International Commercial Arbitration Arbitrability and the Impact of

International Commercial Arbitration Arbitrability and the Impact of Mitsubishi and Eco Swiss decision Nikola Antlová, Jakub Burget, Veronika Hradilová 2011

Arbitrability - definition § Consists of : Arbitr(ation) Ability = ability to be arbitrated - whether the jurisdiction requirements of arbitration ale fullfilled

Conditions of Arbitrability § 1) valid agreement of parties § 2) particular subject matter

Types of Arbitrability § 1) Procedural, Substantive § 2) Subjective : § agreement of parties Objective : § particular state´s law

Arbitrability - distinctions § § § Not same consideration Different from state to state USA : § NY Convention § Broader meaning of this term § US courts have had the power to determine all questions containing the arbitrability § the most important issue : arbitration clause

MITSUBISHI V. SOLER CHRYSLERPLYMOUTH, 473 U. S. 614 (1985) Petitioner-cross-respondent: Mitsubishi Motors Corporation (Mitsubishi). Japanese corporation which manufactures automobiles and CISA, Swiss company wholly owned by Crysler Respondent-cross-petitioner: Soler Chrysler-Plymouth, Inc. (Soler), is a Puerto Rico corporation with its principal place of business in Pueblo Viejo, Guaynabo, Puerto Rico.

Agreenment § On October 31, 1979, Soler entered into a Distributor Agreement with CISA which provided for the sale by Soler of Mitsubishimanufactured vehicles within a designated area, including metropolitan San Juan. App. 18. On the same date, CISA, Soler, and Mitsubishi entered into a Sales Procedure Agreement (Sales Agreement) which, referring to the Distributor Agreement, provided for the direct sale of Mitsubishi products to Soler and governed the terms and conditions of such sales

Paragraph VI of the Sales Agreement: Arbitration § All disputes, controversies or differences which may arise between [Mitsubishi] and [Soler] out of or in relation to Articles I-B through V of this Agreement or for the breach thereof, shall be finally settled by arbitration in Japan in accordance with the rules and regulations of the Japan Commercial Arbitration Association

Dispute § Soler run into serious difficulties in meeting the expected sales volume i 1981 and requested that Mitsubishi cancel several shipments. § About the same time Soler tryed to transship and sale quantity of its vehicles to US and Latin America. § Mitsubishi refused to give permission for such action

Claims § Mitshubishi held Soler responsible for canceling shipments, and therefore for breach of agreenment § Soler alleged that Mitsubishi and CISA had conspired to divide markets in restraint of trade. Refused to permit Soler to sell vehicles to US and South America in order to replace them on market

Who should decide? § Solar supported its claims by (antitrust) Sherman act, therefore demanded US court to decide § Mitshubishi demanded arbitration accordingly to pragraph VI of the sales agreement

U. S. Supreme court decision § American Safety doctrine should be applied to domestic transactions § The expansion of American business and industry will hardly be encouraged if we insist that all disputes must be resolved under our laws and in our court

U. S. Supreme court decision § We conclude that concerns of international comity, respect for the capacities of foreign and transnational tribunals, and sensitivity to the need of the international commercial system for predictability in the resolution of disputes require that we enforce the parties' agreement, even assuming that a contrary result would be forthcoming in a domestic context.

Eco Swiss China Time Ltd. Vs. Benetton International NV, No. C- 126/97 (June 1, 1999) - Benetton (a Netherlands company) concluded a licensing agreement with Eco Swiss and Bulova - the agreement contained an arbitration clause; arbitrators would apply Netherlands law - Benettom terminated the license 3 yrs early → dispute arose - the arbitrators made two awards (a preliminary one, then a final one) -- the application of Benetton for annulment of the arbitration awards (awards were contrary to public policy? )

§ The Netherlands Code of Civil Procedure: annulment of the arbitration award if it is contrary to public policy § The Supreme Court of the Netherlands refered questions to the Court of Justice: the interpretation of Article 101 of the Treaty on the Functioning of the European Union (ex Article 81 TEC): § Article 101 of the Treaty- a matter of public policy

