269 F.3d 187 (3rd Cir.

2001)

E.I. DUPONT DE NEMOURS AND COMPANY, A

DELAWARE CORPORATION
v.
RHONE POULENC FIBER AND RESIN INTERMEDIATES,
S.A.S., AKA RHONE-POULENC FIBRES ET POLYMERES
S.A.; RHODIA, A FRENCH CORPORATION; RHODIA
FIBER AND RESIN INTERMEDIATES, S.A.S., FORMERLY
NAMED RHONE POULENC FIBER AND RESIN
INTERMEDIATES, S.A.S.; RHODIA, SA, F/K/A RHONE
POULENC FIBRES ET POLYMERES S.A. RHODIA FIBER
AND RESIN INTERMEDIATES, SAS AND RHODIA SA,
APPELLANTS
No. 00-3550

UNITED STATES COURT OF APPEALS FOR THE THIRD

CIRCUIT
Argued: September 5, 2001
October 15, 2001
1

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF DELAWARE District Judge: The Honorable Roderick R.
McKelvie (D.C. Civil No. 99-CV-00874)[Copyrighted Material Omitted]
[Copyrighted Material Omitted]

John A. Parkins, Jr., Esq. (Argued), Robert W. Whetzel, Esq., Richards, Layton
& Finger, One Rodney Square P.O. Box 551 Wilmington, DE 19899, Attorneys
for Appellants

P. Clarkson Collins, Jr., Esq. (Argued), Morris, James, Hitchens & Williams,
222 Delaware Avenue P.O. Box 2306 Wilmington, DE 19899, Attorneys for
Appellee

Before: Scirica, Alito, and Barry, Circuit Judges

OPINION OF THE COURT

Barry, Circuit Judge

5

In 1996, after years of negotiation, a Joint Venture Agreement ("the

Agreement") was entered into between DuPont China ("DPC"), Rhone Poulenc
Fiber and Resin Intermediates ("Rhodia Fiber"), and Liaoyang Petro-Chemical
Fiber Company ("LYPFC"), a Chinese entity. DPC and Rhodia Fiber are
subsidiaries of E.I. DuPont de Nemours and Company ("DuPont") and Rhodia,
SA ("Rhodia"),1 respectively. The object of the 50-year joint venture was to
create Sanlong Nylon Company Limited ("Sanlong") to research, manufacture,
and sell certain fibers. The joint venture ultimately failed and DuPont, the
parent of DPC, brought suit against Rhodia Fiber and its parent, Rhodia, to
recover, DuPont says, not for breach of the Agreement, to which it was not a
party, but rather for breach of an oral agreement and fraudulent
misrepresentations which occurred much later in time and as a result of which it
was damaged. Rhodia Fiber and Rhodia moved to dismiss the complaint on
various grounds and to compel arbitration. The District Court denied that
motion in all respects, and an appeal was taken from the denial of the motion to
compel arbitration and the denial of the motion to dismiss for lack of personal
jurisdiction. We will affirm as to the former and dismiss the appeal as to the
latter.
I. The Joint Venture Agreement

While DuPont does not purport to have sued on the Agreement itself, there is
no dispute that the Agreement was at the heart of the proceedings before the
District Court and is at the heart of this appeal. We begin, therefore, with the
relevant provisions of the Agreement and the background of how this litigation
came to be.

Each party to the Agreement -- DPC, Rhodia Fiber and LYPFC -- was to
contribute significant capital to the joint venture in relation to its interest in the
venture. In P 7.02, the parties agreed that:

(a) The Company [Sanlong] will be responsible for obtaining financing that is
beyond or in addition to the Company's registered capital by borrowing funds
from sources inside China or outside China. Upon the unanimous affirmative
vote of every director of the Board, each Party shall provide guaranties[sic] for
such additional financing, in proportion to the Party's contribution to registered
capital. A Party may guarantee the Company's local currency or foreign
currency borrowings, provided that the aggregate amount of all guaranties [sic]
provided, by each Party is in proportion to that Party's contribution to registered

capital. If any Party's guaranty is not acceptable to the Lender, that Party shall,
subject to any necessary approval of the relevant authorities, arrange a guaranty
from a financial institution or other company acceptable to the lender.
9

(B) Upon the unanimous affirmative vote of every director of the Board in
support of the Company obtaining additional financing by way of borrowing
from the Parties, each Party shall directly or indirectly provide loans for
additional financing, in proportion to the Party's contribution to registered
capital. The terms and duration of such loans shall be equitable among the
Parties and agreed upon by the Board.

10

P 7.02 (emphasis added). Nothing in this paragraph obligated either parent

company -- DuPont or Rhodia -- to provide any guarantees or loans; rather,
guarantees and/or loans were obligations of the subsidiaries.

11

Even though the parent companies were not parties to the Agreement, it was
stated in the Agreement that they would "assist the Company in the balancing
of foreign exchange during the Company's initial years of operation by
exporting 14,000 tons and 6,000 tons per year of nylon 6,6 polymer flake
respectively in accordance to the DuPont Polymer Flake Export Sales
Agreement and RP Polymer Flake Export Sales Agreement respectively." P
10.01(b). Also, to ensure the success of the Company, the Agreement provided
that the parties "and their Affiliates will not take action detrimental to the
interest or well-being of the Company." P 10.03(a).2 In conjunction with the
Agreement, DuPont (the parent) entered into three related agreements with the
joint venture company: a supply agreement, a license contract and an export
sales agreement. Rhodia (the parent) also entered into a similar series of related
agreements.

