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Chapter 10
Dispute Settlement
Section 1. The International Dimension and the Consequences for Dispute

Settlement
Whenever parties to a commercial transaction come from different countries, any issues connected
to the settlement of potential disputes take on several additional and complicated dimensions:
ý Choice of law: The transaction and the resulting rights and obligations of the parties – and
the consequences of any breaches of those obligations – have to be determined by reference
to only one legal system. This could be seller’s law or buyer’s law or another legal system
but it cannot be a mix of the legal systems of both parties.1
ý Choice of forum: The form of dispute settlement (litigation versus arbitration?) and the
specific venue or forum (which specific court or arbitration institution or tribunal?) have to
be determined unambiguously to avoid parallel proceedings in different fora with potentially
conflicting outcomes and/or proceedings in a forum that does not or should not have
jurisdiction and may produce an unenforceable result.
ý Recognition and enforcement of foreign judgments or awards: International litigation
results in a judgment or similar judicial decision and international arbitration results in an
award that may need to be recognized and enforced in a country other than the country where
it was adopted.
In the context of commercial transactions, there are two options for the determination of the
applicable law and the applicable forum:
1 There is one exception to the latter rule, namely if the parties, by incorporation into their agreement,
essentially write an entire contract law themselves and draw upon provisions borrowed from both or even
multiple legal systems. The only justification for doing this would be if there is not a single legal system
available that the parties could simply refer to and thus obtain a just and balanced and efficient set of rules
for their contractual rights and obligations. Given the fact that parties in B2B transactions literally have the
choice between almost 200 national legal systems and at least three international contract laws, this
argument cannot seriously be made. At a maximum, parties could decide to chose the contract law regime
that most closely resembles their agreement and then modify just a handful of select clauses of that regime
to obtain a perfect fit.
However, the large number of international contracts that clock in at 80 or 100 pages and contain
literally their own self-contained contract law regime, demonstrates that attorneys often do not follow this
rule. If confronted about the sensibility of their elaborations, they will surely claim that every single clause
is trying to get the best possible deal for their clients. As we have already argued earlier (see ???), this
argument can also not seriously be made. The truth of the matter is, unfortunately, that the attorneys are
primarily billing for a lot of work that is of no use or value to the client and not infrequently actually harms
the position of the party that has to pay for it.
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ý On the basis of the universally recognized principles of freedom of contract and party
autonomy, the parties to a Business-to-Business (B2B) contract – by contrast to Business-to-
Consumer (B2C) contracts – can freely chose the applicable law and the applicable forum.
This is generally done either when a contract is first concluded or when a dispute first arises.
ý If the parties did not make a choice or if a choice is invalid or ineffective, the applicable law
and/or the applicable forum will be determined by reference to the rules of private inter-
national law, also called international conflict of laws. A party choice is invalid if it does not
meet certain form requirements, e.g. is not in writing, or refers to a subject matter where the
law does not allow party choice, e.g. certain transactions affecting real estate. A party choice
is ineffective if the chosen law does not cover the respective issues, e.g. the CISG does not
cover fraud or mistake in the formation of the contract, or if the chosen forum does not exist
or does not accept jurisdiction over the dispute. Most commonly, however, the rules of
private international law come into play because the parties were unable to agree on a
specific law and forum and simply left the question open.
The application of one legal system rather than another and one forum rather than another typically
affects the parties in several ways:
ý Neither the party herself nor her habitual legal counsel will normally be familiar with a
foreign legal system, which may create a bias for “their own” legal system to be applied,
even if this may be unfavorable in substantive or procedural terms.
ý Since the habitual legal counsel will normally not be admitted to the bar in the respective
foreign jurisdiction, the party can either insist on settling the dispute in her own court – even
if that may be unfavorable in other respects – or she will have to retain foreign counsel to
represent her in a foreign forum.
ý The applicability of one legal system rather than another can cause unpredictable outcomes
if the judges are unfamiliar with the applicable law.
ý Certain fora are undesirable for reasons such as excessive delays (the courts of India and Italy
are notorious examples), potential bias against foreign parties, and other issues related to
incompetence, corruption, and general shortcomings with the rule of law (Russia is a
prominent example here).
ý Even if there are no problems with a foreign court as such, the retention of (additional)
foreign counsel, translation of potentially large numbers of documents, as well as travel
expenses of parties, attorneys, witnesses, and experts, can add substantially to the cost of the
dispute settlement.
As a consequence, the “default” for most American lawyers – and for that matter for most lawyers
anywhere in the world who are educated and experienced only in their own legal system – is to insist
on contract clauses that provide for the application of their own legal system and for litigation in
their own courts of law. This, however, will not allow for an agreement if the other side also insists
on the application of their own laws and courts. Moreover, application of one’s own law and
litigation in one’s own courts is not always in one’s clients best interest:
ý The extent of the substantive rights and obligations of the parties may vary, depending on the
applicable law; for example, the standard for the required performance by the seller tends to
be stricter under the UCC compared to a variety of continental European legal systems, as
well as the CISG, let alone English law (see above, ???).
ý Procedural rights and obligations of the parties may vary, depending on the applicable law;
for example, the time limits for the buyer to notify defects with seller’s performance ... ???.
ý A decision by an American court against an American party will be very easily enforceable
in America in favor of the foreign party. By contrast, a decision by an American court in
favor of an American party will not be so easily enforceable abroad against the foreign party.
The purpose of Chapter 10 is to explain in some detail the differences between international
commercial litigation and international commercial arbitration and to highlight the pro’s and con’s
of different forms of dispute settlement in different jurisdictions for different kinds of commercial
transactions. In the end, readers will be able to make sensible choices of law and forum for different
contracts (ex ante) and to plan and implement a strategy for commercial litigation abroad or for
international commercial arbitration after a dispute has arisen (ex post).2
Section 2. International Commercial Litigation3

Private international law, the continental European equivalent of international conflict of laws, is
concerned with three primary problems:
ý determining which courts of which country have jurisdiction to hear disputes in a given civil
or commercial case;4
ý determining the applicable law for the given civil or commercial case: and
2 For additional analysis see also Adrian Biggs: Agreements on Jurisdiction and Choice of Law, Oxford
University Press, Oxford, 2008.
3 For further analysis see, for example, Gary Born & Peter Rutledge: International Civil Litigation in United
States Courts, 5th ed, New York 2011; David Epstein & Charles Baldwin: International Litigation, 4th ed.,
Leiden 2010; Richard Fentiman: International Commercial Litigation, 2nd ed, Oxford 2015; Ralph Folsom:
Principles of International Litigation and Arbitration, St. Paul 2015; John Haley: Fundamentals of
Transnational Litigation: The United States, Canada, Japan, and the European Union, ???2012; Trevor
Hartley: International Commercial Litigation - Text, Cases and Materials on Private International Law,
Cambridge UK 2nd ed 2015; Barton Legum, Theodore Edelman & Ethan Berghoff (eds): International
Litigation Strategies and Practice: International Practitioner’s Deskbook Series, 2nd ed., Chicago 2015;
Stephen McCaffrey & Thomas Main: Transnational Litigation in Comparative Perspective, Oxford 2010;
J.G. Merrills: International Dispute Settlement, 5th ed, Cambridge UK 2011; Russel J. Weintraub,
International Litigation and Arbitration – Practice and Planning, 6th ed., Durham 2011.
4 See also above, Chapter 1, pp. ???.
ý providing whether and under which conditions a foreign judgment shall be recognized and
enforced domestically.
In spite of its name, private international law is traditionally not international law at all. Rather, each
country – and in some cases each sub-national jurisdiction – determines in its national law whether
its courts shall have jurisdiction over a dispute with an international element, when its national law
shall be applied to a case with an international element, and when and under which conditions it will
recognize and enforce a foreign judgment. For example, in Switzerland the rules of private inter-
national law were largely based on case-law until they were codified in the Federal Law of Private
International Law (PIL) in 1987.5 By contrast, in the United States, federal rules on conflict of laws,
jurisdiction, and venue, are codified, while State rules remain largely uncodified and thus determined
by common law. Theoretically, understanding the State-level common law would require extensive
and time consuming research of case law in 50 jurisdictions and the District of Columbia. However,
the Restatement (Second) on Conflict of Laws provides an excellent summary of the common law.
Some additional information on the U.S. and its most important trading partners is provided below,
at pp. ???).
Naturally, uncoordinated national rules for cases with international dimensions can and will differ
and lead to contradictory results. For example, country A may stipulate that disputes related to
international commercial transactions have to be brought in the courts that have jurisdiction over the
defendant (defendant’s court), while the applicable law should be the one of the party that has to
make the characteristic performance under the contract (usually seller’s law). By contrast, country
B may stipulate that its courts shall always have jurisdiction if a dispute involves one of its nationals
and that its courts shall normally apply their own law. As is easy to see, commercial disputes
between a seller from A and a buyer from B could end up being litigated in A under the laws of A
or in B under the laws of B, depending on who brings the first claim and where. This can trigger
what is sometimes referred to as a “race to the courthouse” because the first mover may be able to
determine the applicable law or the forum or both. This is widely considered undesirable, however,
since it can pressure the parties to a commercial transaction into moving from negotiation to litiga-
tion at a time when there were still realistic chances for an amicable settlement of the dispute.
Furthermore, the choices made by the first mover may subsequently be challenged by the other party,
which means that a first law-suit or at least a preliminary stage in the main law-suit will be con-
ducted over questions of jurisdiction and choice of law, which is inefficient from a business point
of view.
The issues related to choice of law by the parties – respectively the applicable law determined by the
rules of private international law if the parties have not made a choice of law or have made an
ineffective choice – have been discussed above, in Chapter 2. At the present time, we will focus on
issues related to choice of forum by the parties – respectively the rules of private international law
that determine the forum in cases where the parties have not made a choice of forum or have made
an ineffective choice, as well as certain aspects of recognition and enforcement of foreign judgments.
5 See François Dessemontet & Walter Stoffel, Private International Law,

http://www.unil.ch/files/live//sites/cedidac/files/shared/Articles/Intro%20Sw%20Law.pdf.
I. International Jurisdiction of National Courts

With regard to jurisdiction of courts in international settings, the following questions have to be
answered by the parties to a dispute:
÷ which court or which courts in which countries have jurisdiction to hear a case concerning
the dispute?
÷ does it matter in this regard whether a party – for example the seller – takes the initiative and
brings a case as applicant or waits for the other party – in this case the buyer – to bring the
case, making the seller defendant in the dispute?
÷ if there is more than one court where a case might be brought and/or if it does make a
difference for the question of jurisdiction whether a party is applicant or defendant, which
court is preferable from the perspective of the party and why?
÷ In practical terms, how can a party ensure that the most favorable court will hear her case or
at least prevent that it goes to the least favorable court?
1. Basic Rules on Jurisdiction or Venue

“Jurisdiction” – literally “to speak law” – is the power of a court to make binding decisions regarding
a specific dispute in front of it. We must distinguish jurisdiction over the parties (in personam), over
the subject matter (in rem), and the power of a court to grant the specific remedy requested of it. The
Restatement (Second) of Conflict of Laws uses the term “judicial jurisdiction” to distinguish the
concepts we are discussing here from the “prescriptive jurisdiction” of states to regulate the status
of people or property and to provide rules for various types of transactions and activities.6 Finally,
there is also the “enforcement jurisdiction” of states, which refers to the possibilities of a state, in
law and in fact, to enforce its regulatory and judicial decisions for and against specific natural and
legal persons. Our focus will be on judicial jurisdiction.
In most cases, jurisdiction is determined by the law applicable at the seat of the court. In international
cases this means that jurisdiction is determined by the private international law or the law on
(international) conflict of laws in force in the country where the court is located. Naturally, these
rules may differ from one country to another. Thus, it may make a difference to the parties to a
dispute whether the one or the other party initiates litigation and where.
When an applicant approaches a court, this voluntary submission usually establishes jurisdiction in
personam over the applicant. The question to be answered is whether the court also has jurisdiction
over the other party, the defendant.
There are four possible answers to this question:
6 For further discussion see Curtis A. Bradley: International Law in the U.S. Legal System, Oxford University
Press, Oxford, 2nd ed. 2015, pp. 186-194.
÷ jurisdiction over the defendant may be established by law, in particular because the defendant
is domiciled in the court district;
÷ jurisdiction of the court may also be established by a prior and valid choice of court agree-
ment between the parties, provided the court and its respective legal system accept the choice
of the parties;
÷ alternatively, jurisdiction of the court may be established by an ad hoc agreement of the
parties to litigate in front of it, in particular if both parties make an appearance and present
arguments on the merits of the case (so-called “prorogation”), provided the court and its
respective legal system accept the choice of the parties;
÷ outside of these options, if the law does not establish jurisdiction over the defendant on a
mandatory basis, and the defendant does not voluntarily submit herself to the jurisdiction of
the court either by a prior choice of court agreement or by making an appearance, the court
does not have jurisdiction.
The basic and universally acknowledged principle is that the court or courts in whose district the
defendant has her domicile have jurisdiction over the defendant. Thus, in general, a natural or legal
person can always be sued in her own court, the defendant court. The respective national legal
system may have different courts for different subject matters and it will usually provide trial or first
instance courts, as well as appellate courts. For example, in Germany, separate courts exist for civil
and criminal cases, administrative cases, tax cases, labor disputes, as well as social security matters.
If a case is brought in a court that lacks jurisdiction in rem, the court may or may not pass the matter
on to the right court. In such cases, the statute of limitations deadline usually continues to run until
the case is in front of the right court.
If a case is brought in a court that may not have jurisdiction in personam over the defendant, the
court may of its own motion examine whether it has jurisdiction. Alternatively, the defendant may
file a motion or make an appearance merely to contest jurisdiction. If the defendant leaves it at that
and does not file any claims on the merits of the case, the court will not consider that the defendant
has “entered an appearance” and will not consider that she has voluntarily submitted to the juris-
diction of the court.
If doubts about a court’s jurisdiction arise after it has been approached by one or both parties, it is
generally for that court to decide whether or not it has jurisdiction and will hear the case. This
principle is called “Kompetenz-Kompetenz”, i.e. the competence to decide its own competence.
Another way of saying the same thing is that the court has jurisdiction to determine its jurisdiction.
If one party approaches the court in A while the other party approaches the court in B, the two courts
may both come to the conclusion that they have jurisdiction over the dispute. This may lead to
parallel proceedings and potentially conflicting outcomes. Since this is undesirable from several
perspectives – waste of court resources, duplication of attorney fees and other expenses for the
parties, as well as damage to the authority of the courts if they end up contradicting each other –
private international law seeks to reduce the probability of parallel cases via the principle of lis
pendens. According to this principle, the first seized court has priority to decide the dispute and any
subsequently seized courts should refuse, suspend, or terminate proceedings brought to them. This
bar, however, is in effect only as long as the first seized court occupies itself with the dispute. Should
the first seized court decide that it does not have jurisdiction – of should it discontinue the matter
for other procedural reasons – a second seized court may accept or resume proceedings regarding
the dispute.7
Should the first seized court not only uphold its jurisdiction over the dispute but also come to a
decision on the merits and this decision becomes final, the bar for any other courts to occupy
themselves with the dispute becomes permanent. The principle of res judicata should be respected
not only within the same country but across the globe and prevent the same parties from re-litigating
the same questions – at least to the extent that they have been decided by the first court – for a
potentially different outcome.8 An exception applies, of course, for the court holding appellate
jurisdiction over the decision of the first court.
2. Special Jurisdictions
In addition to the general jurisdiction of the defendant court, many legal systems provide special
jurisdictions for special subject matters or cases. Such special jurisdictions are generally alternative
to the general jurisdiction at the domicile of the defendant. Thus, several courts within the same
country may have jurisdiction over a given dispute, giving the plaintiff some limited choices. For
example, in tort cases, many legal systems provide jurisdiction at the place where the tort was
committed and/or where the damages occurred. The injured party, therefore, does not have to go to
the domicile of the defendant, which may be far away, but can bring the case (also) where the
tortious act occurred. Similarly, many legal systems provide consumer protection rules pursuant to
which the consumer in a B2C transaction can sue at her own domicile and does not have to go to the
merchant’s domicile. Even for B2B transactions, some legal systems provide jurisdiction at the place
where the contract was concluded and/or where it was to be performed.
Whenever several alternative jurisdictions are available, none of which is exclusive, the party
making the first move gets to make the choice regarding the court to hear the dispute. This is
sometimes referred to as “forum shopping”.9 The following case illustrates jurisdictional choices for
certain parties.
7 For details see, for example, Campbell McLachlan, Lis Pendens in International Litigation, Martinus
Nijhoff Publishers/Brill Academic Publishers, The Hague 2009.
8 For further discussion see Peter R. Barnett: Res Judicata, Estoppel and Foreign Judgments – The Preclusive
Effects of Foreign Judgments in Private International Law, Oxford University Press, Oxford, 2001.
9 For in-depth analysis see Andrew Bell, Forum Shopping and Venue in Transnational Litigation, Oxford
2003.
Handelskwekerij G.J. Bier BV v. Mines de Potasse d’Alsace SA

European Court of Justice, Case 21/76
Judgment of 30 November 1976, 1976 ECR 1735
The applicant operates a horticultural business in the Netherlands and uses water from the river
Rhine for irrigation. The defendant is a potassium mine in France, some 700 km or 400+ miles
upstream on the Rhine. The applicant is seeking compensation for damage done to its business by
defendant’s massive discharge of saline waste into the river. The applicant brought the case in front
of the courts in the Netherlands. After the trial court declined jurisdiction, the applicants appealed
and the Gerechtshof in the Hague referred a question about the interpretation of Article 5(3) of the
Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (the
“Brussels Convention”) to the European Court of Justice. This Convention has meanwhile been
replaced by EU Regulation 1215/2012 of 12 December 2012 on Jurisdiction and the Recognition and
Enforcement of Judgments in Civil and Commercial Matters (the “Brussels I Regulation”), which
is largely congruent to the earlier Brussels Convention but is directly applicable law in all EU
Member States (see below, p. ???).
7
Article 5 of the Convention provides: 'A person domiciled in a Contracting State may, in another
Contracting State, be sued: ... (3) in matters relating to tort, delict or quasi-delict, in the courts for
the place where the harmful event occurred'.
8
That provision must be interpreted in the context of the scheme of conferment of jurisdiction which
forms the subject-matter of Title II of the Convention.
9
That scheme is based on a general rule, laid down by Article 2, that the courts of the State in which
the defendant is domiciled shall have jurisdiction.
10
However, Article 5 makes provision in a number of cases for a special jurisdiction, which the
plaintiff may opt to choose.
11
This freedom of choice was introduced having regard to the existence, in certain clearly defined
situations, of a particularly close connecting factor between a dispute and the court which may be
called upon to hear it, with a view to the efficacious conduct of the proceedings.
12
Thus in matters of tort, delict or quasi-delict Article 5 (3) allows the plaintiff to bring his case
before the courts for 'the place where the harmful event occurred'.
13
In the context of the Convention, the meaning of that expression is unclear when the place of the
event which is at the origin of the damage is situated in a State other than the one in which the place
where the damage occurred is situated, as is the case inter inter alia with atmospheric or water
pollution beyond the frontiers of a State.
14
The form of words 'place where the harmful event occurred', used in all the language versions of
the Convention, leaves open the question whether, in the situation described, it is necessary, in
determining jurisdiction, to choose as the connecting factor the place of the event giving rise to the
damage, or the place where the damage occurred, or to accept that the plaintiff has an option between
the one and the other of those two connecting factors.
15
As regards this, it is well to point out that the place of the event giving rise to the damage no less
than the place where the damage occurred can, depending on the case, constitute a significant
connecting factor from the point of view of jurisdiction.
16
Liability in tort, delict or quasi-delict can only arise provided that a causal connexion can be
established between the damage and the event in which that damage originates.
17
Taking into account the close connexion between the component parts of every sort of liability,
it does not appear appropriate to opt for one of the two connecting factors mentioned to the exclusion
of the other, since each of them can, depending on the circumstances, be particularly helpful from
the point of view of the evidence and of the conduct of the proceedings.
18
To exclude one option appears all the more undesirable in that, by its comprehensive form of
words, Article 5 (3) of the Convention covers a wide diversity of kinds of liability.
19
Thus the meaning of the expression 'place where the harmful event occurred' in Article 5 (3) must
be established in such a way as to acknowledge that the plaintiff has an option to commence
proceedings either at the place where the damage occurred or the place of the event giving rise to it.
20
This conclusion is supported by the consideration, first, that to decide in favour only of the place
of the event giving rise to the damage would, in an appreciable number of cases, cause confusion
between the heads of jurisdiction laid down by Articles 2 and 5 (3) of the Convention, so that the
latter provision would, to that extent, lose its effectiveness.
21
Secondly, a decision in favour only of the place where the damage occurred would, in cases where
the place of the event giving rise to the damage does not coincide with the domicile of the person
liable, have the effect of excluding a helpful connecting factor with the jurisdiction of a court
particularly near to the cause of the damage. [...]
24
Thus it should be answered that where the place of the happening of the event which may give rise
to liablity in tort, delict or quasidelict and the place where that event results in damage are not
identical, the expresson 'place where the harmful event occurred', in Article 5 (3) of the Convention,
must be understood as being intended to cover both the place where the damage occurred and the
place of the event giving rise to it.
25
The result is that the defendant may be sued, at the option of the plaintiff, either in the courts for
the place where the damage occurred or in the courts for the place of the event which gives rise to
and is at the origin of that damage.
________
NOTES AND QUESTIONS

1) Why would the applicant fight a battle all the way to the European Court of Justice over the
question of jurisdiction, instead of simply bringing the case in defendant court? What kind of
benefits might a party gain from “forum shopping”?
2) The present case concerns a tort or delict situation and is in that regard different from (most)
international business transactions. Why is it in this book, regardless?
3) Take a look at the discussion of available forum choices in different countries around the world
(below, p. ???) and try to construct situations where a party to an international business transaction
may have similar opportunities at “forum shopping” as granted to the applicant in Mines de Potasse
d’Alsace.
3. Exclusive Jurisdictions
For certain categories of cases or subject matters, many legal systems prescribe specific and
exclusive jurisdictions. Such cases are exceptions to the principle that a case can always be brought
in defendant court. Instead, only one court will be competent to hear the case, regardless of the
domicile of the parties or the specifics of the case. The most common example is jurisdiction over
immovable property, which most countries give exclusively to the court where the property is
located. Other exclusive jurisdictions specified by many countries concern disputes over entries in
public registers (the court where the register is kept), as well as disputes over status questions of
corporations and other legal persons (the court where the entity is incorporated).
4. Exorbitant Jurisdictions
Because of the general principle that claims should be brought in defendant court, countries should
not entertain law-suits brought in places other than defendant’s domicile, unless they have good
reasons for doing so. While a number of special jurisdictions for the protection of injured or weaker
parties, and certain exclusive jurisdictions where local ties matter, are all widely accepted, some
countries allow applicants additional choices that are not so easily accepted elsewhere. These are
commonly referred to as exorbitant jurisdictions because they go beyond what is mutually acceptable
and infringe on the rights of other countries and their citizens. Clermont and Palmer define
exorbitant jurisdictions as “classes of jurisdiction, although exercised validly under a country’s rules,
that nonetheless are unfair to the defendant because of a lack of significant connection between the
sovereign and either the parties or the dispute.”10
10 See Kevin M. Clermont & John R.B. Palmer, Exorbitant Jurisdiction, Maine Law Review, Vol. 58, No. 2,
pp. 473-505, at p. 474.
An example for an exorbitant jurisdiction is the French rule that a French citizen or corporation can
always bring a law-suit against a foreign party in France (Article 14 of the French Code Civil11). A
summary of the jurisdictional options provided by the U.S. and its most important trading partners
is provided below, at pp. ???-???.
While the party that is favored by an exorbitant jurisdiction may consider herself lucky, problems
may soon occur when it comes to the enforcement of the resulting judgment. In general, the courts
of a country will not recognize and enforce a foreign judgment, if they consider that the foreign court
should not have exercised its jurisdiction. As a result, if a court entertains a law-suit on the basis of
an exorbitant jurisdiction, the resulting judgment will mainly be enforceable in that same country,
provided of course, that the defendant has assets there. If the defendant does not have assets in that
country, it may well be a waste of time and money to go to court on the basis of an exorbitant
jurisdiction.
5. Choice of Court Clauses in Contracts and the Attractiveness of a Particular Forum

As we have seen in Chapter Two, the parties to a B2B transaction can literally choose any legal
system out of about 200 national legal systems and at least three international legal systems, and they
can even craft their own. Of course, some choices of law are smarter than others but the freedom is
virtually unlimited.
The same is not true for the choice of forum. While parties to a B2B transaction are almost always
free to chose arbitration, including virtually any arbitration tribunal (see below, pp. ???), they cannot
choose any court they want for the settlement of their dispute. If they could, one might expect a lot
of cases from around the world going to just two dozen countries or so.12 It is easy to see why this
cannot work and why courts are usually reluctant to accept international cases. First, courts are
public institutions and usually supported by tax payers of the respective country because court fees
don’t cover even nearly all expenses. This would make it problematic to allow just about anybody
from around the world to bring their cases, even if they are completely unrelated to the respective
country or jurisdiction. Furthermore, courts are also very busy and in many cases overburdened,
resulting in long delays for litigants, another reason not to open the door for additional litigants that
could and should better go elsewhere. Third, international cases often pose additional problems, for
example if foreign law has to be applied, if documents are not available in the official language of
the court, if witnesses are unwilling or unable to travel to the seat of the court, etc. This increases
11 A semi-official English version of the French Code Civil is available on the website of the French
Government, https://www.legifrance.gouv.fr.
12 Pretty much all the other countries and their courts and legal systems are not exactly attractive fora for
litigants – at least not for those that actually want to see their dispute settled in a fair and equitable way
within a reasonably time. Either the legal systems and court procedures are excessively cumbersome and
slow, or the outcomes are often unpredictable and seemingly arbitrary, leaving the losing party to speculate
whether incompetence, corruption, or the actual law cost them their victory. For additional discussion see
above, pp. ???, as well as Frank Emmert, Global Failure of Justice Systems – Causes and Consequences,
available at https://www.researchgate.net/profile/Frank_Emmert2.
the risk for the judges and the courts to “get it wrong” and end up with stinging criticism in spite of
extraordinary expenditure of time and effort. Even if a foreign court might accept jurisdiction over
a dispute, there may be problems with recognition and enforcement of the judgment at the place of
business of the parties. Finally, issues of procedural economy may need to be considered – for
example if the majority of documents and other evidence does not exist in the official language of
a chosen court and/or if the parties and lawyers and witnesses will all incur significant travel
expenses to get to that court – as well as issues that make a court more or less attractive, as discussed
above.
For all these reasons, it is extremely important for parties and their legal counsel to know which
jurisdictions can be selected in which cases before a choice of forum is made in a contract clause.
The rules whether or not an international case can be brought in a specific forum vary from one
country to another and they evolve over time. Therefore, only some general guidelines can be
provided here.
Canada: ???
China: The courts in China are generally conservative when it comes to accepting cases with foreign
elements, in particular if the choice of law is not for Chinese law and the language of the contract
is anything other than Mandarin. In addition, it is hard and often impossible to get Chinese courts
to enforce foreign judgments. Therefore, foreign parties entering into contracts with Chinese parties
usually have only two options if they want to make sure that a decision in a dispute can be enforced
in China: Either select a Chinese court as the exclusive jurisdiction by party choice, as well as
Chinese law and Chinese language for the contract, or select international commercial arbitration.
The choice of Chinese courts also has to be considered carefully. Many trial court judges in China
even today are not lawyers but retired military officers. Since many companies in China are wholly
or partly owned by the military, a foreign party cannot expect as self-evident that a trial court in
China will give it a fair hearing and decision. Furthermore, in sufficiently important cases, Chinese
judges may receive instructions directly from the Communist Party headquarters in Beijing. Against
this background, even Chinese parties sometimes try to escape their own courts and include foreign
forum choices in their contracts. A case on point was recently decided in China. A Chinese seller and
a Chinese carrier had used a Bill of Lading for a shipment to Turkey with a choice of forum clause
for Genova, Italy. When the seller sued the carrier in a Chinese court, the carrier disputed jurisdiction
but the Chinese court declared the forum choice invalid. Under Chinese law, the parties to a contract
can select the defendant’s domicile, the applicant’s domicile, the place where the contract was signed
or has to be performed, the location of the subject matter, as well as any other location that has an
actual connection with the parties or the transaction as the place where a dispute has to be brought
to court. Since neither Genova nor Italy had any connection to the case, the clause was held invalid
and jurisdiction at the port of loading was established instead. See Tianjin Maritime Court, People’s
Republic of China, Case no. [2014] JHFSCZ No. 81-1, 17 April 2014.
European Union: The EU is progressively establishing an Area of Freedom, Justice and Security
with a high level of cooperation between the courts and authorities of the Member States. Among
the goals are the facilitation of access to justice for EU citizens across all 28 Member States, equal
treatment for litigants regardless of nationality, and the automatic recognition and easy enforcement
of judicial and extra-judicial decisions of the other Member States. With regard to the courts having
jurisdiction over a dispute, the rules are different for cases where the defendant is domiciled in the
EU versus cases where the defendant is not domiciled in the EU. The former fall under EU law,
namely Regulation 1215/2012 of 12 December 2012 on Jurisdiction and the Recognition and
Enforcement of Judgments in Civil and Commercial Matters, the so-called “Brussels I Regulation”
(OJ 2012 L 351, p. 1).13 By contrast, whether or not a case can be brought in an EU Member State
against a defendant who is not domiciled in the EU is subject to the national law of the respective
Member State.
Reg. 1215/2012 applies “in civil and commercial matters whatever the nature of the court or
tribunal” (Art. 1(1)). It does not apply to “revenue, customs or administrative matters or to the
liability of the State for acts and omissions in the exercise of State authority (acta iure imperii)” (Art.
1(1)). It also does not apply to
(a) the status or legal capacity of natural persons, rights in property arising out
of a matrimonial relationship or out of a relationship deemed by the law
applicable to such relationship to have comparable effects to marriage;
(b) bankruptcy, proceedings relating to the winding-up of insolvent companies
or other legal persons, judicial arrangements, compositions and analogous
proceedings;
(c) social security;
(d) arbitration;
(e) maintenance obligations arising from a family relationship, parentage,
marriage or affinity;
(f) wills and succession, including maintenance obligations arising by reason of
death.14
13 As such, the Regulation only applies to the 28 Member States of the European Union. However, by virtue
of the parallel provisions of the Lugano Convention, its effects are extended to Iceland, Norway, and
Switzerland; see OJ 2007 L 339, p. 3, as well as the update in OJ 2009 L 147, p. 5.
For in-depth analysis see Andrew Dickinson & Eva Lein: The Brussels I Regulation Recast,
Oxford University Press, Oxford, 2015; as well as Peter Mankowski & Ulrich Magnus (eds): Brussels Ibis
Regulation - European Commentaries on Private International Law, Munich 2015.
14 See Article 1(2) of the Regulation. For some of the matters not covered by Reg. 1215/2012 see Regulation
2201/2003 of 27 November 2003 Concerning Jurisdiction and the Recognition and Enforcement of
Judgments in Matrimonial Matters and the Matters of Parental Responsibility, the so-called “Brussels IIbis
Regulation” (OJ 2003 L 338, p. 1, as amended). For detailed analysis of that Regulation see Ulrich Magnus
& Peter Mankowski (eds), Brussels IIbis Regulation, European Commentaries on Private International Law,
Sellier, Munich 2012.
Pursuant to Article 4(1) of the Regulation, “persons domiciled in a Member State shall, whatever
their nationality, be sued in the courts of that Member State.”15 This is the general principle that
disputes should be brought in defendant’s court. However, in the following cases – and this list is
finite – a person domiciled in one Member State may alternatively be sued in the courts of another
Member State:
Article 7 [Alternative Non-Exclusive Jurisdictions]
(1)(a) in matters relating to a contract, in the courts for the place of performance of
the obligation in question;
(b) for the purpose of this provision and unless otherwise agreed, the place of
performance of the obligation in question shall be:
— in the case of the sale of goods, the place in a Member State where, under the
contract, the goods were delivered or should have been delivered,
— in the case of the provision of services, the place in a Member State where,
under the contract, the services were provided or should have been provided;
(c) if point (b) does not apply then point (a) applies;
(2) in matters relating to tort, delict or quasi-delict, in the courts for the place where
the harmful event occurred or may occur;16
(3) as regards a civil claim for damages or restitution which is based on an act giving
rise to criminal proceedings, in the court seised of those proceedings, to the extent
that that court has jurisdiction under its own law to entertain civil proceedings;
(4) as regards a civil claim for the recovery, based on ownership, of a cultural object
as defined in point 1 of Article 1 of Directive 93/7/EEC initiated by the person
claiming the right to recover such an object, in the courts for the place where the
cultural object is situated at the time when the court is seised;
(5) as regards a dispute arising out of the operations of a branch, agency or other
establishment, in the courts for the place where the branch, agency or other
establishment is situated;
(6) as regards a dispute brought against a settlor, trustee or beneficiary of a trust
created by the operation of a statute, or by a written instrument, or created orally and
15 Pursuant to Article 62 of the Regulation, the notion of “domicile” is to be determined by the national law of
the forum state. For legal persons, Article 63 of the Regulation provides a choice between “statutory seat”,
“central administration”, and “principal place of business”.
16 In the important judgment of 30 November 1976 in Case 21/76 Handelskwekerij Bier v Mines de potasse
d’Alsace [1976] ECR 1735, the European Court established the principle of ubiquity for tort cases.
Pursuant to this principle, the injured party can choose between the courts of the place where the tortious act
was committed and the courts of the place where the damages occurred. See p. ???.
evidenced in writing, in the courts of the Member State in which the trust is
domiciled;
(7) as regards a dispute concerning the payment of remuneration claimed in respect
of the salvage of a cargo or freight, in the court under the authority of which the
cargo or freight in question:
(a) has been arrested to secure such payment; or
(b) could have been so arrested, but bail or other security has been given;
provided that this provision shall apply only if it is claimed that the defendant has an
interest in the cargo or freight or had such an interest at the time of salvage.
Article 8 [Jurisdiction for Related Claims]
A person domiciled in a Member State may also be sued:
(1) where he is one of a number of defendants, in the courts for the place where any
one of them is domiciled, provided the claims are so closely connected that it is
expedient to hear and determine them together to avoid the risk of irreconcilable
judgments resulting from separate proceedings;
(2) as a third party in an action on a warranty or guarantee or in any other third-party
proceedings, in the court seised of the original proceedings, unless these were
instituted solely with the object of removing him from the jurisdiction of the court
which would be competent in his case;
(3) on a counter-claim arising from the same contract or facts on which the original
claim was based, in the court in which the original claim is pending;
(4) in matters relating to a contract, if the action may be combined with an action
against the same defendant in matters relating to rights in rem in immovable
property, in the court of the Member State in which the property is situated.
Articles 10-16 of the Regulation deal with special, non-exlusive, i.e. alternative jurisdictions “in
matters relating to insurance” for the benefit of the insured parties; Articles 17-19 provides similar
alternative jurisdictions for consumers, and Articles 20-23 for employees regarding disputes with
their employers. A number of exclusive jurisdictions are regulated as follows:
Article 24 [Exclusive Jurisdictions Regardless of Domicile]
The following courts of a Member State shall have exclusive jurisdiction, regardless
of the domicile of the parties:
(1) in proceedings which have as their object rights in rem in immovable property or
tenancies of immovable property, the courts of the Member State in which the
property is situated.
However, in proceedings which have as their object tenancies of immovable property

