govinfo:USCOURTS-njd-2_26-cv-05788-1

UNITED STATES DISTRICT COURT 
DISTRICT OF NEW JERSEY 
 
 
CAPRICOR THERAPEUTICS, INC., 
 
Plaintiff, 
 
v. 
 
NS PHARMA, INC. and NIPPON 
SHINYAKU CO., LTD., 
 
Defendants. 
 
 
 
Civil Action No. 26-5788 (JXN)(AME) 
 
 
OPINION 
 
 
NEALS, District Judge 
Before the Court is Plaintiff Capricor Therapeutics, Inc.’s (“Capricor”) motion to remand 
a pharmaceutical contract dispute back to New Jersey state court. (ECF No. 18.) Capricor entered 
a contract (“Distribution Agreement”) granting Defendants Nippon Shinyaku Co., Ltd. ( “Nippon 
Shinyaku”) and NS Pharma, Inc. ( “NS Pharma”) (collectively, “Defendants”) the exclusive right 
to distribute a drug (“Drug”). The Distribution Agreement had an arbitration clause. Capricor sued 
to rescind the Distribution Agreement and allow Capricor to distribute the Drug itself. 
Defendants removed this case under Chapter 2 of the Federal Arbitration Act ( “FAA”), 9 
U.S.C. §§ 201–08, which implements the Convention on the Recognition and Enforcement of 
Foreign Arbitral Awards (“Convention”). Capricor moved to remand. (ECF No. 18.) Defendants 
opposed (ECF No. 25) and Capricor replied (ECF No. 26). The Court held oral argument on June 
17, 2026. The Court has carefully considered the parties ’ submissions and arguments. For the 
reasons set forth below, Capricor’s motion to remand is GRANTED. PageID:
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I. BACKGROUND 
A. Statement of Facts 
Capricor, a Delaware biotechnology company, makes a Drug to treat a rare form of 
muscular dystrophy. (See Compl. ¶¶ 2, 5, 23, ECF No. 1-1.) The Drug is awaiting Food and Drug 
Administration (“FDA”) approval. (Id. ¶ 32.) In anticipation of the Drug’s launch, Capricor entered 
a Distribution Agreement with Nippon Shinyaku, a Japanese pharmaceutical company, and its 
subsidiary, NS Pharma, a New Jersey-based Delaware corporation. (Id. ¶¶ 8, 24–25.) 
The Distribution Agreement granted Defendants the exclusive right to distribute the Drug 
in the United States. (Id. ¶ 8.) Relevant here, the Distribution Agreement has an Arbitration Clause. 
The Arbitration Clause states that: 
any matter submitted to arbitration pursuant to any provision contained in this 
Agreement or any dispute arising out of or relating to this Agreement or its breach, 
termination or validity, including whether the claims asserted are arbitrable, . . . 
shall be settled by binding arbitration under the Rules of Arbitration of the 
International Chamber of Commerce (“ICC Rules”) . . . . 
 
(See Distrib. Agreement art. 18.3.1(a), ECF No. 1-2.) The Arbitration Clause, however, also 
specifies that: 
Nothing contained in this Article 18 shall prevent either Party from resorting to 
judicial process if injunctive or other equitable relief from a court is necessary to 
prevent serious and irreparable injury to one Party or to others. The use of 
arbitration procedures will not be construed under the doctrine of laches, waiver or 
estoppel to affect adversely either Party’s right to assert any claim or defense. 
 