12

Two provisions of the Agreement are of particular relevance and, thus,

particular importance here. First, the Agreement contained an arbitration
clause:

13

In the event any dispute or claim or difference of any kind whatsoever arises in
connection with the interpretation or implementation of this Contract (a
"dispute"), including any question regarding its existence[,] validity or
termination, the parties shall attempt in the first instance to resolve the dispute
through friendly consultations. If the dispute is not resolved in this manner
within sixty (60) days after one Party has given both the other Parties written
notice of the existence of the dispute, then, the dispute shall be referred to and
finally resolved by arbitration in Singapore in accordance with the Arbitration

Rules of the Singapore International Arbitration Centre ("SAIC") for the time
being in force. The tribunal shall consist of three (3) arbitrators. The governing
law of this arbitration shall be the substantive law of the PRC and the language
of arbitration shall be English.
14

P 25.01 (emphasis added). Second, the Agreement provided that it was

15

... made for the benefit of LYPFC, [Rhodia Fiber], DCH and their respective
lawful successors and assignees and is legally binding on them. This Contract
may not be changed orally, but only by a written instrument signed by LYPFC,
[Rhodia Fiber] and DCH and approved by the Examination and Approval
Authority.

16

P 27.03.

17

After the joint venture failed, DuPont filed a three count Complaint against
Rhodia Fiber and Rhodia. In the first count, entitled "Third Party Beneficiary
Claims," DuPont alleged that "DuPont, as the ultimate parent of DCH and as
the party required to provide loan guaranties [sic] on behalf of its subsidiary
DCH, was an intended party beneficiary of the Joint Venture Contract," and
that "Rhodia Fiber materially breached the Joint Venture Contract by, without
limitation, failing to provide or secure the required loan guaranties [sic]." A8081. In the second count, entitled "Breach of Agreement to Secure and Provide
Guaranties/Promissory Estoppel," DuPont alleged that it was harmed by the
breach by Rhodia Fiber and Rhodia of a January 1998 oral agreement between
DuPont and the two defendants pursuant to which the defendants agreed to
support the joint venture but did not thereafter provide or secure the requisite
loan guarantees. In the third count, entitled "Fraudulent Inducement/Material
Misrepresentation," DuPont alleged that Rhodia Fiber and Rhodia made false
statements of fact to DuPont with the intent to induce DuPont's subsidiary DCH
"to commit substantial resources and investments to the business of the Joint
Venture and to induce DuPont to support the business of the Joint Venture by,
inter alia, providing Loan guaranties on behalf of the Joint Venture." A83.

18

In response, the defendants moved to compel arbitration and to dismiss the

action for lack of personal jurisdiction, insufficient service of process, failure to
join an indispensable party, and forum non conveniens. DuPont then filed a
First Amended Complaint significantly altering its theory of liability. For
starters, DuPont dropped the first count of the Complaint, which alleged a
breach of the Agreement to which it was an intended third party beneficiary.
The first count of the Amended Complaint, entitled "Breach of Agreement to

Secure and Provide Guaranties/Promissory Estoppel," instead mimicked the

second count of the Complaint, i.e., alleging that at a meeting on January 22,
1998, Bruno deSoyres on behalf of Rhodia, the parent, and Rhodia Fiber, the
subsidiary, entered into an oral agreement with DuPont to further support the
joint venture by securing and providing loan guarantees, and abide by the
obligations contemplated by the Agreement. According to the Amended
Complaint,
19

22. During discussions regarding the EPC Contracts, representatives of RP

expressed concerns regarding the Joint Venture which led DuPont
representatives to believe that the RP Group was reluctant to perform
obligations arising from the Joint Venture Agreement. DCH, as the party to the
Joint Venture Contract, and DuPont as the ultimate parent of DCH and the
party providing the Loan guaranties required to finance the EPC Contracts,
desired to confirm the commitment of the Rhodia Group to the venture before
executing of the EPC contracts and incurring the further financial liabilities
associated therewith.

20

23. At the request of the Rhodia Group's deSoy res, representatives of DCH and
DuPont convened a meeting with deSoyres in Wilmington, Delaware, on
January 22, 1998. Kenneth Wall represented DuPont and Michael Estep
represented DCH at this meeting. deSoyres represented the interests of the
Rhodia Group.

21

24. During the meeting, DuPont and DCH receive d assurance that the Rhodia
Group would continue to support the Joint Venture and fully perform all the
obligations contemplated by the Joint Venture Contract as long as DuPont and
DCH did. DCH and DuPont accepted and relied upon these assurances in
proceeding with the Joint Venture, approving execution of the EPC Contracts
and in agreeing to and ultimately providing Loan guaranties pursuant to the
Joint Venture Contract.

22

A455-46.

23

DuPont alleged that the "Rhodia Group" breached this oral agreement, and,
thus, DuPont named both the parent and the subsidiary in this count as well as
the two remaining counts. The second count of the Amended Complaint
mimicked the third count of the Complaint, i.e., alleging that at the January
1998 meeting the "Rhodia Group" made false statements regarding its intent to
support the joint venture and induced DuPont by material misrepresentationsto
further support the joint venture. Finally, the third count of the Amended

Complaint alleged "Negligent Misrepresentation" based upon the same

statements underlying the new second count.
24

As noted above, the District Court denied defendants' motion to dismiss the
complaint and to compel arbitration, and they appealed. We turn to the issues
we are called upon to decide.

25

A. Should Arbitration Have Been Compelled as to a Non-Signatory?

26

The thrust of this appeal is whether the District Court erred in its refusal to
compel arbitration.3 There is no dispute that the Agreement contained a valid
and enforceable arbitration clause which required all disputes arising out of the
Agreement between the parties be submitted to binding arbitration in
Singapore. The only question is whether DuPont, a non-signatory to that
Agreement, is bound by that arbitration clause. Similarly, there is no dispute
that a non-signatory cannot be bound to arbitrate unless it is bound "under
traditional principles of contract and agency law" to be akin to a signatory of
the underlying agreement. Bel-Ray Co., Inc. v. Chemsite (Pty) Ltd., 181 F.3d
435, 444 (3d Cir. 1999). Appellants appeal from the District Court's conclusion
that DuPont was not bound to arbitrate because it was not (a) an intended third
party beneficiary of the Agreement, (b) the disclosed principal of its agent,
DPC, a party to the Agreement, or (c) equitably estopped from avoiding
arbitration. We review the District Court's conclusions de novo. Pritzker v.
Merrill Lynch, Pierce, Fenner & Smith, Inc., 7 F.3d 1110, 1113 (3d Cir. 1993).
As we recently held:

27

The FAA establishes a strong federal policy in favor of compelling arbitration

over litigation. The Act provides that if a party petitions to enforce an
arbitration agreement, "[t]he court shall hear the parties, and upon being
satisfied that the making of the agreement for arbitration or the failure to
comply therewith is not in issue, the court shall make an order directing the
parties to proceed to arbitration in accordance with the terms of the agreement."
9 U.S.C. S 4. The presumption in favor of arbitration carries "special force"
when international commerce is involved, because the United States is also a
signatory to the Convention on the Recognition and Enforcement of Foreign
Arbitral Awards. The CREFAA commits the courts of signatory states to refer
parties to arbitration when the parties have agreed to arbitrate disputes.
CREFAA is enforced in the United States under Chapter Two of the FAA.