concluded for temporary private use for a maximum period of six consecutive
months, the courts of the Member State in which the defendant is domiciled shall
also have jurisdiction, provided that the tenant is a natural person and that the
landlord and the tenant are domiciled in the same Member State;
(2) in proceedings which have as their object the validity of the constitution, the
nullity or the dissolution of companies or other legal persons or associations of
natural or legal persons, or the validity of the decisions of their organs, the courts of
the Member State in which the company, legal person or association has its seat. In
order to determine that seat, the court shall apply its rules of private international law;
(3) in proceedings which have as their object the validity of entries in public
registers, the courts of the Member State in which the register is kept;
(4) in proceedings concerned with the registration or validity of patents, trade marks,
designs, or other similar rights required to be deposited or registered, irrespective of
whether the issue is raised by way of an action or as a defence, the courts of the
Member State in which the deposit or registration has been applied for, has taken
place or is under the terms of an instrument of the Union or an international conven-
tion deemed to have taken place.
Without prejudice to the jurisdiction of the European Patent Office under the
Convention on the Grant of European Patents, signed at Munich on 5 October 1973,
the courts of each Member State shall have exclusive jurisdiction in proceedings
concerned with the registration or validity of any European patent granted for that
Member State;
(5) in proceedings concerned with the enforcement of judgments, the courts of the
Member State in which the judgment has been or is to be enforced.
Finally, Articles 25 and 26 deal with prorogation, first by written agreement, second by entering an
appearance without contesting the jurisdiction of the seized court. The full text of the Regulation is
reproduced in the Documents Supplement (p. ???). Its provisions can generally be taken as a
reasonably good reflection of the most common rules of private international law found at the
national level.
France: In cases where defendants are not in the EU, France allows French nationals and
corporations to sue in France regardless of the rule that a suit should be brought in defendant court
(Article 14 Code Civil). This is a very far-reaching exorbitant jurisdiction.
Germany: In cases where defendants are not in the EU, Germany allows a suit to be brought in
German courts if the defendants have property in Germany regardless of the rule that a suit should
be brought in defendant court. This is also an exorbitant jurisdiction.
Hague Convention on Choice of Court Agreements (2005): Similar to the EU Regulation
1215/2012, the Brussels Ibis Regulation, the Hague Convention provides a summary of the
internationally accepted principles on jurisdiction based on choice of court agreements, otherwise

known as forum selection clauses. Article 3 defines choice of court agreements as “an agreement
concluded by two or more parties ??? say more17
Italy: In cases where defendants are not in the EU, Italy goes even further than France and allows
anybody with a domicile in Italy to sue in Italy, regardless of the rule that a suit should be brought
in defendant court.18 This is a very far-reaching exorbitant jurisdiction.
Japan:
Netherlands:
Switzerland:
United Kingdom: In cases where defendants are not in the EU, the UK grants jurisdiction to its
courts if the document instituting the proceedings has been served on the defendant during a
temporary presence in the UK, if the defendant has property in the UK, and/or if the plaintiff was
able to seize property of the defendant in the UK. These are also far-reaching exorbitant jurisdictions.
United States: In the United States, the subject “private international law” is generally referred to
as “conflict of laws” and deals with the questions of jurisdiction, choice of law, and recognition and
enforcement of judgments. By and large, the rules applicable to parties from different US States
(interstate cases) are applied also to parties from different countries (international cases). In a more
narrow sense, rules on choice of law determine the applicable law and rules on venue determine
which courts – in a geographic sense – can be called upon to hear a case. By contrast, rules on
jurisdiction determine which courts are competent to hear certain subject matters. For example, U.S.
Federal courts – 94 district courts at the trial level, 13 circuit courts of appeal, and 1 Supreme Court19
17 See also Trevor Harley: Choice-of-Court Agreements Under the European Instruments and the Hague
Convention – The Revised Brussels I Regulation, the Lugano Convention, and the Hague Convention,
Oxford University Press, Oxford, 2013.
18 Legge n. 218, 31 May 1995, Art. 3. For discussion see Andrea Giardina, Italy: Reforming the Italian System
of Private International Law, 35 I.L.M. 760 (1996); as well as Irene Grassi, The Reform of Italian Private
International Law, European Journal of Law Reform 1999, Vol. 1, No. 1/2, pp. 153-???.
19 In addition, the United States Court of International Trade in New York has exclusive jurisdiction (at the
first instance or trial level) to hear cases regarding U.S. customs and trade laws and the United States Court
of Federal Claims in Washington D.C. has exclusive jurisdiction (at the first instance or trial level) over
claims against the federal government. The Court of Appeals for the Federal Circuit has exclusive
jurisdiction to hear appeals against the decisions of these two courts, and over certain specialized cases, for
example involving patents.
– have jurisdiction to hear cases about Federal questions20 and in diversity cases.21 In all other cases,
the courts of the several States have jurisdiction. Whether a particular Federal district court or a
particular State court is also the appropriate venue – or a forum non conveniens – is a separate
question, however. Pursuant to 28 U.S. Code §1391
“(b) Venue in General. – A civil action may be brought in – (1) a judicial district in
which any defendant resides, if all defendants are residents of the State in which the
district is located; (2) a judicial district in which a substantial part of the events or
omissions giving rise to the claim occurred, or a substantial part of property that is
the subject of the action is situated; or (3) if there is no district in which an action
may otherwise be brought as provided in this section, any judicial district in which
any defendant is subject to the court’s personal jurisdiction with respect to such
action.”
(c) Residency. – For all venue purposes – (1) a natural person, including an alien
lawfully admitted for permanent residence in the United States, shall be deemed to
reside in the judicial district in which that person is domiciled; (2) an entity with the
capacity to sue and be sued in its common name under applicable law, whether or not
incorporated, shall be deemed to reside, if a defendant, in any judicial district in
which such defendant is subject to the court’s personal jurisdiction with respect to
the civil action in question and, if a plaintiff, only in the judicial district in which it
maintains its principal place of business; and (3) a defendant not resident in the
United States may be sued in any judicial district, and the joinder of such a defendant
shall be disregarded in determining where the action may be brought with respect to
other defendants.”
???the passage on jurisdiction still needs work! In the Federal code as well as in the various State
common laws, jurisdiction of a particular venue over a defendant is, therefore, established by
20 Article III of the U.S. Constitution is the original source for federal question jurisdiction. It provides that
the “judicial power shall extend to all cases, in law and equity, arising under this Constitution, the laws of
the United States, and Treaties made, or which shall be made, under their Authority.” These jurisdictional
bases have been subsequently concretized in U.S. Code Title 28 – Judiciary and Judicial Procedure,
specifically in Chapter 81 on the Supreme Court (§§1251 to 1260), Chapter 83 on the Federal Courts of
Appeals (§§1291 to 1296), and Chapter 85 on Federal District Courts (§§1330 to 1369).
21 So-called diversity cases involving “citizens of different States” of the U.S., “citizens of a State and citizens
or subjects of a foreign state” unless the foreigner is a permanent resident in the U.S. and lives in the same
State as the other party, as well as “citizens of different States and in which citizens or subjects of a foreign
state are additional parties” (28 U.S. Code §1332 (a)) can be brought directly in federal district court or can
be removed from a State court to a Federal district court, as long as “the matter in controversy exceeds the
sum or value of $75,000, exclusive of interests and costs” (ibid.).
the requirement that the defendant “have certain minimum contacts with [the forum]
such that maintenance of the suit does not offend ‘traditional notions of fair play and
substantial justice’”22
The problem is that “minimum contacts” offer a myriad of interpretations and this generates some
500 cases per year focusing on the question of personal jurisdiction if a suit involves at least one
party from another US State – the Restatement speaks of a “sister State” – or a foreign country.23
The rule in §1391(b)(3) is also referred to as “transient jurisdiction” because it gives a court powers
over a foreign defendant merely because she was served with process in the court district, for
example while on a brief visit. This is generally considered an exorbitant jurisdiction.
The laws of many States of the U.S. not only mirror the venue rules of the Federal courts but go
further to include so-called “attachment jurisdiction”, which can be established by arresting some-
body’s property located in the State,24 as well as jurisdiction based on the fact that the defendant was
“doing business” in the State. The Supreme Court decision in Piper Aircraft Co. v. Reyno (below,
p. ???), and the additional cases mentioned in the Notes and Questions, provide illustrations of this
problem and a general discussion of venue and forum non conveniens as applied nowadays in the
U.S.
???insert passages from Restatement here
The U.S. rules on choice of law are no less complicated. The first thing to remember is that the
courts in one jurisdiction, whether a Federal court or the courts of a particular State of the US, do
not automatically apply their own law to each and every case that comes before them. Until the
middle of the 20th century, conflict rules relied on the closest territorial link. Restatement???
Finally, the recognition and enforcement of “foreign” judgments refers both to judgments from
another US State (interstate cases), and judgments from another country (international cases). The
Revised Uniform Enforcement of Foreign Judgments Act of 1964 (Documents, p. ???) is applied by
47 of the 50 States in the US to interstate cases and essentially implements the full faith and credit
clause of the Constitution. The Uniform Foreign Money-Judgments Recognition Act of 1962
(Documents, p. ???) deals with international cases and is applied in 32 of the 50 States in the US.
It has been revised in 2005. The revision clarifies the burden of proof, namely that the applicant has
the burden of proof that the Act can be applied to the judgment, and any party opposing recognition
has the burden of proof that a specific ground for non-recognition exists (§1716(d)). The revision
also clarifies the procedure. The applicant has to file an action in the court with jurisdiction over the
22 Peter Hay, Russel J. Weintraub & Patrick J. Bochers, Conflict of Laws – Cases and Materials, 12th ed. 2004,
at p. 4, citing the U.S. Supreme Court decision in International Shoe v. State of Washington, 326 U.S. 310
(1945).
23 Hay, Weintraub & Borchers, p. 4. Restatement (Second) of Conflict of Laws (1971), §§??? et al.
24 The Supreme Court requires some kind of “reasonableness test”, however, if the presence of the property is
the only connection of the defendant to the State, see Shaffer v. Heitner, 433 U.S. 186 (1977).
defendant (in personam) or the property (in rem) to obtain recognition (§1718(a)). Alternatively,
recognition can also be sought in a pending case in the form of a counter-claim or defense
(§1718(b)). Finally, the revision provides a statute of limitations of 10 years for the recognition and
enforcement of a foreign country judgment, respectively when the judgment becomes unenforceable
in the country of origin, whichever is earlier (§1721). The revision has so far been adopted in some
20 States.25 In both versions, the Act provides a number of mandatory and optional grounds for
refusal of recognition in §1716 (emphasis added)
(a) Except as otherwise provided in subsections (b) and (c), a court of this state shall
recognize a foreign-country judgment to which this [act] applies.
(b) A court of this state may not recognize a foreign-country judgment if:
(1) the judgment was rendered under a judicial system that does not
provide impartial tribunals or procedures compatible with the
requirements of due process of law;
(2) the foreign court did not have personal jurisdiction over the
defendant; or
(3) the foreign court did not have jurisdiction over the subject matter.
(c) A court of this state need not recognize a foreign-country judgment if:
(1) the defendant in the proceeding in the foreign court did not
receive notice of the proceeding in sufficient time to enable the
defendant to defend;
(2) the judgment was obtained by fraud that deprived the losing party
of an adequate opportunity to present its case;
(3) the judgment or the [cause of action] [claim for relief] on which
the judgment is based is repugnant to the public policy of this state or
of the United States;
(4) the judgment conflicts with another final and conclusive
judgment;
(5) the proceeding in the foreign court was contrary to an agreement
between the parties under which the dispute in question was to be
determined otherwise than by proceedings in that foreign court;
(6) in the case of jurisdiction based only on personal service, the
foreign court was a seriously inconvenient forum for the trial of the
action;
25 For the most up to date information on State enactment see

http://www.uniformlaws.org/Act.aspx?title=Foreign-Country Money Judgments Recognition Act.
(7) the judgment was rendered in circumstances that raise substantial

doubt about the integrity of the rendering court with respect to the
judgment; or
(8) the specific proceeding in the foreign court leading to the
judgment was not compatible with the requirements of due process
of law.
Although the U.S. has not ratified any major conventions for the mutual recognition and enforcement
of judgments, US courts, on the basis of comity, will generally enforce foreign judgments unless one
of the grounds mentioned above is present. Occasionally, enforcement has been refused because
reciprocity was not guaranteed. The procedure to be followed when seeking enforcement of a foreign
judgment is the procedure of the court where enforcement is sought, i.e. it is usually determined by
State law (Restatement (Second), §§99-102).
* * *
After this overview of the options available in different countries around the world, we now have
to turn specifically to the attractiveness of some courts versus others from the point of view of the
parties. There are a number of considerations that make a particular court attractive or unattractive.
For the plaintiff or applicant, it is usually important to get a favorable outcome within the shortest
possible time and at the lowest possible costs, provided it is also effectively enforceable against the
defendant or respondent. On the other hand, the defendant or respondent would usually not want the
proceedings to begin in the first place, to be slow if they cannot be avoided, and to result in a
decision that is either unfavorable for the plaintiff or at least hard to enforce for him.
Thus, a plaintiff and a defendant will be looking at the following qualities, for some of which the
interests will be aligned (“=”) and for others, they will be diametrically opposed (“ø”):
Plaintiff wants Defendant wants

proximity to plaintiff to keep his travel ø proximity to defendant to keep her travel
expenses low expenses low and (potentially) discourage the
plaintiff from bringing the case in the first
place
court fees known to be reasonable or low = although higher court fees may discourage
the plaintiff, they will either be shared by
both parties or even shifted to the losing party
in the end
working language of the court corresponds to = although anticipated higher expenses for
the language used by the parties in their translation and interpretation may discourage
agreement and the language of any other re- the plaintiff, they will either be shared by
levant documents, witnesses, etc. to avoid or both parties or even shifted to the losing party
reduce translation and interpretation expenses in the end
jurisdiction over both parties and the subject ? although doubts about jurisdiction may
matter not in question discourage the plaintiff, a useless law suit in
the wrong forum as a prelude to another law
suit in the right forum will invariably add
expenses for both parties
favorable rules on access to court, including ø stricter or more narrow rules on access to
quick and easy service on the defendant court and more cumbersome rules on service
may discourage the plaintiff
familiarity of the plaintiff and his counsel ø familiarity of the defendant and his counsel
with procedural rules applied by the court; with procedural rules applied by the court;
ideally, plaintiff’s habitual legal counsel is ideally, defendant’s habitual legal counsel is
admitted to practice before the court admitted to practice before the court
familiarity of the court with the substantive = familiarity of the court with the substantive
law to be applied to the case on account of law avoids surprises, which can always go
party agreement or rules of private int’l law both ways
duration of proceedings known to be ? although lengthy trials can be in defendant’s
reasonable or short interest, delaying any negative outcomes of a
trial, it is often not in the best interest of a
business to have claims pending against it;
inefficient proceedings also add expenses and
may be detrimental to any counter-claims
any bias of the judges and/or the procedural ø any bias of the judges and/or the procedural
law and/or the substantive law to be applied law and/or the substantive law to be applied
would be in favor of the plaintiff or at least would be in favor of the defendant or at least
not to his disadvantage not to her disadvantage
enforceability of the decision is virtually ø if (easy) enforceability is by no means
guaranteed against the defendant on account guaranteed, plaintiff may settle for a much
of location of defendant assets and/or well- smaller amount than he did or might get from
functioning agreements for mutual recogni- a judgment
tion and enforcement of judgments with the
country or countries where any assets are
located
As a result of this distribution of interests, business parties located in different countries, at least if
they are basically fair minded and interested in continuing the business relationship, should actually
agree on neutral and efficient third country courts familiar with the language of their transactions.
Since international business is by and large conducted in English these days, many parties might
want to go to court in the United Kingdom or the United States, even if they have few or no
connections to these countries, potentially placing a heavy burden on these courts.
One way national legal systems and national courts can control the influx of foreign cases is via the
doctrine of forum non conveniens. The following case includes a good discussion of the doctrine.
Piper Aircraft Co. v. Reyno

