is con-
tested, Apache Bohai filed a conditional peti-
tion for writ of mandamus directing the district
court to vacate its order and enter an ap-
pealable final judgment. Concluding that we
lack jurisdiction, we dismiss the appeal. Find-
ing no abuse of discretion, we deny mandamus
relief.
I.
On April 2, 1998, Texaco entered into two
written farmin agreements1 with Apache China
Corporation (“Apache China”), according to
which Apache China agreed to drill and pay
for three wells on two of Texaco’s acreage
blocks in the Bohai Bay area of the People’s
Republic of China. In December 1998, Apa-
che China assigned its interests in the farmin
agreements to Apache Bohai, its affiliate. By
June 1999, however, Apache Bohai lost inter-
1 A farmin agreement is a contract whereby one
company acquires an interest in an exploration or
production license by paying some of the past or
future costs of another company that is re-
linquishing part of its interest.

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est in the project and sent documents re-as-
signing all of its interests under the agreement
to Texaco. Texaco signed and returned the
relevant documents in January 2000.
These events gave rise to a dispute over the
parties’ respective obligations under the con-
tract, and in January 2001, Texaco initiated an
arbitration proceeding against Apache China.
Apache Bohai was not named in the arbitration
proceeding but took action anyway, filing suit
in Texas state court requesting a declaratory
judgment that the dispute was not arbitrable
and that it had no liability to Texaco. Texaco
removed the state court proceeding to federal
district court and moved to dismiss or stay the
litigation and to compel arbitration. The
district court granted both motions, issuing an
order to compel arbitration and choosing to
stay rather than dismiss the litigation.
II.
Section 16 of the Federal Arbitration Act
("FAA"), 9 U.S.C. § 16, governs appellate
review of arbitration orders. Congress’s intent
in enacting § 16 was to favor arbitration,2 and
it did so by authorizing immediate appeals
from orders disfavoring arbitration and forbid-
ding immediate appeals from orders favoring
arbitration. Adams v. Ga. Gulf Corp., 237
F.3d 538, 540 (5th Cir. 2001) (citing Forsythe
Int'l, S.A. v. Gibbs Oil Co., 915 F.2d 1017,
1020 (5th Cir. 1990)). The provisions relevant
to this dispute vest the courts of appeals with
jurisdiction over “final decision[s] with respect
to an arbitration . . .,” § 16(a)(3), while specif-
ically denying appellate jurisdiction over
nonfinal orders staying proceedings pending
arbitration, § 16(b)(1). Therefore, our
jurisdiction turns on whether the district
court’s order constitutes a final decision.
A final decision is one that “ends the
litigation on the merits and leaves nothing
more for the court to do but execute the
judgment.” Green Tree Fin. Corp.-Alabama
v. Randolph, 531 U.S. 79, 86 (2000) (citations
and internal quotation marks omitted). Under
this definition, a dismissal is a final decision.
Id. at 89. The district court, however, did not
dismiss the claims, but entered a stay pending
arbitration. An arbitration order entering a
stay, as opposed to a dismissal, is not an
appealable final order.3
Apache Bohai contends that when a district
court enters an order staying an action and re-
ferring all disputed matters to arbitration, leav-
ing no live issues before the district court, this
court should consider the order to be, in effect,
a de facto dismissal and thus a final decision
appealable under § 16(a)(3). Unlike a
dismissal, however, a stay, by definition, con-
stitutes a postponement of proceedings, not a
termination, and thus lacks finality. Further, as
other courts have noted, entry of a stay rather
than a dismissal “suggests that the district
court perceives that it might have more to do
than execute the judgment once arbitration has
been completed.” ATAC Corp. v. Arthur
Treacher’s, Inc., 280 F.3d 1091, 1099 (6th
2 Gilmer v. Interstate/Johnson Lane Corp., 500
U.S. 20, 25 (1991) (citing Moses H. Cone Mem.
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24
(1983)).
3 See Cargill Ferrous Int’l v. Sea Phoenix MV,
No. 01-31193, 2003 WL 1524466, at *5 (5th Cir.
Apr. 9, 2003); see also Green Tree, 531 U.S. at 87
n.2 (“Had the district court entered a stay instead
of a dismissal in this case, that order would not be
appealable.”); Saturn Distrib. Corp. v. Paramount
Saturn, Ltd., No. 02-20431, 2003 WL 1561908,
at *1 (5th Cir. Apr. 10, 2003) (finding district
court order to be a final decision, in part because it
was not accompanied by a stay of proceedings).