28

Sandvik AB v. Advent International Corp., 220 F.3d 99, 104-05 (3d Cir. 2000)

(internal citations omitted). The liberal policy "favoring arbitration

agreements... is at bottom a policy guaranteeing the enforcement of private
contractual arrangements," id., and under the FAA, "a court may only compel a
party to arbitrate where that party has entered into a written agreement to
arbitrate that covers the dispute. Bel-Ray Co., Inc. v. Chemrite (PTY) Ltd., 181
F.3d 435, 444 (3d Cir. 1999) ("Arbitration is strictly a matter of contract. If a
party has not agreed to arbitrate, the courts have no authority to mandate that he
do so.").
29

Because arbitration is a creature of contract law, when asked to enforce an

arbitration agreement against a non-signatory to an arbitration clause, we ask
"whether he or she is bound by that agreement under traditional principles of
contract and agency law." Id. at 444. Each of appellants' theories for binding
DuPont to the arbitration clause, i.e., third party beneficiary, agency/principal,
and equitable estoppel, is a recognized principle of contract or agency law
applicable in the arbitration context. See Thompson-CSF, S.A. v. American
Arbitration Ass'n, 64 F.3d 773, 776 (2d Cir. 1995) (listing ways in which nonsignatories have been bound to arbitration clauses); see also Dayhoff Inc. v.
H.J. Heinz Co., 86 F.3d 1287, 1294-96 (3d Cir. 1996) (non-signatories could
not enforce arbitration clause against signatory where no exception applied, but
successor to signatory could compel arbitration); Barrowclough v. Kidder,
Peabody & Co., Inc., 752 F.2d 923 (3d Cir. 1985)(compelling signatoryemployee to arbitrate claims against signatory-employer and non-objecting
related non-signatory), overruled on other grounds by Pritzker v. Merrill Lynch,
Pierce, Fenner & Smith, 7 F.3d 1110 (3d Cir. 1993). We consider them in turn.

30

1. Was DuPont a Third Party Beneficiary?

31

Appellants maintain that DuPont was an intended third party beneficiary of the
Agreement and, thus, DuPont is bound by the arbitration clause. The District
Court held that DuPont was not a third party beneficiary and, even if it were,
because the claims asserted by DuPont do not arise from any "third party
beneficiary" status under the Agreement, DuPont was not bound to arbitrate its
claims as a third party beneficiary. The District Court was correct.

32

In a series of cases, courts have allowed non-signatory third party beneficiaries

to compel arbitration against signatories of arbitration agreements. John
Hancock Life Ins. Co. v. Wilson, 254 F.3d 48, 59-61 (2d Cir. 2001) (member of
NASD which was bound by its membership to arbitrate disputes, was properly
compelled to arbitrate by third party beneficiary of that agreement); Spear,
Leeds & Kellogg v. Central Life Assurance Co., 85 F.3d 21, 29-30 (2d Cir.
1996) (same with respect to NYSE rules). In the reverse situation, we have also

bound a non-signatory third party beneficiary to a forum selection clause in the

underlying contract. Coastal Steel Corp. v. Tilghman Wheelabrator Ltd., 709
F.2d 190, 202-04 (3d Cir. 1983), overruled on other grounds by Lauro Lines v.
Chasses, 490 U.S. 495 (1989). Thus, whether seeking to avoid or compel
arbitration, a third party beneficiary has been bound by contract terms where its
claim arises out of the underlying contract to which it was an intended third
party beneficiary.
33

Appellants rely heavily on Coastal Steel in attempting to show that DuPont was
as an intended third party beneficiary. In that case, a New Jersey company,
Coastal Steel, entered into a contract with Farmer Norton which contained an
arbitration clause. To fulfill that contract, and at Coastal's suggestion, Farmer
Norton contracted with Tilghman for the purchase of a blast unit. The contract
between Farmer Norton and Tilghman contained a forum selection clause
which named England as the forum. While in bankruptcy, Coastal filed suit
against, inter alia, Farmer Norton (also bankrupt), Tilghman, and its American
parent alleging breach arising out of the Farmer Norton-Tilghman contract. The
Bankruptcy Court and District Court denied Tilghman's motion to dismiss in
favor of the forum selection clause contained in the Farmer Norton-Tilghman
contract. We reversed, and held that Coastal, a non-signatory to the Farmer
Norton-Tilghman contract, was a third party beneficiary of that contract and,
thus, was bound by the forum selection clause contained therein. Coastal Steel,
709 F.2d at 202-04. We reasoned that carving out an exception to the
enforcement of forum selection clauses against third party beneficiaries would
be "inconsistent with the law of contracts, which has long recognized that thirdparty beneficiary status does not permit the avoidance of contractual provisions
otherwise enforceable." Id. at 203. By doing business with Farmer Norton
knowing that Farmer Norton would, in turn, contract with Tilghman in order to
fulfill the underlying contract with Coastal, Coastal was an intended third party
beneficiary of the Farmer Norton-Tilghman contract and could not avoid the
forum selection clause when it sued for breach of that contract. Id.