United States Supreme Court, 1981
No. 80-848; 454 U.S. 235 [some footnotes omitted]
JUSTICE MARSHALL delivered the opinion of the Court.
1
These cases arise out of an air crash that took place in Scotland. Respondent, acting as represen-
tative of the estates of several Scottish citizens killed in the accident, brought wrongful-death actions
against petitioners that were ultimately transferred to the United States District Court for the Middle
District of Pennsylvania. Petitioners moved to dismiss on the ground of forum non conveniens. After
noting that an alternative forum existed in Scotland, the District Court granted their motions. 479
F. Supp. 727 (1979). The United States Court of Appeals for the Third Circuit reversed. 630 F.2d
149 (1980). The Court of Appeals based its decision, at least in part, on the ground that dismissal
is automatically barred where the law of the alternative forum is less favorable to the plaintiff than
the law of the forum chosen by the plaintiff. Because we conclude that the possibility of an
unfavorable change in law should not, by itself, bar dismissal, and because we conclude that the
District Court did not otherwise abuse its discretion, we reverse.
2
I. In July 1976, a small commercial aircraft crashed in the Scottish highlands during the course of
a charter flight from Blackpool to Perth. The pilot and five passengers were killed instantly. The
decedents were all Scottish subjects and residents, as are their heirs and next of kin. There were no
eyewitnesses to the accident. At the time of the crash the plane was subject to Scottish air traffic
control.
3
The aircraft, a twin-engine Piper Aztec, was manufactured in Pennsylvania by petitioner Piper
Aircraft Co. (Piper). The propellers were manufactured in Ohio by petitioner Hartzell Propeller, Inc.
(Hartzell). At the time of the crash the aircraft was registered in Great Britain and was owned and
maintained by Air Navigation and Trading Co., Ltd. (Air Navigation). It was operated by McDonald
Aviation, Ltd. (McDonald), a Scottish air taxi service. Both Air Navigation and McDonald were
organized in the United Kingdom. The wreckage of the plane is now in a hangar in Farnsborough,
England.
4
The British Department of Trade investigated the accident shortly after it occurred. A preliminary
report found that the plane crashed after developing a spin, and suggested that mechanical failure in
the plane or the propeller was responsible. At Hartzell’s request, this report was reviewed by a three-
member Review Board, which held a 9-day adversary hearing attended by all interested parties. The
Review Board found no evidence of defective equipment and indicated that pilot error may have
contributed to the accident. The pilot, who had obtained his commercial pilot's license only three
months earlier, was flying over high ground at an altitude considerably lower than the minimum
height required by his company’s operations manual.
5
In July 1977, a California probate court appointed respondent Gaynell Reyno administratrix of the
estates of the five passengers. Reyno is not related to and does not know any of the decedents or their
survivors; she was a legal secretary to the attorney who filed this lawsuit. Several days after her
appointment, Reyno commenced separate wrongful-death actions against Piper and Hartzell in the
Superior Court of California, claiming negligence and strict liability.[...] Air Navigation, McDonald,
and the estate of the pilot are not parties to this litigation. The survivors of the five passengers whose
estates are represented by Reyno filed a separate action in the United Kingdom against Air
Navigation, McDonald, and the pilot’s estate.[...] Reyno candidly admits that the action against Piper
and Hartzell was filed in the United States because its laws regarding liability, capacity to sue, and
damages are more favorable to her position than are those of Scotland. Scottish law does not
recognize strict liability in tort. Moreover, it permits wrongful-death actions only when brought by
a decedent's relatives. The relatives may sue only for “loss of support and society.”[...]
6
On petitioners’ motion, the suit was removed to the United States District Court for the Central
District of California. Piper then moved for transfer to the United States District Court for the
Middle District of Pennsylvania, pursuant to 28 U.S.C. 1404(a).4 Hartzell moved to dismiss for lack
of personal jurisdiction, or in the alternative, to transfer.[...]
7
In May 1978, after the suit had been transferred, both Hartzell and Piper moved to dismiss the
action on the ground of forum non conveniens. The District Court granted these motions in October
1979. It relied on the balancing test set forth by this Court in Gulf Oil Corp. v. Gilbert, 330 U.S. 501
(1947), and its companion case, Koster v. Lumbermens Mut. Cas. Co., 330 U.S. 518 (1947). In those
decisions, the Court stated that a plaintiff’s choice of forum should rarely be disturbed. However,
when an alternative forum has jurisdiction to hear the case, and when trial in the chosen forum would
“establish . . . oppressiveness and vexation to a defendant . . . out of all proportion to plaintiff’s con-
venience,” or when the “chosen forum [is] inappropriate because of considerations affecting the
court’s own administrative and legal problems,” the court may, in the exercise of its sound discre-
tion, dismiss the case. Koster, supra, at 524. To guide trial court discretion, the Court provided a list
of “private interest factors” affecting the convenience of the litigants, and a list of “public interest
factors” affecting the convenience of the forum. Gilbert, supra, at 508-509.6
8
After describing our decisions in Gilbert and Koster, the District Court analyzed the facts of these
cases. It began by observing that an alternative forum existed in Scotland; Piper and Hartzell had
agreed to submit to the jurisdiction of the Scottish courts and to waive any statute of limitations
defense that might be available. It then stated that plaintiff’s choice of forum was entitled to little
weight. The court recognized that a plaintiff’s choice ordinarily deserves substantial deference. It
4 Section 1404(a) provides: “For the convenience of parties and witnesses, in the interest of justice, a district
court may transfer any civil action to any other district or division where it might have been brought.”
6 The factors pertaining to the private interests of the litigants included the “relative ease of access to sources
of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining
attendance of willing, witnesses; possibility of view of premises, if view would be appropriate to the action;
and all other practical problems that make trial of a case easy, expeditious and inexpensive.” Gilbert, 330
U.S., at 508 . The public factors bearing on the question included the administrative difficulties flowing
from court congestion; the “local interest in having localized controversies decided at home”; the interest in
having the trial of a diversity case in a forum that is at home with the law that must govern the action; the
avoidance of unnecessary problems in conflict of laws, or in the application of foreign law; and the
unfairness of burdening citizens in an unrelated forum with jury duty. Id., at 509.
noted, however, that Reyno “is a representative of foreign citizens and residents seeking a forum in
the United States because of the more liberal rules concerning products liability law,” and that “the
courts have been less solicitous when the plaintiff is not an American citizen or resident, and
particularly when the foreign citizens seek to benefit from the more liberal tort rules provided for the
protection of citizens and residents of the United States.” 479 F. Supp., at 731.
9
The District Court next examined several factors relating to the private interests of the litigants, and
determined that these factors strongly pointed towards Scotland as the appropriate forum. Although
evidence concerning the design, manufacture, and testing of the plane and propeller is located in the
United States, the connections with Scotland are otherwise “overwhelming.” Id., at 732. The real
parties in interest are citizens of Scotland, as were all the decedents. Witnesses who could testify
regarding the maintenance of the aircraft, the training of the pilot, and the investigation of the
accident – all essential to the defense – are in Great Britain. Moreover, all witnesses to damages are
located in Scotland. Trial would be aided by familiarity with Scottish topography, and by easy access
to the wreckage.
10
The District Court reasoned that because crucial witnesses and evidence were beyond the reach
of compulsory process, and because the defendants would not be able to implead potential Scottish
third-party defendants, it would be “unfair to make Piper and Hartzell proceed to trial in this forum.”
Id., at 733. The survivors had brought separate actions in Scotland against the pilot, McDonald, and
Air Navigation. “[I]t would be fairer to all parties and less costly if the entire case was presented to
one jury with available testimony from all relevant witnesses.” Ibid. Although the court recognized
that if trial were held in the United States, Piper and Hartzell could file indemnity or contribution
actions against the Scottish defendants, it believed that there was a significant risk of inconsistent
verdicts.7
11
The District Court concluded that the relevant public interests also pointed strongly towards
dismissal. The court determined that Pennsylvania law would apply to Piper and Scottish law to
Hartzell if the case were tried in the Middle District of Pennsylvania.8 As a result, “trial in this forum
would be hopelessly complex and confusing for a jury.” Id., at 734. In addition, the court noted that
it was unfamiliar with Scottish law and thus would have to rely upon experts from that country. The
court also found that the trial would be enormously costly and time-consuming; that it would be
7 The District Court explained that inconsistent verdicts might result if petitioners were held liable on the
basis of strict liability here, and then required to prove negligence in an indemnity action in Scotland.
Moreover, even if the same standard of liability applied, there was a danger that different juries would find
different facts and produce inconsistent results.
8 Under Klaxon v. Stentor Electric Mfg. Co., 313 U.S. 487 (1941), a court ordinarily must apply the choice-
of-law rules of the State in which it sits. However, where a case is transferred pursuant to 28 U.S.C.
1404(a), it must apply the choice-of-law rules of the State from which the case was transferred. Van Dusen
v. Barrack, 376 U.S. 612 (1946). Relying on these two cases, the District Court concluded that California
choice-of-law rules would apply to Piper, and Pennsylvania choice-of-law rules would apply to Hartzell. It
further concluded that California applied a “governmental interests” analysis in resolving choice-of-law
problems, and that Pennsylvania employed a “significant contacts” analysis. The court used the
“governmental interests” analysis to determine that Pennsylvania liability rules would apply to Piper, and
the “significant contacts” analysis to determine that Scottish liability rules would apply to Hartzell.
unfair to burden citizens with jury duty when the Middle District of Pennsylvania has little
connection with the controversy; and that Scotland has a substantial interest in the outcome of the
litigation.
12
In opposing the motions to dismiss, respondent contended that dismissal would be unfair because
Scottish law was less favorable. The District Court explicitly rejected this claim. It reasoned that the
possibility that dismissal might lead to an unfavorable change in the law did not deserve significant
weight; any deficiency in the foreign law was a “matter to be dealt with in the foreign forum.” Id.,
at 738.
13
On appeal, the United States Court of Appeals for the Third Circuit reversed and remanded for
trial. The decision to reverse appears to be based on two alternative grounds. First, the Court held
that the District Court abused its discretion in conducting the Gilbert analysis. Second, the Court
held that dismissal is never appropriate where the law of the alternative forum is less favorable to
the plaintiff.
14
The Court of Appeals began its review of the District Court’s Gilbert analysis by noting that the
plaintiff's choice of forum deserved substantial weight, even though the real parties in interest are
nonresidents. It then rejected the District Court’s balancing of the private interests. It found that
Piper and Hartzell had failed adequately to support their claim that key witnesses would be
unavailable if trial were held in the United States: they had never specified the witnesses they would
call and the testimony these witnesses would provide. The Court of Appeals gave little weight to the
fact that Piper and Hartzell would not be able to implead potential Scottish third-party defendants,
reasoning that this difficulty would be “burdensome” but not “unfair,” 630 F.2d, at 162.9 Finally, the
court stated that resolution of the suit would not be significantly aided by familiarity with Scottish
topography, or by viewing the wreckage.
15
The Court of Appeals also rejected the District Court’s analysis of the public interest factors. It
found that the District Court gave undue emphasis to the application of Scottish law: “‘the mere fact
that the court is called upon to determine and apply foreign law does not present a legal problem of
the sort which would justify the dismissal of a case otherwise properly before the court.’” Id., at 163
(quoting Hoffman v. Goberman, 420 F.2d 423, 427 (CA3 1970)). In any event, it believed that
Scottish law need not be applied. After conducting its own choice-of-law analysis, the Court of
Appeals determined that American law would govern the actions against both Piper and Hartzell.10
The same choice-of-law analysis apparently led it to conclude that Pennsylvania and Ohio, rather
9 The court claimed that the risk of inconsistent verdicts was slight because Pennsylvania and Scotland both
adhere to principles of res judicata.
10 The Court of Appeals agreed with the District Court that California choice-of-law rules applied to Piper,
and that Pennsylvania choice-of-law rules applied to Hartzell, see n. 8, supra. It did not agree, however, that
California used a “governmental interests” analysis and that Pennsylvania used a “significant contacts”
analysis. Rather, it believed that both jurisdictions employed the “false conflicts” test. Applying this test, it
concluded that Ohio and Pennsylvania had a greater policy interest in the dispute than Scotland, and that
American law would apply to both Piper and Hartzell.
than Scotland, are the jurisdictions with the greatest policy interests in the dispute, and that all other
public interest factors favored trial in the United States.11
16
In any event, it appears that the Court of Appeals would have reversed even if the District Court
had properly balanced the public and private interests. The court stated:
“[I]t is apparent that the dismissal would work a change in the applicable law so that
the plaintiff's strict liability claim would be eliminated from the case. But . . . a
dismissal for forum non conveniens, like a statutory transfer, ‘should not, despite its
convenience, result in a change in the applicable law.’ Only when American law is
not applicable, or when the foreign jurisdiction would, as a matter of its won choice
of law, give the plaintiff the benefit of the claim to which she is entitled here, would
dismissal be justified.” 630 F.2d, at 163-164 (footnote omitted) (quoting DeMateos
v. Texaco, Inc., 562 F.2d 895, 899 (CA3 1977), cert. denied, 435 U.S. 904 (1978)).
17
In other words, the court decided that dismissal is automatically barred if it would lead to a change
in the applicable law unfavorable to the plaintiff.
18
We granted certiorari in these case to consider the questions they raise concerning the proper
application of the doctrine of forum non conveniens. 450 U.S. 909 (1981).12
11 The court’s reasoning on this point is somewhat unclear. It states: “We have held that under the applicable
choice of law rules Pennsylvania and Ohio are the jurisdictions with the greatest policy interest in this
dispute. It follows that the other public interest factors that should be considered under the Supreme Court
cases of Gilbert and Koster favor trial in this country rather than Scotland.” 630 F.2d, at 171.
The Court of Appeals concluded as part of its choice-of-law analysis that the United States had the
greatest policy interest in the dispute. See n. 10, supra. It apparently believed that this conclusion necessa-
rily implied that the forum non conveniens public interest factors pointed toward trial in the United States.
12 We granted certiorari in No. 80-848 to consider the question “[w]hether, in an action in federal district
court brought by foreign plaintiffs against American defendants, the plaintiffs may defeat a motion to
dismiss on the ground of forum non conveniens merely by showing that the substantive law that would be
applied if the case were litigated in the district court is more favorable to them than the law that would be
applied by the courts of their own nation.” We granted certiorari in No. 80-883 to consider the question
whether “a motion to dismiss on grounds of forum non conveniens [should] be denied whenever the law of
the alternate forum is less favorable to recovery than that which would be applied by the district court.”
In this opinion, we begin by considering whether the Court of Appeals properly held that the
possibility of an unfavorable change in law automatically bars dismissal. Part II, infra. Since we conclude
that the Court of Appeals erred, we then consider its review of the District Court’s Gilbert analysis to
determine whether dismissal was otherwise appropriate. Part III, infra. We believe that it is necessary to
discuss the Gilbert analysis in order to properly dispose of the cases.
The questions on which certiorari was granted are sufficiently broad to justify our discussion of the
District Court’s Gilbert analysis. However, even if the issues we discuss in Part III are not within the
bounds of the questions with respect to which certiorari was granted, our consideration of these issues is not
inappropriate. An order limiting the grant of certiorari does not operate as a jurisdictional bar. We may
consider questions outside the scope of the limited order when resolution of those questions is necessary for
the proper disposition of the case. See Olmstead v. United States, 277 U.S. 438 (1928); McCandless v.
Furlaud, 293 U.S. 67 (1934); Redrup v. New York, 386 U.S. 767 (1967).
19
II. The Court of Appeals erred in holding that plaintiffs may defeat a motion to dismiss on the
ground of forum non conveniens merely by showing that the substantive law that would be applied
in the alternative forum is less favorable to the plaintiffs than that of the present forum. The
possibility of a change in substantive law should ordinarily not be given conclusive or even
substantial weight in the forum non conveniens inquiry.
20
We expressly rejected the position adopted by the Court of Appeals in our decision in Canada
Malting Co. v. Paterson Steamships, Ltd., 285 U.S. 413 (1932). That case arose out of a collision
between two vessels in American waters. The Canadian owners of cargo lost in the accident sued
the Canadian owners of one of the vessels in Federal District Court. The cargo owners chose an
American court in large part because the relevant American liability rules were more favorable than
the Canadian rules. The District Court dismissed on grounds of forum non conveniens. The plaintiffs
argued that dismissal was inappropriate because Canadian laws were less favorable to them. This
Court nonetheless affirmed:
“We have no occasion to enquire by what law rights of the parties are governed, as
we are of the opinion [454 U.S. 235, 248] that, under any view of that question, it lay
within the discretion of the District Court to decline to assume jurisdiction over the
controversy. . . . ‘[T]he court will not take cognizance of the case if justice would be
as well done by remitting the parties to their home forum.’” Id., at 419-420 (quoting
Charter Shipping Co. v. Bowring, Jones & Tidy, Ltd., 281 U.S. 515, 517 (1930).
21
The Court further stated that “[t]here was no basis for the contention that the District Court abused
its discretion.” 285 U.S., at 423 .
22
It is true that Canada Malting was decided before Gilbert, and that the doctrine of forum non
conveniens was not fully crystallized until our decision in that case.13 However, Gilbert in no way
affects the validity of Canada Malting. Indeed, by holding that the central focus of the forum non
conveniens inquiry is convenience, Gilbert implicitly recognized that dismissal may not be barred
13 The doctrine of forum non conveniens has a long history. It originated in Scotland, see Braucher, The
Inconvenient Federal Forum, 60 Harv. L. Rev. 908, 909-911 (1947), and became part of the common law of
many States, see id., at 911-912; Blair, The Doctrine of Forum Non Conveniens in Anglo-American Law,
29 Colum. L. Rev. 1 (1929). The doctrine was also frequently applied in federal admiralty actions. See, e.g.,
Canada Malting Co. v. Paterson Steamships, Ltd.; see also Bickel, The Doctrine of Forum Non Conveniens
As Applied in the Federal Courts in Matters of Admiralty, 35 Cornell L. Q. 12 (1949). In Williams v. Green
Bay & Western R. Co., 326 U.S. 549 (1946), the Court first indicated that motions to dismiss on grounds of
forum non conveniens could be made in federal diversity actions. The doctrine became firmly established
when Gilbert and Koster were decided one year later.
In previous forum non conveniens decisions, the Court has left unresolved the question whether
under Erie R. Co. v. Tompkins, 304 U.S. 64 (1938), state or federal law of forum non conveniens applies in
a diversity case. Gilbert, 330 U.S., at 509; Koster, 330 U.S., at 529; Williams v. Green Bay & Western R.
Co., supra, at 551, 558-559. The Court did not decide this issue because the same result would have been
reached in each case under federal or state law. The lower courts in these cases reached the same con-
clusion: Pennsylvania and California law on forum non conveniens dismissals are virtually identical to
federal law. See 630 F.2d, at 158. Thus, here also, we need not resolve the Erie question.
solely because of the possibility of an unfavorable change in law.14 Under Gilbert, dismissal will
ordinarily be appropriate where trial in the plaintiff’s chosen forum imposes a heavy burden on the
defendant or the court, and where the plaintiff is unable to offer any specific reasons of convenience
supporting his choice.15 If substantial weight were given to the possibility of an unfavorable change
in law, however, dismissal might be barred even where trial in the chosen forum was plainly
inconvenient.
23
The Court of Appeals’ decision is inconsistent with this Court’s earlier forum non conveniens
decisions in another respect. Those decisions have repeatedly emphasized the need to retain
flexibility. In Gilbert, the Court refused to identify specific circumstances “which will justify or
require either grant or denial of remedy.” 330 U.S., at 508 . Similarly, in Koster, the Court rejected
the contention that where a trial would involve inquiry into the internal affairs of a foreign
corporation, dismissal was always appropriate. “That is one, but only one, factor which may show
convenience.” 330 U.S., at 527 . And in Williams v. Green Bay & Western R. Co., 326 U.S. 549, 557
(1946), we stated that we would not lay down a rigid rule to govern discretion, and that “[e]ach case
turns on its facts.” If central emphasis were placed on any one factor, the forum non conveniens
doctrine would lose much of the very flexibility that makes it so valuable.
24
In fact, if conclusive or substantial weight were given to the possibility of a change in law, the
forum non conveniens doctrine would become virtually useless. Jurisdiction and venue requirements
are often easily satisfied. As a result, many plaintiffs are able to choose from among several forums.
Ordinarily, these plaintiffs will select that forum whose choice-of-law rules are most advantageous.
Thus, if the possibility of an unfavorable change in substantive law is given substantial weight in the
forum non conveniens inquiry, dismissal would rarely be proper.
25
Except for the court below, every Federal Court of Appeals that has considered this question after
Gilbert has held that dismissal on grounds of forum non conveniens may be granted even though the
law applicable in the alternative forum is less favorable to the plaintiff’s chance of recovery. See,
e. g., Pain v. United Technologies Corp., 205 U.S. App. D.C. 229, 248-249, 637 F.2d 775, 794-795
(1980); Fitzgerald v. Texaco, Inc., 521 F.2d 448, 453 (CA2 1975), cert. denied, 423 U.S. 1052
(1976); Anastasiadis v. S.S. Little John, 346 F.2d 281, 283 (CA5 1965), cert. denied, 384 U.S. 920
(1966).[...] Several Courts have relied expressly on Canada Malting to hold that the possibility of an
unfavorable change of law should not, by itself, bar dismissal. See Fitzgerald v. Texaco, Inc., supra;
Anglo-American Grain Co. v. The S/T Mina D'Amico, 169 F. Supp. 908 (ED Va. 1959).
26
The Court of Appeals’ approach is not only inconsistent with the purpose of the forum non
conveniens doctrine, but also poses substantial practical problems. If the possibility of a change in
law were given substantial weight, deciding motions to dismiss on the ground of forum non
14 See also Williams v. Green Bay & Western R. Co., supra, at 555, n. 4 (citing with approval a Scottish case
that dismissed an action on the ground of forum non conveniens despite the possibility of an unfavorable
change in law).
15 In other words, Gilbert held that dismissal may be warranted where a plaintiff chooses a particular forum,
not because it is convenient, but solely in order to harass the defendant or take advantage of favorable law.
This is precisely the situation in which the Court of Appeals’ rule would bar dismissal.
conveniens would become quite difficult. Choice-of-law analysis would become extremely
important, and the courts would frequently be required to interpret the law of foreign jurisdictions.
First, the trial court would have to determine what law would apply if the case were tried in the
chosen forum, and what law would apply if the case were tried in the alternative forum. It would then
have to compare the rights, remedies, and procedures available under the law that would be applied
in each forum. Dismissal would be appropriate only if the court concluded that the law applied by
the alternative forum is as favorable to the plaintiff as that of the chosen forum. The doctrine of
forum non conveniens, however, is designed in part to help courts avoid conducting complex
exercises in comparative law. As we stated in Gilbert, the public interest factors point towards
dismissal where the court would be required to “untangle problems in conflict of laws, and in law
foreign to itself.” 330 U.S., at 509 .
27
Upholding the decision of the Court of Appeals would result in other practical problems. At least
where the foreign plaintiff named an American manufacturer as defendant,16 a court could not
dismiss the case on grounds of forum non conveniens where dismissal might lead to an unfavorable
change in law. The American courts, which are already extremely attractive to foreign plaintiffs,18
would become even more attractive. The flow of litigation into the United States would increase and
further congest already crowded courts.19 [...]
16 In fact, the defendant might not even have to be American. A foreign plaintiff seeking damages for an
accident that occurred abroad might be able to obtain service of process on a foreign defendant who does
business in the United States. Under the Court of Appeals’ holding, dismissal would be barred if the law in
the alternative forum were less favorable to the plaintiff – even though none of the parties are American,
and even though there is absolutely no nexus between the subject matter of the litigation and the United
States.
18 First, all but 6 of the 50 American States – Delaware, Massachusetts, Michigan, North Carolina, Virginia,
and Wyoming – offer strict liability. CCH Prod. Liability Rep. 4016 (1981). Rules roughly equivalent to
American strict liability are effective in France, Belgium, and Luxembourg. West Germany and Japan have
a strict liability statute for pharmaceuticals. However, strict liability remains primarily an American
innovation. Second, the tort plaintiff may choose, at least potentially, from among 50 jurisdictions if he
decides to file suit in the United States. Each of these jurisdictions applies its own set of malleable choice-
of-law rules. Third, jury trials are almost always available in the United States, while they are never
provided in civil law jurisdictions. G. Gloss, Comparative law 12 (1979); J. Merryman, the Civil Law
Tradition 121 (1969). Even in the United Kingdom, most civil actions are not tried before a jury. G.
Keeton, The United Kingdom, The Development of its Laws and Constitutions 309 (1955). Fourth, unlike
most foreign jurisdictions, American courts allow contingent attorney’s fees, and do not tax losing parties
with their opponents’ attorney’s fees. R. Schlesinger, Comparative Laws: Cases, Text, Materials 275-277
(3d ed. 1970); Orban, Product Liability: A Comparative Legal Restatement – Foreign National Law and the
EEC Directive, 8 Ga. J. Int'l & Comp. L. 342, 393 (1978). Fifth, discovery is more extensive in American
than in foreign courts. R. Schlesinger, supra, at 307, 310, and n. 33.
19 In holding that the possibility of a change in law unfavorable to the plaintiff should not be given substantial
weight, we also necessarily hold that the possibility of a change in law favorable to defendant should not be
considered. Respondent suggests that Piper and Hartzell filed the motion to dismiss, not simply because
trial in the United States would be inconvenient, but also because they believe the laws of Scotland are
more favorable. She argues that this should be taken into account in the analysis of the private interests. We
recognize, of course, that Piper and Hartzell may be engaged in reverse forum-shopping. However, this
possibility ordinarily should not enter into a trial court’s analysis of the private interests. If the defendant is
31
We do not hold that the possibility of an unfavorable change in law should never be a relevant
consideration in a forum non conveniens inquiry. Of course, if the remedy provided by the
alternative forum is so clearly inadequate or unsatisfactory that it is no remedy at all, the unfavorable
change in law may be given substantial weight; the district court may conclude that dismissal would
not be in the interests of justice.22 In these cases, however, the remedies that would be provided by
the Scottish courts do not fall within this category. Although the relatives of the decedents may not
be able to rely on a strict liability theory, and although their potential damages award may be smaller,
there is no danger that they will be deprived of any remedy or treated unfairly.
32
III. The Court of Appeals also erred in rejecting the District Court’s Gilbert analysis. The Court
of Appeals stated that more weight should have been given to the plaintiff’s choice of forum, and
criticized the District Court’s analysis of the private and public interests. However, the District
Court’s decision regarding the deference due plaintiff’s choice of forum was appropriate.
Furthermore, we do not believe that the District Court abused its discretion in weighing the private
and public interests.
33
The District Court acknowledged that there is ordinarily a strong presumption in favor of the
plaintiff’s choice of forum, which may be overcome only when the private and public interest factors
clearly point towards trial in the alternative forum. It held, however, that the presumption applies
with less force when the plaintiff or real parties in interest are foreign.
34
The District Court’s distinction between resident or citizen plaintiffs and foreign plaintiffs is fully
justified. In Koster, the Court indicated that a plaintiff’s choice of forum is entitled to greater
deference when the plaintiff has chosen the home forum. 330 U.S., at 524.23 When the home forum
able to overcome the presumption in favor of plaintiff by showing that trial in the chosen forum would be
unnecessarily burdensome, dismissal is appropriate – regardless of the fact that defendant may also be
motivated by a desire to obtain a more favorable forum. Cf. Klöckner Reederei und Kohlenhandel v. A/S
Hakedal, 210 F.2d 754, 757 (CA2) (defendant not entitled to dismissal on grounds of forum non conveniens
solely because the law of the original forum is less favorable to him than the law of the alternative forum),
cert. dism’d by stipulation, 348 U.S. 801 (1954).
22 At the outset of any forum non conveniens inquiry, the court must determine whether there exists an
alternative forum. Ordinarily, this requirement will be satisfied when the defendant is “amenable to process”
in the other jurisdiction. Gilbert, 330 U.S., at 506 -507. In rare circumstances, however, where the remedy
offered by the other forum is clearly unsatisfactory, the other forum may not be an adequate alternative, and
the initial requirement may not be satisfied. Thus, for example, dismissal would not be appropriate where
the alternative forum does not permit litigation of the subject matter of the dispute. Cf. Phoenix Canada Oil
Co. Ltd. v. Texaco, Inc., 78 F. R. D. 445 (Del. 1978) (court refuses to dismiss, where alternative forum is
Ecuador, it is unclear whether Ecuadorean tribunal will hear the case, and there is no generally codified
Ecuadorean legal remedy for the unjust enrichment and tort claims asserted).
23 In Koster, we stated that “[i]n any balancing of conveniences, a real showing of convenience by a plaintiff
who has sued in his home forum will normally outweigh the inconvenience the defendant may have shown.”
330 U.S., at 524 . See also Swift & Co. Packers v. Compania Colombiana del Caribe, 339 U.S. 684, 697
(1950) (“suit by a United States citizen against a foreign respondent brings into force considerations very
different from those in suits between foreigners”); Canada Malting Co. v. Paterson Steamships, Ltd., 285
U.S., at 421 (“[t]he rule recognizing an unqualified discretion to decline jurisdiction in suits in admiralty
between foreigners appears to be supported by an unbroken line of decisions in the lower federal courts”).
has been chosen, it is reasonable to assume that this choice is convenient. When the plaintiff is
foreign, however, this assumption is much less reasonable. Because the central purpose of any forum
non conveniens inquiry is to ensure that the trial is convenient, a foreign plaintiff’s choice deserves
less deference.24
35
The forum non conveniens determination is committed to the sound discretion of the trial court.
It may be reversed only when there has been a clear abuse of discretion; where the court has
considered all relevant public and private interest factors, and where its balancing of these factors
is reasonable, its decision deserves substantial deference. Gilbert, 330 U.S., at 511 -512; Koster, 330
U.S., at 531 . Here, the Court of Appeals expressly acknowledged that the standard of review was
one of abuse of discretion. In examining the District Court’s analysis of the public and private
interests, however, the Court of Appeals seems to have lost sight of this rule, and substituted its own
judgment for that of the District Court.
36
In analyzing the private interest factors, the District Court stated that the connections with Scotland
are “overwhelming.” 479 F. Supp., at 732. This characterization may be somewhat exaggerated.
Particularly with respect to the question of relative ease of access to sources of proof, the private
interests point in both directions. As respondent emphasizes, records concerning the design,
manufacture, and testing of the propeller and plane are located in the United States. She would have
greater access to sources of proof relevant to her strict liability and negligence theories if trial were
As the District Court correctly noted in its opinion, 479 F. Supp., at 731; see also n. 10, supra, the
lower federal courts have routinely given less weight to a foreign plaintiff’s choice of forum. See, e. g.,
Founding Church of Scientology v. Verlag, 175 U.S. App. D.C. 402, 408, 536 F.2d 429, 435 (1976); Paper
Operations Consultants Int’l, Ltd. v. SS Hong Kong Amber, 513 F.2d 667, 672 (CA9 1975); Fitzgerald v.
Texaco, Inc., 521 F.2d 448, 451 (CA2 1975), cert. denied, 423 U.S. 1052 (1976); Mobil Tankers Co. v.
Mene Grande Oil Co., 363 F.2d 611, 614 (CA3), cert. denied, 385 U.S. 945 (1966); Ionescu v. E. F. Hutton
& Co. (France), 465 F. Supp. 139 (SDNY 1979); Michell v. General Motors Corp., 439 F. Supp. 24, 27
(ND Ohio 1977).
A citizen’s forum choice should not be given dispositive weight, however. See Pain v. United
Technologies Corp., 205 U.S. App. D.C. 229, 252-253, 637 F.2d 775, 796-797 (1980); Mizokami Bros. of
Arizona, Inc. v. Baychem Corp., 556 F.2d 975 (CA9 1977), cert. denied, 434 U.S. 1035 (1978). Citizens or
residents deserve somewhat more deference than foreign plaintiffs, but dismissal should not be automa-
tically barred when a plaintiff has filed suit in his home forum. As always, if the balance of conveniences
suggests that trial in the chosen forum would be unnecessarily burdensome for the defendant or the court,
dismissal in proper.
24 See Pain v. United Technologies Corp., supra, at 253, 637 F.2d, at 797 (citizenship and residence are
proxies for convenience); see also Note, Forum Non Conveniens and American Plaintiffs in the Federal
Courts, 47 U. Chi. L. Rev. 373, 382-383 (1980).
Respondent argues that since plaintiffs will ordinarily file suit in the jurisdiction that offers the
most favorable law, establishing a strong presumption in favor of both home and foreign plaintiffs will
ensure that defendants will always be held to the highest possible standard of accountability for their
purported wrongdoing. However, the deference accorded a plaintiff’s choice of forum has never been
intended to guarantee that the plaintiff will be able to select the law that will govern the case. See supra, at
247-250.
held here.25 However, the District Court did not act unreasonably in concluding that fewer
evidentiary problems would be posed if the trial were held in Scotland. A large proportion of the
relevant evidence is located in Great Britain.
37
The Court of Appeals found that the problems of proof could not be given any weight because
Piper and Hartzell failed to describe with specificity the evidence they would not be able to obtain
if trial were held in the United States. It suggested that defendants seeking forum non conveniens
dismissal must submit affidavits identifying the witnesses they would call and the testimony these
witnesses would provide if the trial were held in the alternative forum. Such detail is not necessary.26
Piper and Hartzell have moved for dismissal precisely because many crucial witnesses are located
beyond the reach of compulsory process, and thus are difficult to identify or interview. Requiring
extensive investigation would defeat the purpose of their motion. Of course, defendants must provide
enough information to enable the District Court to balance the parties’ interests. Our examination
of the record convinces us that sufficient information was provided here. Both Piper and Hartzell
submitted affidavits describing the evidentiary problems they would face if the trial were held in the
United States.27
38
The District Court correctly concluded that the problems posed by the inability to implead
potential third-party defendants clearly supported holding the trial in Scotland. Joinder of the pilot’s
estate, Air Navigation, and McDonald is crucial to the presentation of petitioners’ defense. If Piper
and Hartzell can show that the accident was caused not by a design defect, but rather by the
negligence of the pilot, the plane’s owners, or the charter company, they will be relieved of all
liability. It is true, of course, that if Hartzell and Piper were found liable after a trial in the United
States, they could institute an action for indemnity or contribution against these parties in Scotland.
It would be far more convenient, however, to resolve all claims in one trial. The Court of Appeals
rejected this argument. Forcing petitioners to rely on actions for indemnity or contributions would
be “burdensome” but not “unfair.” 630 F.2d, at 162. Finding that trial in the plaintiff’s chosen forum
25 In the future, where similar problems are presented, district courts might dismiss subject to the condition
that defendant corporations agree to provide the records relevant to the plaintiff’s claims.
26 The United States Court of Appeals for the Second Circuit has expressly rejected such a requirement.
Fitzgerald v. Texaco, Inc., supra, at 451, n. 3. In other cases, dismissals have been affirmed despite the
failure to provide detailed affidavits. See Farmanfarmaian v. Gulf Oil Corp., 437 F. Supp. 910, 924
(SDNY 1977), aff’d., 588 F.2d 880 (CA2 1978). And in a decision handed down two weeks after the
decision in this case, another Third Circuit panel affirmed a dismissal without mentioning such a
requirement. See Dahl v. United Technologies Corp., 632 F.2d 1027 (1980). [...]
27 See Affidavit of Ronald C. Scott, App. to Pet. for Cert. of Hartzell Propeller, Inc., A75; Affidavit of Charles
J. McKelvey, App. to Pet. for Cert. of Piper Aircraft Co. 1f. The affidavit provided to the District Court by
Piper states that it would call the following witnesses: the relatives of the decedents; the owners and
employees of McDonald; the persons responsible for the training and licensing of the pilot; the persons
responsible for servicing and maintaining the aircraft; and two or three of its own employees involved in the
design and manufacture of the aircraft.
would be burdensome, however, is sufficient to support dismissal on grounds of forum non

conveniens.28
39
The District Court’s review of the factors relating to the public interest was also reasonable. On
the basis of its choice-of-law analysis, it concluded that if the case were tried in the Middle District
of Pennsylvania, Pennsylvania law would apply to Piper and Scottish law to Hartzell. It stated that
a trial involving two sets of laws would be confusing to the jury. It also noted its own lack of
familiarity with Scottish law. Consideration of these problems was clearly appropriate under Gilbert;
in that case we explicitly held that the need to apply foreign law pointed towards dismissal.29 The
Court of Appeals found that the District Court’s choice-of-law analysis was incorrect, and that
American law would apply to both Hartzell and Piper. Thus, lack of familiarity with foreign law
would not be a problem. Even if the Court of Appeals’ conclusion is correct, however, all other
public interest factors favored trial in Scotland.
40
Scotland has a very strong interest in this litigation. The accident occurred in its airspace. All of
the decedents were Scottish. Apart from Piper and Hartzell, all potential plaintiffs and defendants
are either Scottish or English. As we stated in Gilbert, there is “a local interest in having localized
controversies decided at home.” 330 U.S., at 509 . Respondent argues that American citizens have
an interest in ensuring that American manufacturers are deterred from producing defective products,
and that additional deterrence might be obtained if Piper and Hartzell were tried in the United States,
where they could be sued on the basis of both negligence and strict liability. However, the
incremental deterrence that would be gained if this trial were held in an American court is likely to
be insignificant. The American interest in this accident is simply not sufficient to justify the
enormous commitment of judicial time and resources that would inevitably be required if the case
were to be tried here.
41
IV. The Court of Appeals erred in holding that the possibility of an unfavorable change in law bars
dismissal on the ground of forum non conveniens. It also erred in rejecting the District Court’s
Gilbert analysis. The District Court properly decided that the presumption in favor of the
respondent’s forum choice applied with less than maximum force because the real parties in interest
are foreign. It did not act unreasonably in deciding that the private interests pointed towards trial in
Scotland. Nor did it act unreasonably in deciding that the public interests favored trial in Scotland.
Thus, the judgment of the Court of Appeals is
Reversed.
[...]
28 See Pain v. United Technologies Corp., 205 U.S. App. D.C., at 244, 637 F.2d, at 790 (relying on similar
argument in approving dismissal of action arising out of helicopter crash that took place in Norway).
29 Many forum non conveniens decisions have held that the need to apply foreign law favors dismissal. See,
e.g., Calavo Growers of California v. Belgium, 632 F.2d 963, 967 (CA2 1980), cert. denied, 449 U.S. 1084
(1981); Schertenleib v. Traum, 589 F.2d, at 1165. Of course, this factor alone is not sufficient to warrant
dismissal when a balancing of all relevant factors shows that the plaintiff’s chosen forum is appropriate.
See, e. g., Founding Church of Scientology v. Verlag, 175 U.S. App. D.C., at 409, 536 F.2d, at 436; Burt v.
Isthmus Development Co., 218 F.2d 353, 357 (CA5), cert. denied, 349 U.S. 922 (1955).
45
JUSTICE STEVENS, with whom JUSTICE BRENNAN joins, dissenting.
46
In No. 80-848, only one question is presented for review to this Court:
“Whether, in an action in federal district court brought by foreign plaintiffs against
American defendants, the plaintiffs may defeat a motion to dismiss on the ground of
forum non conveniens merely by showing that the substantive law that would be
applied if the case were litigated in the district court is more favorable to them than
the law that would be applied by the courts of their own nation.” Pet. for Cert. in No.
80-848, p. i.
47
In No. 80-883, the Court limited its grant of certiorari, see 450 U.S. 909 , to the same question:
“Must a motion to dismiss on grounds of forum non conveniens be denied whenever
the law of the alternate forum is less favorable to recovery than that which would be
applied by the district court?” Pet. for Cert. in No. 80-883, p. i.
48
I agree that this question should be answered in the negative. Having decided that question, I
would simply remand the case to the Court of Appeals for further consideration of the question
whether the District Court correctly decided that Pennsylvania was not a convenient forum in which
to litigate a claim against a Pennsylvania company that a plane was defectively designed and
manufactured in Pennsylvania.
________
NOTES AND QUESTIONS

1) This is a leading case on the doctrine of forum non conveniens and neatly summarizes earlier
case-law. Can you formulate the doctrine in two or three clear and straightforward sentences?1
2) In para. 23, the Justice Marshall refers to the “flexibility” of the doctrine of forum non conveniens.
What does he mean by that? Isn’t there a conflict between predictability or legal certainty on the one
hand and flexibility on the other?
3) Para. 26 outlines how the Court of Appeal would force American courts to analyze cases both
under American and under foreign law in order to make a determination whether the foreign law
applied by the foreign court would be less favorable for the plaintiff. How would this even be
possible in practice? And why would the Court of Appeal think that a plaintiff – basically any
plaintiff, including any foreigner – is entitled to have her case heard in the U.S. court system merely
because that would lead to a more favorable outcome for her? Would the Court of Appeal always
grant access to American courts if a trial in the foreign court would lead to a less favorable outcome?
Check para. 13 for the answer. By overruling the Court of Appeal, is the Supreme Court saying that
1 For further analysis, see also Ronald A. Brand & Scott R. Jablonski: Forum Non Conveniens - History,
Global Practice, and Future under the Hague Convention on Choice of Court Agreements, Oxford
University Press, Oxford 2007.
a more favorable outcome alone can never justify access to American courts? Check para. 31 for the
latter point.
4) Can you explain what the Supreme Court is talking about in note 25?
5) In note 17, the Supreme Court suggests that it could be enough for a foreign case to be brought
to U.S. courts that a foreign company (also) does business in the U.S. An extreme example
confirming this concern occurred after a high speed train of the German state-owned railway
Deutsche Bahn derailed in 1998 near the town of Eschede in Germany and killed 101 people and
injured 88 more. Deutsche Bahn offered about $15,000 to the families of each deceased person.
Outraged by this offer, a self-help group of victim families sought to bring a lawsuit in the United
States. Like in Piper, the accident did not occur in the U.S. and the victims were not American
citizens. However, by contrast to Piper, the defendant was not a U.S. corporation, nor were the
defective wheels designed or manufactured in the United States. The claim that American courts
should nevertheless have jurisdiction was based on the fact that tickets for train trips with Deutsche
Bahn were sold, inter alia, over the internet, hence available in the United States. Thus, Deutsche
Bahn was supposedly doing business in the U.S. and claims by German citizens against the German
railway over an accident in Germany were indeed brought in the District Court of New York,
claiming gross negligence, and seeking punitive damages. See ??? The U.S. court ultimately declined
jurisdiction. That was probably a wise decision but how about if the case had been brought by an
American family over the death of an American citizen who had indeed purchased the ticket from
America over the internet?
6) The dissenting justices apparently saw nothing wrong with the idea of suing an American
company in an American court over a defect that was manufactured or caused in America. With
whom do you agree? What about the default rule that suits have to be brought in defendant court?
Where was the defendant court for Piper Aircraft? What about the fact that Piper first moved to have
the case transferred to the Pennsylvania court and then claimed that it was a forum non conveniens
(see paras. 6 and 7)? What should the rules be about forum non conveniens?
7) Forum non conveniens was also invoked in a very different type of case that led to the 1980
decision in Filártiga v. Peña-Irala. In the 1970s, Dr. Joel Filártiga was a well-known critique of the
Paraguayan dictator Alfredo Stroessner. On 29 March 1976, his seventeen year-old son Joelito was
kidnapped and tortured to death by Americo Peña-Irala, the Inspector General of Police in Asunción,
the capital of Paraguay. Peña-Irala showed the body to Dolly Filártiga, the sister of Joelito, and told
her to pass the message “to shut up” to her father. Dr. Filártiga initiated criminal proceedings for
murder in Paraguay but the only result was the arrest of his attorney. Years later, both Dolly Filártiga
and Peña-Irala met again in the United States where she had applied for political asylum and he had
overstayed a tourist visa. Filártiga reported the crime to the U.S. Immigration and Naturalization
Service who arrested Peña-Irala and ordered his deportation back to Paraguay. While he was still in
custody pending deportation, Filártiga brought an action against Peña-Irala in the Federal Court for
the Eastern District of New York, alleging that he had wrongfully caused the death of her brother
by torture and seeking compensatory and punitive damages of $10 million USD. Peña-Irala moved
to dismiss the complaint for lack of subject-matter jurisdiction and forum non conveniens. Judge
Nickerson, for the district court, dismissed the complaint on jurisdictional grounds, and Peña-Irala
was deported. On appeal, Irving Kaufman, Circuit Judge, wrote the judgment for the United States
Court of Appeals, Second Circuit:2
12
II. Appellants rest their principal argument in support of federal jurisdiction upon the Alien Tort
Statute, 28 U.S.C. s 1350, which provides: “The district courts shall have original jurisdiction of any
civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the
United States.” Since appellants do not contend that their action arises directly under a treaty of the
United States,[...] a threshold question on the jurisdictional issue is whether the conduct alleged
violates the law of nations. In light of the universal condemnation of torture in numerous
international agreements, and the renunciation of torture as an instrument of official policy by
virtually all of the nations of the world (in principle if not in practice), we find that an act of torture
committed by a state official against one held in detention violates established norms of the
international law of human rights, and hence the law of nations. [...]
25
Having examined the sources from which customary international law is derived the usage of
nations, judicial opinions and the works of jurists[...] we conclude that official torture is now pro-
hibited by the law of nations. The prohibition is clear and unambiguous, and admits of no distinction
between treatment of aliens and citizens. Accordingly, we must conclude that the dictum in Dreyfus
v. von Finck, [...] 534 F.2d at 31, to the effect that “violations of international law do not occur when
the aggrieved parties are nationals of the acting state,” is clearly out of tune with the current usage
and practice of international law. The treaties and accords cited above, as well as the express foreign
policy [*885] of our own government,[...] all make it clear that international law confers fundamental
rights upon all people vis-a-vis their own governments. While the ultimate scope of those rights will
be a subject for continuing refinement and elaboration, we hold that the right to be free from torture
is now among them. We therefore turn to the question whether the other requirements for jurisdiction
are met.
26
III. Appellee submits that even if the tort alleged is a violation of modern international law, federal
jurisdiction may not be exercised consistent with the dictates of Article III of the Constitution. The
claim is without merit. Common law courts of general jurisdiction regularly adjudicate transitory tort
claims between individuals over whom they exercise personal jurisdiction, wherever the tort
occurred. Moreover, as part of an articulated scheme of federal control over external affairs, Con-
gress provided, in the first Judiciary Act, s 9(b), 1 Stat. 73, 77 (1789), for federal jurisdiction over
suits by aliens where principles of international law are in issue. The constitutional basis for the
Alien Tort Statute is the law of nations, which has always been part of the federal common law.
27
It is not extraordinary for a court to adjudicate a tort claim arising outside of its territorial juris-
diction. A state or nation has a legitimate interest in the orderly resolution of disputes among those
within its borders, and where the lex loci delicti commissi is applied, it is an expression of comity
to give effect to the laws of the state where the wrong occurred. Thus, Lord Mansfield in Mostyn v.
2 630 F.2d 876 (2d Cir. 1980), most footnotes omitted.

