International Commercial ArbitrationInternational Commercial Arbitration

Arbitrability and the Arbitrability and the Impact of Mitsubishi Impact of Mitsubishi

and Eco Swiss decision and Eco Swiss decision

Nikola Antlová, Jakub Burget, Nikola Antlová, Jakub Burget, Veronika HradilováVeronika Hradilová

20112011

Arbitrability - definitionArbitrability - definition

Consists of :Consists of : Arbitr(ation)Arbitr(ation) AbilityAbility

= ability to be arbitrated= ability to be arbitrated

- whether the jurisdiction requirements of - whether the jurisdiction requirements of arbitration ale fullfilledarbitration ale fullfilled

Conditions of Conditions of ArbitrabilityArbitrability

1)1) valid agreement of partiesvalid agreement of parties

2)2) particular subject matter particular subject matter

Types of ArbitrabilityTypes of Arbitrability

1)1) Procedural, SubstantiveProcedural, Substantive

2)2) Subjective :Subjective : agreement of partiesagreement of parties

Objective : Objective : particular state´s lawparticular state´s law

Arbitrability - distinctions Arbitrability - distinctions

Not same considerationNot same consideration Different from state to stateDifferent from state to state USA :USA :

NY ConventionNY Convention Broader meaning of this termBroader meaning of this term US courts have had the power to determine all US courts have had the power to determine all

questions containing the arbitrability questions containing the arbitrability the most important issue : arbitration clausethe most important issue : arbitration clause

MITSUBISHI V. SOLER CHRYSLER-MITSUBISHI V. SOLER CHRYSLER-PLYMOUTH, 473 U. S. 614 (1985)PLYMOUTH, 473 U. S. 614 (1985)

Petitioner-cross-respondent:Petitioner-cross-respondent:Mitsubishi Mitsubishi Motors Corporation (Mitsubishi). Motors Corporation (Mitsubishi). Japanese corporation which Japanese corporation which manufactures automobiles and CISA, manufactures automobiles and CISA, Swiss company wholly owned by CryslerSwiss company wholly owned by Crysler

Respondent-cross-petitioner:Respondent-cross-petitioner: Soler Soler Chrysler-Plymouth, Inc. (Soler), is a Chrysler-Plymouth, Inc. (Soler), is a Puerto Rico corporation with its principal Puerto Rico corporation with its principal place of business in Pueblo Viejo, place of business in Pueblo Viejo, Guaynabo, Puerto Rico.Guaynabo, Puerto Rico.

AgreenmentAgreenment On October 31, 1979, Soler entered into a On October 31, 1979, Soler entered into a

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

Paragraph VI of the Sales Paragraph VI of the Sales Agreement: ArbitrationAgreement: Arbitration

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

DisputeDispute Soler run into serious difficulties in meeting Soler run into serious difficulties in meeting

the expected sales volume i 1981 and the expected sales volume i 1981 and requested that Mitsubishi cancel several requested that Mitsubishi cancel several shipments.shipments.

About the same time Soler tryed to transship About the same time Soler tryed to transship and sale quantity of its vehicles to US and and sale quantity of its vehicles to US and Latin America.Latin America.

Mitsubishi refused to give permission for Mitsubishi refused to give permission for such actionsuch action

ClaimsClaims

Mitshubishi held Soler responsible for Mitshubishi held Soler responsible for canceling shipments, and therefore for canceling shipments, and therefore for breach of agreenmentbreach of agreenment

Soler alleged that Mitsubishi and CISA Soler alleged that Mitsubishi and CISA had conspired to divide markets in had conspired to divide markets in restraint of trade. Refused to permit Soler restraint of trade. Refused to permit Soler to sell vehicles to US and South America to sell vehicles to US and South America in order to replace them on marketin order to replace them on market

Who should decide?Who should decide?

Solar supported its claims by (antitrust) Solar supported its claims by (antitrust) Sherman act, therefore demanded US Sherman act, therefore demanded US court to decidecourt to decide

Mitshubishi demanded arbitration Mitshubishi demanded arbitration accordingly to pragraph VI of the sales accordingly to pragraph VI of the sales agreementagreement

U.S. Supreme court U.S. Supreme court decisiondecision

American Safety doctrine should be American Safety doctrine should be applied to domestic transactionsapplied to domestic transactions

The expansion of American business and The expansion of American business and industry will hardly be encouraged if we industry will hardly be encouraged if we insist that all disputes must be resolved insist that all disputes must be resolved under our laws and in our courtunder our laws and in our court

U.S. Supreme court U.S. Supreme court decisiondecision

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

Eco Swiss China Eco Swiss China Time Ltd. Vs. Time Ltd. Vs. Benetton Benetton International NV, International NV, No. C- 126/97 (June 1, No. C- 126/97 (June 1, 1999) 1999)

- Benetton (a Netherlands company) - Benetton (a Netherlands company) concluded a licensing agreement concluded a licensing agreement with Eco Swiss and Bulovawith Eco Swiss and Bulova

- the agreement contained an the agreement contained an arbitration clause; arbitrators would arbitration clause; arbitrators would apply Netherlands lawapply Netherlands law

- Benettom terminated the license 3 Benettom terminated the license 3 yrs early → dispute aroseyrs early → dispute arose

- tthe arbitrators made two awards (a he arbitrators made two awards (a preliminarypreliminary one, then a final one)one, then a final one)

-- the application of Benetton for - the application of Benetton for annulment of the arbitration awards annulment of the arbitration awards (awards were contrary to(awards were contrary to public public policy?policy?))

The Netherlands Code of Civil Procedure: The Netherlands Code of Civil Procedure: annulment of the arbitration award if it is annulment of the arbitration award if it is contrary to public policycontrary to public policy

The Supreme Court of the NetherlandsThe Supreme Court of the Netherlands refered questions to the Court of Justice: refered questions to the Court of Justice: the interpretation of Article 101 of the the interpretation of Article 101 of the Treaty onTreaty on thethe FunctioningFunctioning ofof the the European Union (ex Article 81 TEC):European Union (ex Article 81 TEC):

Article 101 of the Treaty- a matter of Article 101 of the Treaty- a matter of public policypublic policy

Result:Result: 1) non-application or misapplication of 1) non-application or misapplication of

Article 101 may give rise to the public Article 101 may give rise to the public policy defence in enforcement proceedingspolicy defence in enforcement proceedings

2) domestic rules which restrict possibility 2) domestic rules which restrict possibility for annulment because it has become for annulment because it has become res res judicata judicata are justified by basic principles of are justified by basic principles of the national judicial system → the the national judicial system → the principles of principles of res judicata res judicata prevailed over the prevailed over the principle of the primacy of EU law principle of the primacy of EU law

ECJ, summary:ECJ, summary: 1) „1) „Where domestic rules of procedure require a national court to grant Where domestic rules of procedure require a national court to grant

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

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

Použitá literaturaPoužitá literatura

MISTELIS,A.L., BREKOULAKIS,S.L. MISTELIS,A.L., BREKOULAKIS,S.L. Arbitrability: International Arbitrability: International and Comparative Perspectives. and Comparative Perspectives. Kluwer Law International, 2009. Kluwer Law International, 2009. 408s. ISBN 9789041127303408s. ISBN 9789041127303

FOUCHARD,P., GAILLARD,E., GOLDMAN,B. FOUCHARD,P., GAILLARD,E., GOLDMAN,B. International International commercial arbitration. commercial arbitration. Kluwer Law International, 1999. 1280s. Kluwer Law International, 1999. 1280s. ISBN 9789041110251 ISBN 9789041110251

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