34

Appellants argue that DuPont, "whose employees negotiated this contract, has
admitted that it was obligated to make a loan guarantee on behalf of DuPont
China and that it was the intended beneficiary of the contract which allegedly
required Rhodia Fiber to provide a similar guarantee." Appellants' Br. at 40.
This argument is flawed for at least two reasons. First, unlike the clear third
party beneficiary relationship in Coastal, there is no evidence that DuPont was
an intended third party beneficiary under the Agreement. Under Delaware law,
which is the law the parties discuss, to qualify as a third party beneficiary of a
contract, (a) the contracting parties must have intended that the third party
beneficiary benefit from the contract, (b) the benefit must have been intended as

a gift or in satisfaction of a pre-existing obligation to that person, and (c) the

intent to benefit the third party must be a material part of the parties' purpose in
entering into the contract. Guardian Constr. Co. v. Tetra Tech Richardson, Inc.,
583 A.2d 1378, 1386 (1990) ("In order for third-party beneficiary rights to be
created, not only is it necessary that performance of the contract confer a
benefit upon a third person that was intended, but the conferring of the
beneficial effect on such third-party, whether it be creditor or donee, should be
a material part of the contract's purpose."). Thus, if it was not the promisee's
intention to confer direct benefits upon a third party, but rather such third party
happens to benefit from the performance of the promise either coincidentally or
indirectly, then the third party will have no enforceable rights under the
contract. Appellants have not offered any evidence that DuPont was anything
more than an incidental third party beneficiary.
35

The parties to the Agreement were only LYPFC (the Chinese entity), Rhodia
Fiber and DCH; moreover, the Agreement provided that it was

36

made for the benefit of LYPFC, [Rhodia Fiber], DCH and their respective
lawful successors and assignees and is legally binding on them. This Contract
may not be changed orally, but only by a written instrument signed by LYPFC,
[Rhodia Fiber] and DCH and approved by the Examination and Approval
Authority.

37

A158, P 27.03 The arbitration clause itself anticipated only three beneficiaries
to the Agreement, all of them parties. It stated that if disputes could not be
resolved amicably and "one Party has given both of the other Parties written
notice of the existence of the dispute, then, the dispute shall be referred to and
finally resolved by arbitration in Singapore in accordance with the Arbitration
Rules of the Singapore International Arbitration Centre ("SAIC") for the time
being in force." P 25.01 (emphasis added). Although DuPont as the parent of
DPC would certainly benefit from the success of DPC, DuPont was not an
intended third party beneficiary of the Agreement any more than any parent
who expects to benefit from the success of the business ventures of its
subsidiary.

38

Appellants argue, however, that DuPont was a third party beneficiary because
(a) DuPont negotiated the Agreement, (b) DuPont's claims "mirror DuPont
China's claims in arbitration, all of which stem from the Joint Venture
Contract," (c) DuPont was positioned to derive more than shareholder benefits
from the joint venture, and (d) DuPont claimed in the initial Complaint that it
was a third party beneficiary of the Agreement and that it was required to
guarantee the joint venture company's debt under the Agreement. We disagree.

39

First, that DuPont negotiated the Agreement, without more, has nothing to do
with whether it was a third party beneficiary. Second, appellants err in their
contention that DuPont's claims mirror DPC's claims in arbitration. DPC is
arbitrating the breach of the underlying Agreement and seeking its lost profits
and the recoupment of its investment whereas DuPont is litigating its losses
arising out of a 1998 oral agreement that was breached and misrepresentations
made by appellants' representative outside of the Agreement.4 Third, appellants
have offered nothing to support their bald assertion that DuPont was positioned
to derive more than shareholder benefits from the joint venture. While DuPont's
"related agreements" at least potentially would have benefitted DuPont, they do
not render DuPont an intended third party beneficiary of the Agreement.
Fourth, although it was imprudent of DuPont to have alleged in its initial
Complaint that it was a third party beneficiary of the Agreement, the question
of its status is ultimately for us to decide under applicable law. Parenthetically,
we note that it was also imprudent for DuPont to allege, as it initially alleged,
that it was required under the Agreement to guarantee the joint venture's debt.
DuPont now states, correctly, that under the Agreement, DPC was required to
provide a suitable guarantee and that, DuPont, in turn, chose to provide that
guarantee for DPC.

40

Appellants' third party beneficiary argument fails for yet another, perhaps more
obvious, reason. Appellants point out that "[t]he Court in Coastal Steel applied
the forum selection clause to all claims that implicated the underlying contract
to which Coastal Steel was third-party beneficiary, including claims for
negligent design, breach of implied warranty and misrepresentation."
Appellants' Br. at 37. Coastal Steel, its progeny and Delaware law make clear
that a third party beneficiary will only be bound by the terms of the underlying
contract where the claims asserted by that beneficiary arise from its third party
beneficiary status. Industrial Electronics Corp. v. iPower Distribution Group,
Inc., 215 F.3d 677, 680 (7th Cir. 2000) (third party beneficiary non-signatory
was not compelled to arbitrate claims because the claims did not arise out of the
contract from which it derived its third party status); Spear, 85 F.3d at 29-30.
None of DuPont's amended claims, however, arise out of its alleged third party
beneficiary status under the Agreement; rather, DuPont's claims arise from the
misrepresentations allegedly made to it by appellants' representative. Those
misrepresentations, while arguably related to the underlying Agreement, do not
relate to any "third party beneficiary" status created at the inception of the
Agreement.5
2. Agency

41

Next, appellants argue that DuPont's intimate involvement with the Sanlong

project renders it liable under traditional agency principles because DPC acted
as DuPont's disclosed agent and, under principles of agency law, DuPont is
bound by DPC's Agreement. The District Court correctly rejected this
argument, a conclusion underscored by the fact that appellants have failed to
cite either the relevant factors we should consider in determining whether DCH
acted as DuPont's agent or any case that would carry the day.
42

Traditional principles of agency law may bind a non-signatory to an arbitration

agreement. Thomson-CSF, S.A. v. American Arbitration Assoc., 64 F.3d 773,
776 (2d Cir. 1995). Under Delaware law:

43

One corporation whose shares are owned by a second corporation does not, by
that fact alone, become the agent of the second company. However, one
corporation -- completely independent of a second corporation -- may assume
the role of the second corporation's agent in the course of one or more specific
transactions. This restricted agency relationship may develop whether the two
separate corporations are parent and subsidiary or are completely unrelated
outside the limited agency setting. Under this second theory, total domination
or general alter ego criteria need not be proven.