Fabrigas, 1 Cowp. 161 (1774), quoted in McKenna v. Fisk, 42 U.S. (1 How.) 241, 248, 11 L.Ed. 117
(1843) said:
(I)f A becomes indebted to B, or commits a tort upon his person or upon his personal
property in Paris, an action in either case may be maintained against A in England,
if he is there found . . . . (A)s to transitory actions, there is not a colour of doubt but
that any action which is transitory may be laid in any county in England, though the
matter arises beyond the seas.
28
Mostyn came into our law as the original basis for state court jurisdiction over out-of-state torts,
McKenna v. Fisk, supra, 42 U.S. (1 How.) 241, 11 L.Ed. 117 (personal injury suits held transitory);
Dennick v. Railroad Co., 103 U.S. 11, 26 L.Ed. 439 (1880) (wrongful death action held transitory),
and it has not lost its force in suits to recover for a wrongful death occurring upon foreign soil, Slater
v. Mexican National Railroad Co., 194 U.S. 120, 24 S.Ct. 581, 48 L.Ed. 900 (1904), as long as the
conduct complained of was unlawful where performed. Restatement (Second) of Foreign Relations
Law of the United States s 19 (1965). Here, where in personam jurisdiction has been obtained over
the defendant, the parties agree that the acts alleged would violate Paraguayan law, and the policies
of the forum are consistent with the foreign law,[...] state court jurisdiction would be proper. Indeed,
appellees conceded as much at oral argument. [...]
34
Thus, it was hardly a radical initiative for Chief Justice Marshall to state in The Nereide, 13 U.S.
(9 Cranch) 388, 422, 3 L.Ed. 769 (1815), that in the absence of a congressional enactment,20 United
States courts are “bound by the law of nations, which is a part of the law of the land.” These words
were echoed in The Paquete Habana, supra, 175 U.S. at 700, 20 S.Ct. at 299: “(i)nternational law
is part of our law, and must be ascertained and administered by the courts of justice of appropriate
jurisdiction, as often as questions of right depending upon it are duly presented for their deter-
mination.”
35
The Filartigas urge that 28 U.S.C. s 1350 be treated as an exercise of Congress’s power to define
offenses against the law of nations. While such a reading is possible, see Lincoln Mills v. Textile
Workers, 353 U.S. 488, 77 S.Ct. 912, 1 L.Ed.2d 972 (1957) (jurisdictional statute authorizes judicial
explication of federal common law), we believe it is sufficient here to construe the Alien Tort
Statute, not as granting new rights to aliens, but simply as opening the federal courts for adjudication
of the rights already recognized by international law. [...]
36
Although the Alien Tort Statute has rarely been the basis for jurisdiction during its long history,[...]
in light of the foregoing discussion, there can be little doubt that this action is properly brought in
federal court.[...] This is undeniably an action by an alien, for a tort only, committed in violation of
the law of nations. The paucity of suits successfully maintained under the section is readily attribut-
20 The plainest evidence that international law has an existence in the federal courts independent of acts of
Congress is the long-standing rule of construction first enunciated by Chief Justice Marshall: “an act of
congress ought never to be construed to violate the law of nations, if any other possible construction
remains . . . .” The Charming Betsy, 6 U.S. (2 Cranch), 34, 67, 2 L.Ed. 208 (1804), quoted in Lauritzen v.
Larsen, 345 U.S. 571, 578, 73 S.Ct. 921, 926, 97 L.Ed. 1254 (1953).
able to the statute’s requirement of alleging a “violation of the law of nations” (emphasis supplied)
at the jurisdictional threshold. Courts have, accordingly, engaged in a more searching preliminary
review of the merits than is required, for example, under the more flexible “arising under”
formulation. [*888] Compare O’Reilly de Camara v. Brooke, 209 U.S. 45, 52, 28 S.Ct. 439, 441,
52 L.Ed. 676 (1907) (question of Alien Tort Statute jurisdiction disposed of “on the merits”)
(Holmes, J.), with Bell v. Hood, 327 U.S. 678, 66 S.Ct. 773, 90 L.Ed. 939 (1946) (general federal
question jurisdiction not defeated by the possibility that the averments in the complaint may fail to
state a cause of action). Thus, the narrowing construction that the Alien Tort Statute has previously
received reflects the fact that earlier cases did not involve such well-established, universally
recognized norms of international law that are here at issue. [...]
41
IV. Pena argues that the customary law of nations, as reflected in treaties and declarations that are
not self-executing, should not be applied as rules of decision in this case. In doing so, he confuses
the question of federal jurisdiction under the Alien Tort Statute, which requires consideration of the
law of nations, with the issue of the choice of law to be applied, which will be addressed at a later
stage in the proceedings. The two issues are distinct. Our holding on subject matter jurisdiction
decides only whether Congress intended to confer judicial power, and whether it is authorized to do
so by Article III. The choice of law inquiry is a much broader one, primarily concerned with fairness,
see Home Insurance Co. v. Dick, 281 U.S. 397, 50 S.Ct. 338, 74 L.Ed. 926 (1930); consequently,
it looks to wholly different considerations. [...]
42
Pena also argues that “(i)f the conduct complained of is alleged to be the act of the Paraguayan
government, the suit is barred by the Act of State doctrine.” This argument was not advanced below,
and is therefore not before us on this appeal. We note in passing, however, that we doubt whether
action by a state official in violation of the Constitution and laws of the Republic of Paraguay, and
wholly unratified by that nation’s government, could properly be characterized as an act of state. See
[*890] Banco Nacionale de Cuba v. Sabbatino, supra, 376 U.S. 398, 84 S.Ct. 923, 11 L.Ed.2d 804;
Underhill v. Hernandez, 168 U.S. 250, 18 S.Ct. 83, 42 L.Ed. 456 (1897). [...]
* * *
Can Piper Aircraft be reconciled with Filártiga v. Peña-Irala? Or are the two courts applying
different standards, which may be justified by the differences in fact and subject matter?
Given what is going on around the world on a daily basis, Filártiga v. Peña-Irala could have opened
up the U.S. court system to a great many lawsuits from foreigners who were tortured in one of the
many countries where effective judicial remedies are generally not available or at least not to those
in opposition to the government. Would that be a good or a bad development? Why?1 See the
decisions in Tel-Oren v. Libyan Arab Republic, 517 F.Supp. 542 (D.D.C. 1981), Argentine Republic
1 In support of Filartiga, in particular, Blum & Steinhardt, Federal Jurisdiction Over International Human
Rights Claims: The Alien Tort Claims Act After Filartiga v. Pena-Irala, 22 Harv. Int’l L.J. 53 (1981); in
opposition, inter alia, Hassan, A Conflict of Philosophies: The Filartiga Jurisprudence, 32 Int. & Comp.
L.Q. 250 (1983). For a rather nuanced assessment see Karen E. Holt, Filartiga v. Pena-Irala After Ten
Years: Major Breakthrough or Legal Oddity?, Ga.J.Int’l&Comp.L., Vol. 20, pp. 543-569.
v. Amerada Hess Shipping Corporation, 488 U.S. 428 (1989), and more recently in Kiobel v. Royal
Dutch Petroleum, 133 S.Ct. 1659 (2013), to find out how and why the American courts have largely
eliminated access for plaintiffs like the Filártiga family in more recent years.2
Finally, do you agree that international law should have the kind of influence in U.S. domestic law
that was originally granted to it by Chief Justice Marshall in 1804 (see note 20 and para. 34 above)?
Why or why not? Do we still do this today? Why or why not?
2 For further discussion see also Sarah H. Cleveland, Commentary on Kiobel v. Royal Dutch Petroleum – The
Kiobel Presumption and Extraterritoriality, Columbia Journal of Transnational Law, Vol. 52, pp. 8-27.
Checklist 10-1
How to Determine the Forum State - Which Courts Have Jurisdiction Over a Dispute
Resulting from an IBT?
(1) Autonomous choice by agreement of the parties

– in writing at the time of the conclusion of the contract
– in writing after the dispute has arisen
provided the rules on private international law / international conflict of laws of the
chosen country accept the choice and the subject matter does not fall under an
exclusive jurisdiction elsewhere;
(2) Jurisdiction of the first-seized court if the defendant enters an appearance without
contesting jurisdiction;
(3) The courts in the country determined by private international law (international
conflict of laws); as a rule of thumb, claims have to be brought at the place of
residence or incorporation or the seat or the place of business (domicile) of the
defendant;
N.B. PIL rules are not fully harmonized between countries; most countries provide for
certain alternative jurisdictions besides domicile of defendant, to protect the weaker
parties in tort cases, consumer cases, insurance contracts, employment contracts, etc.;
some countries also have alternative jurisdictions falling into the category of exorbitant
jurisdictions;
(4) If the first-seized court accepts jurisdiction and as long as it occupies itself with the
case, the rule of lis pendens should block any other courts from hearing a case
involving the same parties and the same claim(s);
(5) If the first-seized court adopts a decision on the merits, the rule of res judicata should
permanently block any other courts from accepting a case involving the same parties
and the same claim(s); an exception applies only for the court having appellate
jurisdiction over the decision of the first-seized court;
(6) For defendants with a domicile in the EU, the rules of Regulation 1215/2012 are
applicable and displace any Member State rules of private international law or
conflicts.
6. Serving a Claim in a Foreign Jurisdiction
Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and
Commercial Matters, ratified by the U.S. in 1969, Documents, p. ???
Article 10 of the Hague Convention provides an option for states to object to the direct service of
judicial documents on natural or legal persons within their jurisdiction. One state that has made use
of this option is China.3 The only option to effect service on a party in China is, therefore, the route
via the Central Authority designated as per Article 2 of the Hague Convention. This is the Ministry
of Justice of the People’s Republic of China. The address and other specific instructions can be
found – for each signatory state of the Convention – on the website of the Hague Conference on
Private International Law. For China, the URL is https://www.hcch.net/en/states/authori-
ties/details3/?aid=243. If service is not effected in this way, the Chinese party may not attend judicial
proceedings abroad and China will not enforce a default judgment obtained against the Chinese
party.
U.S. Federal Rule of Civil Procedure 4 (Weintraub p. 144, include here!)

in the U.S. parties can create a “Certificate of Service” or “Proof of Service” to declare how and
when a document was served on a natural or legal person domiciled in the United States; this often
has to be submitted together with same document to court
Regulation 1393/2007 of ??? on the Service in the Member States of Judicial and Extrajudicial
Documents in Civil and Commercial Matters
7. Submission to the Jurisdiction of a Particular Forum

???
3 China has objected to the option of service via diplomatic or consular agents (Art. 8(2)), service directly by
mail (Art. 10(a)), and service directly through judicial officers (Art. 10(b) and (c)). This information, and
similar information about all other contracting states, can be obtained from the website of the Hague
Conference, www.hcch.net/en/home.
8. What to Do About Proceedings in the Wrong Forum?
lis pendens
forum non conveniens
antisuit injunctions
torpedo actions
Allianz SpA and Assicurazioni Generali SpA v West Tankers Inc.

European Court of Justice, Case C-185/07
Judgment of 10 February 2009, 2009 ECR I-663
The dispute in the main proceedings and the question referred for a preliminary ruling
9
In August 2000 the Front Comor, a vessel owned by West Tankers and chartered by Erg Petroli
SpA (‘Erg’), collided in Syracuse (Italy) with a jetty owned by Erg and caused damage. The
charterparty was governed by English law and contained a clause providing for arbitration in London
(United Kingdom).
10
Erg claimed compensation from its insurers Allianz and Generali up to the limit of its insurance
cover and commenced arbitration proceedings in London against West Tankers for the excess. West
Tankers denied liability for the damage caused by the collision.
11
Having paid Erg compensation under the insurance policies for the loss it had suffered, Allianz
and Generali brought proceedings on 30 July 2003 against West Tankers before the Tribunale di
Siracusa (Italy) in order to recover the sums they had paid to Erg. The action was based on their
statutory right of subrogation to Erg’s claims, in accordance with Article 1916 of the Italian Civil
Code. West Tankers raised an objection of lack of jurisdiction on the basis of the existence of the
arbitration agreement.
12
In parallel, West Tankers brought proceedings, on 10 September 2004, before the High Court of
Justice of England and Wales, Queens Bench Division (Commercial Court), seeking a declaration
that the dispute between itself, on the one hand, and Allianz and Generali, on the other, was to be
settled by arbitration pursuant to the arbitration agreement. West Tankers also sought an injunction
restraining Allianz and Generali from pursuing any proceedings other than arbitration and requiring
them to discontinue the proceedings commenced before the Tribunale di Siracusa (‘the anti-suit
injunction’).
13
By judgment of 21 March 2005, the High Court of Justice of England and Wales, Queens Bench
Division (Commercial Court), upheld West Tankers’ claims and granted the anti-suit injunction
sought against Allianz and Generali. The latter appealed against that judgment to the House of Lords.
They argued that the grant of such an injunction is contrary to Regulation No 44/2001 [the precursor
to Regulation 1215/2012 cited above, p. ???].
14
The House of Lords first referred to the judgments in Case C-116/02 Gasser [2003] ECR I-14693
and Case C-159/02 Turner [2004] ECR I-3565, which decided in substance that an injunction
restraining a party from commencing or continuing proceedings in a court of a Member State cannot
be compatible with the system established by Regulation No 44/2001, even where it is granted by
the court having jurisdiction under that regulation. That is because the regulation provides a
complete set of uniform rules on the allocation of jurisdiction between the courts of the Member
States which must trust each other to apply those rules correctly.
15
However, that principle cannot, in the view of the House of Lords, be extended to arbitration,
which is completely excluded from the scope of Regulation No 44/2001 by virtue of Article 1(2)(d)
thereof. In that field, there is no set of uniform Community rules, which is a necessary condition in
order that mutual trust between the courts of the Member States may be established and applied.
Moreover, it is clear from the judgment in Case C-190/89 Rich [1991] ECR I-3855 that the exclusion
in Article 1(2)(d) of Regulation No 44/2001 applies not only to arbitration proceedings as such, but
also to legal proceedings the subject-matter of which is arbitration. The judgment in Case C-391/95
Van Uden [1998] ECR I-7091 stated that arbitration is the subject-matter of proceedings where they
serve to protect the right to determine the dispute by arbitration, which is the case in the main
proceedings.
16
The House of Lords adds that since all arbitration matters fall outside the scope of Regulation No
44/2001, an injunction addressed to Allianz and Generali restraining them from having recourse to
proceedings other than arbitration and from continuing proceedings before the Tribunale di Siracusa
cannot infringe the regulation.
17
Finally, the House of Lords points out that the courts of the United Kingdom have for many years
used anti-suit injunctions. That practice is, in its view, a valuable tool for the court of the seat of
arbitration, exercising supervisory jurisdiction over the arbitration, as it promotes legal certainty and
reduces the possibility of conflict between the arbitration award and the judgment of a national court.
Furthermore, if the practice were also adopted by the courts in other Member States it would make
the European Community more competitive vis-à-vis international arbitration centres such as New
York, Bermuda and Singapore.
18
In those circumstances, the House of Lords decided to stay its proceedings and to [make a
reference to the European Court of Justice pursuant to Article 267 TFEU].
The question referred for a preliminary ruling
19
By its question, the House of Lords asks, essentially, whether it is incompatible with Regulation
No 44/2001 for a court of a Member State to make an order to restrain a person from commencing
or continuing proceedings before the courts of another Member State on the ground that such
proceedings would be contrary to an arbitration agreement, even though Article 1(2)(d) of the
regulation excludes arbitration from the scope thereof.
20
An anti-suit injunction, such as that in the main proceedings, may be directed against actual or
potential claimants in proceedings abroad. As observed by the Advocate General in point 14 of her
Opinion, non-compliance with an anti-suit injunction is contempt of court, for which penalties can
be imposed, including imprisonment or seizure of assets.
21
Both West Tankers and the United Kingdom Government submit that such an injunction is not
incompatible with Regulation No 44/2001 because Article 1(2)(d) thereof excludes arbitration from
its scope of application.
22
In that regard it must be borne in mind that, in order to determine whether a dispute falls within
the scope of Regulation No 44/2001, reference must be made solely to the subject-matter of the
proceedings (Rich, paragraph 26). More specifically, its place in the scope of Regulation No 44/2001
is determined by the nature of the rights which the proceedings in question serve to protect (Van
Uden, paragraph 33).
23
Proceedings, such as those in the main proceedings, which lead to the making of an anti-suit
injunction, cannot, therefore, come within the scope of Regulation No 44/2001.
24
However, even though proceedings do not come within the scope of Regulation No 44/2001, they
may nevertheless have consequences which undermine its effectiveness, namely preventing the
attainment of the objectives of unification of the rules of conflict of jurisdiction in civil and
commercial matters and the free movement of decisions in those matters. This is so, inter alia, where
such proceedings prevent a court of another Member State from exercising the jurisdiction conferred
on it by Regulation No 44/2001.
25
It is therefore appropriate to consider whether the proceedings brought by Allianz and Generali
against West Tankers before the Tribunale di Siracusa themselves come within the scope of
Regulation No 44/2001 and then to ascertain the effects of the anti-suit injunction on those
proceedings.
26
In that regard, the Court finds, as noted by the Advocate General in points 53 and 54 of her
Opinion, that, if, because of the subject-matter of the dispute, that is, the nature of the rights to be
protected in proceedings, such as a claim for damages, those proceedings come within the scope of
Regulation No 44/2001, a preliminary issue concerning the applicability of an arbitration agreement,
including in particular its validity, also comes within its scope of application. This finding is
supported by paragraph 35 of the Report on the accession of the Hellenic Republic to the Convention
of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial
Matters (OJ 1978 L 304, p. 36) (‘the Brussels Convention’), presented by Messrs Evrigenis and
Kerameus (OJ 1986 C 298, p. 1). That paragraph states that the verification, as an incidental
question, of the validity of an arbitration agreement which is cited by a litigant in order to contest
the jurisdiction of the court before which he is being sued pursuant to the Brussels Convention, must
be considered as falling within its scope. [The Brussels Convention is the precursor to Reg 44/2001;
the Brussels Convention, Reg 44/2001 and the current Reg 1215/2015 contain parallel provisions
regarding the present matter.]
27
It follows that the objection of lack of jurisdiction raised by West Tankers before the Tribunale
di Siracusa on the basis of the existence of an arbitration agreement, including the question of the
validity of that agreement, comes within the scope of Regulation No 44/2001 and that it is therefore
exclusively for that court to rule on that objection and on its own jurisdiction, pursuant to Articles
1(2)(d) and 5(3) of that regulation.
28
Accordingly, the use of an anti-suit injunction to prevent a court of a Member State, which
normally has jurisdiction to resolve a dispute under Article 5(3) of Regulation No 44/2001, from
ruling, in accordance with Article 1(2)(d) of that regulation, on the very applicability of the
regulation to the dispute brought before it necessarily amounts to stripping that court of the power
to rule on its own jurisdiction under Regulation No 44/2001.
29
It follows, first, as noted by the Advocate General in point 57 of her Opinion, that an anti-suit
injunction, such as that in the main proceedings, is contrary to the general principle which emerges
from the case-law of the Court on the Brussels Convention, that every court seised itself determines,
under the rules applicable to it, whether it has jurisdiction to resolve the dispute before it (see, to that
effect, Gasser, paragraphs 48 and 49). It should be borne in mind in that regard that Regulation No
44/2001, apart from a few limited exceptions which are not relevant to the main proceedings, does
not authorise the jurisdiction of a court of a Member State to be reviewed by a court in another
Member State (Case C-351/89 Overseas Union Insurance and Others [1991] ECR I-3317, paragraph
24, and Turner, paragraph 26). That jurisdiction is determined directly by the rules laid down by that
regulation, including those relating to its scope of application. Thus in no case is a court of one
Member State in a better position to determine whether the court of another Member State has
jurisdiction (OverseasUnion Insurance and Others, paragraph 23, and Gasser, paragraph 48).
30
Further, in obstructing the court of another Member State in the exercise of the powers conferred
on it by Regulation No 44/2001, namely to decide, on the basis of the rules defining the material
scope of that regulation, including Article 1(2)(d) thereof, whether that regulation is applicable, such
an anti-suit injunction also runs counter to the trust which the Member States accord to one another’s
legal systems and judicial institutions and on which the system of jurisdiction under Regulation No
44/2001 is based (see, to that effect, Turner, paragraph 24).
31
Lastly, if, by means of an anti-suit injunction, the Tribunale di Siracusa were prevented from
examining itself the preliminary issue of the validity or the applicability of the arbitration agreement,
a party could avoid the proceedings merely by relying on that agreement and the applicant, which
considers that the agreement is void, inoperative or incapable of being performed, would thus be
barred from access to the court before which it brought proceedings under Article 5(3) of Regulation
No 44/2001 and would therefore be deprived of a form of judicial protection to which it is entitled.
32
Consequently, an anti-suit injunction, such as that in the main proceedings, is not compatible with
Regulation No 44/2001.
33
This finding is supported by Article II(3) of the New York Convention, according to which it is
the court of a Contracting State, when seised of an action in a matter in respect of which the parties
have made an arbitration agreement, that will, at the request of one of the parties, refer the parties
to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of
being performed.
34
In the light of the foregoing considerations, the answer to the question referred is that it is
incompatible with Regulation No 44/2001 for a court of a Member State to make an order to restrain
a person from commencing or continuing proceedings before the courts of another Member State on
the ground that such proceedings would be contrary to an arbitration agreement.
________
NOTES AND QUESTIONS

1) The case involves the interpretation of a provision in Regulation 1215/2012 of 12 December
2012 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and
Commercial Matters, introduced in the section on choice of court clauses in contracts (above, p.
???). According to its Article 1(2)(d), the Regulation does not apply to “arbitration”. As a
consequence, the provisions of the Regulation directing applicants to the appropriate court(s) do not
apply when there is an arbitration clause. Furthermore, the Regulation does not get in the way of the
New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (see below,
p. ???). However, the Regulation does not clearly state who should decide whether an arbitration
clause is actually valid in a given case. The House of Lords, called upon by the party that would
prefer to arbitrate, wants to be able to grant an anti-suit injunction preventing the other party from
going to court, respectively requiring them to discontinue any proceedings already begun. In
considering whether to grant an anti-suit injunction, the House of Lords, as the court with
jurisdiction over the place of arbitration, would implicitly have to make a decision on the validity
of the arbitration clause. The Tribunale di Siracusa, however, had already been seized by the party
that would prefer to litigate and is the court that would have jurisdiction pursuant to the Regulation
in the absence of a valid arbitration clause. In considering whether to pursue with the case, the
Tribunale would implicitly have to make a decision on the validity of the arbitration clause as well.
Thus, the European Court of Justice had to decide which court should have priority, i.e. whether the
exclusion of “arbitration” in the Regulation covers also the question whether an arbitration clause
is valid or not.
As can be seen from para. 26, the ECJ held that the validity of an arbitration agreement is a
preliminary question to a law suit falling within the scope of application of the Regulation. Thus, it
gave the power to the Tribunale to decide the validity of the arbitration clause, in line with the time
honored principle that if the jurisdiction of a court is disputed, it is for that same court to decide upon
its jurisdiction (para. 29). In so doing, it rejected the availability of anti-suit injunctions in cases like
this one, since the courts of one Member State could not prevent the courts of another Member State
from exercising their powers to make preliminary decisions regarding jurisdiction. However, the ECJ
also held in Van Uden and elsewhere that the right to arbitrate falls under the exclusion of Article
1(2)(d) of the Regulation and, therefore, has to be protected by the court with jurisdiction over the
place of arbitration. What are the consequences if the Tribunale should decide that the arbitration
clause is not valid and that litigation can go ahead in Siracusa, while the House of Lords decides that
the arbitration clause is valid and that arbitration can go ahead in London? (Where) Would a
judgment from Siracusa be recognized and enforced? (Where) Would an arbitral award from London
be recognized and enforced? What about procedural economy?
2) In another case that came before the European Court of Justice, the companies E.ON (Germany)
and Gazprom (Russia) had signed a shareholder agreement with the Lithuanian State Property Fund
for the creation of a joint-stock company, AB Lietuvos Dujos, for the transportation and distribution
of natural gas. In the fall of 2010, a majority of the members of the company board, including
representatives of Gazprom, took a number of decisions regarding the quantity and price of gas to
be purchased from Gazprom in 2011. Subsequently, the Lithuanian Ministry of Energy, on behalf
of the Lithuanian State Property Fund, accused the company board of not acting in the company’s
best interest when accepting conditions that did not reflect market prices. The Ministry brought an
action in the Vilnius Regional Court against the company and several of its board members seeking
an investigation of the decisions. Since the shareholder agreement contained an arbitration clause,
Gazprom claimed that the Vilnius court did not have jurisdiction and initiated arbitration
proceedings before the Arbitration Institute of the Stockholm Chamber of Commerce. The latter, by
an award dated 31 July 2012, decided that the arbitration clause in the shareholder agreement had
been partially breached and ordered the Ministry of Energy to discontinue the proceedings pending
before the Vilnius Regional Court.4
However, the Ministry did not withdraw its claims and the Vilnius Regional Court decided on 3
September 2012 that “an application for investigation of the activities of a legal person fell within
its jurisdiction and was not arbitrable under Lithuanian law.”5 On the merits, the Regional Court
ordered an investigation of the decisions of the company board. This decision, in turn, was appealed
by the company board and its Gazprom-appointed members to the Lithuanian Court of Appeal,
together with an application for the recognition and enforcement of the arbitral award of 31 July
2012.
On 17 December 2012 and 21 February 2013, respectively, the Lithuanian Court of Appeal rejected
the appeal and the application from the company board and its members. It held “(i) that the arbitral
tribunal which made the arbitral award could not rule on an issue already raised before and examined
by the [Vilnius Regional Court] and (ii) that, in ruling on that issue, the arbitral tribunal had not
observed Article V(2)(a) of the [New York] Convention. Furthermore, the [Court of Appeal] stated
that, by the arbitral award of 31 July 2012 recognition and enforcement of which were sought, the
arbitral tribunal not only limited the Ministry’s capacity to bring proceedings before a Lithuanian
court with a view to initiation of an investigation in respect of the activities of a legal person, but
also denied that national court the power which it possesses to determine whether it has jurisdiction.
In that way, the arbitral tribunal infringed the national sovereignty of the Republic of Lithuania,
which is contrary to Lithuanian and international public policy. According to the [Court of Appeal],
4 http://cisarbitration.com/wp-content/uploads/2013/02/Gazprom-v-Republic-of-Lithuania-SCC-Arbitration-
No.-V-1252011-Award-dated-31-July-2012.pdf
5 European Court of Justice, Judgment of 13 May 2015, Case C-536/13 Gazprom, 2015 ECR ???, recital 19.
the refusal to recognise the award was also justified by Article V(2)(b) of the New York
Convention.”6
Both decisions of the Lithuanian Court of Appeal were then challenged on points of law before the
Supreme Court of Lithuania by the company board and some of its members. The Supreme Court,
by order of 20 November 2013, decided to stay the proceedings and request a preliminary ruling
from the European Court of Justice inter alia on the following question: “Where an arbitral tribunal
issues an anti-suit injunction and thereby prohibits a party from bringing certain claims before a court
of a Member State, which under the rules on jurisdiction in [Regulation No 1215/2012] has
jurisdiction to hear the civil case as to the substance, does the court of a Member State have the right
to refuse to recognise such an award of the arbitral tribunal because it restricts the court’s right to
determine itself whether it has jurisdiction to hear the case under the rules on jurisdiction in
[Regulation No 1215/2012]?”7
The European Court, after reminding the parties that “arbitration does not fall within the scope of
Regulation No [1215/2012],” decided as follows: “Since the New York Convention governs a field
excluded from the scope of Regulation No [1215/2012], it does not relate to a ‘particular matter’
within the meaning of Article 71(1) of that regulation. Article 71 governs only the relations between
that regulation and conventions falling under the particular matters that come within the scope of
Regulation No [1215/2012 ...]. It follows from all the foregoing considerations that the answer to
the questions referred is that Regulation No [1215/2012] must be interpreted as not precluding a
court of a Member State from recognising and enforcing, or from refusing to recognise and enforce,
an arbitral award prohibiting a party from bringing certain claims before a court of that Member
State, since that regulation does not govern the recognition and enforcement, in a Member State, of
an arbitral award issued by an arbitral tribunal in another Member State.”8
What does this mean for parallel proceedings in court and in arbitration in the EU? Do you agree
with the European Court of Justice? Obviously, the ECJ was just looking at Regulation 1215/2012
but could it have done more to support the New York Convention? (How) Could Gazprom have
enforced the arbitration clause in the shareholder agreement?
9. Legal Representation in a Foreign Jurisdiction
10. Counterclaims
6 Ibid., recitals 21 and 22.

7 Ibid., recitals 24-26.
8 Ibid., recitals 43 and 44.
11. Injunctions and Other Forms of Interim Relief
12. Evidence
1970 Hague Convention on the Taking of Evidence Abroad in Civil and Commercial Matters,
Documents, p. 629
Regulation 1206/2001 of 28 May 2001 on Cooperation Between the Courts of the Member States
in the Taking of Evidence in Civil and Commercial Matters, OJ 2001 L 174, p. 1
13. Other Procedural Issues
14. The Judgment
15. Appeals
II. Enforcement of Foreign Judgments

1971 Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and
Commercial Matters, Documents, p. 638
not ratified widely
more recent effort between U.S. and EU 1999 Preliminary Draft Convention on Jurisdiction and
Foreign Judgments in Civil and Commercial Matters, Documents, p. 6579
US Code of Civil Procedure Section 1713-1724, the Uniform Foreign-Country Money Judgments
Recognition Act
EU Regulation 1215/2012, Articles 36 et seq.
On several occasions, courts in Europe have held that awards including punitive damages will not
be enforced in Europe because they violate public policy. If the elements of the award that are
compensatory versus punitive are not clearly apportioned, the European courts will usually refuse
enforcement of the entire award.
Veronica Ruiz Abou-Nigm: The Arrest of Ships in Private International Law, Oxford University
Press, Oxford, 2012
9 For background information and analysis see, inter alia, Brandon B. Danford: The Enforcement of Foreign
Money Judgments in the United States and Europe: How Can We Achieve a Comprehensive Treaty?, 2004
Rev. Litig., Vol. 23, pp. 381-434; as well as Samuel Baumgartner, The Proposed Hague Convention on
Jurisdiction and Foreign Judgments, Tübingen 2003;
Section 3. International Commercial Arbitration

Literature: Nigel Blackaby & Constantine Partasides: Redfern and Hunter on International
Arbitration, 6th ed., Oxford 2015; Gary Born: International Commercial Arbitration: Law and
Practice, Vols. I and II, The Hague, 2nd ed 2014; W. Laurence Craig et al.: Craig, Park and Paulsson
on International Chamber of Commerce Arbitration, Oxford UP, Oxford, 4th ed. 2017; Franco
Ferrari (ed): Forum Shopping in the International Commercial Arbitration Context, Munich 2013;
Herbert Kronke et al (eds), The New York Convention: Recognition and Enforcement of Foreign
Arbitral Awards, Wolters Kluwer, The Hague, 2010; Margaret Moses, The Principles and Practice
of International Commercial Arbitration, Cambridge University Press, Cambridge (UK), 2nd ed.
2012; Georgios Petrochilos: Procedural Law in International Arbitration, Oxford University Press,
Oxford, 2004; S.I. Strong: Research and Practice in International Commercial Arbitration, Oxford
University Press, Oxford, 2009; Andrew Tweeddale & Keren Tweeddale: Arbitration of Commercial
Disputes, Oxford University Press, Oxford, 2007; Tibor Várady, John J. Barceló and Arthur T. von
Mehren, International Commercial Arbitration - A Transnational Perspective, 6th ed, Westlaw, St.
Paul, 2015; Frank-Bernd Weigand: Practitioner’s Handbook on International Commercial
Arbitration, Oxford University Press, Oxford, 2nd ed. 2010
I. Introduction
As a general rule, dispute settlement clauses should provide for mechanisms that actually work and
provide timely, fair, cost efficient, and enforceable solutions to the parties of an agreement. Very
rarely should a party deliberately propose or accept a clause that it considers ineffective, on the
assumption that this may be in her favor if she gets sued.
On the assumption that dispute settlement clauses should actually work, there are good reasons why
arbitration has become the method of choice for international business partners. This may seem a
bit surprising, given the fact that parties to B2B transactions can theoretically choose any one of
almost 200 national court systems for the settlement of their disputes. Every one of those is staffed
with publicly appointed judges and backed by the police powers of the respective state to provide
enforcement of the judgments, if necessary. So how can it be that private arbitration tribunals
increasingly have the edge over public courts, in particular if we consider that most of the arbitration
tribunals are not even permanent courts and instead constituted ad hoc when a case is brought and
staffed with just about anybody who the parties want to entrust their issue with, including arbitrators
that do not have to be trained as lawyers at all?
The short answer is – and a very sad answer indeed, given the huge amount of time and money we
spend around the world on educating our lawyers and judges and setting up our courts – that out of
about 200 countries in the world, based on many years of practical experience, the author would not
recommend to clients to litigate in some 180 of them. In plain English, about 90% of all national
court systems in the world are not recommended for parties seeking timely, fair, cost efficient, and
enforceable solutions to their disputes!10
10 See note ??? above.

??? explain typical problems

We do not want to be misunderstood. We are not saying that there are no judges in the countries of
Central and Latin America, Africa, Asia, or Southern, Central and Eastern Europe that are
competent, honest and trustworthy. In some countries, problems are systemic and affect all
procedures – for example the enormous delays in Italian or Indian courts. In other countries, China
and Russia come to mind, problems are more random, when it becomes a question of hit and miss
whether one gets a fair minded, competent and incorruptible judge and/or whether the authorities
will allow for rule of law or seek to influence the outcome of a case behind closed doors. Reliance
on luck, however, should not be part of a well designed dispute settlement strategy.
???
Certain limitations are warranted for arbitration, however. First, while arbitration is often the best
form of dispute settlement involving companies of comparable levels of expertise and bargaining
power, it is far less suitable for disputes between vastly disparate parties. This is particularly
noticeable in business-to-consumer transactions, so-called B2C contracts. In contrast to judges, who
are paid by the government and do not benefit from additional cases being brought, arbitrators are
free-lance and get paid only when they are selected to hear and decide a case. This creates an
imbalance if, for example, General Motors ends up in a dispute with a buyer of one of its cars. For
the arbitrator, the consumer will almost certainly be a one-time customer, while GM could become
a profitable revenue stream if it selects the same arbitrator repeatedly for similar cases. The conflict
of interest for the arbitrator and resulting difficulty of deciding the case objectively should be
obvious. This is why many countries in the world, in particular in Europe, do not allow arbitration
clauses to be added to B2C contracts.
Second, arbitration is not a good tool for settling relatively minor claims. In such cases, the court fees
would be minor as well and the procedure would be effectively subsidized by the government.
However, no such subsidization takes place in arbitration and the fees can easily become prohibitive.
This is compounded by the fact that arbitration for the most part does not know and is not able to
accommodate class action suits to aggregate many relatively small claims against one and the same
defendant resulting from similar or identical problems.11
In recent years, a number of American companies, including many of the larger banks, have started
to include arbitration clauses in the contracts with their private customers. As the New York Times
reported on 5 May 2016, this had the effect, inter alia, that only a tiny fraction of disputes valued at
$2,500 or less went to arbitration and the vast majority of millions of claims over questionable fees
and overcharges and the like were abandoned by the customers, including many where efforts to
build a class action case were blocked on the basis of the arbitration clauses (pp. A1 and B3). To
counter this trend, the Consumer Financial Protection Bureau has proposed a prohibition of
arbitration clauses in B2C contracts for the financial companies subject to the Bureau’s regulations.
11 This issue is discussed in detail in S.I. Strong: Class, Mass, and Collective Arbitration in National and
International Law, Oxford University Press, Oxford 2013.
Even if adopted, this would not affect, however, any such clauses in contracts by cell-phone or car
rental companies, etc., let alone individual employment contracts.
For our purposes, we will limit the analysis to the cases where arbitration is voluntarily agreed to in
contracts between businesses generally understanding what they are doing and able to negotiate their
deals on a level playing field. Even in such contexts, however, it is usually not worthwhile to actually
go to arbitration for claims much lower than $50,000, with a single arbitrator, or about $150,000,
with a panel of three arbitrators. Such relatively small cases should be settled amicably, allowing the
parties to return to doing business together and thus recovering the shared losses from the earlier
dispute.
Filanto, S.p.A. v. Chilewich International Corp.