§ Result: § 1) non-application or misapplication of Article 101 may give rise to the public policy defence in enforcement proceedings § 2) domestic rules which restrict possibility for annulment because it has become res judicata are justified by basic principles of the national judicial system → the principles of res judicata prevailed over the principle of the primacy of EU law

§ ECJ, summary: § 1) „Where domestic rules of procedure require a national court to grant an application for annulment of an arbitration award where such an application is founded on failure to observe national rules of public policy, it must also grant such an application where it is founded on failure to comply with the prohibition laid down in Article 85 of the Treaty (now Article 81 EC). That provision constitutes a fundamental provision which is essential for the accomplishment of the tasks entrusted to the Community and, in particular, for the functioning of the internal market. Also, Community law requires that questions concerning the interpretation of the prohibition laid down in Article 85 should be open to examination by national courts when they are asked to determine the validity of an arbitration award and that it should be possible for those questions to be referred, if necessary, to the Court of Justice for a preliminary ruling. “

§ 2) „Community law does not require a national court to refrain from applying domestic rules of procedure according to which an interim arbitration award which is in the nature of a final award and in respect of which no application for annulment has been made within the prescribed time-limit acquires the force of res judicata and may no longer be called in question by a subsequent arbitration award, even if this is necessary in order to examine, in proceedings for annulment of a subsequent arbitration award, whether an agreement which the interim award held to be valid in law is nevertheless void under Article 85 of the Treaty (now Article 81 EC), where the time-limit prescribed does not render excessively difficult or virtually impossible the exercise of rights conferred by Community law. “

Použitá literatura § MISTELIS, A. L. , BREKOULAKIS, S. L. Arbitrability: International and Comparative Perspectives. Kluwer Law International, 2009. 408 s. ISBN 9789041127303 § FOUCHARD, P. , GAILLARD, E. , GOLDMAN, B. International commercial arbitration. Kluwer Law International, 1999. 1280 s. ISBN 9789041110251 § Internetová stránka dostupná na: http: //www. gibsondunn. com/publications/Documents/Shore. Defining. Arbitrability. pdf § Internetová stránka dostupná na: http: //www. delawarelitigation. com/2010/10/articles/chancery-courtupdates/procedural-arbitrability-compared-with-substantivearbitrability-should-court-or-arbitrator-decide/ § Internetová stránka dostupná na: http: //arbitration. uslegal. com/arbitration/arbitrability/ § Website: http: //caselaw. lp. findlaw. com/cgibin/getcase. pl? court=us&vol=473&invol=614

§ Internetová stránka dostupná na: § http: //ct. findacase. com/research/wfrm. Doc. Viewer. aspx/xq/fac. 1996 0613_0000040. DCT. htm/qx § Internetová stránka dostupná na: § http: //www. uchastings. edu/facultyadministration/faculty/armbruster/Eco%20 Swiss%20 Case. pdf § Internetová stránka dostupná na: § http: //eurlex. europa. eu/Lex. Uri. Serv. do? uri=CELEX: 61997 J 0126 : EN: HTML § Internetová stránka dostupná na: § http: //www. wilmerhale. com/files/Publication/5 c 9 f 5 f 0 d-c 4 dc-43 c 28 fae 4 dabb 56 c 41 cd/Presentation/Publication. Attachment/4 e 4 e 4 babdb 82 -4 f 71 -8 d 1 e-5089 c 9 dd 0748/Ratliff%202000_Part%201. pdf

§ Internetová stránka dostupná na: § http: //www. sjberwin. com/Contents/Publications/pdf/49/090606043 516. pdf § Internetová stránka dostupná na: § http: //books. google. cz/books? id=6 we 5 d. Iahwk. C&printsec=frontcover&source=gbs_ge_summary_r&cad =0#v=onepage&q&f=false § Internetová stránka dostupná na: § http: //books. google. cz/books? id=b 1 Ogn. DQ 2 Unw. C&printsec=front cover&source=gbs_ge_summary_r&cad=0#v=onepage&q&f=false