Mitsubishi Motors Corp. vs. Soler Chrysler-Plymouth, Inc.
FACTS IN BRIEF:
A Japanese corporation and Chrysler International entered into a Joint Venture (called Mitsubishi Motors) for the distribution of cars through the Respondent’s dealers outside the continental US. Owing to a fall in the market for cars, the Respondent sought permission to transship the cars to the US and Latin America- which was denied.
Petitioner brought an action in a US District Court seeking an order compelling the parties to arbitration in pursuance of the sales agreement. Respondent alleged that the dispute involved antitrust claims (division of markets resulting in restraint of trade), which are not arbitrable.
District Court: referred to arbitration.
Court of Appeals: Reversed the part relating to arbitration of the antitrust claims. Upheld the remaining order.
The Majority in this case concluded 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 the parties’ agreement be enforced, even assuming that a contrary result would be forthcoming in a domestic context. The mere appearance of an antitrust dispute does not alone warrant invalidation of the selected forum on the assumption that the arbitration clause is tainted.
The majority also opined that there is no reason to assume at the outset of the dispute that international arbitration will not provide an adequate mechanism. To be sure, the international arbitral tribunal owes no prior allegiance to the legal norms of particular states; hence, it has no direct obligation to vindicate their statutory dictates. The tribunal, however, is bound to effectuate the intentions of the parties. Where the parties have agreed that the arbitral body is to decide a defined set of claims which includes, as in these cases, those arising from the application of American antitrust law, the tribunal therefore should be bound to decide that dispute in accord with the national law giving rise to the claim. Having permitted the arbitration to go forward, the national courts of the United States will thus have the opportunity at the award-enforcement stage to ensure that the legitimate interest in the enforcement of the antitrust laws has been addressed.
The dissenting opinion was that the Court is holding rests almost exclusively on the federal policy favoring arbitration of commercial disputes and vague notions of international comity.
As per the dissenting opinion-
(1) a fair construction of the language in the arbitration clause in the parties’ contract does not encompass a claim that auto manufacturers entered into a conspiracy in violation of the antitrust laws;
(2) an arbitration clause should not normally be construed to cover a statutory remedy that it does not expressly identify;
(3) Congress did not intend 2 of the Federal Arbitration Act to apply to antitrust claims; and
(4) Congress did not intend the Convention on the Recognition and Enforcement of Foreign Arbitral Awards to apply to disputes that are not covered by the Federal Arbitration Act.
It was also opined that antitrust violations can affect hundreds of thousands – perhaps millions – of people and inflict staggering economic damage. . . . and it could not be believed that Congress intended such claims to be resolved elsewhere than in the courts. Arbitration awards are only subject to review for manifest disregard of the law and the rudimentary procedures which make arbitration so desirable in the context of a private disputes.