United States District Court for the Southern District of New York
91 Civ. 3253 (CLB)
Charles L. Brieant, Chief Judge
Decided 14 April 1992 (footnotes and some details omitted)
1
By motion fully submitted on December 11, 1991, defendant Chilewich International Corp. moves
to stay this action pending arbitration in Moscow. Plaintiff Filanto has moved to enjoin arbitration
or to order arbitration in this federal district.
2
This case is a striking example of how a lawsuit involving a relatively straightforward international
commercial transaction can raise an array of complex questions. Accordingly, the Court will recount
the factual background of the case, derived from both parties, memoranda of law and supporting
affidavits in some detail.
3
Plaintiff Filanto is an Italian corporation engaged in the manufacture and sale of footwear.
Defendant Chilewich is an export-import firm incorporated in the state of New York with its
principal place of business in White Plains. On February 28, 1989, Chilewich's agent in the United
Kingdom, Byerly Johnson, Ltd., signed a contract with Raznoexport, the Soviet Foreign Economic
Association, which obligated Byerly Johnson to supply footwear to Raznoexport. Section 10 of this
contract – the "Russian Contract" – is an arbitration clause, which reads in pertinent part as follows:
“All disputes or differencies [sic] which may arise out of or in connection with the
present Contract are to be settled, jurisdiction of ordinary courts being excluded, by
the Arbitration at the USSR Chamber of Commerce and Industry, Moscow, in
accordance with the Regulations of the said Arbitration.” [sic] [...]
4
This contract was signed by Byerly Johnson and by Raznoexport, and is sometimes referred to as
“Contract No. 32-03/93085”.
5
The first exchange of correspondence between the parties to this lawsuit is a letter dated July 27,
1989 from Mr. Melvin Chilewich of Chilewich International to Mr. Antonio Filograna, chief
executive officer of Filanto. This letter refers to a recent visit by Chilewich and Byerly Johnson
personnel to Filanto's factories in Italy, presumably to negotiate a purchase to fulfill the Russian
Contract, and then states as follows:
“Attached please find our contract to cover our purchase from you. Same is governed
by the conditions which are enumerated in the standard contract in effect with the
Soviet buyers [the Russian contract], copy of which is also enclosed.” [...]
6
The next item in the record is a letter from Filanto to Chilewich dated September 2, 1989. This
letter refers to a letter from Chilewich to Filanto of August 11, 1989, which “you [Chilewich] sent
me with the contracts n 10001-10002-10003.” These numbers do not correspond to the contract sued
on here, but refer instead to other, similar contracts between the parties. None of these contracts, or
their terms, are in the record, both parties having been afforded ample opportunity to submit
whatever they wished.
7
The last paragraph of the September 2, 1989 letter from Filanto to Chilewich states as follows:
“Returning back the enclosed contracts n 10001-10002-10003 signed for acceptance,
we communicate, if we do not misunderstood, the Soviet's contract that you sent us
together with your above mentioned contract, that of this contract we have to respect
only the following points of it:
– n 5 Packing and marking
– n 6 Way of Shipment
– n 7 Delivery – Acceptance of Goods
We ask for your acceptance by return of post.” [sic] [...]
8
The intent of this paragraph, clearly, was to exclude from incorporation by reference inter alia
section 10 of the Russian contract, which provides for arbitration. Chilewich, for its part, claims
never to have received this September 2 letter. In any event, it relates only to prior course of conduct.
9
It is apparent from the record that further negotiations occurred in early 1990, but the content of
those negotiations is unclear; it is, however, clear that deliveries of boots from Filanto to Chilewich
were occurring at this time, pursuant to other contracts, since there is a reference to a shipment
occurring between April 23, 1990 and June 11, 1990.
10
The next document in this case, and the focal point of the parties' dispute regarding whether an
arbitration agreement exists, is a Memorandum Agreement dated March 13, 1990. This Memo-
randum Agreement, number 9003002, is a standard merchant's memo prepared by Chilewich for
signature by both parties confirming that Filanto will deliver 100,000 pairs of boots to Chilewich at
the Italian/Yugoslav border on September 15, 1990, with the balance of 150,000 pairs to be delivered
on November 1, 1990. Chilewich's obligations were to open a Letter of Credit in Filanto's favor prior
to the September 15 delivery, and another letter prior to the November delivery. This Memorandum
includes the following provision:
“It is understood between Buyer and Seller that USSR Contract No. 32-03/93085 [the
Russian Contract] is hereby incorporated in this contract as far as practicable, and
specifically that any arbitration shall be in accordance with that Contract.” [...]
11
Chilewich signed this Memorandum Agreement, and sent it to Filanto. Filanto at that time did not
sign or return the document. Nevertheless, on May 7, 1990, Chilewich opened a Letter of Credit in
Filanto's favor in the sum of $2,595,600.00. The Letter of Credit itself mentions the Russian
Contract, but only insofar as concerns packing and labeling.
12
Again, on July 23, 1990, Filanto sent another letter to Chilewich, which reads in relevant parts as
follows:
“We refer to Point 3, Special Conditions, to point out that: returning back the above-
mentioned contract, signed for acceptance, from Soviet Contract 32-03/93085 we
have to respect only the following points of it:
– No. 5 – Packing and Marking
– No. 6 – Way of Shipment
– No. 7 – Delivery Acceptance of Goods”.
13
It should be noted that the contract referred to in this letter is apparently another contract between
the parties, as the letter refers to "Sub. Contract No. 32-03/03122", while the contract sued on in the
present action is No. 32-03/03123.
14
This letter caused some concern on the part of Chilewich and its agents: a July 30, 1990 fax from
Byerly Johnson, Chilewich's agent, to Chilewich, mentions Filanto's July 23 letter, asserts that it
“very neatly dodges” certain issues, other than arbitration, covered by the Russian Contract, and
states that Johnson would “take it up” with Filanto during a visit to Filanto's offices the next week.
15
Then, on August 7, 1990, Filanto returned the Memorandum Agreement, sued on here, that
Chilewich had signed and sent to it in March; though Filanto had signed the Memorandum
Agreement, it once again appended a covering letter, purporting to exclude all but three sections of
the Russian Contract. [...]
16
There is also in the record an August 7, 1990 telex from Chilewich to Byerly Johnson, stating that
Chilewich would not open the second Letter of Credit unless it received from Filanto a signed copy
of the contract without any exclusions. In order to resolve this issue, Byerly Johnson on August 29,
1990 sent a fax to Italian Trading SRL, an intermediary, reading in relevant part:
“We have checked back through our records for last year, and can find no exclusions
by Filanto from the Soviet Master Contract and, in the event, we do not believe that
this has caused any difficulties between us.
"We would, therefore, ask you to amend your letters of the 23rd July 1990 and the
7th August 1990, so that you accept all points of the Soviet Master Contract No. 32-
03/93085 as far as practicable. You will note that this is specified in our Special
Condition No. 3 of our contracts Nos. 9003001 and 9003 [illegible]”. [...]
17
Filanto later confirmed to Italian Trading that it received this fax.
18
As the date specified in the Memorandum Agreement for delivery of the first shipment of boots
– September 15, 1990 – was approaching, the parties evidently decided to make further efforts to
resolve this issue: what actually happened, though, is a matter of some dispute. Mr. Filograna, the
CEO of Filanto, asserts that the following occurred:
“Moreover, when I was in Moscow from September 2 through September 5, 1990,
to inspect Soviet factories on an unrelated business matter, I met with Simon
Chilewich. Simon Chilewich, then and there, abandoned his request of August 29,
1990, and agreed with me that the Filanto-Chilewich Contract would incorporate
only the packing, shipment and delivery terms of the Anglo-Soviet Contract. Also
present at this meeting were Sergio Squilloni of Italian Trading (Chilewich's agent),
Kathy Farley, and Max Flaxman of Chilewich and Antonio Sergio of Filanto”.
19
Mr. Simon Chilewich, in his sworn affidavit, does not refer to this incident, but does state the
following:
“In fact, subsequent to the communications and correspondence described above, I
met with Mr. Filograna face to face in Paris during the weekend of September 14,
1990. During that meeting, I expressly stated to him that we would have no deal if
Filanto now insisted on deleting provisions of the Russian Contract from our
agreement. Mr. Filograna, on behalf of Filanto, stated that he would accede to our
position, in order to keep Chilewich's business”. [...]
20
Plaintiff does not address or deny defendant’s version of the Paris meeting. Filanto’s Complaint
in this action alleges that it delivered the first shipment of boots on September 15, and drew down
on the Letter of Credit.
21
On September 27, 1990, Mr. Filograna faxed a letter to Chilewich. This letter refers to “assurances
during our meeting in Paris”, and complains that Chilewich had not yet opened the second Letter of
Credit for the second delivery, which it had supposedly promised to do by September 25. Mr.
Chilewich responded by fax on the same day; his fax states that he is “totally cognizant of the
contractual obligations which exist”, but goes on to say that Chilewich had encountered difficulties
with the Russian buyers, that Chilewich needed to “reduce the rate of shipments”, and denies that
Chilewich promised to open the Letter of Credit by September 25. [...]
22
According to the Complaint, what ultimately happened was that Chilewich bought and paid for
60,000 pairs of boots in January 1991, but never purchased the 90,000 pairs of boots that comprise
the balance of Chilewich's original order. It is Chilewich's failure to do so that forms the basis of this
lawsuit, commenced by Filanto on May 14, 1991.
23
There is in the record, however, one document that post-dates the filing of the Complaint: a letter
from Filanto to Chilewich dated June 21, 1991. This letter is in response to claims by Byerly Johnson
that some of the boots that had been supplied by Filanto were defective. The letter expressly relies
on a section of the Russian contract which Filanto had earlier purported to exclude – Section 9
regarding claims procedures – and states that “The April Shipment and the September Shipment are
governed by the Master Purchase Contract of February 28, 1989, n 32-03/93085 (the “Master
Purchase Contract”).” [...]
24
This letter must be regarded as an admission in law by Filanto, the party to be charged. A litigant
may not blow hot and cold in a lawsuit. The letter of June 21, 1991 clearly shows that when Filanto
thought it desirable to do so, it recognized that it was bound by the incorporation by reference of
portions of the Russian Contract, which, prior to the Paris meeting, it had purported to exclude. This
letter shows that Filanto regarded itself as the beneficiary of the claims adjustment provisions of the
Russian Contract. This legal position is entirely inconsistent with the position which Filanto had
professed prior to the Paris meeting, and is inconsistent with its present position. Consistent with the
position of the defendant in this action, Filanto admits that the other relevant clauses of the Russian
Contract were incorporated by agreement of the parties, and made a part of the bargain. Of necessity,
this must include the agreement to arbitrate in Moscow. In the June 21, 1991 letter, Mr. Filograna
writes:
“The April Shipment and the September Shipment are governed by the Master
Purchase Contract of February 28, 1989 N. 32-03-93085 (the "Master Purchase
Contract") The Master Purchase Contract provides that claims for inferior quality
must be made within six months of the arrival of the goods at the USSR port”. [...]
25
Against this background based almost entirely on documents, defendant Chilewich on July 24,
1991 moved to stay this action pending arbitration, while plaintiff Filanto on August 22, 1992 moved
to enjoin arbitration, or, alternatively, for an order directing that arbitration be held in the Southern
District of New York rather than Moscow, because of unsettled political conditions in Russia.
Jurisdiction/Applicable Law
26
Plaintiff bases subject matter jurisdiction in this action on diversity of citizenship, as Filanto is an
Italian corporation with its principal place of business in Italy, while Chilewich is a New York
corporation with its principal place of business in New York, thereby invoking New York law and
choice of law rules, under Erie R. Co. v. Tompkins, 304 U.S. 64, 82 L. Ed. 1188, 58 S. Ct. 817
(1938).
27
This Court, however, finds another overriding basis for subject matter jurisdiction which will
affect our choice of law: chapter 2 of the Federal Arbitration Act, which comprises the Convention
on the Recognition and Enforcement of Foreign Arbitral Awards and its implementing legislation,
codified at 9 U.S.C. § 201 et seq. (West Supp. 1991). The United States, Italy and the USSR are all
signatories to this Convention, and its implementing legislation makes clear that the Arbitration
Convention governs disputes regarding arbitration agreements between parties to international
commercial transactions:
“An arbitration agreement or arbitral award arising out of a legal relationship,
whether contractual or not, which is considered as commercial, including a trans-
action, contract, or agreement described in section 2 of this title, falls under the
Convention. An agreement or award arising out of such a relationship which is
entirely between citizens of the United States should be deemed not to fall under the
Convention . . .” 119 U.S.C. § 202 (West Supp. 1991).
28
The Arbitration Convention specifically requires courts to recognize any “agreement in writing
under which the parties undertake to submit to arbitration . . .” Convention on the Recognition and
Enforcement of Foreign Arbitral Awards Article II(1). The term “agreement in writing” is defined
as “an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in
an exchange of letters or telegrams”. Convention on the Recognition and Enforcement of Foreign
Arbitral Awards Article II(2).
29
The Convention’s implementing legislation also provides an independent basis of subject matter
jurisdiction:
“An action or proceeding falling under the Convention shall be deemed to arise under
the laws and treaties of the United States. The district courts of the United States.....
shall have original jurisdiction over such an action or proceeding, regardless of the
amount in controversy.” 9 U.S.C. § 203 (West Supp. 1991).
30
Thus, although defendant has moved for a stay under Chapter 1 of the Arbitration Act, 9 U.S.C.
§ 3 (West 1970), this case actually falls under Chapter 2 of that title – the Convention and its
implementing legislation.
31
This independent jurisdictional basis is of some importance to this litigation. On a motion pursuant
to the Arbitration Act, federal law governs issues relating to the arbitrability of a dispute. Moses H.
Cone Hospital v. Mercury Construction Corp., 460 U.S. 1, 24, 103 S. Ct. 927, 74 L. Ed. 2d 765
(1983) (Act “creates a body of federal substantive law of arbitrability, applicable to any arbitration
agreement within the coverage of the Act”); Prima Paint v. Flood & Conklin Mfg. Co., 388 U.S. 395,
404-05, 18 L. Ed. 2d 1270, 87 S. Ct. 1801 (1967) (application of federal arbitration law in diversity
case permissible notwithstanding Erie since Arbitration Act was enacted pursuant to Congressional
commerce power); McPheeters v. McGinn, Smith & Co., 953 F.2d 771, 772 (2d Cir. 1992) (“Federal
law. . . governs the current dispute as to the scope of the agreement”) (citation omitted); Genesco,
Inc. v. T. Kakiuchi Co., Ltd., 815 F.2d 840, 845 (2d Cir. 1987) (same); Coenen v. R.W. Pressprich
& Co., 453 F.2d 1209, 1211 (2d Cir.) (“Once a dispute is covered by the Act, federal law applies to
all questions of interpretation, construction, validity, revocability and enforceability”), cert. denied,
406 U.S. 949, 32 L. Ed. 2d 337, 92 S. Ct. 2045 (1972).
32
However, the focus of this dispute, apparent from the parties’ submissions, is not on the scope of
the arbitration provision included in the Russian contract; rather, the threshold question is whether
these parties actually agreed to arbitrate their disputes at all. In such a situation, where the issue is
whether there is any arbitration agreement between the parties, there is authority for the proposition
that state, rather than federal law, should be applied. Recold, S.A. de C.V. v. Monfort of Colorado,
Inc., 893 F.2d 195, 197 n.6 (8th Cir. 1990) (“In addressing the issue of whether a party has entered
into an agreement to arbitrate under the Arbitration Act, courts are to apply general state law
principles . . .”) (citation omitted); Supak & Sons Mfg. Co., Inc. v. Pervel Industries, Inc., 593 F.2d
135, 137 (4th Cir. 1979) (“Section 2 [of the Act] dictates the effect of a contractually-agreed upon
arbitration provision, but it does not displace state law on the general principles governing formation
of the contract itself”); Astor Chocolate Corp. v. Mikroverk, Ltd., 704 F. Supp. 30, 33 (E.D.N.Y.
1989) (“While federal law governs the issue of the scope of the arbitration clause, state law governs
the issue of whether or not the clause is part of the contract”); Cook Chocolate Co. v. Salomon, Inc.,
684 F. Supp. 1177, 1182 (S.D.N.Y. 1988) (“At the same time, however, § 2 of the Act preserves
general principles of state contract law as rules of decision on whether the parties have entered into
an agreement to arbitrate”); Duplan Corp. v. W.B. Davis Hosiery Mills, Inc., 442 F. Supp. 86, 87-88
(S.D.N.Y. 1977) (Congress in passing Arbitration Act did not intend “to create a federal law of
contract formation”). Indeed, the Supreme Court has recently indicated that this analysis is correct,
at least with respect to cases controlled by chapter 1 of the Arbitration Act:
“Thus, state law, whether of legislative or judicial origin, is applicable if that law
arose to govern issues concerning the validity, revocability, and enforceability of
contracts generally”. Perry v. Thomas, 482 U.S. 483, 492, 96 L. Ed. 2d 426, 107 S.
Ct. 2520 n.9 (1987) (emphasis in original). See also Volt Information Sciences v.
Leland Stanford, Jr. University, 489 U.S. 468, 475, 109 S. Ct. 1248, 103 L. Ed. 2d
488 (1989) (same).
33
Plaintiff at one point did contend that state law applied, for an understandable reason: New York
law arguably imposes a heavier burden on a party seeking to compel arbitration than does its federal
counterpart. Compare Schubtex, Inc. v. Allen Snyder, Inc., 49 N.Y.2d 1, 399 N.E.2d 1154, 424
N.Y.S.2d 133 (1979) (retention without objection by buyer of seller's printed forms containing
arbitration clause insufficient basis to compel buyer to arbitrate) and Matter of Marlene Industries
Corp., 45 N.Y.2d 327, 333, 380 N.E.2d 239, 242, 408 N.Y.S.2d 410, 413 (1978) (parties “will not
be held to have chosen arbitration as the forum for the resolution of their disputes in the absence of
an express, unequivocal agreement to that effect”) with Pervel Industries, Inc. v. TM Wallcovering
Inc., 675 F. Supp. 867, 869-70 (S.D.N.Y. 1987) (agreement to arbitrate may be inferred from parties’
course of dealing), aff'd, 871 F.2d 7 (2d Cir. 1989). There is, however, some authority in this Circuit
that federal law applies to contract formation issues when the existence of an agreement to arbitrate
is in issue. David L. Threlkeld & Co. v. Metallgesellschaft Ltd., 923 F.2d 245, 249 (2d Cir.)
(applying federal law of contracts to dispute regarding existence of agreement C-12361 to arbitrate),
cert. dismissed, 112 S. Ct. 17, 115 L. Ed. 2d 1094 (1991); Genesco, supra, at 845 (“Hence whether
Genesco is bound by the arbitration clause of the sales confirmation forms is determined under
federal law, which comprises generally accepted principles of contract law”) (footnote omitted);
Fisser v. International Bank, 282 F.2d at 231, 233 (2d Cir. 1960) (same); In re Midland Bright
Drawn Steel Ltd., 1989 Westlaw 125788, 1989 U.S. Dist. Lexis 12368 (S.D.N.Y. 1989) (applying
federal law to contract formation issue in case governed by Arbitration Convention). See also Matter
of Ferrara, S.p.A., 441 F. Supp. 778, 780-81 (S.D.N.Y. 1977), aff'd without opinion, 580 F.2d 1044
(2d Cir. 1978). Cf. Fahnestock & Co., Inc. v. Waltman, 935 F.2d 512, 517-19 (2d Cir.) (upholding
under state law vacatur of punitive damages element of arbitrator's award), cert. denied, 116 L. Ed.
2d 331, 112 S. Ct. 380 (1991).
34
This Court concludes that the question of whether these parties agreed to arbitrate their disputes
is governed by the Arbitration Convention and its implementing legislation. That Convention, as a
treaty, is the supreme law of the land, U.S. Const. art. VI cl. 2, and controls any case in any
American court falling within its sphere of application. Thus, any dispute involving international
commercial arbitration which meets the Convention's jurisdictional requirements, whether brought
in state or federal court, must be resolved with reference to that instrument. See Black & Pola v. The
Manes Organization, Inc., 72 A.D.2d 514, 421 N.Y.S.2d 6 (lst Dep't 1979) (federal law determines
whether parties have agreed to arbitrate if underlying dispute involves interstate commerce), aff'd,
50 N.Y.2d 821, 407 N.E.2d 1345, 430 N.Y.S.2d 49 (1980). See also Threlkeld, supra, at 250
(holding Convention and Arbitration Act preempt Vermont statute requiring inter alia that
arbitration agreement be signed by both parties). But see McDermott International v. Lloyds
Underwriters of London, 944 F.2d 1199, 1210-11 (5th Cir.) (noting conflicting authorities on
whether state courts must apply Arbitration Act and stating that “state courts do not necessarily have
to stay litigation or compel arbitration under the Convention either”), reh’g en banc denied, 947 F.2d
1489 (5th Cir. 1991). This Court believes that the Fifth Circuit is clearly wrong on this in light of
Article VI of the Constitution, not therein mentioned; the Second Circuit also apparently disagrees
with that court’s conclusion. Corcoran v. Ardra Insurance Co., Ltd., 842 F.2d 31, 35 (2d Cir. 1988).
35
Accordingly, the Court will apply federal law to the issue of whether an “agreement in writing”
to arbitrate disputes exists between these parties.
36
Courts confronted by cases governed by the Arbitration Convention must conduct a limited, four-
part inquiry:
1) Is there an agreement in writing to arbitrate the subject of the dispute. Convention,
Articles II(l), II(2).
2) Does the agreement provide for arbitration in the territory of a signatory country?
Convention, Articles I(1), I(3); 9 U.S.C. § 206; Declaration of the United States Upon
Accession, reprinted at 9 U.S.C.A § 201, Note 43 (1990 Supp.)
3) Does the agreement arise out of a legal relationship, whether contractual or not,
which is considered as commercial? Convention, Article I(3); 9 U.S.C. §202.
4) Is a party to the contract not an American citizen, or does the commercial
relationship have some reasonable relation with one or more foreign states? 9 U.S.C.
§ 202.
Ledee v. Ceramiche Ragno, 684 F.2d 184, 186-87 (1st Cir. 1982); Sedco v. Petroleos Mexicanos
Mexican National Oil Co., 767 F.2d 1140, 1145 (5th Cir. 1985); Tennessee Imports, Inc. v. Filippi,
745 F. Supp. 1314, 1321 (M.D. Tenn. 1990); Corcoran v. Ardra Insurance Co., Ltd., 657 F. Supp.
1223, 1227 (S.D.N.Y. 1987), aff’d, 842 F.2d 31 (2d Cir. 1988). In this case, the second, third and
fourth criteria are clearly satisfied, as the purported agreement provides for arbitration in Moscow,
the Chilewich-Filanto relationship is a “commercial” relationship, and Filanto is an Italian corpo-
ration. The central disputed issue, therefore, is whether the correspondence between the parties,
viewed in light of their business relationship, constitutes an “agreement in writing”.
37
Courts interpreting this “agreement in writing” requirement have generally started their analysis
with the plain language of the Convention, which requires “an arbitral clause in a contract or an
arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams”,
Article I(1), and have then applied that language in light of federal law, which consists of generally
accepted principles of contract law, including the Uniform Commercial Code. See, e.g., Genesco,
supra, at 845-46 (holding under “general contract principles” that buyer agreed to arbitrate disputes
arising under unsigned sales confirmation forms due to parties' course of dealing and buyer's
signatures on related sales confirmation forms); Sen Mar, Inc. v. Tiger Petroleum Corp. 774 F. Supp.
879, 883-84 (S.D.N.Y 1991) (denying seller's motion to compel arbitration since arbitration clause
not in signed writing or in exchange of letters); Midland Bright Drawn Steel, supra, at 3-4 (holding
seller entitled to stay of arbitration since arbitration clause represented material alteration of contract
not accepted by seller); Beromun Aktiengesellschaft v. Societa Industriale Agricola, Inc., 471 F.
Supp. 1163, 1171-72 (S.D.N.Y. 1979) (denying seller's motion to compel arbitration since no
contract ever formed between parties). But see Astor Chocolate, supra, at 33-34 (applying state
contract law in case governed by Convention). See also Zambia Steel & Building Supplies Ltd. v.
James Clark& Eaton Ltd., 2 Lloyd's Rep. 225 (1986) (United Kingdom) (seller’s oral assent to sales
note containing arbitration clause sufficient under Convention to compel arbitration).
38
However, as plaintiff correctly notes, the “general principles of contract law” relevant to this
action, do not include the Uniform Commercial Code; rather, the “federal law of contracts” to be
applied in this case is found in the United Nations Convention on Contracts for the International Sale
of Goods (the “Sale of Goods Convention”), codified at 15 U.S.C. Appendix (West Supp. 1991).
This Convention, ratified by the Senate in 1986, is a self-executing agreement which entered into
force between the United States and other signatories, including Italy, on January 1, 1988. See
Preface to Convention, reprinted at 15 U.S.C. Appendix (West Supp. 1991). Although there is as yet
virtually no U.S. case law interpreting the Sale of Goods Convention, see Taylor & Crisera, “U.N.
Pact Has Wide Application”, Nat. L. J., Dec. 23, 1991 at 23, it may safely be predicted that this will
change: absent a choice-of-law provision, and with certain exclusions not here relevant, the
Convention governs all contracts between parties with places of business in different nations, so long
as both nations are signatories to the Convention. Sale of Goods Convention Article 1 (1)(a). Since
the contract alleged in this case most certainly was formed, if at all, after January 1, 1988, and since
both the United States and Italy are signatories to the Convention, the Court will interpret the
“agreement in writing” requirement of the Arbitration Convention in light of, and with reference to,
the substantive international law of contracts embodied in the Sale of Goods Convention.
39
Not surprisingly, the parties offer varying interpretations of the numerous letters and documents
exchanged between them. The Court will briefly summarize their respective contentions.
40
Defendant Chilewich contends that the Memorandum Agreement dated March 13 which it signed
and sent to Filanto was an offer. It then argues that Filanto's retention of the letter, along with its
subsequent acceptance of Chilewich's performance under the Agreement – the furnishing of the May
11 letter of credit – estops it from denying its acceptance of the contract. Although phrased as an
estoppel argument, this contention is better viewed as an acceptance by conduct argument, e.g., that
in light of the parties’ course of dealing, Filanto had a duty timely to inform Chilewich that it
objected to the incorporation by reference of all the terms of the Russian contract. Under this view,
the return of the Memorandum Agreement, signed by Filanto, on August 7, 1990, along with the
covering letter purporting to exclude parts of the Russian Contract, was ineffective as a matter of law
as a rejection of the March 13 offer, because this occurred some five months after Filanto received
the Memorandum Agreement and two months after Chilewich furnished the Letter of Credit. Instead,
in Chilewich's view, this action was a proposal for modification of the March 13 Agreement.
Chilewich rejected this proposal, by its letter of August 7 to Byerly Johnson, and the August 9 fax
by Johnson to Italian Trading SRL, which communication Filanto acknowledges receiving.
Accordingly, Filanto under this interpretation is bound by the written terms of the March 13
Memorandum Agreement; since that agreement incorporates by reference the Russian Contract
containing the arbitration provision, Filanto is bound to arbitrate.
41
Plaintiff Filanto’s interpretation of the evidence is rather different. While Filanto apparently agrees
that the March 13 Memorandum Agreement was indeed an offer, it characterizes its August 7 return
of the signed Memorandum Agreement with the covering letter as a counteroffer. While defendant
contends that under Uniform Commercial Code §2-207 this action would be viewed as an acceptance
with a proposal for a material modification, the Uniform Commercial Code, as previously noted does
not apply to this case, because the State Department undertook to fix something that was not broken
by helping to create the Sale of Goods Convention which varies from the Uniform Commercial Code
in many significant ways. Instead, under this analysis, Article 19(l) of the Sale of Goods Convention
would apply. That section, as the Commentary to the Sale of Goods Convention notes, reverses the
rule of Uniform Commercial Code §2-207, and reverts to the common law rule that “A reply to an
offer which purports to be an acceptance but contains additions, limitations or other modifications
is a rejection of the offer and constitutes a counter-offer”. Sale of Goods Convention Article 19(l).
Although the Convention, like the Uniform Commercial Code, does state that non-material terms
do become part of the contract unless objected to, Sale of Goods Convention Article 19(2), the
Convention treats inclusion (or deletion) of an arbitration provision as “material”, Sale of Goods
Convention Article 19(3). The August 7 letter, therefore, was a counteroffer which, according to
Filanto, Chilewich accepted by its letter dated September 27, 1990. Though that letter refers to and
acknowledges the “contractual obligations” between the parties, it is doubtful whether it can be
characterized as an acceptance.
42
More generally, both parties seem to have lost sight of the narrow scope of the inquiry required
by the Arbitration Convention. Ledee, supra, at 186. All that this Court need do is to determine if
a sufficient “agreement in writing” to arbitrate disputes exists between these parties. Cf. United
Steelworkers of America v. Warrior& Gulf Co., 363 U.S. 574, 582, 4 L. Ed. 2d 1409, 80 S. Ct. 1347
(1960) (party cannot be required to submit to arbitration absent agreement). Although that inquiry
is informed by the provisions of the Sale of Goods Convention, the Court lacks the authority on this
motion to resolve all outstanding issues between the parties. Indeed, contracts and the arbitration
clauses included therein are considered to be “severable”, a rule that the Sale of Goods Convention
itself adopts with respect to avoidance of contracts generally. Sale of Goods Convention Article
81(l). There is therefore authority for the proposition that issues relating to existence of the contract,
as opposed to the existence of the arbitration clause, are issues for the arbitrators:
“The district court reasoned that an arbitrator can derive his or her power only from
a contract, so that when there is a challenge to the existence of the contract itself, the
court must first decide whether there is a valid contract between the parties. Although
this appears logical, it goes beyond the requirements of the statute and violates the
clear directive of Prima Paint, 388 U.S. at 404, 87 S. Ct. at 1806 . . .” Republic of
Nicaragua v. Standard Fruit Co., 937 F.2d 469, 476 n.9 (9th Cir. 1991), cert. denied,
117 L. Ed. 2d 516, 60 U.S.L.W. 3615, 112 S. Ct. 1294 (1992).
43
The Standard Fruit court is technically correct in its interpretation of the Prima Paint case, which
drew a distinction between a challenge to the validity of the contract itself and a challenge to the
validity of the arbitration clause; the former, in the Court's view, was a question for the arbitrators,
while the latter was a Question for the court. Prima Paint, supra, at 404.
44
However, there are often limits to how many angels can dance on the head of a pin – even when
the performance is choreographed by the distinguished courts just cited. There seems, for example,
to be some confusion in the Ninth Circuit itself about the proper application of the Prima Paint rule,
as a case decided six months prior to Standard Fruit shows. See Three Valleys Municipal Water
District v. E.F. Hutton & Co. Inc., 925 F.2d 1136, 1138-42 (9th Cir. 1991) (holding whether contract
containing arbitration clause formed initially question for court). There are numerous cases in the
Second Circuit where the court has – out of necessity – adjudicated relevant contract issues on
motions to stay or compel arbitration. See, e.g., McPheeters, supra, at 773 (holding that defendant
seeking arbitration not third-party beneficiary of underlying agreement); Genesco, supra, at 846
(“We focus not on whether there was subjective agreement as to each clause in the contract, but on
whether there was objective agreement with respect to the entire contract”) (citation omitted); Maria
Victoria Naviera, S.A. v. Cementos del Valle, S.A., 759 F.2d 1027, 1030 (2d Cir. 1985) (holding that
contract containing arbitration clause was not modified by later agreement); Midland Bright Drawn
Steel, 1989 Westlaw 125788 at 2-4, 1989 U.S. Dist. Lexis 12368 at 3 (resolving date when
underlying contract formed and holding that contract did not include arbitration clause); Beromun
Aktiengesellschaft, supra, at 1172 (denying motion to compel arbitration since “no contract ever
existed between parties”).
45
Since the issue of whether and how a contract between these parties was formed is obviously
related to the issue of whether Chilewich breached any contractual obligations, the Court will direct
its analysis to whether there was objective conduct evidencing an intent to be bound with respect to
the arbitration provision. Cf. Matterhorn v. NCR Corp., 763 F.2d 866, 871-73 (7th Cir. 1985)
(Posner, J.) (discussing cases). See also Teledyne, Inc. v. Kone Corp., 892 F.2d 1404, 1410 (9th Cir.
1990) (arbitration clause enforceable despite later finding by arbitrator that contract itself invalid).
46
The Court is satisfied on this record that there was indeed an agreement to arbitrate between these
parties.
47
There is simply no satisfactory explanation as to why Filanto failed to object to the incorporation
by reference of the Russian Contract in a timely fashion. As noted above, Chilewich had in the
meantime commenced its performance under the Agreement, and the Letter of Credit it furnished
Filanto on May 11 itself mentioned the Russian Contract. An offeree who, knowing that the offeror
has commenced performance, fails to notify the offeror of its objection to the terms of the contract
within a reasonable time will, under certain circumstances, be deemed to have assented to those
terms. Restatement (Second) of Contracts § 69 (1981); Graniteville v. Star Knits of California, Inc.,
680 F. Supp. 587, 589-90 (S.D.N.Y. 1988) (compelling arbitration since party who failed timely to
object to salesnote containing arbitration clause deemed to have accepted its terms); Imptex
International Corp. v. Lorprint, Inc., 625 F. Supp. 1572, 1572 (S.D.N.Y. 1986) (Weinfeld, J.) (party
who failed to object to inclusion of arbitration clause in sales confirmation agreement bound to
arbitrate). The Sale of Goods Convention itself recognizes this rule: Article 18(l), provides that “A
statement made by or other conduct of the offeree indicating assent to an offer is an acceptance”.
Although mere “silence or inactivity” does not constitute acceptance, Sale of Goods Convention
Article 18(l), the Court may consider previous relations between the parties in assessing whether a
party's conduct constituted acceptance, Sale of Goods Convention Article 8(3). In this case, in light
of the extensive course of prior dealing between these parties, Filanto was certainly under a duty to
alert Chilewich in timely fashion to its objections to the terms of the March 13 Memorandum
Agreement – particularly since Chilewich had repeatedly referred it to the Russian Contract and
Filanto had had a copy of that document for some time.
48
There are three other convincing manifestations of Filanto’s true understanding of the terms of this
agreement. First, Filanto’s Complaint in this action, as well as affidavits subsequently submitted to
the Court by Mr. Filograna, refer to the March 13 contract: the Complaint, for example, states that
“On or about March 13, 1990, Filanto entered into a contract with Chilewich. . .”. These statements
clearly belie Filanto’s post hoc assertion that the contract was actually formed at some point after
that date. Indeed, Filanto finds itself in an awkward position: it has sued on a contract whose terms
it must now question, in light of the defendant’s assertion that the contract contains an arbitration
provision. This situation is hardly unknown in the context of arbitration agreements. See Tepper
Realtv Co. v. Mosaic Tile Co., 259 F. Supp. 688, 692 (S.D.N.Y. 1966) (“In short, the plaintiffs
cannot have it both ways. They cannot relay [sic] on the contract, when it works to their advantage,
and repudiate it when it works to their disadvantage”).
49
Second, Filanto did sign the March 13 Memorandum Agreement. That Agreement, as noted above,
specifically referred to the incorporation by reference of the arbitration provision in the Russian
Contract; although Filanto, in its August 7 letter, did purport to “have to respect” only a small part
of the Russian Contract, Filanto in that very letter noted that it was returning the March 13
Memorandum Agreement “signed for acceptance”. In light of Filanto's knowledge that Chilewich
had already performed its part of the bargain by furnishing it the Letter of Credit, Filanto's
characterization of this action as a rejection and a counteroffer is almost frivolous.
50
Third, and most important, Filanto, in a letter to Byerly Johnson dated June 21, 1991, explicitly
stated that “the April Shipment and the September shipment are governed by the Master Purchase
Contract of February 28, 1989 [the Russian Contract]”. Furthermore, the letter, which responds to
claims by Johnson that some of the boots that were supplied were defective, expressly relies on
section 9 of the Russian Contract – another section which Filanto had in its earlier correspondence
purported to exclude. The Sale of Goods Convention specifically directs that “in determining the
intent of a party. . . due consideration is to be given to . . . any subsequent conduct of the parties”,
Sale of Goods Convention Article 8(3). In this case, as the letter post-dates the partial performance
of the contract, it is particularly strong evidence that Filanto recognized itself to be bound by all the
terms of the Russian Contract.
51
In light of these factors, and heeding the presumption in favor of arbitration, Moses H. Cone,
supra, at 24-26, which is even stronger in the context of international commercial transactions,
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631, 87 L. Ed. 2d 444, 105
S. Ct. 3346 (1985), the Court holds that Filanto is bound by the terms of the March 13 Memorandum
Agreement, and so must arbitrate its dispute in Moscow.
Remedy
52
Having determined that the parties should arbitrate their disputes in accordance with their
agreement, the Court must address the question of remedy. As this action is governed by the
Convention and its implementing legislation, the Court has specific authority to order the parties to
proceed to arbitration in Moscow. 9 U.S.C. § 206 (West Supp. 1991) (“A Court having jurisdiction
under this Chapter may direct that arbitration be held in accordance with the agreement at any place
therein provided for, whether the place is within or without the United States”). Defendant has not
sought this remedy, since it would likewise be the defendant in the arbitration. However, it would
be clearly inequitable to permit the party contending that there is an arbitration agreement to avoid
arbitration. In the interests of justice, the Court will compel the parties to arbitrate in Moscow. Cf.
Tennessee Imports, supra, at 1322 n.4 (treating defendant’s motion to dismiss as request to refer
parties to arbitration).
53
There may be some theoretical question as to whether the remedy defendant does seek – a stay
under 9 U.S.C. § 3 – is available in a case falling under the Convention. The problem here is that
Chapter 2 of the Act – the Convention and its implementing legislation – does not expressly grant
the Court authority to stay an action pending arbitration. Chapter 1 of the Arbitration Act, which
governs arbitration agreements relating primarily to interstate commerce, does make a stay available,
9 U.S.C. § 3 (West 1970). Furthermore, 9 U.S.C. § 208, the final section of the statute implementing
the Convention, states that Chapter 1 of the Act applies to Chapter 2 cases when not in conflict with
Chapter 2.
54
Some courts have suggested that the language of Article II(3) of the Convention, which states that
a court “shall refer the parties to arbitration” once the requirements of the Convention have been
satisfied means, by negative implication, that a stay is not permitted. According to these courts, the
proper remedy in a Convention case is to refer the parties to arbitration and dismiss for lack of
subject matter jurisdiction. McCreary Tire & Rubber Co. v. CEAT S.p.A., 501 F.2d 1032, 1037 (3d
Cir. 1974) (dismissal required); Astor Chocolate, 704 F. Supp. at 35 (same); Siderius, Inc. v.
Compania de Acero del Pacifico, SA, 453 F. Supp. 22, 25 (S.D.N.Y. 1978) (same). This is facially
absurd because the enabling legislation gives the district court the power at least to compel
arbitration. How could even this limited power be exercised without subject matter jurisdiction?
55
Other courts have concluded that granting a stay pending arbitration is permissible in Convention
cases. E.g., Rhone Mediterranee Compagnia Francese di Assicurazioni e Riassicurazoni v. Lauro,
712 F.2d 50, 54 (3d Cir. 1983). Our own Court of Appeals seemed to adopt this position, as it
recently countenanced an injunction in aid of arbitration in a Convention case, Borden, Inc. v. Meiji
Milk Products Co., Ltd., 919 F.2d 822, 826 (2d Cir. 1990), cert. denied, 114 L. Ed. 2d 712, 111 S.
Ct. 2259 (1991). In a more recent case, though, with facts closer to those in the instant case, another
panel of that court expressly declined to follow Borden, or resolve the issue of whether a stay or
dismissal is appropriate, Threlkeld, supra, at 253 n.2. See also Tennessee Imports, supra, at 1323-25
(reviewing cases and holding that stay and dismissal are both permissible methods of referral under
the Convention); Restatement (Third) of the Foreign Relations Law of the United States § 487(2)
(1980) (same).
56
This Court agrees in theory with those courts which have held that retaining jurisdiction but
staying the action is consistent with the commands of the Convention. However, to do so in this case
would serve no purpose, since the entire controversy between these parties is subject to and will be
resolved by arbitration. Accordingly, it is appropriate that a final judgment issue here containing a
mandatory injunction to arbitrate in accordance with the Convention and what this Court finds to be
the agreement of the parties.
57
Lastly, the plaintiff contends that if this Court does order arbitration, the Court should take judicial
notice of the unsettled conditions in Moscow and order arbitration to proceed in this judicial district.
The language of section 206 is concededly permissive: the Court “may direct that arbitration be held
in accordance with the agreement at any place therein provided for”. 9 U.S.C. § 206 (West Supp.
1991). These parties, though, did agree to arbitrate their disputes in Moscow. Compare Oil Basins
Ltd. v. Broken Hill Proprietary Co., Ltd., 613 F. Supp. 483, 486-87 (S.D.N.Y 1985) (section 206
furnishes sole authority for court to order arbitration outside its judicial district) with Bauhinia Corp.
v. China National Machinery & Equipment Import & Export Corp., 819 F.2d 247 (9th Cir. 1987)
(ordering arbitration before American Arbitration Association when parties' agreements ambiguous
as to arbitration site).
58
Plaintiff relies on cases which have stated or held that forum-selection clauses may be invalidated
when the chosen forum has become seriously inconvenient or dangerous. The Bremen v. Zapata Off-
Shore Co., 407 U.S. 1, 16, 32 L. Ed. 2d 513, 92 S. Ct. 1907 (1972) (noting that invalidation of
forum-selection clause appropriate when chosen forum “seriously inconvenient”) (emphasis in
original); Rockwell International Systems, Inc. v. Citibank, N.A., 719 F.2d 583, 587-88 (2d Cir.
1983) (no adequate remedy in courts of post-revolutionary Iran). Whatever the applicability of these
cases in the arbitration context, the chosen forum in this case does have a reasonable relation to the
contract at issue, as the ultimate purchaser of the boots was a Russian concern and the Russian
Contract was incorporated by reference into Filanto's Memorandum Agreement with Chilewich.
Furthermore, though conditions in the Republic of Russia are unsettled, they continue to improve
and there is no reason to believe that the Chamber of Commerce in Moscow cannot provide fair and
impartial justice to these litigants.
SO ORDERED.
Dated: April 14, 1992, White Plains, New York, Charles L. Brieant, Chief Judge
________
NOTES AND QUESTIONS