(Id. art. 18.3.3.) 
B. Procedural History 
On May 7, 2026, Capricor filed a verified complaint against Defendants in New Jersey 
Superior Court, Chancery Division to (1) rescind the Distribution Agreement and (2) enjoin 
Defendants from interfering with Capricor ’s efforts to distribute the Drug itself; or, in the 
alternative, (3) declare that Capricor has the right to distribute the Drug. (See Compl.) PageID:
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The Chancery Judge scheduled a preliminary injunction hearing on June 3, 2026. (See Pl.’s 
Moving Br. at 9, ECF No. 18.) On May 20, 2026, however, Defendants removed the action to this 
Court. (See Notice of Removal, ECF No. 1.) 
In their Notice of Removal, Defendants assert that the Court has subject matter jurisdiction 
through 9 U.S.C. § 203 and removal jurisdiction through 9 U.S.C. § 205. ( Id.) Under 9 U.S.C. § 
202, 
An arbitration agreement or arbitral award 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 [Convention]. 
 
And, according to 9 U.S.C. § 203, 
An action or proceeding falling under the Convention shall be deemed to arise 
under the laws and treaties of the United States. The district courts of the United 
States . . . shall have original jurisdiction over such an action or proceeding, 
regardless of the amount in controversy. 
 
9 U.S.C. § 205 directs that: 
Where the subject matter of an action or proceeding pending in a State court relates 
to an arbitration agreement or award falling under the Convention, the defendant or 
the defendants may, at any time before the trial thereof, remove such action or 
proceeding to the district court of the United States for the district and division 
embracing the place where the action or proceeding is pending. The procedure for 
removal of causes otherwise provided by law shall apply, except that the ground 
for removal provided in this section need not appear on the face of the complaint 
but may be shown in the petition for removal. 
 
Taken together, Defendants argue that the Court has subject matter jurisdiction because the 
Distribution Agreement is an arbitration agreement falling under the Convention. 
Capricor moved to remand on May 29, 2026, requested the Court hear the matter on an 
expedited basis, and sought oral argument. (See Pl.’s Moving Br.) The Court granted the expedited 
briefing schedule and scheduled oral argument. (See Mem. & Order, ECF No. 22.) PageID:
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Capricor argues that the Court lacks subject matter jurisdiction because courts within this 
Circuit have repeatedly held that § 203 confers subject matter jurisdiction over only actions to 
compel arbitration or enforce an arbitration award. (Pl.’s Moving Br. at 13–16.) But, as Capricor 
notes, the complaint neither sought to compel arbitration nor enforce an arbitration award. ( Id. at 
13.) Capricor asserts that § 205 does not provide an independent basis for removal. (Id. at 14–16.) 
Further, Capricor states that this lawsuit falls within the Distribution Agreement’ s arbitration 
carveout for injunctive relief, and is therefore not subject to arbitration. ( Id. at 16–18.) Capricor 
also moves for attorneys ’ fees. (Id. at 18–23.) Defendants opposed (Defs.’ Opp’n, ECF No. 25), 
and Capricor replied (Capricor Reply, ECF No. 26). Shortly before filing opposition to the motion 
to remand, however, Defendants filed a motion to compel arbitration. ( See Mot. to Compel, ECF 
No. 23.) The Court held oral argument on June 17, 2026. 
II. LEGAL STANDARD 
 “ When a plaintiff moves for a remand to state court, the removing party must show removal 
was proper.” Verdone v. Rice & Rice, PC , 724 F. Supp. 3d 366, 379 (D.N.J. 2024). The Court 
strictly construes removal statutes “against removal” and resolves all doubts in favor of remand. 
Id. (citations omitted). And the Court assumes as true “all factual allegations of the complaint.” Id. 
(quoting Steel Valley Auth. v. Union Switch & Signal Div., 809 F.2d 1006, 1010 (3d Cir. 1987)). 
III. DISCUSSION 
A. § 203 Does Not Confer Subject Matter Jurisdiction 
i. § 203 Only Grants Jurisdiction to Compel Arbitration or Enforce an 
Award 
 
