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International Paper Co. v. Schwabedissen Maschinen & Anlagen GMBH

United States Court of Appeals for the Fourth Circuit

January 25, 2000, Argued ; March 14, 2000, Decided

No. 98-2482

Opinion

 [*413]  DIANA GRIBBON MOTZ, Circuit Judge:

A buyer became dissatisfied with an industrial saw and brought suit against the manufacturer of the saw on the basis of a contract between the distributor and the manufacturer. The question presented to us is whether an arbitration clause in the distributor-manufacturer contract requires the buyer, a nonsignatory to that contract, to arbitrate its claims against the manufacturer. The district court held that it did. Concluding that the buyer cannot sue to enforce the guarantees and warranties [**2]  of the distributor-manufacturer contract  [*414]  without complying with its arbitration provision, we affirm.

Westinghouse Electric Corporation (a predecessor-in-interest of the International Paper Company) sought to purchase an industrial saw manufactured by Schwabedissen Maschinen & Anlagen GMBH, a German corporation. On April 1, 1991, Westinghouse sent to Wood Systems Incorporated, a United States distributor of Schwabedissen saws, a non-binding letter of intent to purchase a new Schwabedissen double trim saw. Westinghouse personnel then visited Schwabedissen's facility in Germany to observe its production process. Upon their return, in a purchase order from Westinghouse to Wood dated May 17, 1991, Westinghouse agreed to buy and Wood agreed to sell the Schwabedissen saw, in accordance with a performance guarantee and certain specifications.

On June 6, 1991, Schwabedissen sent Wood an "Order Confirmation/Contract" for the saw Westinghouse sought to purchase, which included extensive specifications. Schwabedissen contends, and the district court found, that this contract also included the terms of two additional documents--the "General Conditions for the Supply and Erection of Plant [**3]  and Machinery for Import and Export No. 188A, prepared under the auspices of the United Nations Economic Commission for Europe" (the "General Conditions"), and the "Annex attached to the General Conditions for the Supply and Erection of Plant and Machinery for Import and Export by the German Mechanical Engineering Industry" (the "Annex"). The "General Conditions" contain an arbitration clause providing that "any dispute arising out of the Contract shall be finally settled, in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce, by one or more arbitrators designated by those Rules," and establish the governing law as that of the country of the contractor. The "Annex" permits the contractor to bring an action before a court rather than an arbitrator "unless and until the dispute has been referred to arbitration by one of the parties."

On June 12, 1991, Wood sent a purchase order for the saw to Schwabedissen, together with the specifications from Westinghouse's purchase order. In response, Schwabedissen arranged for delivery of the saw, which was installed at Westinghouse's plant in late December 1991. According to Westinghouse, the saw [**4]  "completely failed to properly operate once installed or at anytime thereafter." No written contract ever existed between Westinghouse and Schwabedissen, but Westinghouse maintains that when difficulty arose as to the saw's operation, Schwabedissen orally agreed to repair the saw, but failed to do so.

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206 F.3d 411 *; 2000 U.S. App. LEXIS 3762 **

INTERNATIONAL PAPER COMPANY, Plaintiff-Appellant, v. SCHWABEDISSEN MASCHINEN & ANLAGEN GMBH, Defendant-Appellee.

Prior History:  [**1]  Appeal from the United States District Court for the District of South Carolina, at Greenwood. Solomon Blatt, Jr., Senior District Judge. (CA-93-2727-9-8).

Disposition: AFFIRMED.

CORE TERMS

arbitration, arbitration clause, district court, nonsignatory, parties, amend, arbitration provision, purchase order, arbitration agreement, allegations, amended complaint, third-party, warranties, employees, estopped

Business & Corporate Compliance, Contracts Law, Contract Conditions & Provisions, Arbitration Clauses, Civil Procedure, Appeals, Standards of Review, Clearly Erroneous Review, Alternative Dispute Resolution, Arbitration, General Overview, Pretrial Matters, Judicial Review, Banking Law, Federal Acts, Federal Arbitration Act, Mandatory ADR, Contract Formation, Execution & Delivery, International Trade Law, Dispute Resolution, International Commercial Arbitration, Arbitration, Labor & Employment Law, Collective Bargaining & Labor Relations, Labor Arbitration, Enforcement, Contracts Law, Estoppel, Equitable Estoppel, Validity of ADR Methods, Administrative Law, Agency Adjudication, Alternative Dispute Resolution, Foreign Arbitral Awards, International Law, Arbitration & Mediation, Agreements, International Trade Law, International Commercial Arbitration, Abuse of Discretion