Chapter+6

Mitsubishi Motors v. Soler Chrysler-Plymouth In 1979, Soler Chrysler-Plymouth, Inc., became a distributor for CISA, a Swiss subsidiary of Chrysler. Soler was to sell Plymouth cars in Puerto Rico. Mitsubishi Motors was a joint venture between CISA and Mitsubishi Heavy Industries, Inc. CISA, Soler, and Mitsubishi Motors entered into an agreement that contained the following clause: Arbitration of certain matters: All disputes, controversies, or differences which may arise between MMC and Buyer (Soler)… shall be finally settled by arbitration in Japan in accordance with the rules and regulations of the Japan Commercial Arbitration Association.
Justice Stewart:…A contractual provision specifying in advance the forum in which disputes shall be litigated and the law to be applied is an almost indispensable precondition to achievement of the orderliness and predictability essential to any international business transaction. Furthermore, such a provision obviates the danger that a dispute under the agreement might be submitted to a forum hostile to the interests of one of the parties or unfamiliar with the problem involved. A parochial refusal by the courts of one country to enforce an international arbitration agreement would not only frustrate these purposes, but would invite unseemly and mutually destructive jockeying by the parties to secure tactical litigation advantages… “…We cannot have trade and commerce in world markets and international waters exclusively on our terms, governed by our laws, and resolved in our courts.” For all these reasons we hold that the agreement of the parties in this case to arbitrate any dispute arising out of their international commercial transaction is to be respected and enforced by the federal courts in accordance with the explicit provisions of the Arbitration Act. Reversed and remanded.
Scherk v. Alberto-Culver Alberto-Culver Co., a Delprincipal office in Illinois, manufactures toiletries and hair products in the United States and abroad. In February 1969, it signed in Austria a contract to purchase three businesses of Fritz Scherk (a German citizen) that were organized under German and Liechtenstein laws, as well as the trademarks to related cosmetics. In the contract, Scherk warranted that he had the sole and unencumbered ownership of these trademarks. The contract also contained a clause that provided that “any controversy or claim that shall arise out of this agreement or the breach thereof would be referred to arbitration before the International Chamber of Commerce in Paris, France, and that the laws of Illinois shall govern.” One year after the closing, Alberto-Culver discovered that others had claims to Scherk’s trademarks. Alberto-Culver tried to rescind the contract; Scherk refused, and Alberto filed suit in Illinois Federal District Court claiming that the misrepresentations violated the Securities and Exchange Act, sec. 10(b) and the SEC rule 10b-5. Scherk moved to dismiss or to stay the action pending arbitration. In the US District Court, the motion to dismiss was denied and arbitration was enjoined. The Court Appeals affirmed. The Supreme Court granted certiorari.
IV. Change of attitudes in the U.S. and the U.K. towards arbitration
1. Traditional hostility of U.S. and English courts towards arbitration 1) Judicial review of arbitral awards 2) Appellant jurisdiction of appeals against arbitral awards 2. Change of attitudes General respect for the parties’ right to choosing arbitration
The agreement worked for several years until during a slowdown, Mitsubishi filed a request for arbitration in Tokyo and also filed an action in Federal District Court to compel arbitration. Soler claimed that antitrust as well as other violations were involved that should not be addressed by arbitration. The District Court ordered arbitration. The Court of Appeals reversed the part of the order submitting Soler’s antitrust claim to arbitration. The Supreme Court granted certiorari. Justice Blackmun: … As international trade has expanded in recent decades, so too has the use of international arbitration to resolve disputes arising in the course of that trade. The controversies that international arbitral institutions are called upon to resolve have increased in diversity as well as in complexity. Yet the potentials of these tribunals for efficient disposition of legal disagreements arising from commercial relations has not yet been tested. If they are to take a central place in the international legal order, national courts will need to ‘shake off the old judicial hostility to arbitration, and also their customary and understandable unwillingness to cede jurisdiction of a claim arising under domestic law to a foreign or transnational tribunal. To this extent, at least, it will be necessary for national courts to subordinate domestic notions of arbitrability to the international policy favoring commercial arbitration. Affirmed in part, reversed in part, and remanded.