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Cir. 2002). Consequently, although it may be
true that in some instances the entry of a stay
disposes of most or all issues, that fact alone
does not render it the functional equivalent of
a dismissal.4
Apache Bohai cites two cases in which we
found appellate jurisdiction despite the plain
absence of a dismissal; neither contradicts our
conclusion that a stay is not a final decision.
In Am. Heritage Life Ins. Co. v. Orr, 294 F.3d
702 (5th Cir. 2002), we held that an order
compelling arbitration and “closing” the case
was a reviewable final decision.5 The district
court in that case had issued an order staying
state court proceedings, compelling
arbitration, and closing the case, leaving
nothing to do but execute the judgment. Id.
In that context, we held that “closing” the case
was functionally indistinguishable from
dismissal.6 In this case, by contrast, the court
did not purport to close the case
administratively, nor did it attempt in any other
way to terminate its involvement in the
proceedings.
Apache Bohai also cites Gulf Guar. Life
Ins. Co. v. Conn. Gen. Life Ins. Co., 304 F.3d
476 (5th Cir. 2002), as an example of this
court’s willingness to find the existence of an
appealable final decision despite the lack of an
explicit dismissal. In Gulf Guaranty, id. at
480-81, the district court reopened a suit for
the express purpose of consolidating it with a
later action. The order forming the basis for
the appeal in Gulf Guaranty explicitly
dismissed the later action but failed to mention
the claims from the earlier suit. Id. We
concluded, in light of the various indications
that the court intended to dismiss both suits,
that the order was a final decision.
Far from expanding the definition of final
decision for purposes of § 16(a)(3), we merely
recognized that “the intention, as well as the
effect [of the order], was to dismiss [the
action]." Id. at 483.7 Here, there is no
indication that the district court intended to
dismiss the case but failed to do so through an
oversight. Rather, it entered an order
expressly granting a stay of the proceedings
pending arbitration.
III.
In the alternative, Apache Bohai seeks a
writ of mandamus directing the district court
to vacate its order and enter an appealable final
judgment. Mandamus is a drastic remedy
reserved only for truly extraordinary situ-
ations. Will v. United States, 389 U.S. 90,
106 (1967). The district court must have
committed a “clear abuse of discretion” or
4 See ATAC Corp., 280 F.3d at 1099. In Green
Tree, 531 U.S. at 87 n.2, the Court noted that had
the district court entered a stay rather than a dis-
missal, the order would have been unappealable.
Thus, even where dismissal is appropriate, i.e., all
claims have been referred to arbitration, the entry
of a stay rather than a dismissal bars appellate
jurisdiction.
5 Am. Heritage, 294 F.3d at 708; but see ATAC
Corp., 280 F.3d at 1099 (holding that order to
compel arbitration and close proceedings is not an
appealable final decision).
6 Am. Heritage, 294 F.3d at 708 (“[T]here is no
practical distinction between ‘dismiss’ and ‘close’
for purposes of this appeal.”).
7 Indeed, our consideration in Gulf Guaranty of
the intent underlying the district court’s order di-
rectly undercuts Apache Bohai’s position. If the
primary consideration were the practical effect of
the order, as Bohai contends, there would have
been no need to evaluate the district court’s intent.

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engaged in “conduct amounting to the usur-
pation of power.” Mallard v. United States
Dist. Ct., 490 U.S. 296, 309 (1989) (citations
and internal quotation marks omitted). This
burden is particularly heavy in the context of
mandamus review of a decision to enter a stay
pending arbitration, “because Congress has
expressly limited interlocutory review of a dis-
trict court decision on arbitration.” McDer-
mott Int’l, Inc. v. Underwriters at Lloyds, 981
F.2d 744, 748 (5th Cir. 1993). “Moreover, it
is more than well settled that a writ of
mandamus is not to be used as a substitute for
appeal[.]” Id.
To establish its entitlement to mandamus
relief, Apache Bohai is required to show clear-
ly and indisputably that the district court did
not have the discretion to stay the proceedings
pending arbitration.8 It has not made this
showing. Apache Bohai is unable to cite a sin-
gle case in which we held that a district court
abused its discretion by staying rather than
dismissing proceedings pending arbitration.9
Indeed, we have held that a decision, under
similar circumstances, to issue a stay rather
than a dismissal was not an abuse of discretion
warranting mandamus.10
The appeal in No. 02-20489 is
DISMISSED, and the petition for writ of
mandamus in No. 02-21158 is DENIED.
8 See McDermott, 981 F.2d at 748 (citing Gulf-
stream Aerospace v. Mayacamas Corp., 485 U.S.
271, 289 (1988)).
9 Apache Bohai relies primarily on Alford v.
Dean Witter Reynolds, Inc., 975 F.2d 1161 (5th
Cir. 1992), to support its contention that the dis-
trict court’s order constitutes an abuse of discre-
tion. In Alford, we concluded that “the weight of
authority clearly supports dismissal of a case when
all of the issues raised in the district court must be
submitted to arbitration.” Id. at 1164 (emphasis
omitted). In other words, Alford held merely that
dismissal was not an abuse of discretion. Id. The
court did not hold that dismissal was required
under the circumstances, much less that failure to
dismiss would have been an abuse of discretion.
See id.; see also Fedmet Corp. v. M/V Buyalyk,
(continued...)
9(...continued)
194 F.3d 674, 676 (5th Cir. 1999) (holding that
“district courts have discretion to dismiss cases in
favor of arbitration,” but not implying any
obligation to do so).
10 See McDermott, 981 F.2d at 748 (“[Peti-
tioner] has failed to satisfy this most demanding
standard [mandamus standard]. The district court
did not clearly overstep its authority when it grant-
ed the order compelling arbitration and stayed
further proceedings pending that arbitration.”).

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