1) This is a classic case where buyer and seller conducted extensive negotiations, sent many
communications and contract drafts and clauses back and forth and never arrived at one single
written and signed and mutually accepted contract with clear and comprehensive terms. However,
since neither side wanted to miss out on the business opportunity, they proceeded to implement their
“agreement”. As is so often the case in these scenarios, once a dispute arose between the parties,
instead of proceeding immediately to an efficient and enforceable resolution method, the parties
conducted a first round of litigation simply over the question of the applicable law and the
appropriate forum for the dispute settlement. It should be easy to see how this is inefficient and, in
extreme cases, can be detrimental to legitimate claims of one or both sides.
2)
3)
4) In para 41, the Court refers to U.S. participation in the United Nations Convention on the
International Sale of Goods (CISG) as the State Department trying “to fix something that was not
broken”. What does the Court mean with this statement and what does Chief Judge Brieant not
understand?
II. Step-by-Step Guide to International Commercial Arbitration

1. Existence of a Conflict or Dispute
“Conflict” is often understood as something negative, even destructive. Something that begins with
a disagreement or a clash of interests, if unresolved, may lead to violence or war. Indeed, the Latin
term “conflictus” is the act of striking together, a dramatic clash of forces.
Conflict to lawyers, however, is the normal state of things and the very reason why the profession
exists and continues to thrive. Whenever two or more parties enter into contractual negotiations or
interact in other ways in the market place, there is a conflict of interest. The seller would like to get
the highest possible price with the lowest possible level of obligations and liabilities for her goods
or services, while the buyer wants to pay the lowest possible price and get the highest possible level
of assurances and performance. Without this kind of divergency of interests, markets would be far
less dynamic and business might stall altogether. This is evidenced by heavily regulated markets or
business transactions. Conflict as such, therefore, is neither unnatural nor bad. It all depends on how
the conflict is managed and resolved.
???
2. The Documents and Rules that Govern International Commercial Arbitration

In general, there are five sets of rules that govern international commercial arbitration, namely
• The law that governs the int’l recognition and enforcement of the agreement to arbitrate û
see Art. II of the United Nations Convention on the Recognition and Enforcement of Foreign
Arbitral Awards, the so-called “New York Convention”, Documents, p. ???;
• The “lex arbitri” that governs the actual arbitration proceedings = typically the Rules of
Arbitration of the tribunal PLUS any mandatory rules applicable in the country where the
tribunal is located (for details, see below);
• The procedural law of the court that may be called upon to help with evidence and/or interim
relief;
• The substantive law (= contract law) that governs the dispute at issue;
• The law that governs the int’l recognition and enforcement of the arbitral award û see Art.
III - VI of the New York Convention.
Let’s take a closer look: ???
a) Article II of the New York Convention

The New York Convention of 10 June 1958 entered into force in 1959 and by now has been ratified
by 156 states, including virtually all major trading nations. The status of ratifications, including any
reservations or declarations made by some of the state parties, can be found at http://www.unci-
tral.org/uncitral/en/uncitral_texts/arbitration/NYConvention_status.html. In the United States, the
New York Convention was implemented via amendments to the 1925 Federal Arbitration Act,
Documents, p. ???.
Pursuant to Article I, the New York Convention applies to arbitral awards made in the territory of
a state other than the state where the recognition and enforcement is sought. “State” in this context
refers to country, not to one or more of the several states of the United States of America. Thus, the
New York Convention applies only to the recognition and enforcement of foreign arbitral awards.
This means that an arbitral award made under the auspices of the American Arbitration Association
in Washington D.C. will be enforceable in the U.S. pursuant to the Federal Arbitration Act but
without reference to or obligation under the New York Convention. It also means that it is usually
better to select a place or seat for arbitration as neither the home country of the seller nor the buyer
and certainly not the country where the majority of either side’s assets are located.
Article II of the New York Convention imposes an obligation on the contracting states and their
courts to recognize an “agreement in writing” pursuant to which the parties have agreed to subject
any disputes between them to arbitration, rather than litigation. The obligation is rather straight-
forward but not always respected. The following case examines whether the courts of one country
can declare litigation brought in another country invalid because the parties are bound by an
arbitration clause.
Ust-Kamenogorsk Hydropower Plant JSC v. AES Ust-Kamenogorsk Hydropower Plant

LLP
before The Supreme Court of the United Kingdom
Judgment Given on 12 June 2013
Trinity Term
[2013] UKSC 35
On appeal from: [2011] EWCA Civ 647
LORD MANCE (with whom Lord Neuberger, Lord Clarke, Lord Sumption and Lord Toulson agree)
Introduction
1
An agreement to arbitrate disputes has positive and negative aspects. A party seeking relief within
the scope of the arbitration agreement undertakes to do so in arbitration in whatever forum is
prescribed. The (often silent) concomitant is that neither party will seek such relief in any other
forum. If the other forum is the English court, the remedy for the party aggrieved is to apply for a
stay under section 9 of the Arbitration Act 1996.
2
The issue on this appeal is whether, if the other forum is a foreign jurisdiction outside the European
régime of the Brussels Regulation (EC) No 44/2001 and the Lugano Convention, the English court
has any and if so what power to declare that the claim can only properly be brought in arbitration
and/or to injunct the continuation or commencement of the foreign proceedings. (It is clear that
injunctive relief in relation to foreign proceedings within the Brussels/Lugano space is impermissible
under the Regulation and Convention: West Tankers Inc v Allianz SpA [see above, p. ???].
3
By order dated 16 April 2010, Burton J granted the respondent, Aes Ust-Kamenogorsk Hydropower
Plant LLP (“AESUK”), such a declaration together with an injunction in relation to the bringing of
proceedings against it by the appellant, Ust-Kamenogorsk Hydropower Plant JSC (“JSC”): [2010]
2 All ER (Comm) 1033. By order dated 1 July 2011 the Court of Appeal dismissed JSC’s appeal
against the judge’s order: [2012] 1 WLR 920.
4
The perhaps unusual feature is that AESUK has not commenced, and has no intention or wish to
commence, any arbitration proceedings. Its contention is simply that JSC should not pursue or be
free to pursue court proceedings against it. If JSC commences arbitration proceedings, then no doubt
AESUK will defend them.
Background
5
AESUK is the current grantee and lessee of a 25 year concession granted by agreement dated 23
July 1997 entitling it to operate an energy producing hydroelectric plant in Kazakhstan. From 1997
to 2007, the concession was held by its parent or affiliate company, Tau Power BV. JSC is the
current owner and grantor of the concession, having succeeded to the concession’s original owner
and grantor, the Republic of Kazakhstan.
6
The concession agreement is governed by Kazakh law (clause 31), but contains a London
arbitration clause (clause 32). It was common ground below and it remains common ground, at least
for the purposes of this appeal, that this clause is governed by and to be construed in accordance with
English law. It is therefore unnecessary to consider authority in this area such as C v D [2007]
EWCA Civ 1282, Sulamérica Cia Nacional de Seguros SA v Enesa Engenharia SA [2012] EWCA
Civ 638 and Arsanovia Ltd v Cruz City 1 Mauritius Holdings [2012] EWHC 3702 (Comm).
7
The arbitration clause provides in summary that, subject to provisions contained in clauses 17.8 and
17.9, any dispute or difference arising out of or in connection with any matter or thing in relation to
the provisions of the concession agreement and the transactions contemplated by the parties that
cannot be resolved by negotiation should be settled by arbitration in accordance with the Rules of
Conciliation and Arbitration of the International Chamber of Commerce (the “ICC”) to be conducted
in London.
8
Relations between the owners and holders of the concession have for some years been fraught.
Burton J summarised the history in paras 5 to 10 of his judgment, and it is unnecessary to repeat it
here. Some salient facts suffice.
9
First, during the period when it owned the concession, the Republic of Kazakhstan brought
proceedings in Kazakhstan against AESUK’s predecessors in title, Tau Power BV, and on 8 January
2004 obtained from the Kazakh Supreme Court a ruling that the arbitration clause was invalid. This
was on two grounds: that the arbitration agreement included tariff disputes, which would put such
disputes beyond the control of the Republic contrary to its public policy; and that the reference in
clause 32 to the Rules of the ICC was not a reference to the ICC and left the arbitral body
unspecified.
10
Burton J and the Court of Appeal held that they were not bound by the Kazakh court’s conclusions
in relation to an arbitration agreement subject to English law, and that neither ground was
sustainable. Tariff disputes were in fact outside the arbitration agreement, by reason of the reference
to clauses 17.8 and 17.9, under which they fell to be dealt with by an expert; and the reference in
clause 32 to the ICC was plainly sufficient to mean that any arbitration was to be by the ICC. There
is no appeal to this Court in relation to these matters.
11
On 12 June 2009 JSC brought proceedings against AESUK in the Specialist Inter-District
Economic Court of East Kazakhstan Oblast (“the Economic Court”), alleging that AESUK had failed
to supply information concerning concession assets pursuant to a request duly made under the
concession agreement. AESUK’s application to stay these proceedings under the arbitration clause
was dismissed on 28 July 2009 on the ground that the clause had been annulled by the Supreme
Court’s ruling of 8 January 2004.
12
On 31 July 2009 AESUK issued proceedings before the English Commercial Court claiming
declarations that the arbitration clause was valid and enforceable and a without notice interim anti-
suit injunction restraining JSC from pursuit of the proceedings before the Economic Court.
AESUK’s attempt to rely on this injunction in the Kazakh courts was rejected by the Economic
Court on 5 August 2009 and on an appeal to the East Kazakhstan Regional Court on 11 September
2009. Both the Economic Court and the Regional Court also held that JSC was entitled to the
information which it had requested.
13
Meanwhile on 21 August 2009 the interim injunction granted by the English Commercial Court
was continued by consent pending a challenge by JSC to the jurisdiction of the English courts and
amended to provide that JSC would withdraw its request for information the subject of the Kazakh
proceedings. However, despite being requested, JSC did not undertake either that it would not
resubmit a request for information or that it would not commence further proceedings in Kazakhstan.
Hence, the continuation of the present proceedings, leading to Burton J’s and the Court of Appeal’s
judgments and orders.
Burton J’s order
14
The order dated 16 April 2010 giving effect to Burton J’s judgment declares in paragraph 2 that
JSC “cannot bring”, and orders in paragraph 3 that JSC “is restrained from bringing” “the claim, the
subject matter of the [Kazakhstan proceedings], or any other claim arising out of or in connection
with any matter or thing in relation to the provisions of the Concession Agreement …., save only for
[excepted matters], otherwise than by commencing arbitration proceedings in the International
Chamber of Commerce in London and pursuant to its Rules.” By its order dated 1 July 2011 giving
effect to its judgment, the Court of Appeal simply dismissed the appeal against Burton J’s order.
15
In its terms and form, Burton J’s order was and is a final order, as to both the declaration and the
injunction which it granted. Indeed, in para 1 of his judgment, Burton J recorded that he was being
asked to give “final relief” on AESUK’s arbitration claim form, and in the final para 54 to 56 of his
judgment, referring back to para 21, he concluded that AESUK was entitled to the grant of “(limited)
final declaratory and injunctive relief”. In these paragraphs, he made clear that he regarded an
injunction in the wording of his later order as “limited” in a way which would avoid any concern
about “usurpation or ouster” of the jurisdiction of the arbitrators, if any arbitration were to take place,
and would give “the opportunity …. for any proper challenge to be made to the jurisdiction of the
arbitrators or the applicability of the arbitration clause”.
16
Rix LJ, giving the main judgment in the Court of Appeal with which his colleagues agreed,
addressed the nature of the order made by commenting (para 108) that it might possibly be said that
a binding declaration as to the existence of the arbitration agreement trespassed on the theoretical
possibility that an arbitral tribunal might one day have to grapple with that very issue, that he did not
himself think that it would do, but that he “need not decide that question here, for the judge has been
cautious not to give such a declaration and the operator [AESUK] as respondent in this appeal has
not sought to go further than the judge has gone”.
17
Before the Supreme Court, both sides have in their submissions treated the judge’s order as a final
order; and so in terms it is. Neither side has sought to have the order, if it stands, corrected or
qualified. Appeals lie against orders, and parties are entitled and correct to take orders at their face
value. Burton J’s order was in terms a final order declaring that certain claims could only properly
be pursued in arbitration, and restraining their pursuit in any other forum. If an arbitration were to
be commenced, by either side, in the future, it would not, under Burton J’s order, be open to the
respondent to object to its commencement or to the jurisdiction of the arbitral tribunal by
submissions which contradicted the terms of the declaration made and injunction ordered by Burton
J. The Supreme Court can and should consider the order on that basis. Further, if the court has,
consistently with the scheme of the Arbitration Act 1996, power to make any sort of declaration
about arbitral jurisdiction, then Rix LJ was, in my view, right that there is no objection to its being
a final and binding declaration.
The issue
18
The issue is therefore whether the English court has power to declare that the claim can only
properly be brought in arbitration and/or to injunct the continuation or commencement of
proceedings brought in any other forum outside the Brussels/Lugano régime. Although Lord
Goldsmith in his oral submissions laid some emphasis on the primacy of the declaratory relief
claimed by AESUK and ordered by Burton J, in my opinion the claim and order for injunctive relief
are more important. Before the court could order final injunctive relief, it had to conclude that there
was a binding and applicable arbitration agreement – as JSC’s own case in fact correctly stated at
para 67. The order for injunctive relief carried by itself the basis of an issue estoppel in any future
proceedings, precluding JSC from denying the existence or validity of such an agreement.
19
The rival submissions regarding the court’s power turn primarily on the scope and effect of the
Arbitration Act 1996. Mr Toby Landau QC for AESUK advances a simple case. Independently of
that Act, the court has a general inherent power to declare rights and further, under section 37 of the
Senior Courts Act (formerly the Supreme Court Act) 1981:
“The High Court may by order (whether interlocutory or final) grant an injunction or
appoint a receiver in all cases in which it appears to the court to be just and
convenient to do so”.
20
Despite its generality, there are statements limiting the application of section 37 to two situations:
(a) where one party can show that the other party has invaded, or threatens to invade, a legal or
equitable right of the former for the enforcement of which the latter is amenable to the jurisdiction
of the court, and (b) where one party to any action has behaved, or threatens to behave, in a manner
which is unconscionable: South Carolina Insurance Co v Assurantie Maatschappij “De Zeven
Provincien” NV [1987] AC 24, 40B-D, per Lord Brandon, with whose speech Lord Bridge and Lord
Brightman agreed without qualification. Lord Mackay and Lord Goff voiced a reservation as to
whether section 37 should be so limited, and Lord Mustill in Channel Tunnel Group Ltd v Balfour
Beatty Construction Ltd [1993] AC 334, 362B left the point open. It is unnecessary to say more
about this here, since, on Mr Landau’s case, the first situation applies. JSC has invaded or is
threatening to invade AESUK’s legal right not to be sued in Kazakhstan. Absent any contrary reason,
there is, AESUK submits, no reason why the court should not exercise both its declaratory powers
and its powers under section 37. To do so would support the commitment to arbitration contained
in the arbitration clause. In contrast, JSC – although it invokes the supposed policy interests of
international users of London arbitration – opposes the deployment of such powers in order to
frustrate the arbitration clause.
The negative aspect of an arbitration agreement and exclusive choice of court clause
21
At points in his submissions, Lord Goldsmith QC, representing JSC, suggested that any negative
obligation inherent in an arbitration agreement is a mere ancillary to current or intended arbitral
proceedings. As a matter of interpretation of a straightforward agreement to arbitrate disputes in a
particular forum (like that in this case: para 7 above), there is no basis for any such limitation. The
negative aspect of an arbitration agreement is a feature shared with an exclusive choice of court
clause. In each case, the negative aspect is as fundamental as the positive. There is no reason why
a party to either should be free to engage the other party in a different forum merely because neither
party wishes to bring proceedings in the agreed forum. Nor is there any basis for treating the
Arbitration Act 1996 as affecting the interpretation of an arbitration agreement in this respect,
although it is JSC’s case that the effect of the Act is to preclude the court from granting relief to
enforce the negative aspect of an arbitration agreement unless and until arbitral proceedings are on
foot or proposed (see para 29 et seq below).
22
The case-law also contains no support for JSC’s argument that the negative aspect of an arbitration
agreement is enforceable only when an arbitration is on foot or proposed. It is true that in most of
the cases an arbitration was on foot, but none of the statements of principle identify this as relevant
or critical. The case-law is worth considering more closely not only to make this good, but also as
background to a consideration of JSC’s submissions on the effect of the Arbitration Act.
23
Both prior to the Arbitration Act 1996 and indeed subsequently - until the present case - the
negative aspect was well recognised, and it was well established that the English courts would give
effect to it, where necessary by injuncting foreign proceedings brought in breach of either an
arbitration agreement or an exclusive choice of court clause. Further, such relief was treated as the
counterpart of the statutory power to grant a stay of domestic proceedings to give effect to an
arbitration agreement. A stay is not made conditional upon arbitration being on foot, proposed or
brought. If there is power under section 37 to injunct the commencement or continuation of foreign
proceedings, no reason is evident why the exercise of this power should depend upon such a
condition. In each case it is, on the face of it, for either party to commence any arbitration it wishes
at any time, or not to do so.
24
In Pena Copper Mines Ltd v Rio Tinto Co Ltd (1911) 105 LT 846, an English law contract
provided for any matter in difference to be referred to arbitration under the Arbitration Act 1889 (and
for an award to be a condition precedent to any liability in respect thereof), but Rio Tinto began
Spanish court proceedings. No arbitration was on foot. The Pena company expressed itself “perfectly
willing to refer” any dispute to arbitration, but that does not mean that it proposed to do so itself and
no such condition was imposed upon it. After referring to the statutory power to stay which would
have existed had Rio Tinto commenced English court proceedings, the Court of Appeal ordered Rio
Tinto to desist from the Spanish proceedings. The arbitration clause involved, in Cozens Hardy
MR’s words, “probably an express negative, but …. certainly an implied negative”, a contract “that
they will not sue in a foreign court” (pages 850-851), and Rio Tinto’s conduct in suing in Spain was,
in Fletcher Moulton LJ’s words, “certainly contrary to their contractual duties” (page 852). That an
award was a condition precedent to any liability cannot have been decisive.
25
By the 1990s it had come to be thought that the power to injunct foreign proceedings brought in
breach of contract should be exercised “only with caution”, because English courts “will not lightly
interfere with the conduct of proceedings in a foreign court”: see eg Sokana Industries Inc v Freyre
& Co Inc [1994] 2 Lloyd’s Rep 57, 66, per Colman J. But in Aggeliki Charis Cia Maritime SA v
Pagnan SpA (The “Angelic Grace”) [1995] 1 Lloyd’s Rep 87, where the parties had agreed to
arbitrate all disputes in London (an award not being a condition precedent to liability) and owners
commenced such an arbitration while charterers sued in court in Venice, the Court of Appeal held,
citing Pena Copper and other authority, that courts ought not to feel diffident about granting an anti-
suit injunction, if sought promptly. Without it the claimant would be deprived of its contractual
rights in a situation where damages would be manifestly an inadequate remedy. The time had come,
in Millett LJ’s words, “to lay aside the ritual incantation that this is a jurisdiction which should only
be exercised sparingly and with great caution”. An injunction should be granted to restrain foreign
proceedings in breach of an arbitration agreement “on the simple and clear ground that the defendant
has promised not to bring them”. The principle was endorsed in the context of exclusive choice of
court clauses by the House of Lords in Donohue v Armco Inc [2001] UKHL 64; [2002] 1 All ER
749, a decision recognising (para 24) that strong reasons are required to outweigh the prima facie
entitlement to an injunction. In that case, a claim for fraud conspiracy was brought against Mr
Donohue in New York in breach of an agreement providing for the exclusive jurisdiction of the
English courts. Mr Donohue was refused an anti-suit injunction because strong reasons (in the form
of alleged participation in the alleged fraud of other New York defendants not party to any exclusive
jurisdiction agreement) existed why the New York proceedings should continue. But the
consideration that Mr Donohue had not commenced English proceedings on the substance of the
matter played no part in the reasoning. Indeed the House recognised that he would continue to have
a prima facie right to recover any damage he suffered in consequence of the continuation of the New
York proceedings against him contrary to the exclusive jurisdiction clause: paras 36 and 48 per Lord
Bingham and Lord Hobhouse.
26
Lord Hobhouse also encapsulated the principle in Turner v Grovit [2001] UKHL 65; [2002] 1
WLR 107, when he said:
“25 …. Under English law, a person has no right not to be sued in a particular forum,
domestic or foreign, unless there is some specific factor which gives him that right.
A contractual arbitration or exclusive jurisdiction clause will provide such a ground
for seeking to invoke the right to enforce the clause. The applicant does not have to
show that the contractual forum is more appropriate than any other; the parties'
contractual agreement does that for him. …..
27 The applicant for a restraining order must have a legitimate interest in making his
application and the protection of that interest must make it necessary to make the
order. Where the applicant is relying upon a contractual right not to be sued in the
foreign country (say because of an exclusive jurisdiction clause or an arbitration
clause), then, absent some special circumstance, he has by reason of his contract a
legitimate interest in enforcing that right against the other party to the contract.”
27
In the West Tankers case at first instance ([2005] EWHC 454 (Comm), paras 13, 59 and 72),
Colman J referred to The “Angelic Grace” and Donohue v Armco, when granting a permanent
injunction restraining the pursuit of the Italian legal proceedings which he had held to be in breach
of a London arbitration agreement. That aspect of the decision was not questioned when the matter
came before the Court of Appeal and the House of Lords, where Lord Hoffmann said, [2007] 1
Lloyd’s Rep 391, para 10:
“By section 37(1) of the Supreme Court Act 1981 the High Court has jurisdiction to
grant an injunction (whether interlocutory or final) ‘in all cases in which it appears
to the court to be just and convenient to do so’. The English courts have regularly
exercised this power to grant injunctions to restrain parties to an arbitration
agreement from instituting or continuing proceedings in the courts of other countries:
see The Angelic Grace [1995] 1 Lloyd's Rep 87.”
He went on to refer to the court’s power to grant an interim injunction under section 44, to which
I revert below. The interpretation subsequently given to the Brussels Regulation by the Court of
Justice in West Tankers (Case C-185/07) now means that an English court can no longer enforce
contractual rights (or prevent oppression of the sort found to exist in Turner v Grovit) by injuncting
a party within its jurisdiction from commencing or continuing proceedings in a foreign court within
the Brussels/Lugano regime. But that limitation is irrelevant in this case.
28
Unless the Arbitration Act 1996 requires a different conclusion, the negative aspect of a London
arbitration agreement is therefore a right enforceable independently of the existence or imminence
of any arbitral proceedings.
The scheme of the Arbitration Act 1996
29
JSC submits that it is contrary to the terms, scheme, philosophy and parliamentary intention of the
Arbitration Act 1996 for an English court to determine that foreign proceedings involve a breach of
an arbitration agreement or issue either declaratory or injunctive relief on that basis other than when
arbitral proceedings are on foot or proposed and only then under the provisions of the Act. The
Arbitration Act contains “a complete and workable set of rules for the determination of jurisdictional
issues”. The general rule is that the arbitral tribunal should consider jurisdictional issues in the first
instance – with “the only exception to that general rule for a party asserting arbitral jurisdiction to
be found in section 32”. Unless and until one or other party commences an arbitration, the court
should keep a distance. Any more general power contained in section 37 has been superseded by the
Act, or should at least no longer be exercised.
30
During the hearing before the Supreme Court there was discussion as to the extent to which JSC
was submitting that there was no longer any jurisdiction to rely on section 37, or simply that it would
be wrong in principle to do so, in a context such as the present. This discussion arose because, in the
Court of Appeal, different counsel then appearing for JSC was, for good or bad reason, concerned
that JSC should not “descend into the arena of discretionary arguments” and, as he saw it, “risk
submitting to the jurisdiction” (para 91 of the judgment of Rix LJ). Counsel therefore confined his
submissions to “statutory or principled objection[s] to the jurisdiction” of the court (para 94). The
Supreme Court is content to accept that this leaves it open to JSC to argue now both that there is no
longer any jurisdiction to exercise the power otherwise contained in section 37 and, alternatively,
that it would be wrong in principle to do so in the present context, absent perhaps very special
circumstances not here present.
31
JSC points out correctly that the 1996 Act embodies, (from Mustill and Boyd, Commercial
Arbitration: (2001) Companion Volume to 2nd Ed, preface endorsed by Lord Steyn) “a new
balancing of the relationships between parties, advocates, arbitrators and courts which is not only
designed to achieve a policy proclaimed within Parliament and outside, but may also have changed
their juristic nature”: Lesotho Highlands Development Authority v Impregilo SpA [2005] UKHL 43,
[2006] 1 AC 221, para 17. The Act was also a response to “international criticism that the Courts
intervene more than they should in the arbitral process, thereby tending to frustrate the choice the
parties have made to use arbitration rather than litigation as the means for resolving their disputes”:
Report on Arbitration of the Departmental Advisory Committee (“DAC”) 1996 (with Lord Justice
Saville as its chair), paragraphs 20-22. This criticism was addressed by the third of the general
principles with which the Act, unusually, begins:
“1. General principles.

