Express Contract References Create Third-Party Beneficiary Arbitration Obligations and ICC-Rule Incorporation Delegates Arbitrability

I. Introduction

In Various Insurers, Reinsurers and Retrocessionaires v. General Electric International, Inc. (11th Cir. Mar. 18, 2025), the Eleventh Circuit addressed whether a non-signatory project owner—and, derivatively, its subrogated insurers—could be compelled to arbitrate under an arbitration clause contained in a services contract executed between the plant operator and a General Electric entity.

The dispute arose after a catastrophic turbine failure at the Hadjret En Nouss Power Plant in Tipaza, Algeria. The owner, Shariket Kahraba Hadjret En Nouss (“SKH”), did not sign the pertinent “Services Contract”; the operator, SNC-Lavalin Contructeurs International Inc. (“SNC”), did. SKH’s insurers (as SKH’s subrogees) sued multiple GE entities in Georgia state business court. After removal, the defendants moved to compel arbitration under the Services Contract, arguing SKH was a third-party beneficiary bound by the contract’s arbitration clause and that arbitrability questions were delegated.

The core issues on appeal were: (1) whether SKH was an intended third-party beneficiary of the Services Contract such that its subrogees were bound to arbitrate; and (2) who decides which claims fall within the arbitration agreement—court or arbitrator—given the contract’s incorporation of ICC arbitration rules.

II. Summary of the Opinion

The Eleventh Circuit affirmed the district court’s order compelling arbitration. It held:

  1. Third-party beneficiary: SKH was an intended third-party beneficiary of the Services Contract under the federal common-law test (applied by assumption), because the contract’s text and surrounding circumstances showed an intent to benefit SKH and to confer concrete rights on SKH. As SKH’s subrogees, the Insurers “stand in the shoes” of SKH and are equally bound.
  2. Delegation of arbitrability: By incorporating the ICC Conciliation and Arbitration Rules, the parties clearly and unmistakably delegated questions of “ultimate arbitrability” (which claims are arbitrable) to the arbitral forum, consistent with Eleventh Circuit precedent on incorporating arbitral rules.

The court also noted the Insurers had not preserved arguments about the ability of non-signatory GE entities to compel arbitration if arbitration was otherwise required, citing abandonment principles; accordingly, it did not address that question.

III. Analysis

A. Precedents Cited

1. Standard of review and issue preservation

  • Bodine v. Cook's Pest Control, Inc., 830 F.3d 1320 (11th Cir. 2016): supplied the de novo standard for reviewing an order compelling arbitration. The court used Bodine to frame arbitration enforcement as a legal question reviewed without deference.
  • Young v. Grand Canyon Univ., Inc., 57 F.4th 861 (11th Cir. 2023): applied for the proposition that issues not “squarely raise[d]” are abandoned. This allowed the panel to bypass whether GE entities not party to the Services Contract could independently compel arbitration.

2. Choice-of-law by litigation assumption

  • Usme v. CMI Leisure Mgmt., Inc., 106 F.4th 1079 (11th Cir. 2024), and Bahamas Sales Assoc., LLC v. Byers, 701 F.3d 1335 (11th Cir. 2012): supported the court’s decision to proceed under federal common law because the parties litigated the third-party-beneficiary question under that law. Importantly, the court did not definitively hold federal common law governs; it treated the issue as conceded for purposes of decision.

3. New York Convention framework and limited merits inquiry

  • Suazo v. NCL (Bahamas) Ltd., 822 F.3d 543 (11th Cir. 2016): cited for the procedural point that a Convention-enforcement party may move to compel arbitration “in accordance with the agreement” under 9 U.S.C. § 206.
  • Bautista v. Star Cruises, 396 F.3d 1289 (11th Cir. 2005): supplied the “very limited inquiry” and the four prerequisites for compelling arbitration under the Convention. The panel used Bautista to isolate the only contested prerequisite here: whether an “agreement to arbitrate” existed as to SKH (a non-signatory).

4. Subrogation principle

  • US Airways, Inc. v. McCutchen, 569 U.S. 88 (2013): quoted to define subrogation as substitution—standing in the shoes of another. This framed the analysis: if SKH would be bound to arbitrate, so too would the Insurers as SKH’s subrogees.

