9th Cir.;
16-35628

The court of appeals vacated a district court judgment and remanded. The court held that the arbitrator, and not the district court, needed to decide the scope of an arbitration clause.

Portland General Electric Company (PGE) hired several related contracting companies to build a power plant. The contract allowed PGE to terminate the contracts upon the contractors' default. The construction contract required the contractors to obtain a performance bond. Liberty Mutual Insurance Company and Zurich American Insurance Company issued the required bond to PGE. The construction contract also required the contractors to obtain a guaranty of performance from parent company Abengoa S.A. Abengoa issued a guaranty to PGE that provided for binding arbitration of any disputes. The guaranty specified that the arbitration to be conducted by the International Chamber of Commerce (ICC) under its procedural rules. The guaranty further provided that either party had the right to implead any other person or entity (with such person or entity's consent). PGE later declared the contractors in default and terminated the construction contract. Abengoa filed a request for arbitration with the ICC, naming PGE as respondent and the contractors and sureties as impleaded parties. The sureties consented and sent PGE a leter denying liability under the bond. PGE filed suit against the sureties, alleging breach of the bond and bad faith. PGE also sought a preliminary injunction prohibiting the sureties from arbitrating their claims against PGE, arguing that Abengoa improperly impleaded them. The sureties moved to stay the litigation pending resolution of the arbitration.