Federal courts have limited jurisdiction . Kokkonen v. Guardian Life Ins. Co. of Am., 511 
U.S. 375, 377 (1994). They “ possess only that power authorized by Constitution and statute .” 
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). One such statute is 28 PageID:
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U.S.C. § 1331, which empowers federal courts to hear “ all civil actions arising under the 
Constitution, laws, or treaties of the United States.” 
Under 9 U.S.C. § 203, “[a]n action or proceeding falling under the Convention shall be 
deemed to arise under the laws and treaties of the United States.” While § 202 defines an agreement 
falling under the convention, the remainder of the Federal Arbitration Act (“FAA”) does not define 
an “action or proceeding falling under the Convention.” See 9 U.S.C. §§ 1–401. That said, § 206 
empowers courts to “direct that arbitration be held in accordance with the agreement,” while § 207 
permits courts to enter “an order confirming the award.” Accordingly, both the Supreme Court and 
Third Circuit have (albeit indirectly) noted that § 203 grants courts jurisdiction to compel 
arbitration or enforce an a rbitration award. Vaden v. Discover Bank, 556 U.S. 49, 59 n.9 (2009) 
(“Chapter 2 of the FAA, not implicated here, does expressly grant federal courts jurisdiction to 
hear actions seeking to enforce an agreement or award falling under the [Convention].”); Century 
Indem. Co. v. Certain Underwriters at Lloyd’ s, 584 F.3d 513, 523 (3d Cir. 2009) ( “The FAA 
empowers district courts to compel arbitration in accordance with agreements, 9 U.S.C. § 206, and 
to enforce awards, 9 U.S.C. § 207, falling within the . . . Convention.”). 
Several courts within this Circuit have similarly concluded that § 203 confers subject 
matter jurisdiction only to (1) compel arbitration pursuant to § 206; or (2) enforce an arbitration 
award pursuant to § 207. See SGP USA LLC v. AM Sailing Purchaser LLC, No. 26-257, 2026 WL 
788669, at *3–7 (D. Del. Mar. 20, 2026); Landbridge Port Servs. (Hong Kong) Ltd v. Notarc Port 
Inv. LLC, No. 24- 254, 2024 WL 1299685, at *2 –4 (D. Del. Mar. 27, 2024) ( “[T]he Court has 
reviewed the language of the FAA and the . . . Convention and sees no language granting the Court 
authority to enjoin a foreign arbitration.”); URS Corp. v. Lebanese Co. for Dev., 512 F. Supp. 2d 
199, 206–08 (D. Del. 2007) (“[I]t is apparent that making a judicial determination on arbitrability, PageID:
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prior to an action seeking recognition or enforcement of an award, is inconsistent with the purposes 
of the FAA and the . . . Convention.”). 
The Court finds this view persuasive. Courts cannot “construe federal jurisdictional statutes 
more expansively than their language, most fairly read, requires.” Merrill Lynch, Pierce, Fenner 
& Smith Inc. v. Manning, 578 U.S. 374, 389 (2016). And Congress “says what it means and means 
what it says.” Oklahoma v. Castro-Huerta, 597 U.S. 629, 642 (2022) (citation omitted). Here, § 
202 defines certain agreements as falling under the Convention. But § 203 confers jurisdiction 
over actions falling under the Convention. If an agreement and an action meant the same thing, or 
if Congress intended for an action to mean “ any action involving an agreement falling under the 
Convention,” it would have said so. It did not. 
Rather, the structure of Chapter 2 specifies that courts can compel arbitration under § 206 
or enforce an award under § 207. And the purpose of the Convention was to “encourage the 
recognition and enforcement of commercial arbitration agreements in international contracts and 
to unify the standards by which agreements to arbitrate are observed and arbitral awards are 
enforced in the signatory countries.” Scherk v. Alberto-Culver Co., 417 U.S. 506, 520 n.15 (1974). 
Taken together, the most natural, consistent reading of § 203 is that an action means an action to 
compel arbitration under § 206 or to enforce an award under § 207. See Landbridge, 2024 WL 
1299685, at *3 ( “The Third Circuit has indirectly expressed the view that § 203 provides only 
limited jurisdiction in cases with actions to compel arbitration or enforce arbitral awards.”). 
The Court must determine whether subject matter jurisdiction existed “ [a]t the time the 
petition for removal is filed. ” Westmoreland Hosp. Ass’n v. Blue Cross of W. Pa., 605 F.2d 119, PageID:
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123 (3d Cir. 1979). 1 Because, at time Defendants removed, they neither moved to enforce the 
arbitration provision in the Distribution Agreement, nor sought to enforce an arbitration award, the 
Court lacks subject matter jurisdiction.2 
ii. Even If Broadly Read, This Action Does Not Fall Under § 203 
Accepting Defendants ’ broad reading of § 203 does not compel a different conclusion 
because this action does not arise out of the Distribution Agreement ’s Arbitration Clause. The 
Arbitration Clause states that: 
any matter submitted to arbitration pursuant to any provision contained in this 
Agreement or any dispute arising out of or relating to this Agreement or its breach, 
termination or validity, including whether the claims asserted are arbitrable, . . . 
shall be settled by binding arbitration under the Rules of Arbitration of the 
International Chamber of Commerce (“ICC Rules”) . . . . 
 