44

When one corporation acts as the agent of a disclosed principal corporation, the
latter corporation may be liable on contracts made by the agent. Liability may
attach to the principal corporation even though it is not a party named in the
agreement.

45

Unlike the alter ego/piercing the corporate veil theory, when customary agency
is alleged the proponent must demonstrate a relationship between the
corporation and the cause of action. Not only must an arrangement exist
between the two corporations so that one acts on behalf of the other and within
usual agency principles, but the arrangement must be relevant to the plaintiff's
claim of wrongdoing.

46

Phoenix Canada Oil Co. v. Texaco, Inc., 842 F.2d 1466, 1477 (3d Cir. 1988)
(citations omitted). To bind a principal by its agent's acts, the plaintiff must
demonstrate that the agent was acting on behalf of the principal and that the
cause of action arises out of that relationship. Id.

47

Appellants rely principally on J.J. Ryan & Sons, Inc. v. Rhone Poulenc
Textiles, S.A., 863 F.2d 315 (4th Cir. 1988) and Phoenix Canada in support of
their agency argument. In Phoenix Canada, we did not apply agency principles
but, instead, remanded for the District Court to make this fact-intensive inquiry.

Moreover, we noted that the agency relationship must relate to the cause of
action alleged in the complaint. It is far from clear that this case passes that test.
Appellants' reliance on J.J. Ryan & Sons is also misplaced. The Fourth Circuit
never cited to agency principles and merely permitted a signatory to arbitrate its
claims against a non-signatory parent company where that parent company was
willing to submit to arbitration. J.J. Ryan & Sons, 863 F.2d at 320-21. The
Court noted, however, held that a court "may" refer claims against a nonsignatory parent to arbitration when the claims against the parent and the
subsidiary are "based on the same facts and are inherently inseparable." Id. at
320. No such claim can be made here.
48

Appellants also invoke Pritzker v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,
7 F.3d 1110 (3d Cir. 1993), but Pritzker is inapposite. In Pritzker, we bound an
agent to the principal's arbitration agreement. Here, appellants seek to hold a
principal to an agent's agreement and the rationale of Pritzker does not apply
with equal force. In Pritzker, a trustee of a pension plan sued its broker, Merrill
Lynch, and a related company to recover for violations of ERISA. Merrill
Lynch moved to compel arbitration and the District Court denied that motion.
We reversed, holding that (a) the trustees were bound to arbitrate their claims
against Merrill Lynch as signatories to a binding arbitration agreement, and (b)
over the trustees' objection, the trustees were bound to arbitrate the dispute
against the individual broker and the sister company, neither of which signed
the aforementioned agreement. Specifically, with respect to the broker, we
found that where the principal is bound to arbitration and the complaints arise
out of the agent's conduct on behalf of that principal, the agent is bound by the
principal's agreement to arbitrate disputes. Id. at 1122. With respect to the sister
company, we summarily found that company bound as an agent and possibly as
an alter-ego of Merrill Lynch. Id.

49

In the case subjudice, unlike Pritzker, appellants seek to hold DuPont liable as a
principal, not as an agent; moreover, unlike Pritzker, DuPont could act on its
own.

50

Appellants' attempt to bind DuPont on agency principles fails.

3. Equitable Estoppel

51

Finally, appellants argue that DuPont is equitably estopped from avoiding the
arbitration clause in the Agreement. We have never applied an equitable
estoppel theory to bind a non-signatory to an arbitration clause although there
appears to be no reason why, in an appropriate case, we would refrain from

doing so.
52

As the Second Circuit recently explained, there are two theories of equitable
estoppel in this context. First, courts have held non-signatories to an arbitration
clause when the non-signatory knowingly exploits the agreement containing
the arbitration clause despite having never signed the agreement. ThomsonCSF, S.A. v. American Arbitration Assoc., 64 F.3d 773, 778 (2d Cir. 1995).
Second, courts have bound a signatory to arbitrate with a non-signatory "at the
nonsignatory's insistence because of `the close relationship between the entities
involved, as well as the relationship of the alleged wrongs to the nonsignatory's
obligations and duties in the contract... and[the fact that] the claims were
intimately founded in and intertwined with the underlying contract obligations.'
" Id. at 779 (quoting Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc., 10 F.3d
753, 757 (11th Cir. 1993)(quoting McBro Planning & Dev. Co. v. Triangle
Elec. Constr. Co., 741 F.2d 342, 344 (7th Cir. 1984))(internal quotation marks
omitted). Appellants' reliance on the first of these two theories stands on
somewhat stronger ground than their reliance on the second.

53

Under the first theory, courts prevent a non-signatory from embracing a

contract, and then turning its back on the portions of the contract, such as an
arbitration clause, that it finds distasteful. See, e.g., American Bureau of
Shipping v. Tencara Shipyard S.P.A., 170 F.3d 349, 353 (3d Cir. 1999) (nonsignatory bound by contract under which it received the direct benefits of lower
insurance and the ability to sail under the French flag); Thomson-CSF, S.A., 64
F.3d at 779 (finding only indirect benefit insufficient to invoke equitable
estoppel against a non-signatory). As the Fourth Circuit explained, "In the
arbitration context, the doctrine recognizes that a party may be estopped from
asserting that the lack of his signature on a written contract precludes
enforcement of the contract's arbitration clause when he has consistently
maintained that other provisions of the same contract should be enforced to
benefit him. `To allow [a plaintiff] to claim the benefit of the contract and
simultaneously avoid its burdens would both disregard equity and contravene
the purposes underlying enactment of the Arbitration Act.' " International Paper
Co. v. Schwabedissen Maschinen & Anlagen GMBH, 206 F.3d 411, 418 (4th
Cir. 2000) (internal citation omitted).