5. Third-party beneficiary doctrine under federal common law

  • Beverly v. Macy, 702 F.2d 931 (11th Cir. 1983): functioned as the Eleventh Circuit’s principal internal guidepost on third-party beneficiary status. The court relied on Beverly for (i) the requirement of manifest intent to benefit a third party, (ii) the “key inquiry” focusing on whether the claimant was intended to benefit from the provision at issue, and (iii) permission to consider circumstances surrounding contract formation—not only the text.
  • Hencely v. Fluor Corp., 120 F.4th 412 (4th Cir. 2024): cited as an articulation of the federal common-law test—express or implied intent to benefit the third party— and for the same “text plus circumstances” approach.
  • Restatement (Second) of Contracts § 302: provided the doctrinal structure distinguishing “intended” vs. “incidental” beneficiaries. The opinion centered the dispute on § 302(1)(b): whether circumstances show an intent “to give the beneficiary the benefit of the promised performance.”
  • Price v. Pierce, 823 F.2d 1114 (7th Cir. 1987); Montana v. United States, 124 F.3d 1269 (Fed. Cir. 1997); and U.S. ex rel. May v. Purdue Pharma L.P., 737 F.3d 908 (4th Cir. 2013): were cited to show multiple federal courts consult Restatement § 302 in federal common-law third-party-beneficiary analysis. Montana also supplied the “reasonable reliance” formulation (Restatement comment d): whether the putative beneficiary would reasonably rely on the promise as conferring a right.
  • United States v. S. Fla. Water Mgmt. Dist., 922 F.2d 704 (11th Cir. 1991): used as a contrasting Eleventh Circuit example where non-parties were not third-party beneficiaries because they could not identify specific contract language conferring rights. The panel used it to emphasize that SKH could point to concrete textual rights and repeated references.
  • InterGen N.V. v. Grina, 344 F.3d 134 (1st Cir. 2003), and Hogan v. SPAR Grp., Inc., 914 F.3d 34 (1st Cir. 2019): were the Insurers’ main authorities against third-party beneficiary status. The panel distinguished both on their facts: InterGen involved arbitration limited to disputes “between the Buyer and Seller,” with defined terms excluding the non-party; and Hogan involved a non-named customer with only a “tenuous” benefit and an arbitration clause limited to disputes between signatories. Here, SKH was repeatedly named and had express, unilateral rights in the Services Contract.

6. Delegation of arbitrability through incorporation of arbitration rules

  • Terminix Int'l Co., LP v. Palmer Ranch Ltd. P'ship, 432 F.3d 1327 (11th Cir. 2005): was the controlling Eleventh Circuit precedent for delegation by incorporating institutional rules. In Terminix, incorporation of AAA Commercial Rules (including Rule 8 on the arbitrator’s jurisdiction) constituted “clear and unmistakable” delegation. The panel extended the same reasoning to ICC rules, citing ICC Article 6(4)’s “prima facie” gatekeeping and concluding the parties agreed that arbitrability would be decided in arbitration.

B. Legal Reasoning

1. The Convention prerequisite: existence of an agreement to arbitrate as to SKH

Applying the New York Convention framework (via Bautista v. Star Cruises), the court treated the case as turning on the first prerequisite: an “agreement in writing” to arbitrate. The Services Contract indisputably contained an arbitration clause, but SKH’s non-signatory status required a doctrine permitting enforcement against a non-party. The panel used third-party beneficiary theory (rather than equitable estoppel, agency, veil-piercing, or assumption) to supply the necessary “agreement” linkage.

2. Why SKH was an intended third-party beneficiary under § 302(1)(b)

The court identified multiple textual anchors showing the parties’ intent that the Services Contract’s performance would benefit SKH and that SKH possessed rights under the contract:

  • The Services Contract expressly described SNC as “the Operator” acting under an O&M Agreement with SKH as “the Project Owner,” and tied the services relationship to that owner-operator structure.
  • It contemplated “changes to a Power Train Set decided upon by either the Project Owner [SKH] or the Operator [SNC],” indicating SKH had decision-making authority affecting performance.
  • It provided SKH “may have access to” operation and maintenance reports the service provider was responsible for preparing.
  • It gave SKH unilateral emergency authority to make decisions to avoid or limit damage when the service provider failed to respond.