(See Distrib. Agreement art. 18.3.1(a).) But the Arbitration Clause provides: 
Nothing . . . shall prevent either Party from resorting to judicial process if injunctive 
or other equitable relief from a court is necessary to prevent serious and irreparable 
 
1 At oral argument, Defendants argued that the Court may determine whether subject matter jurisdiction exists after 
the time of removal, citing Royal Canin U. S. A., Inc. v. Wullschleger , 604 U.S. 22 (2025). And, because Defendants 
moved to compel arbitration after removing, they argue the Court has jurisdiction. Both arguments miss the mark. 
 To start, Royal Canin did not rewrite the well-established rules of subject matter jurisdiction. Rather, Royal 
Canin recited the uncontroversial proposition that the plaintiff is “the master of the complaint,” whose “control over 
those matters extends beyond the time her first complaint is filed .” 604 U.S. at 35. And, just as “eliminating federal 
claims in such a suit can destroy federal jurisdiction, . . . . [a]dding federal claims can create federal jurisdiction where 
it once was wanting.” Id. at 36. But that is within the plaintiff’s control; not, as in this case, the defendant’s. See Hain 
Celestial Grp., Inc. v. Palmquist, 607 U.S. 421, 433 (2026) (“The identity of the party asking for the dismissal is 
important because ‘[t]he plaintiff is “the master of the complaint, ”’ and generally has the right to choose whether to 
proceed in federal or state court.” (quoting Royal Canin, 604 U.S. at 35)). Because Capricor has done nothing to confer 
jurisdiction after removal, the Court looks to subject matter jurisdiction as it was at the time of removal. 
 Next, Defendants’ motion to compel arbitration does not create subject matter jurisdiction. “ [N]o action of 
the parties can confer subject-matter jurisdiction upon a federal court.” Ins. Corp. of Ir. v. Compagnie des Bauxites de 
Guinee, 456 U.S. 694, 702 (1982). Moreover, 9 U.S.C. § 203 expands the Court’s federal question jurisdiction. Federal 
question jurisdiction “exists only when a federal question is presented on the face of the plaintiff’ s properly pleaded 
complaint.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). Federal question jurisdiction cannot arise from a 
defense or a counterclaim. See id. at 392–93. That includes a post-removal motion to compel arbitration. 
2 Defendants argue that in Suter v. Munich Reinsurance Co., 223 F.3d 150 (3d Cir. 2000), the Third Circuit construed 
§§ 203 and 205 broadly enough to encompass this action. Not so. Suter did not interpret § 203. That case considered 
only whether a party could waive its right to remove under § 205. Id. at 158 (holding “that there can be no waiver of 
a right to remove under the Convention Act in the absence of clear and unambiguous language requiring such a 
waiver.”). PageID:
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injury to one Party or to others. The use of arbitration procedures will not be 
construed under the doctrine of laches, waiver or estoppel to affect adversely either 
Party’s right to assert any claim or defense. 
 
