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Filanto, S.p.A. v. Chilewich Int'l Corp. - 789 F. Supp. 1229 (S.D.N.Y. 1992)

Rule:

The Arbitration Convention specifically requires courts to recognize any agreement in writing under which the parties undertake to submit to arbitration. Convention on the Recognition and Enforcement of Foreign Arbitral Awards Article II(1). The term "agreement in writing" is defined as an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams. Convention on the Recognition and Enforcement Of Foreign Arbitral Awards Article II(2).

Facts:

Plaintiff Italian corporation entered into an agreement with defendant New York corporation where it would provide boots to satisfy an agreement between defendant and a Russian company. After a disagreement among the parties, plaintiff brought an action seeking to enjoin the arbitration required by the contract between defendant and the Russian economic association (the Russian contract) or to order arbitration in New York. Defendant filed a motion to stay the present action, pending arbitration in Moscow.

Issue:

Should the United States District Court issue a mandatory injunction for the parties--plaintiff Italian corporation and defendant New York corporation--to arbitrate in Moscow, as provided in an arbitration clause an agreement between defendant and a Russian economic association?

Answer:

Yes.

Conclusion:

The United States District Court explained that the Convention's implementing legislation provides an independent basis of subject matter jurisdiction. This independent jurisdictional basis is of some importance to this litigation because on a motion pursuant to the Arbitration Act, federal law governs issues relating to the arbitrability of a dispute. However, the focus of the instant dispute is not on the scope of the arbitration provision included in the Russian contract; rather, the threshold question is whether these parties actually agreed to arbitrate their disputes at all.

The Court issued a final judgment, including a mandatory injunction requiring the parties to arbitrate in Moscow as provided in the arbitration clause. The Court found that there were a series of exchanges among the parties concerning the incorporation of the Russian contract into their agreement. But the Court determined that a memorandum agreement signed by the parties that specifically incorporated by reference the arbitration provision in the Russian contract was the binding written contract. The Court held that plaintiff should be bound because it attempted to utilize to its benefit another provision of the Russian contract and because it signed the memorandum.

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