54

Generally, these cases involve non-signatories who, during the life of the
contract, have embraced the contract despite their non-signatory status but then,
during litigation, attempt to repudiate the arbitration clause in the contract. See,
e.g., Tencara Shipyard, 170 F.3d at 353 (non-signatory derived benefit from
contract and could not avoid the arbitration clause contained therein).6 Here,
there is no evidence that DuPont embraced the Agreement itself during the

lifetime of the Agreement, or that it received any direct benefit under the
Agreement. Thus, in a strict sense, these cases do not help appellants.7
55

What gives us some pause, however, is that a close examination of the

Amended Complaint reveals that, at bottom, DuPont's claims against the
subsidiary, Rhodia Fiber, arise, at least in part, from the underlying Agreement.
Parenthetically, it is difficult to decipher exactly what DuPont claims each
appellant has done giving rise to liability because in its Amended Complaint
DuPont lumps them together as "the Rhodia Group," just as in the Complaint, it
lumped them together as "RP."

56

The Amended Complaint does not allege only that Rhodia, the parent, breached
its oral agreement to provide loan guarantees to its subsidiary. If this were
DuPont's only claim in this case, the Amended Complaint would have named
one, and only one, defendant -- Rhodia. Instead, the Amended Complaint also
named Rhodia Fiber, the subsidiary, as a defendant because, DuPont alleges,
Rhodia Fiber breached its oral promise to DuPont that it would continue to
abide by its obligations in the Agreement, i.e., securing loan guarantees for the
joint venture. To the extent that DuPont presses a claim against Rhodia Fiber
for breaching its oral commitment to perform under the Agreement, DuPont
alleges a claim which can well be argued (a) embraces the underlying
Agreement and (b) requires proof that Rhodia Fiber ultimately breached the
underlying Agreement. The question, then, is whether having alleged that it
entered into a separate oral agreement with Rhodia Fiber binding Rhodia Fiber
to the very obligations it undertook in the Agreement, DuPont is now equitably
estopped from avoiding another provision of the Agreement, i.e., the arbitration
clause. This is a close call.

57

On the one hand, we must be careful about disregarding the corporate form and
treating a non-signatory like a signatory. On the other hand, by alleging, albeit
by virtue of a separate oral agreement, that Rhodia Fiber failed to secure loan
guarantees, DuPont's claim against Rhodia Fiber implicates, at least in part, the
very Agreement which DuPont repudiates to avoid arbitration. It is, however,
that separate oral agreement that saves the day for DuPont because, wholly
apart from whether Rhodia Fiber breached the Agreement, what is at the core
of this case is the conduct and the statements of appellants' representative in
January of 1998.

58

With reference to the second theory of equitable estoppel, appellants rely on a

series of cases in which signatories were held to arbitrate related claims against
parent companies who were not signatories to the arbitration clause. In each of
these cases, a signatory was bound to arbitrate claims brought by a non-

signatory because of the close relationship between the entities involved, as

well as the relationship of the alleged wrongs to the non-signatory's obligations
and duties in the contract and the fact that the claims were intertwined with the
underlying contractual obligations. Thomson-CSF, S.A., 64 F.3d at 779. In
essence, a non-signatory voluntarily pierces its own veil to arbitrate claims
against a signatory that are derivative of its corporate-subsidiary's claims
against the same signatory. Grigson v. Creative Artists Agency, L.L.C., 210
F.3d 524, 527 (5th Cir. 2000) (non-signatory able to compel signatory to
arbitrate claims related to the contract which contained an arbitration clause);
J.J. Ryan & Sons, 863 F.2d at 320-21 (discussed above); Sunkist Soft Drinks,
Inc. v. Sunkist Growers, Inc., 10 F.3d 753, 757 (11th Cir. 1993) (compelling
signatory to arbitrate claims against non-signatory that were intertwined with
claims arising from contract governed by arbitration clause); Hughes Masonry
Co., Inc. v. Greater Clark County Sch. Bldg. Corp., 659 F.2d 836, 840-41 (7th
Cir. 1981) (same); McBro Planning and Dev. Co. v. Triangle Elec. Const. Co.,
Inc., 741 F.2d 342, 344 (11th Cir. 1984) (non-signatory to contract containing
arbitration clause was bound by signatory to arbitrate dispute where claims
were inextricably intertwined with duties created in underlying contract and
non-signatory signed a related contract which contained an arbitration clause).8
Appellants recognize that these cases bind a signatory not a non-signatory to
arbitration, but argue that this is a distinction without a difference. They are
wrong.
59

Indeed, the Second Circuit recently rejected the same "distinction without a
difference" argument:

60

As these cases indicate, the circuits have been willing to estop a signatory from
avoiding arbitration with a nonsignatory when the issues the nonsignatory is
seeking to resolve in arbitration are intertwined with the agreement that the
estopped party has signed. As the district court pointed out, however, "[t]he
situation here is inverse: E & S, as signatory, seeks to compel Thomson, a nonsignatory." While E & S suggests that this is a non-distinction, the nature of
arbitration makes it important. Arbitration is strictly a matter of contract; if the
parties have not agreed to arbitrate, the courts have no authority to mandate that
they do so. In the line of cases discussed above, the courts held that the parties
were estopped from avoiding arbitration because they had entered into written
arbitration agreements, albeit with the affiliates of those parties asserting the
arbitration and not the parties themselves. Thomson, however, cannot be
estopped from denying the existence of an arbitration clause to which it is a
signatory because no such clause exists. At no point did Thomson indicate a
willingness to arbitrate with E & S. Therefore, the district court properly
determined these estoppel cases to be inapposite and insufficient justification

for binding Thomson to an agreement that it never signed.

61

Thomson-CSF, S.A., 64 F.3d at 779 (internal citations omitted). The distinction

between signatories and non-signatories is important to ensure that short of
piercing the corporate veil, a court does not ignore the corporate form of a nonsignatory based solely on the inter-relatedness of the claims alleged. The
District Court recognized that this was so, holding that the corporate form
cannot be discarded and a non-signatory required to arbitrate unless its conduct
falls within one of the accepted principles of agency or contract law that permit
doing so.

