Cengage Advantage Books: Business Law Today, The Essentials 10th Edition by Roger LeRoy Miller

تمرين 14

S T Oil Equipment Machinery, Ltd. v. Juridica Investments, Ltd.
FACTS Juridica Investments, Ltd. (JIL), entered into a financing contract with S T Oil Equipment Machinery, Ltd., a U.S. company. The contract included an arbitration provision stating that any disputes would be arbitrated in Guernsey, which is one in a group of British islands in the English Channel. The contract also stated that it was executed in Guernsey and that it would be fully performed there. When a dispute arose between the parties, JIL initiated arbitration in Guernsey. Nevertheless, S T filed a suit in federal district court in the United States. When JIL filed a motion to dismiss in favor of arbitration, the court granted the motion and compelled arbitration under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards-an international agreement also known as the New York Convention. S T appealed.
ISSUE Was arbitration required under the New York Convention?
DECISION Yes. The U.S. Court of Appeals for the Fifth Circuit affirmed the district court's judgment compelling arbitration.
REASON The court explained that the New York Convention requires arbitration if "(1) there is a written agreement to arbitrate the matter; (2) the agreement provides for arbitration in a Convention signatory nation; (3) the agreement arises out of a commercial legal relationship; and (4) a party to the agreement is not an American citizen." Here, the first three requirements were clearly satisfied, but there was some question about whether JIL was an American citizen based on its principal place of business. Nevertheless, under the statute implementing the Convention, an arbitration agreement between U.S. citizens is enforceable if it "involves property abroad, envisages performance or enforcement abroad, or has some other reasonable relation with one or more foreign states." In this case, JIL and S T executed their contract in Guernsey and agreed that it would be fully performed there. Thus, the parties had a reasonable relation with a foreign state beyond the arbitration agreement itself. Arbitration was therefore required under the Convention.
CRITICAL THINKING-Global Consideration What would happen if Congress did not require a reasonable relationship with a foreign state for arbitration agreements between U.S. citizens? Would there be more or fewer agreements to arbitrate disputes abroad ?