## Facts

- After Gulf hurricanes, regulators required offshore rigs to enhance moorings, prompting Noble Drilling Services, Inc. to buy new wire mooring rope.
- Noble negotiated with Certex USA, Inc. (a distributor) to purchase wire rope manufactured by Bridon (the manufacturers).
- Noble issued purchase orders to Certex that contained no arbitration clause and included an “entire agreement” provision stating the purchase order terms were the complete agreement between Noble and Certex.
- Certex’s relationship with Bridon was governed by a distribution agreement that included an arbitration clause and expressly disclaimed any intent to benefit third parties and excluded third-party enforcement rights.
- To fill Noble’s order, Certex entered into purchase order agreements with Bridon directing Bridon to ship the rope directly to Noble; these agreements incorporated Bridon’s terms and conditions containing an arbitration clause.
- Noble was not provided the Certex–Bridon distribution agreement, the Certex–Bridon purchase order agreements, or Bridon’s incorporated terms and conditions.
- After Hurricane Ike, the ropes allegedly failed, damaging Noble’s rigs.
- Noble sued Certex and Bridon asserting, among other claims, breach of Noble’s sales contract with Certex, negligence against Bridon, warranty claims, and misrepresentation/DTPA claims against one or both defendants.

## Issues

1. Whether a nonsignatory purchaser (Noble) could be compelled to arbitrate under arbitration clauses contained in supplier–distributor agreements (Certex–Bridon) based on direct-benefits estoppel or a theory that the claims were dependent on those contracts.

## Decision

- The Fifth Circuit reversed the order compelling arbitration and dismissing the action, and remanded for further proceedings in district court.
- Noble, as a nonsignatory, was not bound to arbitrate under the Certex–Bridon agreements.
- Direct-benefits estoppel did not apply because Noble did not knowingly exploit the Certex–Bridon contracts and any benefit received was indirect and flowed from Noble’s own contract with Certex.
- The “claims dependent on contract” theory did not apply because Noble’s claims did not rely on, seek to enforce, or require proving the Certex–Bridon contracts.

## Legal Principles

- Arbitration is a matter of consent; a nonsignatory may be compelled to arbitrate only under limited, recognized doctrines (including certain forms of estoppel).
- Direct-benefits estoppel requires that the nonsignatory knowingly exploit the specific agreement containing the arbitration clause and obtain a direct benefit from that agreement; indirect benefits from an upstream supply arrangement are insufficient.
- A nonsignatory cannot be compelled to arbitrate merely because its claims are factually intertwined with a contract containing an arbitration clause; the claims must be legally based on, or seek enforcement of, that contract.
- Express contractual disclaimers excluding third-party rights weigh against treating a nonsignatory as an intended beneficiary or binding it to arbitration provisions in the disclaimed contract.

## Conclusion

The Fifth Circuit held that Noble could litigate its product-failure and related contract, warranty, tort, and statutory claims in court because it neither knowingly invoked nor sought to enforce the upstream Certex–Bridon agreements containing arbitration clauses, and those agreements expressly excluded third-party rights.


Noble Drilling Servs., Inc. v. Certex USA, Inc., 620 F.3d 469 (5th Cir. 2010)