Under Beverly v. Macy and Montana v. United States, these provisions made SKH “reasonable in relying” on the Services Contract as conferring rights and benefits, distinguishing SKH from parties who merely receive incidental downstream advantages from others’ contracting.

3. Distinguishing the Insurers’ contrary authorities

The panel’s treatment of InterGen N.V. v. Grina and Hogan v. SPAR Grp., Inc. highlights an emerging line between: (i) contracts that merely presuppose a broader commercial ecosystem in which a non-party benefits, and (ii) contracts that repeatedly name the non-party and allocate it affirmative rights to direct, access, or act with respect to performance.

In effect, the court treated “named status + express rights” as strong evidence of intended beneficiary status, whereas corporate affiliation (InterGen) and generic customer benefit (Hogan) are insufficient.

4. Delegation of arbitrability via ICC rules

Using Terminix Int'l Co., LP v. Palmer Ranch Ltd. P'ship as the analytic template, the court held that incorporation of ICC rules constitutes clear delegation. Although ICC Article 6(4) describes a “prima facie” institutional decision about whether arbitration “shall proceed,” the panel treated that framework as sufficient to remove claim-by-claim arbitrability sorting from the court and place it in the arbitral process.

C. Impact

1. Non-signatory owners and subrogated insurers face increased arbitration exposure

The decision strengthens the path to compel arbitration against project owners (and their subrogated insurers) when a services contract—signed by an operator—(i) repeatedly names the owner and (ii) grants the owner direct contractual rights (access, decision authority, emergency powers). Insurers pursuing subrogation recoveries in court will need to evaluate whether their insured qualifies as an intended beneficiary of the relevant vendor/service agreements, even if the insured never signed them.

2. Contract drafting consequences for infrastructure and O&M ecosystems

Multi-contract project structures often separate ownership, operation, supply, installation, and service. This opinion incentivizes careful drafting around:

  • Owner references: repeated naming and role definitions can support intended-beneficiary findings.
  • Owner “rights” clauses: access rights, approval rights, and emergency decision clauses may transform an owner from incidental to intended beneficiary.
  • Arbitration scope clauses: restricting arbitration to disputes “between the parties” (as in InterGen/Hogan) may reduce non-signatory exposure.

3. Delegation clarity for international arbitration clauses

By treating ICC rule incorporation similarly to AAA rule incorporation, the Eleventh Circuit signals that many institutional-rule incorporations in international contracts will be read as delegations of arbitrability—meaning early, court-based efforts to litigate claim scope may fail once a valid arbitration agreement is found to bind the disputants.

IV. Complex Concepts Simplified

  • New York Convention: A treaty (implemented in the U.S. through FAA Chapter 2) that requires courts to recognize and enforce qualifying international arbitration agreements and awards, subject to limited defenses.
  • Subrogation: When an insurer pays a loss, it may pursue recovery in the insured’s name/rights. The insurer generally cannot obtain greater rights than the insured and is subject to the same contractual limits (including arbitration obligations) that bind the insured.
  • Third-party beneficiary: A non-signatory can sometimes enforce—or be bound by—a contract if the contracting parties intended to benefit that non-party (not merely incidentally). Courts look for intent in the contract text and surrounding circumstances.
  • “Incidental” vs. “intended” beneficiary: An incidental beneficiary gains some advantage from a contract’s performance but was not the object of the parties’ intent to confer enforceable rights; an intended beneficiary was.
  • Delegation of arbitrability: Parties can agree that the arbitrator (not the court) will decide threshold questions about whether particular claims fall within the arbitration clause. Incorporating arbitration rules that authorize jurisdictional determinations is often treated as such an agreement.
  • “Prima facie” review (ICC Article 6(4)): A preliminary screening—whether an arbitration agreement may exist—after which the arbitration proceeds and jurisdictional disputes are addressed within the arbitral framework.

V. Conclusion

The Eleventh Circuit’s decision establishes a practical rule for Convention cases in complex project settings: a non-signatory owner (and its subrogated insurers) can be compelled to arbitrate as a third-party beneficiary when the services contract expressly identifies the owner and grants it concrete rights tied to performance—particularly rights to direct, access, or act unilaterally in critical scenarios. Separately, incorporation of ICC arbitration rules is treated as a “clear and unmistakable” delegation of arbitrability, moving claim-scope disputes into the arbitral process once the arbitration agreement is found to bind the parties.