In Infuturia Global Ltd v Sequus Pharmaceuticals, Inc., et al, (9th Cir. Feb. 7, 2011), the plaintiff, Infuturia Global Ltd, a British Virgin Islands citizen, entered a licensing agreement with Yissum, an Israeli citizen, that included an arbitration provision. The licensing agreement involved technology developed by Yissum and Professor Yechezkel Barenholz at the Hebrew University of Jerusalem. Sequus, a California citizen, entered a separate licensing agreement with Yissum. Sequus had also worked with Barenholz and Yissum.

Infuturia eventually sued Sequus, the Hebrew University and Barenholz, but not Yissum, in the California state court, for tortious interference with Infuturia's licence. Yissum petitioned the state court to stay proceedings, which the court granted, pending arbitration in Israel. In the arbitration, Infuturia alleged that Yissum violated the licence based on claims similar to those made in the state court. The arbitrators found that Yissum did not breach the licence.

After the arbitration, the state court lifted the stay. Infuturia filed an amended complaint, taking account of the arbitrator's findings. The University and Barenholz filed a Notice of Removal under section 205 of the Federal Arbitration Act. Section 205 allows for removal from state to federal court "[w]here the subject matter of an action or proceeding pending in a State court relates to an arbitration agreement or award falling under the [New York Convention]. . . ." Infuturia responded with a motion to remand, arguing that Sequus, the University, and Barenholz were not parties to the foreign arbitration agreement, making removal improper. The district court denied the motion to remand, finding that the arbitration agreement fell under the New York Convention and the proceeding was related to the agreement.

Infuturia filed another amended complaint naming only Sequus as a defendant. Sequus argued that collateral estoppel prevented Infuturia from litigating issues decided against it by the Israeli arbitrator and moved to dismiss on other grounds. The district court granted the motions. Infuturia then appealed to the Ninth Circuit, arguing that removal under section 205 requires privity of contract between the parties. The parties did not dispute that the arbitral award fell under the New York Convention.

The Ninth Circuit rejected Infuturia's argument and looked to the Fifth Circuit to define the meaning of "relates to". Whether a proceeding is "related to" an arbitral award or agreement turns on the relatedness of the subject matter to the agreement or award, not the relatedness of the parties. An award relates to a case when it could "conceivably affect the outcome." Since Sequus raised an affirmative defence relying on an arbitral award, the award could affect the outcome of the case. Therefore, the district court had removal jurisdiction.

The Ninth Circuit addressed the meaning of "related to" for the first time and looked to the Fifth Circuit for guidance. With two circuit courts broadly interpreting "relates to" under section 205, parties seeking removal may expect other courts to do the same.