62

In sum, the thrust of the claims in the Amended Complaint are far enough
removed from the Agreement such that DuPont should not be equitably
estopped from repudiating the arbitration clause contained in the Agreement.

63

II. Is the Issue of Personal Jurisdiction Now Appealable?

64

DuPont has moved to dismiss appellants' appeal from the District Court's
concededly interlocutory order denying appellants' motion to dismiss for want
of personal jurisdiction. Appellants ask this Court to exercise its discretion in
favor of review under the doctrine of pendent appellate jurisdiction. We reject
appellants' request.

65

The doctrine of pendent appellate jurisdiction, in its broadest formulation,

allows an appellate court in its discretion to exercise jurisdiction over issues
that are not independently appealable but that are intertwined with issues over
which the appellate court properly and independently exercises its jurisdiction.
In re TuTu Wells Contamination Litigation, 120 F.3d 368, 382 (3d Cir. 1997)
(citing 16 Charles Alan Wright, Arthur R. Miller, & Edward H. Cooper,
Federal Practice and Procedure S 3937 at 684-85 (2d ed. 1996). In Swint v.
Chambers County Commission, the Supreme Court considered the availability
of pendent appellate jurisdiction and explicitly struck down the Eleventh
Circuit's liberal construction of 28 U.S.C. SS 1291 and 1292 which, the Court
said, circumvented the limits Congress set on appellate jurisdiction of
interlocutory orders -- in other words, those orders listed in 1292(a) and those
certified by a district court under 1292(b). 514 U.S. 35, 45-47 (1995).

66

Congress thus chose to confer on district courts first line discretion to allow
interlocutory appeals. If courts of appeals had discretion to append to a Cohen authorized appeal from a collateral order further rulings of a kind neither
independently appealable nor certified by the district court, then the two-tiered

arrangement S 1292(b) mandates would be severely undermined.

67

Id. at 47 (internal footnotes omitted). Despite this rather absolute language, the
Court did not foreclose entirely the availability of pendent appellate
jurisdiction:

68

We need not definitively or preemptively settle here whether or when it may be

proper for a court of appeals, with jurisdiction over one ruling, to review,
conjunctively, related rulings that are not themselves independently appealable.
The parties do not contend that the District Court's decision to deny the
Chambers County Commission's summary judgment motion was inextricably
intertwined with that court's decision to deny the individual defendants'
qualified immunity motions, or that review of the former decision was
necessary to ensure meaningful review of the latter.

69

Id. at 50-51 (internal citations omitted).

70

Building on this guarded endorsement of pendent appellate jurisdiction in

certain limited circumstances, we and other Circuits have recognized "a
discretionary, though `narrow,' doctrine of pendent appellate jurisdiction. But
we have also concluded that the doctrine should be used `sparingly,' and only
where there is a sufficient overlap in the facts relevant to both the appealable
and non-appealable issues to warrant plenary review. We have also stated that
`pendent appellate jurisdiction over an otherwise unappealable order is
available only to the extent necessary to ensure meaningful review of an
appealable order.' " In re Montgomery County, 215 F.3d 367, 375-76 (3d Cir.
2000) (emphasis in original) (citations omitted); see also In re Tutu Wells, 120
F.3d at 382. Essentially, post-Swint, we have defined pendent appellate
jurisdiction to mirror the Supreme Court's two examples: inextricably
intertwined orders or review of the non-appealable order where it is necessary
to ensure meaningful review of the appealable order.

71

Although we have not addressed whether we should exercise pendent

jurisdiction over an appeal of a motion to compel arbitration, other Circuits
have done so. Where personal jurisdiction is inextricably intertwined with the
immediately appealable decision on a motion to compel arbitration or other
immediately appealable order, Courts of Appeals have exercised pendent
jurisdiction over a personal jurisdiction issue, but those Courts have been
careful to explain that the basis of the personal jurisdiction decision was
identical to the basis of the immediately appealable order. PaineWebber Inc. v.
Chase Manhattan Private Bank, 260 F.3d 453, 461-62 (5th Cir. 2001) (consent

to arbitrate claim in particular forum was also the basis of exercise of personal
jurisdiction and, thus, the issues were interrelated and both reviewed on
appeal); Dominium Austin Partners, L.L.C. v. Emerson, 248 F.3d 720, 726-27
(8th Cir. 2001) (implicitly the same); S & Davis Int'l, Inc. v. The Republic of
Yemen, 218 F.3d 1292, 1297 (11th Cir. 2000) (exercising pendent jurisdiction
over personal jurisdiction issue when immunity under Foreign Sovereign
Immunity Act was properly before the court and the two issues were
"inextricably intertwined"); Hanil Bank v. PT. Bank Negara Indonesia, 148
F.3d 127, 130 (2d Cir. 1998) (same).
72

Where, however, personal jurisdiction is not "interrelated" or "intertwined"

with the merits of the immediately appealable order, Courts of Appeals exercise
restraint and forego review until the unrelated issue is appealable in its own
right. See, e.g., United States Fidelity and Guaranty Co. v. Braspetro Oil
Services Co., 199 F.3d 94, 97 (2d Cir. 1999) (exercising pendent appellate
jurisdiction over interrelated personal jurisdiction issue but refusing to review
interlocutory forum issue because it has "little or nothing in common with" the
appealable order); Rein v. Socialist People's Libyan Arab Jamahiriya, 162 F.3d
748, 759 (2d Cir. 1998); see also Associated Business Telephone Systems,
Corp. v. Greater Capital Corp., 861 F.2d 793, 796 (3d Cir. 1988) (passing on
personal jurisdiction of defendant company against whom injunction was
granted to ensure that injunction was granted against party over whom the
district court had authority, but refusing to review personal jurisdiction of
individual defendants who were not affected by injunction). The fact that
personal jurisdiction is or can be case-dispositive does not alter the analysis for
two reasons. First, denials of motions to dismiss for want of personal
jurisdiction are not ordinarily immediately appealable. Second, as the Second
Circuit explained:

73

It does not follow, however, that a court cannot decide issues of subject matter
jurisdiction without at the same time making definitive findings as to personal
jurisdiction. For instance, a court could find subject matter jurisdiction without
passing on whether there had been effective service of process, thus leaving the
personal jurisdiction question open. The current case presents a different
example of the same point. Libya's challenge to personal jurisdiction is based
on due process and the principle of minimum contacts. We can readily decide
whether the district court had subject matter jurisdiction over Libya without at
all considering whether it would violate due process to subject Libya to
personal jurisdiction. Because review of the latter is not necessary for review of
the former, we conclude that the issues of subject matter jurisdiction and
personal jurisdiction are not inextricably intertwined in this case.