The provisions of this Part are founded on the following principles, and shall be
construed accordingly—
(a) the object of arbitration is to obtain the fair resolution of disputes by an impartial
tribunal without unnecessary delay or expense;
(b) the parties should be free to agree how their disputes are resolved, subject only
to such safeguards as are necessary in the public interest;
(c) in matters governed by this Part the court should not intervene except as provided
by this Part.”
32
JSC’s submissions in this area give rise to two questions. The first is the extent to which it is
correct to regard the 1996 Act as a complete and workable set of rules for the determination of all
jurisdictional issues in all situations. The other is what is meant by the word “should” in section 1(c).
As to the first, section 1(c) is limited to “matters governed by this Part”, and it is clear that the
drafters of the Act were not attempting a complete code of arbitration law. The DAC Report 1996
stated expressly that “The Bill does not purport to provide an exhaustive code on the subject of
arbitration”, but that they had “sought to include what we consider to be the more important common
law principles, whilst preserving all others, in so far as they are consistent with the provisions of this
Bill (see clause 81)”. Clause 81 became section 81, reading
“Nothing in this Part shall be construed as excluding the operation of any rule of law
consistent with the provisions of this Part in particular, any rule of law as to—
(a) matters which are not capable of settlement by arbitration;
(b) the effect of an oral arbitration agreement; or
(c) the refusal of recognition or enforcement of an arbitral award on grounds of
public policy”.
The DAC Report instances confidentiality as another subject deliberately left outside the scope of
the Act.
33
The use of the word “should” in section 1(c) was also a deliberate departure from the more
prescriptive “shall” appearing in article 5 of the UNCITRAL Model Law. Article 5 reads that “In
matters governed by this Law, no court shall intervene except where so provided in this Law”.
Article 5 had been the subject of forceful critique in A New Arbitration Act?, the 1989 report on the
UNCITRAL Model Law by the DAC at a time when its chair was Lord Justice Mustill, who had also
represented the United Kingdom at UNCITRAL. Even in matters which might be regarded as falling
within Part 1, it is clear that section 1(c) implies a need for caution, rather than an absolute
prohibition, before any court intervention.
34
It is in these circumstances that the question now arises whether it is consistent with the 1996 Act
for the English court to determine whether there is a valid and applicable arbitration agreement
covering the subject matter of actual or threatened foreign proceedings and, if it holds that there is,
to injunct the commencement or continuation of the foreign proceedings. JSC points to sections 32
and 72 of the Act as the means by which a challenge to the jurisdiction may, under certain
conditions, be pursued during an arbitration and to section 67 as the means by which an award may
be challenged for lack of jurisdiction. It submits, that, if AESUK convoked an arbitral tribunal, the
arbitrators could rule on their jurisdiction under section 30, their ruling could be tested under
sections 32, 67 and/or 72 and the court could in the meantime be asked to give interim relief under
section 44.
Sections 30, 32 and 72 and Kompetenz-Kompetenz
35
Section 30 provides that an arbitral tribunal may rule on its own substantive jurisdiction:
“30 Competence of tribunal to rule on its own jurisdiction.
(1) Unless otherwise agreed by the parties, the arbitral tribunal may rule on its own
substantive jurisdiction, that is, as to—
(a) whether there is a valid arbitration agreement,
(b) whether the tribunal is properly constituted, and
(c) what matters have been submitted to arbitration in accordance with the arbitration
agreement.
(2) Any such ruling may be challenged by any available arbitral process of appeal or
review or in accordance with the provisions of this Part.”
Section 30 reflects the principle of “Kompetenz-Kompetenz”, discussed in Dallah Real Estate and
Tourism Holding Co v Ministry of Religious Affairs of the Government of Pakistan [2010] UKSC
46, [2011] 1 AC 763. In short, any tribunal convoked to determine a dispute may, as a preliminary,
consider and rule upon the question whether the dispute is within its substantive jurisdiction, without
such ruling being binding on any subsequent review of its determination by the court under sections
32, 67 or 72 of the 1996 Act. However, a tribunal cannot by its preliminary ruling that it has
substantive jurisdiction to determine a dispute confer upon itself a substantive jurisdiction which it
does not have. Absent a submission specifically tailored to embrace them (as to which there is no
suggestion here), jurisdictional issues stand necessarily on a different footing to the substantive
issues on which an award made within the tribunal’s jurisdiction will be binding.
36
In Dallah, I put these points as follows (para 24):
“…. Arbitrators (like many other decision-making bodies) may from time to time
find themselves faced with challenges to their role or powers, and have in that event
to consider the existence and extent of their authority to decide particular issues
involving particular persons. But, absent specific authority to do this, they cannot by
their own decision on such matters create or extend the authority conferred upon
them.”
Lord Collins said (para 84) that it does not follow, from the general principle that a tribunal has
power to consider its own jurisdiction:
“that the tribunal has the exclusive power to determine its own jurisdiction, nor does
it follow that the court of the seat may not determine whether the tribunal has
jurisdiction before the tribunal has ruled on it. Nor does it follow that the question
of jurisdiction may not be re-examined by the supervisory court of the seat in a
challenge to the tribunal’s ruling on jurisdiction. Still less does it mean that when the
award comes to be enforced in another country, the foreign court may not re-examine
the jurisdiction of the tribunal.”
37
Section 32 enables the court to determine any question as to the substantive jurisdiction of a
tribunal “on the application of a party to arbitral proceedings”, provided that the application is made
by agreement of all the other parties or, subject to the court being satisfied of various matters, with
the tribunal’s permission. Section 44 provides for the court to have “for the purposes of and in
relation to arbitral proceedings”, and on the application of a party or proposed party to the
proceedings, the same power of making orders about certain listed matters as it has for purposes of
and in relation to legal proceedings. The listed matters include the making of an interim injunction,
but, save in case of urgency, the court is only to act on an application made under section 44 with
the permission of the tribunal or the agreement of the other parties to the arbitral proceedings.
38
Section 72 permits a party alleged to be a party to arbitral proceedings but who takes no part in
them to take his jurisdictional challenge directly to the court without waiting for the tribunal to
address the matter.
39
In support of its submissions, JSC relies upon cases in which commercial judges have refused to
permit the pursuit of court proceedings for a declaration as to the existence of a binding arbitration
clause brought by a claimant in current or proposed arbitration proceedings: ABB Lummus Global
Ltd v Keppel Fels Ltd [1999] 2 Lloyd’s Rep 24; Vale do Rio Doce Navegaceo SA v Shanghai Bao
Steel Ocean Shipping Co Ltd [2000] 2 All ER (Comm) 70. In Vale do Rio, Thomas J observed that
it could not have been the intention that a party to a disputed arbitration agreement could obtain the
decision of the courts on its existence without being subject to the restrictions contained in section
32 by the simple step of not appointing an arbitrator (para 53). Although he concluded (para 60) that
the court had no “jurisdiction” to allow the application, earlier, in noting the change from “shall” to
“should” in section 1(c), he had said that “it is clear that the general intention was that the court
should usually not intervene outside the specific circumstances specified in Part 1 of the 1996 Act”
(para 52).
40
These cases have no direct bearing on the present situation. Here, no arbitration proceedings are
on foot and AESUK does not intend or wish to institute any. Sections 30, 32, 44 and 72 of the Act
are all in terms inapplicable. No arbitration tribunal exists to determine its own competence under
section 30. The principle of Kompetenz-Kompetenz – or, in an anglicised version suggested by Lord
Sumption, jurisdiction-competence – makes sense where a tribunal is asked to exercise a substantive
jurisdiction and hears submissions at the outset as to whether it has such a jurisdiction. Even then,
the court has the last word in establishing whether the substantive jurisdiction actually exists. But
the principle has no application where no arbitration is on foot or contemplated. On JSC’s case, a
party wishing relief in relation to foreign proceedings brought or threatened contrary to an arbitration
agreement, must however commence, or should be required to undertake to commence, an arbitration
against the other party who is rejecting the existence or application of any arbitration agreement.
Further, the only substantive relief that JSC could suggest might be sought in such an arbitration
would be an order, within the power afforded by section 48(5)(a) of the 1996 Act, not to commence
or continue any foreign proceedings; and the efficacy of any such order as arbitrators might make,
in any such arbitration, if they held that they had jurisdiction, would depend upon the court
determining for itself that the tribunal had jurisdiction, and then enforcing the tribunal’s order under
either section 44 or section 66 of the Act with the backing of the court’s contempt jurisdiction.
41
In these circumstances, there is, in my opinion, every reason why the court should be able to
intervene directly, by an order enforceable by contempt, under section 37. To do so cannot be
regarded, in the DAC’s words, as “intervene[ing] in the arbitral process, thereby tending to frustrate
the choice the parties have made to use arbitration rather than litigation as the means for resolving
their disputes”. On the contrary, JSC has complete freedom of choice in relation to the arbitration
agreement. In denying that the court has any relevant jurisdiction, JSC is seeking to benefit by
AESUK’s reliance on an arbitration agreement, while itself denying its existence. A party is entitled
to benefit by the existence of an arbitration agreement, but normally only by asserting it, e.g. by
commencing an arbitration or applying for a stay under section 9. Those must however be the last
things that JSC is willing to do.
42
As to section 32, there is no party to arbitral proceedings who could apply to the court to determine
any question of arbitral jurisdiction, and there are no other parties or tribunal with whose consent or
permission any such application would have to be made and no tribunal whose substantive
jurisdiction could be the subject of such an application.
Section 44
43
Similarly, the court’s powers listed in section 44 are exercisable only “for the purposes of and in
relation to arbitral proceedings” and depend upon such proceedings being on foot or “proposed”: see
section 44(3). That alone is sufficient in my opinion to lead to a conclusion that section 44 has no
bearing on the question whether section 37 empowers the court to restrain the commencement or
continuation of foreign proceedings in the light of an arbitration agreement under which neither party
wishes to commence an arbitration.
44
I should however say something further about JSC’s submission that section 44(2)(e) embraces
the granting of an interim injunction to restrain the pursuit of foreign proceedings during a current
or proposed arbitration. The careful limitation of the court’s power to “the granting of an interim
injunction” militates, he argues, against the existence of any general power to injunct foreign
proceedings under section 37, even on an interim basis in relation to current or proposed arbitral
proceedings, let alone on a permanent basis in their absence.
45
It is helpful to set out section 44 in full:
“Court powers exercisable in support of arbitral proceedings.

(1) Unless otherwise agreed by the parties, the court has for the purposes of and in
relation to arbitral proceedings the same power of making orders about the matters
listed below as it has for the purposes of and in relation to legal proceedings.
(2) Those matters are—
(a) the taking of the evidence of witnesses;
(b) the preservation of evidence;
(c) making orders relating to property which is the subject of the proceedings or as
to which any question arises in the proceedings—
(i) for the inspection, photographing, preservation, custody or
detention of the property, or
(ii) ordering that samples be taken from, or any observation be made
of or experiment conducted upon, the property;
and for that purpose authorising any person to enter any premises in the possession
or control of a party to the arbitration;
(d) the sale of any goods the subject of the proceedings;
(e) the granting of an interim injunction or the appointment of a receiver.
(3) If the case is one of urgency, the court may, on the application of a party or
proposed party to the arbitral proceedings, make such orders as it thinks necessary
for the purpose of preserving evidence or assets.
(4) If the case is not one of urgency, the court shall act only on the application of a
party to the arbitral proceedings (upon notice to the other parties and to the tribunal)
made with the permission of the tribunal or the agreement in writing of the other
parties.
(5) In any case the court shall act only if or to the extent that the arbitral tribunal, and
any arbitral or other institution or person vested by the parties with power in that
regard, has no power or is unable for the time being to act effectively.
(6) If the court so orders, an order made by it under this section shall cease to have
effect in whole or in part on the order of the tribunal or of any such arbitral or other
institution or person having power to act in relation to the subject-matter of the order.
(7) The leave of the court is required for any appeal from a decision of the court
under this section.”
46
Section 44(2) is the modern successor to the First Schedule to the Arbitration Act 1934 and section
12(6) of the Arbitration Act 1950 - section 44(2)(e) corresponds with paragraph 8 of the First
Schedule and section 12(6)(h) of the 1950 Act. The matters listed in section 44 are all matters which
could require the court’s intervention during actual or proposed arbitral proceedings. The power to
grant an interim injunction is expressed in general terms, but is limited, save in cases of urgency, to
circumstances in which either the tribunal permits an application to the court or all the other parties
agree to this in writing. There is no power to grant a final injunction, even after an award. There is
authority (not requiring review on this appeal) that section 44(3) can include orders urgently required
pending a proposed arbitration to preserve or enforce parties’ substantive rights - eg an order to allow
inspection of an agent’s underwriting records or to submit a proposed transfer to a central bank: see
Hiscox Underwriting Ltd v Dickson Manchester & Co Ltd [2004] 2 Lloyd’s Rep 438; Cetelem SA
v Roust Holdings Ltd [2005] EWCA Civ 618; [2005] 1 WLR 3555. Such orders can be said to be
“for the purposes of and in relation to arbitral proceedings”. But orders restraining the actual or
threatened breach of the negative aspect of an arbitration agreement may be required both where no
arbitration proceedings are on foot or proposed, and where the case is not one of urgency (and so not
within section 44(3)). They enforce the negative right not to be vexed by foreign proceedings. This
is a right of a different character both to the procedural rights with which section 44 is mainly, at
least, concerned, and to the substantive rights to which the Hiscox and Cetelem cases hold that it
extends.
47
In Starlight Shipping Co v Tai Ping Insurance Co Ltd (The “Alexandros T”) [2007] EWHC 1893
(Comm); [2008] 1 All ER (Comm) 593, Cooke J addressed the inter-relationship of section 44 of
the 1996 Act and section 37 of the Senior Courts Act 1981 in a context where proceedings were
being pursued in China in apparent breach of an arbitration agreement and where arbitral
proceedings were also current. He treated both sections as potentially available, adding that the
matters relevant under section 44 could also bear on, though not govern in the same way, the exercise
of the general discretion under section 37 (para 29). He considered that “the contractual right to have
disputes referred to arbitration” must be an “asset” falling within section 44(3). In the upshot, he
gave interim relief under section 44, on the basis that the matter was urgent under section 44(3)
because the arbitral tribunal would not be able to issue an award restraining the claimants in the
Chinese proceedings from pursuing such proceedings speedily enough or, therefore, effectively under
section 44(5). At the same time, he also made an interim order under section 37, pointing out inter
alia that “The difference between an order of this court and that of the arbitrators is that remedies
for contempt are available if an order of this court should be breached” (para 31).
48
The better view, in my opinion, is that the reference in section 44(2)(e) to the granting of an
interim injunction was not intended either to exclude the Court’s general power to act under section
37 of the 1981 Act in circumstances outside the scope of section 44 of the 1996 Act or to duplicate
part of the general power contained in section 37 of the 1981 Act. Where an injunction is sought to
restrain foreign proceedings in breach of an arbitration agreement - whether on an interim or a final
basis and whether at a time when arbitral proceedings are or are not on foot or proposed - the source
of the power to grant such an injunction is to be found not in section 44 of the 1996 Act, but in
section 37 of the 1981 Act. Such an injunction is not “for the purposes of and in relation to arbitral
proceedings”, but for the purposes of and in relation to the negative promise contained in the
arbitration agreement not to bring foreign proceedings, which applies and is enforceable regardless
of whether or not arbitral proceedings are on foot or proposed. Colman J in Sokana Industries Inc
v Freyre & Co Inc [1994] 2 Lloyd’s Rep 57 was correct on this point when he held that the court’s
power to make orders “for the purpose of and in relation to a reference” in section 12(6) of the
Arbitration Act 1950 did not include the granting of relief consisting of either a final or an interim
injunction to restrain an alleged breach of a London Chamber of Commerce arbitration agreement
consisting in the commencement of proceedings in Florida.
49
There was no power to serve the proceedings out of the jurisdiction on the defendants in Sokana
Industries because it was not made “under the Arbitration Act 1950 or …. 1979”. The current
position is in my opinion different. Although Part 62 of the Civil Procedure Rules is divided into
Parts, including Part I, headed “Claims under the 1996 Act” and Part II, headed “Other Arbitration
Claims”, the text of these Parts indicates in my view that Part I relates to circumstances in which,
if there were an arbitration, it would be subject to the 1996 Act, rather than to the old law, and that
it covers matters relating to an arbitration agreement, independently of any arbitral proceedings.
Thus, CPR62.2 provides:
“(1) In this Section of this Part ‘arbitration claim’ means –
(a) any application to the court under the 1996 Act;
(b) a claim to determine –
(i) whether there is a valid arbitration agreement;
(ii) whether an arbitration tribunal is properly constituted; or
(iii) what matters have been submitted to arbitration in accordance
with an arbitration agreement;
(c) a claim to declare that an award by an arbitral tribunal is not binding on a party;
and
(d) any other application affecting –
(i) arbitration proceedings (whether started or not); or
(ii) an arbitration agreement.”
Under CPR62.5, governing service out of the jurisdiction, the court may give permission to serve
an arbitration claim form out of the jurisdiction if
“(b) the claim is for an order under section 44 of the 1996 Act; or
(c) the claimant –
(i) seeks some other remedy or requires a question to be decided by
the court affecting an arbitration (whether started or not), an
arbitration agreement or an arbitration award; and
(ii) the seat of the arbitration is or will be within the jurisdiction or

the conditions in section 2(4) of the 1996 Act are satisfied.”
50
I regard these provisions as wide enough to embrace a claim under section 37 to restrain foreign
proceedings in breach of the negative aspect of an arbitration agreement. In circumstances where an
arbitration claim includes under CPR62.2(d) “any other application affecting (i) arbitration
proceedings (whether started or not); or (ii) an arbitration agreement”, the requirement in
CPR62.5(c)(ii) that “the seat of the arbitration is or will be within the jurisdiction” must be read as
satisfied if the seat of any arbitration, if any were to be commenced or proposed under the arbitration
agreement, would be within the jurisdiction. In so far as Thomas J in Vale do Rio considered (para
59) that the predecessor to CPR62.2 (the then CPR PD 49G) included provisions equivalent to the
present CPR62.2(1)(b),(c) and (d) “out of an abundance of caution …. to spell out the terms of the
1996 Act (or just possibly to cater for an oral arbitration agreement)”, I would respectfully disagree.
Thomas J was in any event concerned with a point on the construction of the 1996 Act, which as he
correctly said could not possibly be affected by the view taken of CPR PD 49G. His statement that
the language might “just possibly” cater for an oral arbitration agreement itself opens the possibility,
which I think correct, that the drafters were not confining themselves to issues, regarding arbitration
agreements, arising under the provisions of 1996 Act.
51
I add only that in the present case, although leave was in fact obtained under CPR PD 6B,
paragraph 3.1(2) and CPR62.5(1)(b) and (c), the court would appear also to have had jurisdiction
to give leave for service out of the jurisdiction under CPR PD 6B(6)(c), on the ground that, treating
the arbitration agreement as the “contract”, the claim was “made in respect of a contract where the
contract …. (c) is governed by English law”.
Section 9
52
Returning to the scheme of Part I of the 1996 Act, the principal focus is on the commencement,
conduct, consequences and court powers with regard to an actual or proposed arbitration. In addition,
Part I starts with sections 1 to 8 identifying the nature and certain features of the arbitration
agreements to which it applies while sections 9 to 11 deal with stays of domestic legal proceedings
where such an agreement exists. Section 9 runs contrary to JSC’s general case, since it represents
a situation in which the court, rather than the arbitral tribunal, rules in the first instance on arbitral
jurisdiction, and does so bindingly. The Court of Appeal in Fiona Trust and Holding Corp v
Privalov [2007] EWCA Civ 20; [2007] 1 All ER (Comm) 891, para 36 and Lightman J in Albon (t/a
NA Carriage Co) v Naza Motor Trading Sdn Bhd (No 3) [2007] EWHC 665 (Ch); [2007] 2 All ER
1075, paras 14 to 20 correctly so held.
53
However, JSC relies upon section 9, as supplementing its case on the general scheme of the 1996
Act and on the particular implications of sections such as sections 30, 32, 67 and 72, in another
respect. Given that the court under section 9 determines the existence or otherwise of arbitral
jurisdiction conclusively and at the outset, JSC points out that this is expressly provided by the Act.
In contrast, the Act makes no reference to, and so it submits implicitly excludes, any power to injunct
the commencement or continuation of foreign proceedings.
54
I do not accept JSC’s case on this point. Section 9 reflects, in domestic law, the requirement in
article II(3) of the New York Convention on the Recognition and Enforcement of Foreign Arbitral
Awards (United Nations 1958) that:
“II.3. The court of a Contracting State, when seized of an action in a matter in respect
of which the parties have made an agreement within the meaning of this article, shall,
at the request of one of the parties, refer the parties to arbitration, unless it finds that
the said agreement is null and void, inoperative or incapable of being performed.”
Nothing in the New York Convention requires Contracting States to have in their law any equivalent
power to that which section 37 includes in respect of foreign proceedings in breach of an arbitration
agreement. The silence in Part 1 is in this respect unremarkable.
Section 37 of the Senior Courts Act 1981
55
More generally, JSC’s case depends upon a conclusion that the Arbitration Act 1996 either limits
the scope, or as a matter of general principle qualifies the use, of the general power contained in
section 37, so that it is no longer permissible to deploy section 37 to injunct foreign proceedings
begun or threatened in breach of an arbitration agreement. Again, I cannot accept JSC’s case.
56
Section 37 is a general power, not specifically tailored to situations where there is either an
arbitration agreement or an exclusive choice of court clause. To adopt words of Lord Mustill in the
Channel Tunnel case, [1993] AC 334, 360E-F, with reference to the relationship between section
37 and the previous arbitration legislation (the Arbitration Act 1950):
“Under section 37(1) by contrast the arbitration clause is not the source of the power
to grant an injunction but is merely a part of the facts in the light of which the court
decides whether or not to exercise a power which exists independently of it.”
The court may as a result need to be very cautious:
“in the exercise of its general powers under section 37 so as not to conflict with any
restraint which the legislature may have imposed on the exercise of the new and
specialised powers.” (p 364B-C).
However, it is, in my opinion, entirely understandable that Parliament should not have thought to
carve out from section 37 of the Senior Courts Act or to reproduce in the 1996 Act one aspect of a
general power conferred by section 37. It cannot be deduced from the fact that it did not do so that
it intended that the general power should never be exercised in any context associated with
arbitration.
57
On the contrary, it would be astonishing if Parliament should, silently and without warning, have
abrogated or precluded the use by the English court of its previous well-established jurisdiction
under section 37 in respect of foreign proceedings commenced or threatened in breach of the
negative aspect of an arbitration agreement. One would have expected the intended inapplicability
of section 37 to have been made very clear in both the DAC Report and the Act. The 1996 Act does
in Schedule 3 or 4 provide for other presently immaterial amendments or repeals in respect of

provisions in what was the Supreme Court Act and is now the Senior Courts Act 1981.
58
The “Angelic Grace” [1994] 1 Lloyd’s Rep 168 in particular was a highly prominent decision,
expressed in emphatic terms during the very period when the DAC was preparing the Bill for the Act
and its own report. Nothing in the DAC report of 1996 addresses either it or the long-standing and
well recognised jurisdiction which was its subject-matter. Yet a regime under which the English
court could no longer enforce the negative rights of a party to a London arbitration agreement by
injunctive relief restraining foreign proceedings would have been, and would have been seen, as a
radical diminution of the protection afforded by English law to parties to such an arbitration
agreement. It would have aroused considerable interest and, no doubt, concern. The only sensible
inference is that the drafters of the Act never contemplated that it could or would undermine the
established jurisprudence on anti-suit injunctions.
59
It was only later that the Court of Justice in Luxembourg restricted the use of such injunctions; and
then only in relation to foreign proceedings in the area covered by the Brussels/Lugano régime and
on the basis of the mutual trust affirmed to exist between courts within that regime. The interest and
concern that this aroused witnesses to the interest that would have been aroused had the Bill or 1996
Act been seen as having any such radical intention or effect in relation to courts worldwide. The West
Tankers case [2009] AC 1138 suggests that it did not occur to anyone until this case that it did.
Conclusion
60
The power to stay domestic legal proceedings under section 9 and the power to determine that
foreign proceedings are in breach of an arbitration agreement and to injunct their commencement
or continuation are in truth opposite and complementary sides of a coin. Subject to the recent
European inroad, that remains the position. The general power provided by section 37 of the 1981
Act must be exercised sensitively and, in particular, with due regard for the scheme and terms of the
1996 Act when any arbitration is on foot or proposed. It is also open to a court under section 37, if
it thinks fit, to grant any injunction on an interim basis, pending the outcome of current or proposed
arbitration proceedings, rather than a final basis. But, for the reasons I have given, it is inconceivable
that the 1996 Act intended or should be treated sub silentio as effectively abrogating the protection
enjoyed under section 37 in respect of their negative rights under an arbitration agreement by those
who stipulate for an arbitration with an English seat.
61
In some cases where foreign proceedings are brought in breach of an arbitration clause or exclusive
choice of court agreement, the appropriate course will be to leave it to the foreign court to recognise
and enforce the parties’ agreement on forum. But in the present case the foreign court has refused
to do so, and done this on a basis which the English courts are not bound to recognise and on
grounds which are unsustainable under English law which is accepted to govern the arbitration
agreement. In these circumstances, there was every reason for the English courts to intervene to
protect the prima facie right of AESUK to enforce the negative aspect of its arbitration agreement
with JSC.
62
It follows that Burton J had jurisdiction under section 37 of the Senior Courts Act 1981 to make
the order that he did, and that there was nothing wrong in principle with his exercise of his power
to do so. The Court of Appeal was right so to conclude, and the appeal should be dismissed.
________
NOTES AND QUESTIONS

1) The outcome of the case is consistent with earlier case law from the UK and various other
jurisdictions but it contradicts the judgment of the European Court of Justice in the West Tankers
Case, above p. ???. One explanation for West Tankers is the applicability of the EU Regulation
44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Com-
mercial Matters, Documents p. ???,12 to jurisdictional conflicts between courts of the Member States
of the EU. However, the New York Convention precedes the founding of the EU and the adoption
of the Brussels and Lugano Conventions, as well as Regulation 44/2001. Can Contracting States to
the New York Convention create rules that conflict with their obligations under the New York
Convention in the framework of the EU? Should they?
2) Further to question 1 and more specifically, should a court of one country be able to enjoin the
courts of another country from examining an arbitration clause and accepting litigation after finding
it limited or defective? What are arguments in favor and against such a power? How and where can
the decisions of the British courts be enforced? What do they mean for the proceedings in
Kazakhstan? Could one say, therefore, that the European Court of Justice, in West Tankers, was
wrong? Or that the UK Supreme Court in the present case is wrong? Or can the judgments co-exist
meaningfully?
3) What do you make of the fact that in the present case, there was not (yet) a case of actual
arbitration proceedings competing with the litigation in Kazakhstan? It seems that one side to the
dispute wanted to litigate in Kazakhstan but under no circumstances wanted to participate in
arbitration in London, while the other side would be open to arbitration in London but under no
circumstances wanted to be drawn into litigation in Kazakhstan. What, if anything, does this tell us
about the trust placed by either party into the preferred dispute settlement mechanism of the other
party? And – potentially – about the merits of their respective claims?
12 Regulation 44/2001 replaced an earlier convention between the EU Member States, the 1968 Brussels
Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters. This is
why the Regulation is commonly referred to as “the Brussels Regulation”. A parallel convention extended –
and continues to extend – the main features of the Brussels Convention to a number of European states that
are not members of the EU, the 1988 Lugano Convention on Jurisdiction and the Enforcement of Judgments
in Civil and Commercial Matters.
More recently, Regulation 44/2001 has itself been updated and replaced by Regulation 1215/2012
of 12 December 2012 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and
Commercial Matters, OJ 2012 L 351, pp. 1-32. The updated and current Regulation is actually reproduced
in our Documents at p. ???.
4)
5)
6) In Kamenogorsk, the issue was that one party to an arbitration agreement initiated litigation
instead of arbitration. Another problem with an agreement to arbitrate can be the refusal of one party
to participate in arbitration by not showing up and/or not appointing an arbitrator. We will examine
below, at p. ???, whether the other party can obtain an award in default.
b) The lex arbitri typically consists of several sets of rules that have to be applied congruently:
– specific rules agreed upon by the parties, for example the UNCITRAL Arbitration Rules13
– as a back-up, the procedural rules of the arbitration institution, if any
– as a back-up, optional rules in the national arbitration law applicable at the seat of arbitration
(this could be federal or state law or both; it may be similar or identical to the UNCITRAL
Model Law)
– as an outer guard rail, the mandatory rules of the national arbitration law applicable at the
seat of arbitration
c) National procedural law – usually mandatory – applicable to the court that is called upon for
help
d) The substantive law

– chosen by the parties (could be a national legal system – e.g. “the laws of New York” or
“Swiss law” – or an international convention system – e.g. the CISG – with or without back-
up of a national legal system); or, in the absence of an effective choice or to fill gaps in an
effective choice
– the substantive law applicable pursuant to the rules of private international law (Q: Which
ones?)
e) Articles III - VI of the NY Convention (and possibly the national procedural law of the court
that is called upon for enforcement, if it contains mandatory rules about enforcement, in particular
ordre public provisions recognized by the NY Convention)
13 For detailed analysis see David D. Caron & Lee M. Caplan: The UNCITRAL Arbitration Rules – A
Commentary, Oxford University Press, Oxford, 2nd ed. 2013.
3. Important Providers of (International) Arbitration Services

Global
International Chamber of Commerce (ICC)14 – http://www.iccwbo.org/
Permanent Court of Arbitration (PCA), the Hague (the PCA can only be called upon for
disputes where at least one party is a state, a state-controlled entity, or an intergovernmental
organization)15 – http://www.pca-cpa.org/
Regional
a) Americas
American Arbitration Association (AAA) and its International Center for Dispute Resolution
(ICDR)16 – https://www.icdr.org
The most widely used regional institution in Central and Latin America is the Centro de
Arbitraje y Mediación de la Cámera de Comercio de Santiago (CAM Santiago), although it
would be an exaggeration to think of it as the regional arbitration center for Central and Latin
America.17 ???this info is 2011, a 2016 version of the “Latin American Arbitral Institutions
Guide and Scoreboard” is in preparation => check back later???
b) Europe
London Court of International Arbitration18 – http://www.lcia.org/
Arbitration Institute of the Stockholm Chamber of Commerce – http://www.sccinstitute.com/
Swiss Chambers of Commerce – https://www.swissarbitration.org/sa/en/
c) Asia and Pacific
China International Economic and Trade Arbitration Commission (CIETAC), Beijing19 –
http://www.cietac.org/
14 For further reading see W. Laurence Craig et al.: Craig, Park and Paulsson on International Chamber of
Commerce Arbitration, Oxford University Press, Oxford, 4th ed. 2017.
15 See also Brooks Daly, Evgeniya Goriatcheva & Hugh Meighen: A Guide to the PCA Arbitration Rules,
Oxford University Press, Oxford, 2014.
16 See also Martin F. Gusy, James M. Hosking & Franz T. Schwarz: A Guide to the ICDR International
Arbitration Rules, Oxford University Press, Oxford 2011.
17 See also Jan Kleinheisterkamp: International Commercial Arbitration in Latin America – Regulation and
Practice in the MERCOSUR and the Associated Countries, Oxford University Press, Oxford, 2005.
18 See also Peter Turner & Reza Mohtashami: A Guide to the LCIA Arbitration Rules, Oxford University
Press, Oxford, 2009.
19 See also Jianlong Yu, Lijun Cao & Michael Moser: A Guide to the CIETAC Arbitration Rules, Oxford
University Press, Oxford, 2017.
Singapore International Arbitration Center20 – http://www.siac.org.sg/

Hong Kong International Arbitration Center21 – http://www.hkiac.org/en/
d) Middle East
Cairo Regional Center for International Commercial Arbitration – http://crcica.org.eg/
Dubai International Arbitration Center – http://www.diac.ae/idias/
e) Africa
Common Court of Justice and Arbitration (OHADA), Abidjan – http://ohada.org/ccja.html
Subject-Matter Specific
a) Investor-State Arbitration
International Center for Settlement of Investment Disputes (ICSID), Washington DC22 –
https://icsid.worldbank.org/apps/ICSIDWEB/Pages/default.aspx
b) Intellectual Property
WIPO Arbitration and Mediation Center, Geneva – http://www.wipo.int/amc/en/
c) Trade in Agricultural Commodities
The Grain and Feed Trade Association (GAFTA), London – http://www.gafta.com/Home
4. The Agreement to Arbitrate