(Id. art. 18.3.3.) 
This action is plainly a “resort[] to judicial process” for “injunctive or other equitable relief 
from a court . . . to prevent serious and irreparable injury to one Party or to other s.” (Id.) This 
matter, accordingly, falls outside the Arbitration Clause. Therefore, even if the Court adopted 
Defendants’ expansive view of § 203, which it does not, § 203 would nonetheless not confer 
subject matter jurisdiction over this action. 
B. § 205 Does Not Confer Subject Matter Jurisdiction 
9 U.S.C. § 205 directs that: 
Where the subject matter of an action or proceeding pending in a State court relates 
to an arbitration agreement or award falling under the Convention, the defendant or 
the defendants may, at any time before the trial thereof, remove such action or 
proceeding to the district court of the United States for the district and division 
embracing the place where the action or proceeding is pending. The procedure for 
removal of causes otherwise provided by law shall apply, except that the ground 
for removal provided in this section need not appear on the face of the complaint 
but may be shown in the petition for removal. 
 
Defendants argue that, independently or when read in connection with § 203, § 205 confers broad 
subject matter jurisdiction over actions involving foreign arbitration agreements. (Defs.’ Opp’n at 
14–19.) 
 The Court disagrees. Subject matter jurisdiction is distinct from removal jurisdiction. 
Subject matter jurisdiction “defines the court’s authority to hear a given type of case. ” Carlsbad 
Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635, 639 (2009) (quoting United States v. Morton, 467 U.S. 
822, 828 (1984)). Removal jurisdiction “is a means of bringing cases within federal courts’ original 
jurisdiction into those courts.” Cofield v. U.S. Dep’t of Justice, No. 15-558, 2018 WL 2317528, at 
*6 (D.N.J. May 22, 2018) (citation omitted). “ Thus, the absence of language in § 205 explicitly PageID:
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conferring subject matter jurisdiction strongly supports a finding that § 205 does not confer subject 
matter jurisdiction.” Landbridge, 2024 WL 1299685, at *3. Moreover, “ it would be peculiar for 
Congress to plainly grant narrow original jurisdiction in § 203, but to disguise a grant of broad 
jurisdiction to removed cases in § 205.” Because § 205 creates removal jurisdiction, not subject 
matter jurisdiction, § 205 does not empower the Court to hear this case. 
C. No Other Statute Confers Subject Matter Jurisdiction 
This is a state law breach of contract claim , meaning the Court cannot exercise federal 
question jurisdiction over this action. See 28 U.S.C. § 1331. And, because Capricor and NS Pharma 
are both Delaware corporations , the Court cannot hear this action in diversity. See 28 U.S.C. § 
1332(a). 
D. Attorneys’ Fees Are Unwarranted 
Capricor requests attorneys’ fees, which the Court denies. “ An order remanding the case 
may require payment of just costs and any actual expenses, including attorney fees, incurred as a 
result of the removal. ” 28 U.S.C. § 1447(c). “ Absent unusual circumstances, courts may award 
attorney’s fees under § 1447(c) only where the removing party lacked an objectively reasonable 
basis for seeking removal.” Martin v. Franklin Cap. Corp., 546 U.S. 132, 141 (2005). The Court 
has discretion “to consider whether unusual circumstances” exist. Id. Having reviewed the parties’ 
briefs and oral arguments, the Court concludes Defendants had a colorable basis for removal. 
Accordingly, unusual circumstances did not exist and a fee award is unwarranted. PageID:
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IV. CONCLUSION 
For the foregoing reasons, Capricor’s motion to remand (ECF No. 18) is GRANTED. An 
appropriate Order accompanies this Opinion. 
 
 
DAT
ED: 6/17/2026 _______________________ 
 JULIEN XAVIER NEALS 
 United States District Judge PageID:
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