Law School Case Brief
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth - 473 U.S. 614, 105 S. Ct. 3346 (1985)
The first task of a court asked to compel arbitration of a dispute is to determine whether the parties agreed to arbitrate that dispute. The court is to make this determination by applying the federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Federal Arbitration Act, 9 U.S.C.S. § 1 et seq.
A Puerto Rico corporation entered into distribution and sales agreements with a Swiss corporation and a Japanese corporation which manufactured automobiles in Japan. This automobile manufacturer was the product of a joint venture between the Swiss corporation and another Japanese corporation. The sales agreement contained a clause providing for arbitration by the Japan Commercial Arbitration Association of all disputes arising out of certain articles of the agreement or for the breach thereof. Subsequently, disputes arose from a slackening of the sale of the automobiles. After attempts to work out these disputes failed, the Japanese manufacturer brought an action against the Puerto Rico corporation in the district court under the federal Arbitration Act and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, seeking an order to compel arbitration of the disputes in accordance with the arbitration clause, which provided that arbitration take place in Japan in accordance with the rules and regulations of the Japan Commercial Arbitration Association. The Puerto Rico corporation filed an answer and counterclaims, asserting, among others, causes of action under the Sherman Act and other statutes. The district court ordered arbitration of all the issues raised in the complaint and most of the issues raised in the counterclaims, including the federal antitrust issues, holding that the international character of the undertaking in question required enforcement of the arbitration clause even as to the antitrust claims. The United States Court of Appeals for the First Circuit reversed insofar as the district court ordered submission of the antitrust claims to arbitration. The case was appealed.
Is arbitration proper?
The order finding that defendant's antitrust claims were not arbitrable was reversed. The court found that the antitrust dispute alone did not invalidate the forum selection clause, and the potential complexity of the antitrust claim did not bar arbitration. The parties and arbitral body could retain competent arbitrators, and the dispute would be governed by the national law giving rise to the claim. There was a strong presumption reinforced by the Federal Arbitration Act and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards that favored arbitration for international commerce.
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