74

Rein v. Socialist People's Libyan Arab Jamahiriya, 162 F.3d 748, 759 (2d Cir.
1998).

75

We undoubtedly have jurisdiction over the District Court's refusal to compel

arbitration and, as the previous section of this opinion indicates, that issue can
be discussed at length and resolved without any reference to whether there was
personal jurisdiction over appellants or whether the meeting in Delaware
attended by their representative amounted to "minimum contacts." Indeed, for
purposes of reviewing and resolving the arbitration issue, we were bound to
accept as true DuPont's allegation that a "Rhodia Group" representative made
the representations alleged in the Amended Complaint without passing on their
existence, accuracy or effect. Moreover, the "inter-relatedness" listed by
appellants is far wide of the mark -- they cite to the existence and location of
DuPont's actions, which simply have nothing to do with whether the District
Court properly exercised jurisdiction over them.9 The issue of personal
jurisdiction does not have to be reviewed to exercise meaningful review of the
immediately appealable arbitration issue, and we will not exercise pendent
appellate jurisdiction to review that issue now.
III. Conclusion

76

For the foregoing reasons, we will affirm the judgment of the District Court
insofar as it denied appellants' motion to compel arbitration and will dismiss the
appeal from the denial of appellants' motion to dismiss for lack of personal
jurisdiction.

NOTES:
1

Formerly known as Rhone Poulenc, Fibres Et Polymeres S.A.

The Agreement defined "Affiliate," "Affiliates" or "Affiliated Company" as

"any corporation, partnership, association, or other entity or organization which
controls, or is controlled by, or is under common control with, that Party. The
term "control" as used with respect to any Party, means the ownership, directly
or indirectly of 50% or more of the voting stock of such corporation or the
possession, directly or indirectly, of the power to direct or cause the direction of
the management and policies of such corporation, partnership, association or
other entity or organization, or to receive, directly or indirectly, 50% or more of
the profits of such corporation, partnership, association or other entity or

organization (whether through the ownership or voting stock, by contracts or

otherwise). Notwithstanding the foregoing for purposes of this Contract,
"Affiliate" "Affiliates" or Affiliated Company" shall not mean China
Petrochemical Corporation."
P 1.04.
3

This Court has jurisdiction to consider the appeal from the denial of a motion to
compel arbitration. Sandvik AB v. Advent Int'l. Corp., 220 F.3d 99, 102-04 (3d
Cir. 2000).

DPC alleged in the arbitration that Rhodia Fiber failed to provide the required
guarantee under Article 7.02 for a proposed loan to Sanlong, causing the loan
not to be made and, thus, causing Sanlong's collapse and dissolution. At oral
argument, we were advised that Rhodia Fiber lost the arbitration but that
damages had not yet been set.

Even if this Court were to find that DuPont is bound by the Agreement and,
thus, by the arbitration clause, DuPont might well argue that its claims fall
outside the scope of that clause. The arbitration clause applies only to a dispute
that "arises in connection with the interpretation or implementation of this
Contract." A156, P 25.01. Even though the "arising out of " language has been
read broadly by courts, DuPont could argue that its claims in the Amended
Complaint arise out of alleged obligations or misrepresentations made outside
of the Agreement and not arising therefrom. See Industrial Electronics, 215
F.3d at 680 (third party beneficiary non-signatory was not compelled to
arbitrate claims because the claims did not arise out of the contract from which
it derived its third party status.). Thus, it is not a foregone conclusion that, were
this Court to find DuPont bound by the Agreement, this case would
automatically be sent to arbitration.

At least one court has referred to "equitable estoppel" when it required a nonsignatory to arbitrate based on its conduct during litigation as opposed to during
the lifetime of the commercial contract. International Paper Co., 206 F.3d at
417-18 (buyer was bound to arbitrate claim against manufacturer even though it
was not a signatory to manufacturer-distributor contract because the buyer
alleged a breach of that contract). While at first blush this appears helpful to
appellants, a closer examination reveals that the non-signatory in that case also
received a direct benefit under the contract during the lifetime of the contract.

We cannot help but note that many of these cases resemble the third party
beneficiary cases. In Tencara Shipyard, for example, the non-signatory was the
intended third party beneficiary of the contract containing the arbitration
clause. The two theories of liability are, however, distinct. Under the third party

beneficiary theory, a court must look to the intentions of the parties at the time
the contract was executed. Under the equitable estoppel theory, a court looks to
the parties' conduct after the contract was executed. Thus, the snapshot this
Court examines under equitable estoppel is much later in time than the snapshot
for third party beneficiary analysis.
8

See also Dominiun Austin Partners, L.L.C. v. Emerson, 248 F.3d 720, 728 (8th
Cir. 2001) (party equitably estopped from arguing that opposing parties were
not bound by arbitration clause where that same party alleged in other lawsuit
that those opposing parties were bound by the contract containing the
arbitration clause.); Long v. Silver, 248 F.3d 309, 320 (4th Cir. 2001)
(compelling signatory to arbitration clause to arbitrate claims against nonsignatory shareholders where the signatory claimed that the non-signatories
owed him a duty under the contract they did not sign).
The cases cited by appellants do not further their argument. Three of those
cases were before the respective Courts of Appeals after final judgment, and
personal jurisdiction was considered first because it was a threshold issue. The
remaining case -- which, in any event, predated Swint -- involved the grant of
an injunction. It is well-settled that when a court grants an injunction, the
underlying personal jurisdiction decision is immediately reviewable on appeal.