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August 3, 2005.


The opinion of the court was delivered by: RICHARD CASEY, District Judge


JSC Surgutneftegaz ("Petitioner") brought a petition to stay arbitration against the President and Fellows of Harvard College ("Respondent") in New York State court. Respondent removed the petition to this Court. The Court finds all of Petitioner's arguments against arbitration to be without merit. For the reasons that follow, the petition to stay arbitration is DENIED.


  Petitioner is an oil and gas company organized under the laws of the Russian Federation. Petitioner's common and preferred stock is publicly traded in Russia, and since 1996 its stock has been available for purchase by investors in the United States under an arrangement between Petitioner and The Bank of New York. Under this arrangement, ING Eurasia holds shares of Petitioner's stock in Moscow as custodian for The Bank of New York, which issues what are called American Depositary Shares ("ADRs") to investors in the United States. Respondent is one of those investors, owning over three million ADRs that represent preferred shares in Petitioner.

  Respondent claims that as an owner of ADRs, it is entitled to an annual fixed dividend guaranteed in Petitioner's company charter and prospectus. Respondent maintains that Petitioner has been paying insufficient dividends. The sale of ADRs representing preferred shares is governed by a deposit agreement of March 19, 1998 among Respondent, The Bank of New York, and owners of ADRs.*fn1 Section 7.06 of that agreement is an arbitration clause that states:
(a) Any controversy, claim or cause of action brought by any party hereto against the Company arising out of or relating to the Shares or other Deposited Securities, the American Depositary Shares, the Receipts or this Agreement, or the breach hereof or thereof, shall be finally settled by arbitration in accordance with the rules of the American Arbitration Association, which rules are deemed to be incorporated by reference into this Section 7.06, . . . and provided further that any such controversy, claim or cause of action relating to or based upon the provisions of the Federal securities laws of the United States or the rules and regulations promulgated thereunder may, but need not, be submitted to arbitration as provided in this Section 7.06.
The place of arbitration shall be New York, New York, and the language of the arbitration shall be English.
. . . .
(b) Any controversy, claim or cause of action arising out of or relating to the Shares or other Deposited Securities, the American Depositary Shares, the Receipts or this Deposit Agreement not subject to arbitration shall be litigated in the Federal and state courts in the Borough of Manhattan.
(JSC Surgutneftegaz and The Bank of New York as Depositary and Owners and Beneficial Owners of American Depositary Receipts Deposit Agreement, Mar. 19, 1998 ("Deposit Agreement") § 7.06.)

  Pursuant to the arbitration clause in the Deposit Agreement, Respondent sought to compel arbitration against Petitioner before the American Arbitration Association ("AAA") in New York by filing a notice of arbitration. Respondent asserts three substantive claims: (1) breach of the Deposit Agreement, (2) violation of Petitioner's company charter by failing to declare and pay the required dividends, and (3) securities fraud under the U.S. securities laws.*fn2 Petitioner, in response, filed a motion to stay arbitration in New York State Supreme Court. Respondent removed the petition to this Court pursuant to 9 U.S.C. § 205, which provides for removal of cases relating to arbitration agreements that fall under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("New York Convention"), June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 3.

  In support of its petition to stay arbitration, Petitioner argues that: (1) the arbitration agreement is invalid on the public-policy grounds of comity, the internal-affairs doctrine for corporations, and forum non conveniens; (2) the agreement does not encompass Respondent's claims; and (3) the securities-fraud claim is barred by the statute of limitations. Petitioner also argues that, if the dispute is arbitrable at all, it must be arbitrated in London under the rules of the London Court of International Arbitration pursuant to a provision of the ADRs themselves.


  A. Federal Not State Law of Arbitrability Applies

  As an initial matter, Petitioner argues that the Court must decide whether arbitration should be stayed as a matter of New York State law. But the question is governed by federal, not state, law. Chapter 2 of the Federal Arbitration Act ("FAA") incorporates the New York Convention. See 9 U.S.C. § 201. Section 202 of the FAA explains:
An arbitration agreement . . . arising out of a legal relationship, whether contractual or not, which is considered as commercial, including a transaction, contract, or agreement described in section 2 of this title, falls under the [New York] Convention. An agreement . . . arising out of such a relationship which is entirely between citizens of the United States shall be deemed not to fall under the [New York] Convention unless that relationship involves property located abroad, envisages performance or enforcement abroad, or has some other reasonable relation with one or more foreign states.
Id. § 202. For the New York Convention to apply to this dispute, there must be a written arbitration agreement that provides for arbitration in the territory of a signatory to the Convention, the subject matter of the relationship between the parties must be commercial, and the dispute cannot be entirely domestic in scope. Smith/Enron Cogeneration Ltd. P'ship v. Smith Cogeneration Int'l, Inc., 198 F.3d 88, 92 (2d Cir. 1999). These requirements are all undisputedly met here: The Deposit Agreement contains a written arbitration clause providing for arbitration in the United States regarding the purchase and sale of securities in a foreign corporation. As such, it is governed by the New York Convention through the FAA.*fn3

  The Court must apply the "federal substantive law of arbitrability" in determining whether the disputes are arbitrable under the FAA. Moses H. Cone Mem. Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24 (1983) (holding that the FAA section 2 creates a federal substantive law of arbitrability applicable to any arbitration agreement that falls within the FAA).*fn4 That substantive law includes a presumption in favor of arbitration, which requires that "any doubts concerning the scope of arbitrable issues" shall be resolved in favor of arbitration, id. at 24-25, but a presumption that the Court, rather than the arbitrator, is to decide whether matters are subject to arbitration, First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944-45 (1995).

  In deciding whether the matters raised in Respondent's notice of arbitration are properly arbitrable under the FAA, the Court's role is limited to determining whether a valid and enforceable arbitration agreement exists between the parties and whether one party has improperly failed, neglected, or refused to arbitrate. Shaw Group Inc. v. Triplefine Int'l Corp., 322 F.3d 115, 120 (2d Cir. 2003). Petitioner's arguments as to the first question (that the arbitration agreement is unenforceable on grounds of public policy) are without merit. As to the second question, the Court finds that the parties have committed the decision on whether their disputes are arbitrable to arbitration.

  B. The Arbitration Agreement is Not Unenforceable on Public-Policy Grounds

  Petitioner maintains that the arbitration agreement should not be enforced on the public-policy grounds of international comity, the internal-affairs doctrine for corporations, and forum non conveniens. None of these is a valid reason for refusing to enforce the arbitration agreement. Article II(1) of the New York Convention provides:
Each Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration.
330 U.N.T.S. at 38 (emphasis added). The Convention also permits refusal to enforce arbitration agreements on the grounds that they are "null and void, inoperative or incapable of being performed." Id., art. II(3), 330 U.N.T.S. at 38. The Court need not wade very far into the murky waters of Article II to reject Petitioner's arguments.*fn5 It has been suggested that the public policy of the enforcing jurisdiction may provide a means to refuse enforcement of an arbitration agreement under Article II. See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 639 n. 21 (1985) ("We do not quarrel with the Court of Appeals' conclusion that Art. II(1) of the Convention . . . contemplates exceptions to arbitrability grounded in domestic law."). If that is so, then it must be public policy as a matter of federal, not state, law. See Smith/Enron Cogeneration Ltd., 198 F.3d at 96 ("When we exercise jurisdiction under Chapter Two of the FAA, we have compelling reasons to apply federal law, which is already well-developed, to the question of ...

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