In general, any natural or legal person can be taken to court, with or without her consent. We have
discussed above, which courts may have jurisdiction for such cases. Some exceptions apply to states
and certain other public entities, for example on the basis of foreign sovereign immunity.
By contrast, no natural or legal person can be forced into arbitration without her agreement.
Therefore, an agreement to arbitrate between the parties to a dispute is a conditio sine qua non for
the initiation of arbitration proceedings (cf. Article II(1) and Article IV(1)(b) of the New York
Convention). However, the agreement to participate in arbitration – rather than litigation – does not
need to be current at the time when the dispute arises. Thus, two types of agreements to arbitrate can
be usefully distinguished: ???
20 See also Mark Mangan, Lucy Reed & John Choong: A Guide to the SIAC Arbitration Rules, Oxford
University Press, Oxford 2014.
21 See also Michael J. Moser & Chiann Bao: Guide to the HKIAC Arbitration Rules, Oxford University Press,
Oxford 2017.
22 See also Antonio R. Parra: The History of ICSID, Oxford University Press, Oxford, 2012.
The conditions for validity of an agreement to arbitrate can be found in ??? NY Conv?
Against this background, it should not be difficult to draft a good arbitration clause that enables to
parties to pursue ... Indeed, the required or key elements are not hard to identify. Combined with the
general notion that any contractual agreement should be clear and unambiguous,
Checklist 10-2
Frank Emmert Rules on How to Draft a Good Arbitration Clause:
The “Ten ½ Commandments” for a Successful Start of the Arbitration Proceedings
(1) Include the written clause in the main part (front) of the contract and have the parties
sign; do not rely just on communication in letters, let alone e-mails (? What happens if
a clause turns out to be defective ?)
(2) Make it clear that arbitration is mandatory, not optional, for both sides.
(3) Include a broad statement that the parties submit “all disputes” that can possibly arise
between them “related to the contract or the underlying business transaction” to
arbitration, not just those about the rights and obligations under the contract or any
other specific category of dispute (avoid narrow language such as “disputes... under
this contract” but remember that duplication is useless and just inelegant, e.g. “arising
out of, in connection with, or relating to this agreement”).
(4) Make it clear that arbitration shall be the first and last instance of dispute settlement
(unless negotiation and/or mediation is required before; when should this be
considered? when not?).
(5) Be perfectly clear and precise about the selected tribunal! Look up the correct name! If
large amounts of money are (potentially) at stake and/or the enforcement may have to
be done in a country that might not be friendly to foreign business interests enforcing
awards against local employers, avoid ad hoc arbitration unless parties know each
other and/or have strong interests in continuing collaboration.
(6) Specify the place of arbitration even if identical to the seat of the tribunal.
(7) Specify the number of arbitrators and how they shall be selected. Avoid unrealistic
time limits. Do not name persons that may be unable to act.
(8) Specify the language to be used for the arbitration.
(9) Specify the procedural law = typically the arbitration rules used by the tribunal. For ad
hoc, specify that the arbitrator(s) have to follow well established rules like the
UNCITRAL Arbitration Rules, the LCIA Rules or the English Arbitration Act.
(10) If the parties conclude more than one agreement, make sure that the arbitration clause
is exactly the same in all agreements to avoid having to go to different courts or
tribunals for different issues arising out of the same business relationship.
(11) Specify the substantive law to govern the contractual relationship and any claims
arising between the parties.
Chart 10-1
Some Guidelines for the Choice of Arbitration Format
parties may not know and there could be and the amount of
or trust each other problems with money potentially in
and/or have no enforcement of an dispute is very large
=> ICC
specific interest in award at the place or and could be a matter
continuing their places where the of survival for the
business relations assets are party
there are no
parties may not know the amount of money
particular problems
or trust each other potentially in dispute
expected with
and/or have no is higher than 1 => quality regional
enforcement of an
specific interest in million $$, although arbitration institution
award at the place or
8 continuing their
places where the
not necessarily a
business relations matter of survival
level of assets are
seriousness but the amount of

for the party and there are no money potentially in
parties know & trust
particular problems dispute is higher than
or parties each other and/or
expected with $200,000; however
have high level of => ad hoc, panel of
enforcement of an not more than a few
9 interest in continuing
award at the place or million $$ and
three
their business
places where the certainly not a matter
relations
assets are of survival for the
party
and there are no

parties know & trust particular problems and the amount of
each other and/or expected with money potentially in
=> ad hoc, sole
have high level of enforcement of an dispute is relatively
arbitrator
interest in continuing award at the place or minor, under about
business relations places where the $250,000
assets are
________
NOTES AND QUESTIONS

1. While it is clear that there cannot be arbitration proceedings if there is no agreement to arbitrate,
neither at the time when a contract between the parties was drafted and signed, nor at the time when
the dispute arose, it is far less clear what should happen when there was some kind of agreement but
it is unclear or incomplete. Typical problems in arbitration clauses include the following:
– arbitration may be optional and not required instead of litigation (example: ???)
– the arbitration institution may be mislabeled (example:

– the terms and conditions for the choice of arbitrators and/or the procedure may be difficult
or impossible to meet (example: ???).
From our practical experience and conversations with other lawyers and arbitrators, we can safely
say that more than 50% of all arbitration clauses used in international business transactions are less
than ideal and
Example 1:
Example 2: In the case of HKL Group Co Ltd v Rizq International Holdings Pte Ltd ([2013] SGHCR
5), the Singapore High Court had to decide on the validity of the following arbitration clause:
“Any dispute shall be settled by amicable negotiation between two Parties. In case
both Parties fail to reach amicable agreement, all disputes out of in connection with
the contract shall be settled by the Arbitration Committee at Singapore under the
rules of The International Chamber of Commerce of which awards shall be final and
binding both parties. Arbitration fee and other related charge shall be borne by the
losing Party unless otherwise agreed.”
2. Discuss the following arbitration clauses and whether they would be likely to cause problems and
why: ??? insert samples here, not above...
3. In a recent case in China, the Dalian Intermediate People’s Court was confronted with a lawsuit
brought by a Chinese party against an American company. The US party objected to the lawsuit,
claiming that there was a valid arbitration clause. The contract had been negotiated by e-mail and
the relevant clause read “GOVERNING RULES: GAFTA89/23 COMBINED LONDON 125
ARBITRATION IF NECESSARY.” The GAFTA references are to the rules of the Grain and Feed
Trade Association. These rules are available online at http://www.gafta.com/. Pursuant to Pavani
Reddy of Zaiwalla & Co Solicitors, “[t]oday, the majority of world trade in cereals and animal feed
[is] carried out under GAFTA contracts and the institution has a range of about 80 standard form
contracts [...] These contracts refer disputes to GAFTA administered arbitrations under forms 125
and 126. [...] GAFTA is a dominant international arbitration institution and is held in high respect
around the world. [...] GAFTA contracts are governed by English law and provide for England to
be the venue of the arbitration.” (http://www.zaiwalla.co.uk/blog/2012/02/the-gafta-arbi-
tration-process-explained/). In the end, the Chinese court held that Chinese law, specifically Article
18 of the Law of the People’s Republic of China on Application of Laws to Foreign-Related Civil
Relations (2010), allows parties to choose the law or rules applicable to an arbitration agreement.
Whenever parties to an IBT have not made a choice, the laws or rules of the arbitration institution,
respectively the law applicable at the seat of the arbitration shall apply. In the case at hand, London
was determined to be the seat of the arbitration and the English Arbitration Act was held to be the
applicable law. Under English law, the arbitration clause was considered to be valid. The Chinese
court further pointed out that even if the parties had not mentioned London in the clause, GAFTA
125 Rules also point to London as the seat of the arbitration. Finally, the court held that the fact that
the Chinese party was challenging the validity of the contract did not affect the effectiveness of the
arbitration clause because of the principle of independence found in English law. (Case No. [2015]
DMSCZ No. 24, decision of 13 July 2015)
* * *
Against this background, we will now review the strengths and weaknesses of a number of arbitra-
tion clauses found in actual contracts and/or recommended by various service providers.
Sample Arbitration Clauses
1) “Any dispute, controversy or claim arising out of or in connection with, or relating to this Agreement
or any breach or alleged breach hereof shall, upon the request of any party involved, be submitted
to, and settled by, arbitration.”
2) “Arbitration. Any controversy, claim or dispute arising out of or relating to this Agreement, shall be
settled solely and exclusively by binding arbitration in San Francisco, California. Such arbitration
shall be conducted in accordance with the then prevailing commercial arbitration rules of
JAMS/Endispute ("JAMS"), with the following exceptions if in conflict: (a) one arbitrator shall be
chosen by JAMS; (b) each party to the arbitration will pay its pro rata share of the expenses and fees
of the arbitrator, together with other expenses of the arbitration incurred or approved by the
arbitrator; and (c) arbitration may proceed in the absence of any party if written notice (pursuant to
the JAMS' rules and regulations) of the proceedings has been given to such party. Each party shall
bear its own attorneys fees and expenses. The parties agree to abide by all decisions and awards
rendered in such proceedings. Such decisions and awards rendered by the arbitrator shall be final
and conclusive. All such controversies, claims or disputes shall be settled in this manner in lieu of
any action at law or equity; provided however, that nothing in this subsection shall be construed as
precluding the bringing an action for injunctive relief or other equitable relief. The arbitrator shall
not have the right to award punitive damages or speculative damages to either party and shall not
have the power to amend this Agreement. The arbitrator shall be required to follow applicable law.
IF FOR ANY REASON THIS ARBITRATION CLAUSE BECOMES NOT APPLICABLE, THEN
EACH PARTY, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE RELATING
HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER MATTER INVOLVING THE PARTIES
HERETO.”
3) “English law-arbitration, if any, London according ICC Rules.” (Arab-African Energy Corp. v.
Olieprodukten Nederland, B.V.2 Lloyd's Rep)
4) “Disputes hereunder shall be referred to Arbitration to be carried out by Arbitrators named by the
ICC in Geneva in accordance with the Arbitration Procedure set forth in the Civil Code of Venezuela
and in the Civil Code of France with due regard for the law of the place of Arbitration.” (Example
provided in Craig, Park and Poulsson, International Chamber of Commerce Arbitration, Oceana, 3rd
ed. 2000, pp. 132-133)
5) “In the event of any unresolved dispute, the matter will be referred to the ICC.”
6) “All disputes in connection with the present agreement shall be submitted in the first instance to
arbitration. The arbitrator shall be a well known chamber of commerce (like the ICC) designated by
mutual agreement between the parties.” (quoted in Singapore International Arbitration Blog,
Pathological Arbitration Clauses, https://singaporeinternationalarbitra-

tion.com/2013/03/08/pathological-arbitration-clauses/)
7) “Any and all disputes arising under the contract will be referred to mutually agreed mechanisms or
procedures of international arbitration, such as the LCIA rules.” (???source?)
8) “In case of a dispute, the parties undertake to submit to arbitration but in case of litigation, the
tribunal de la seine shall have exclusive jurisdiction.” (Example provided in Craig, Park and
Poulsson, International Chamber of Commerce Arbitration, Oceana, 3 rd ed. 2000, p. 128)
9) “… arbitration before the New York Commercial Arbitration Association.” (Warnes SA v Harvic
Int'l Ltd)
10) “[Parties undertake] to have the dispute submitted to binding arbitration through The American
Arbitration Association [hereafter: AAA] or to any other US court. (…) The arbitration shall be
conducted based upon the Rules and Regulations of the International Chamber of Commerce (ICC
500).” (quoted in Singapore International Arbitration Blog, Pathological Arbitration Clauses,
https://singaporeinternationalarbitration.com/2013/03/08/pathological-arbitration-clauses/)
The Chartered Institute of Arbitrators
“Any dispute or difference arising out of or in connection with this contract shall be determined by the
appointment of a single arbitrator to be agreed between the parties, or failing agreement within fourteen days,
after either party has given to the other a written request to concur in the appointment of an arbitrator, by an
arbitrator to be appointed by the President or a Vice President of the Chartered Institute of Arbitrators.”
The London Court of International Arbitration
“Any dispute arising out of or in connection with this contract, including any question regarding its existence,
validity or termination, shall be referred to and finally resolved by arbitration under the LCIA Rules, which
Rules are deemed to be incorporated by reference into this clause.
The number of arbitrators shall be [one/three].
The seat, or legal place, of arbitration shall be [insert city or country].
The language to be used in the arbitral proceedings shall be [insert language].
The governing law of the contract shall be the substantive law of [insert governing law].”
The International Court of Arbitration
“All disputes arising out of or in connection with the present contract shall be finally settled under the Rules
of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance
with the said Rules.”
The American Arbitration Association / International Centre for Dispute Resolution
The website of the ICDR provides a sophisticated “Clause Builder Tool” that allows parties to an IBT and/or
their lawyers to develop custom made dispute settlement clauses. The most basic result may look something
like this:
“Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be
determined by arbitration administered by the International Centre for Dispute Resolution in accordance with
its International Arbitration Rules.”
However, parties are explicitly invited to make additional choices, such as with or without expedited
procedures, the number of arbitrators, the method of selecting the arbitrators, their qualifications, the place
of arbitration, the language, etc.
UNCITRAL Model Clause
“Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or
invalidity thereof…”
Sample Multi-Stage Dispute Settlement Clauses
American Arbitration Association
“Neg1 In the event of any dispute, claim, question, or disagreement arising from or relating to this
agreement or the breach thereof, the parties hereto shall use their best efforts to settle the dispute,
claim, question, or disagreement. To this effect, they shall consult and negotiate with each other in
good faith and, recognizing their mutual interests, attempt to reach a just and equitable solution
satisfactory to both parties. If they do not reach such solution within a period of 60 days, then, upon
notice by either party to the other, all disputes, claims, questions, or differences shall be finally
settled by arbitration administered by the American Arbitration Association in accordance with the
provisions of its Commercial Arbitration Rules.
Med 1 If a dispute arises out of or relates to this contract, or the breach thereof, and if the dispute cannot
be settled through negotiation, the parties agree first to try in good faith to settle the dispute by
mediation administered by the American Arbitration Association under its Commercial Mediation
Procedures before resorting to arbitration, litigation, or some other dispute resolution procedure.
Int’l 5 In the event of any controversy or claim arising out of or relating to this contract, the parties hereto
shall consult and negotiate with each other and, recognizing their mutual interests, attempt to reach
a solution satisfactory to both parties. If they do not reach settlement within a period of 60 days, then
either party may, by notice to the other party and the International Centre for Dispute Resolution,
demand mediation under the International Mediation Procedures of the International Centre for
Dispute Resolution. If settlement is not reached within 60 days after service of a written demand for
mediation, any unresolved controversy or claim arising out of or relating to this contract shall be
settled by arbitration in accordance with the International Arbitration Rules of the International
Centre for Dispute Resolution.
Int’l 6 In the event of any controversy or claim arising out of or relating to this contract, the parties hereto
agree first to try and settle the dispute by mediation administered by the International Centre for
Dispute Resolution under its rules before resorting to arbitration, litigation, or some other dispute
resolution technique.”
Judicial Arbitration and Mediation Services (JAMS)
“1. The parties agree that any and all disputes, claims or controversies arising out of or relating to this
Agreement shall be submitted to JAMS, or its successor, for mediation, and if the matter is not resolved
through mediation, then it shall be submitted to JAMS, or its successor, for final and binding arbitration
pursuant to the clause set forth in Paragraph 5 below.
2. Either party may commence mediation by providing to JAMS and the other party a written request for
mediation, setting forth the subject of the dispute and the relief requested.
3. The parties will cooperate with JAMS and with one another in selecting a mediator from the JAMS panel
of neutrals and in scheduling the mediation proceedings. The parties agree that they will participate in the
mediation in good faith and that they will share equally in its costs.
4. All offers, promises, conduct and statements, whether oral or written, made in the course of the mediation
by any of the parties, their agents, employees, experts and attorneys, and by the mediator or any JAMS
employees, are confidential, privileged and inadmissible for any purpose, including impeachment, in any
arbitration or other proceeding involving the parties, provided that evidence that is otherwise admissible or
discoverable shall not be rendered inadmissible or nondiscoverable as a result of its use in the mediation.
5. Either party may initiate arbitration with respect to the matters submitted to mediation by filing a written
demand for arbitration at any time following the initial mediation session or at any time following 45 days
from the date of filing the written request for mediation, whichever occurs first (“Earliest Initiation Date”).
The mediation may continue after the commencement of arbitration if the parties so desire.
6. At no time prior to the Earliest Initiation Date shall either side initiate an arbitration or litigation related
to this Agreement except to pursue a provisional remedy that is authorized by law or by JAMS Rules or by
agreement of the parties. However, this limitation is inapplicable to a party if the other party refuses to
comply with the requirements of Paragraph 3 above.”
United States Arbitration & Mediation (USA&M)
“Dispute Resolution. Any controversy or claim arising out of or relating to this contract, the relationship
resulting in or from this contract or breach of any duties hereunder will be settled by Arbitration in
accordance with the Commercial Arbitration Rules of the U. S. Arbitration & Mediation, Midwest
(“USA&M”) or the American Arbitration Association (“AAA”). All hearings will be held in St. Louis,
Missouri before an Arbitrator who is a licensed attorney with at least 15 years of experience in commercial
law. A judgment upon the award rendered by the Arbitrator shall be entered in a Court with competent
jurisdiction. The Federal Arbitration Act (Title 9 U.S. Code Section 1 et. seq.) shall govern all arbitration
and confirmation proceedings. As a condition precedent to the filing of an arbitration claim, the parties agree
to first mediate any claims between them at USA&M or AAA. Any party refusing to mediate shall not
prevent the other party or parties from pursuing their claims in arbitration. The parties will share the cost of
mediation equally. Nothing herein will be construed to prevent any party’s use of injunction, and/or any other
prejudgment or provisional action or remedy. Any such action or remedy will not waive the moving party’s
right to compel arbitration of any dispute. The parties agree to also meet and negotiate in good faith in order
to resolve any disputes which may arise between them.”
Chartered Institute of Arbitrators
“Catch All” Dispute Resolution Clause
“The parties shall attempt to resolve any dispute arising out of or relating to this contract through
negotiations between senior executives of the parties, who have authority to settle the same.
If the matter is not resolved by negotiation within 30 days of receipt of a written 'invitation to negotiate', the
parties will attempt to resolve the dispute in good faith through an agreed Alternative Dispute Resolution
(ADR) procedure, or in default of agreement, through an ADR procedure as recommended to the parties by
the President or the Vice President, for the time being, of the Chartered Institute of Arbitrators.
If the matter has not been resolved by an ADR procedure within 60 days of the initiation of that procedure,
or if any party will not participate in an ADR procedure, the dispute may be referred to arbitration by any
party. The seat of the arbitration shall be England and Wales. The arbitration shall be governed by both the
Arbitration Act 1996 and Rules as agreed between the parties. Should the parties be unable to agree on an
arbitrator or arbitrators, or be unable to agree on the Rules for Arbitration, any party may, upon giving
written notice to other parties, apply to the President or the Vice President, for the time being, of the
Chartered Institute of Arbitrators for the appointment of an Arbitrator or Arbitrators and for any decision on
rules that may be necessary.
Nothing in this clause shall be construed as prohibiting a party or it’s affiliate from applying to a court for
interim injunctive relief.”
________
NOTES AND QUESTIONS

1.
2.
5. Initiation of Arbitration Proceedings
6. Establishment of the Arbitration Tribunal

One of the biggest advantages of arbitration is the ability of the parties to select their arbitrators. This
gives them the opportunity not only to select arbitrators they trust to be independent and impartial.
They can also select individuals with specific qualifications and experience with regard to a
particular industry, trade, or type of transaction. This may include not only legal knowledge but also
technical and commercial expertise. Other factors that will play a role in the selection of the
arbitrator(s) will be nationality (a sole or presiding arbitrator will usually be of a different nationality
from either of the parties), language proficiency, availability, as well as cost. Among the substantive
qualifications parties should be looking for is sufficient experience in arbitration, including the
management of the proceedings, in particular if the case is complicated. This also means that
individuals who are experienced litigators may not be the best arbitrators since they bring a different
perspective to the procedure.
The first step toward establishment of the tribunal will be the decision whether to proceed with one
or with three arbitrators.
???
On the one hand, the possibility of challenging an arbitrator is important to safeguard the integrity
of the procedure and ensure that a tribunal can only proceed if both parties have confidence in its
fairness and impartiality. This is particularly important given the fact that the award by the tribunal
will usually be the first and final decision in the dispute, i.e. there is no appellate review for mistakes
of fact or law. On the other hand, a challenge can be used for tactical purposes to delay the procedure
and/or to build a case for a challenge to an award at the enforcement stage.
7. The Terms of Reference to Determine the Powers and Procedures of the Arbitration
Tribunal
To determine the powers of an arbitration tribunal and the procedures it needs to follow, as always
in arbitration, we first look whether the parties have a specific agreement. Only to the extent they do
not, we would look for
Powers and Responsibilities of the Arbitration Tribunal
Î Party discretion => Terms of Appointment or

Terms of Reference (ICC Art. 23)
= provide specific powers
Ï Lex arbitri
Ð Lex forum
Ñ Tribunal discretion = provide general powers
Ò Lex enforcement
The ICC Rules require the drafting of “Terms of Reference” (Art. 23). Under the 2015 CIETAC
Rules, such Terms of Reference are optional (Art. 35(5)). Other arbitration rules refer only indirectly
to something akin to Terms or Reference (see, for example, Art. 16(2) of the AAA Rules, Art. 15
of the 2012 Swiss Rules, or Arts. 14 and 22 of the LCIA Rules).
Whether they are called “Terms of Reference” or “Terms of Appointment” or “Submission
Agreement”, a carefully drafted agreement between all parties, their legal counsel, and all arbitrators,
regarding the jurisdiction of the tribunal (= the scope of its work and the rights and obligations of
the arbitrators), and the ground rules for the arbitration procedure, is of paramount importance for
the success of the arbitration itself and the enforceability of the resulting arbitral award. As a binding
contract, it makes it very hard for any of the participants to claim at a later stage that this or that act
of the tribunal was illegal or unfair or that such and such issue would allow a challenge of all or parts
of the award. Such a contract is all the more important, if the arbitration is conducted ad hoc and
without the support and regulatory framework of a major arbitration organization.
Key Elements of the “Terms of Reference”: ???change this to a “contract”-like format and add
Articles where such rules are mentioned, e.g. #27
1) Full names of the parties to the arbitration with details of incorporation and/or legal status
and relationship to other entities concerned by the procedure, if any.
2) Responsible contact persons at the parties with address, phone, fax, and e-mail, where
communications can be or have to be sent.
3) Full names of legal counsel with power of attorney to represent claimant and respondent in
the present proceedings with address, phone, fax, and e-mail, where communications can be
or have to be sent.
4) Full names of the arbitrators with address, phone, fax, and e-mail, where communications
can be or have to be sent.
5) Confirmation by the arbitrators on impartiality and independence.
6) An agreement how the tribunal and the parties/representatives shall communicate with each
other (e.g. e-mail with subsequent hard-copy confirmation by fax and/or courier).
7) An agreement that communication shall be timely if sent by the due date at the place of
sending, regardless of the corresponding time at the place of receipt.
8) Summary of claimant’s factual and legal arguments and relief sought.
9) Summary of respondent’s factual and legal arguments and plea to the tribunal regarding the
relief sought by claimant.
10) Any counterclaims by respondent.
11) Determination of amount(s) in dispute for the purpose of calculation of costs and fees.
12) References to any and all arbitration clauses and/or submission agreements as the basis of
the arbitration.
13) Acceptance of the parties of the arbitrators and the tribunal as properly selected and
appointed.
14) List of issues to be decided by the tribunal.
15) List of issues not to be investigated and decided by the tribunal, if applicable.
16) Agreement that #14 and #15 can be changed by agreement between the parties, in particular
in case of a settlement, only on condition of simultaneous agreement on the distribution and
payment of the costs of the arbitration.
17) Agreement on the place of the arbitration for purposes of applicable national back-up laws.
18) Agreement on the place and time of subsequent hearings and whether any meetings will be
held elsewhere or via internet.
19) Agreement on the language of the arbitration, possibly with a stipulation that a party wishing
to rely on documents or witnesses requiring translation or interpretation will have to bear the
respective costs.
20) Agreement on limitations regarding the length and number of written submissions to be
exchanged and/or time-limits for oral presentations, meetings, and hearings, if so desired.
21) Agreement on the powers of the tribunal to make partial awards, interim awards, procedural
orders, and other procedural decisions, and/or to hear witnesses, appoint experts, as may be
necessary and appropriate, and the internal procedure of the tribunal to take and sign these
decisions, if different from any institutional rules that may be applicable.
22) Agreement on admissible and not admissible evidence, if desired, including appointment of
experts, etc. Agreement on the Applicability of the 2010 IBA Rules on the Taking of
Evidence in International Arbitration.
23) Agreement preventing the parties from resorting to ordinary courts for interim relief or any
other issues within the jurisdiction of the tribunal.
24) Agreement on the applicable substantive law as per the underlying contracts or a first or
modified choice between the parties.
25) Exclusion of decision-making by the tribunal as amiable compositeur or ex aequo et bono,
if so desired.
26) Agreement on time limits, decision-making, notification, and deposit of the final award by
the tribunal, if different from any institutional rules that may be applicable.
27) Agreement waiving or excluding any right to appeal the award in court, if so desired, see for
example Article 34(b) ICC Rules; §69 English Arbitration Act.
28) Agreement on payment of advances on costs of the arbitration, if not already made at an
earlier stage (who? when? how much? to whom?).
29) Agreement on confidentiality of the proceedings, any materials and documents discussed
and/or presented during the arbitration, the deliberations of the tribunal and, if so desired, the
award itself, with the exception of such disclosures as may be required by law and/or for
legitimate purposes of challenging or enforcing an award.
30) Limitation of liability of the arbitrators and the tribunal for any acts or omissions conducted
in the context of the arbitration, with the exception of gross negligence or intent.
31) Stipulation of the time and place for the agreement on the terms of reference and the law
applicable to these terms (should be the law applicable at the place of the arbitration).
32) Signatures of all parties, all legal counsel, and all arbitrators. Parties may delegate their legal
counsel to sign on their behalf.
8. Preliminary Decisions of an Arbitration Tribunal
9. Exchange of Written Submissions
10. Evidence
???
Thus, in ad hoc arbitration and sometimes even in institutional arbitration before well-established
institutions, it may be necessary to fall back on the courts at the seat of the arbitration to obtain ???.
As a consequence, it is important to conduct the arbitration at a place that is willing to provide this
kind of support when necessary and that has efficient and trustworthy courts to call upon. This
explains why places like London, Stockholm,23 or various towns in Switzerland24 have become
frequent destinations for arbitration proceedings and why we would discourage parties from selecting
locations in countries or regions like Russia, mainland China, East and Central Asia, and much of
the Middle East, Africa, and Latin America as the seat of an arbitration.25 However, if evidence
and/or assets are exclusively located in one of the latter countries or regions, a (procedural) decision
from a court in England or Sweden or Switzerland may not easily be recognized and enforced there.
This may provide a good enough reason for placing the seat of an arbitration in such a country in
spite of certain reservations about its courts. In practice, it is advisable to look at recent cases
involving the enforcement of institutional arbitration and/or court decisions requiring the production
23 See Finn Madsen: Commercial Arbitration in Sweden, Oxford University Press, Oxford, 3rd ed. 2007.
24 See also Gabrielle Kaufmann-Kohler & Antonio Rigozzi: International Arbitration – Law and Practice in
Switzerland, Oxford University Press, Oxford, 2015.
25 Although it has a complicated legal framework, New York City is also a popular place for arbitration. A
good analysis of the applicable rules can be found in James H. Carter & John Fellas (eds): International
Commercial Arbitration in New York, Oxford University Press, Oxford, 2nd ed. 2016.
of documents or other evidence in the respective countries.26 For example, China may more easily
respect a decision on evidence by the Hong Kong International Arbitration Center (HKIAC) than by
the Vienna International Arbitration Centre (VIAC).
Witnesses27
11. The (Main) Hearing
12. The Award by the Tribunal
13. Challenges to an Award
14. Recognition and Enforcement of the Award

[reverse Chevron and Chromalloy? Delete Chromalloy and keep only Chevron? What does
Chromalloy add?]
??? Panama Convention here or up with NY Convention???
Central and Latin America currently presents a mixed picture. Brazil, Chile, Colombia, Mexico and
Peru are generally supportive of international commercial arbitration and usually do not present
problems when it comes to the enforcement of foreign awards. This is in contrast to Argentina,
Bolivia, Ecuador, Nicaragua, and Venezuela, where populist governments have a tendency towards
opposition against enforcement of foreign awards, in particular in cases of investor-state arbitration,
even including decisions by ICSID.
Chevron Corporation and Texaco Petroleum Co. v. Republic of Ecuador

United States District Court for the District of Columbia
Civil Action No. 12-1247 (JEB)
MEMORANDUM OPINION
26 For more general discussion see also Michael Ostrove, Claudia Salomon & Bette Shifman: Choice of Venue
in International Arbitration, Oxford University Press, Oxford, 2014.
27 For further discussion see Kaj Hobér & Howard S. Sussman: Cross-Examination in International
Arbitration, Oxford University Press, Oxford, 2015.
1
Petitioners Chevron Corporation and Texaco Petroleum Company filed this action to confirm an
award issued by an international tribunal under 9 U.S.C. § 207 and the 1958 Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, better known as the New York
Convention. Respondent Republic of Ecuador seeks to deny such confirmation on several bases.
First, Ecuador argues that this Court lacks subject-matter jurisdiction because the case does not meet
the requirements of the arbitration exception to the Foreign Sovereign Immunities Act. Second, it
contends that confirmation must be denied under the New York Convention because the Award was
beyond the scope of the submission to arbitration and is contrary to United States public policy.
Finally, it maintains that this Court should, at a minimum, stay proceedings in this matter while
Ecuador attempts to have the Award set aside by courts in the Netherlands, where the Award was
rendered. Disagreeing on all fronts, the Court will deny Ecuador’s request and grant Chevron’s
Petition to Confirm the Award.
I. Background
2
According to the Petition, Chevron and Texaco (together “Chevron”) entered into a contract with
Ecuador in 1973, permitting Chevron to exploit oil reserves in Ecuador’s Amazon region, on the
condition that Chevron provide a percentage of its crude-oil production at a reduced price to meet
Ecuadorian domestic-consumption needs. See Pet., ¶¶ 11-12. The agreement was amended in 1977
and expired in June 1992. Id., ¶¶ 11, 16. As Chevron began winding up its work in Ecuador in 1991,
it filed seven breach-of-contract cases there against the Ecuadorian government, seeking over $553
million in damages for various breaches of the 1973 and 1977 agreements. Id., ¶ 17. These disputes
largely concerned allegations that Ecuador had overstated its domestic oil-consumption needs, and
appropriated more crude oil than it was entitled to acquire at the reduced price. Id. ¶ 17. The lawsuits
remained pending in Ecuadorian courts until being incorporated into the arbitration at issue in this
case in 2006. Id., ¶ 21.
3
Meanwhile, in 1997, the U.S.-Ecuador Bilateral Investment Treaty (BIT) entered into force. Id., ¶
18; Treaty Between the United States of America and the Republic of Ecuador Concerning the
Encouragement and Reciprocal Protection of Investments, U.S.-Ecuador, Aug. 27, 1993, S. Treaty
Doc. No. 103-15. The BIT generally provides certain legal protections to American and Ecuadorian
investors when they engage in foreign direct investment in the reciprocal country. It specifically
provides, inter alia, that disputes against one of the parties arising out of such investments may be
resolved by resort to binding arbitration upon request of a company or national of the other party.
Id., art. VI(3). After more than a decade had elapsed without a determination of its claims pending
in the Ecuadorian courts, Chevron filed a Notice of Arbitration in 2006 alleging that Ecuador had
breached the BIT by allowing its claims to languish in those courts without a resolution. See Pet.,
¶¶ 21, 24-25.
4
A three-member arbitral Tribunal based at The Hague conducted several rounds of hearings
concerning both its jurisdiction to hear the case and the merits of the dispute. Id., ¶¶ 10, 22. The
Tribunal issued an Interim Award in December 2008 finding it had jurisdiction to hear the case, see
Declaration of Edward G. Kehoe, Exh. 3 (Interim Award), a Partial Award on the Merits in March
2010 finding that the Ecuadorian courts’ undue delay constituted a breach of the BIT, see id., Exh.
4 (Partial Award on the Merits), and a Final Award in August 2011 concerning damages. See id.,
Exh. 5 (Final Award on the Merits). Ecuador petitioned the District Court of The Hague to set aside
the Award in July 2010, but the court denied that request in May 2012. See Pet., ¶ 34. Ecuador
subsequently appealed the Dutch District Court’s judgment, and its appeal remains pending. See
Resp. Opp. to Pet. (ECF No. 18) at 3, 9.
5
Chevron now seeks an order confirming the Final Award under the New York Convention.
Ecuador, not surprisingly, objects.
II. Analysis
6
Ecuador raises three arguments in an effort to derail confirmation: the Court lacks subject-matter
jurisdiction under the Foreign Sovereign Immunities Act, confirmation should be denied under the
New York Convention, and a stay pending appeal in the Netherlands is appropriate. The Court
addresses each in turn.
A. Foreign Sovereign Immunities Act
7
Ecuador first argues that the Foreign Sovereign Immunities Act, 28 U.S.C. § 1604, deprives the
Court of subject-matter jurisdiction. See Resp. Opp. to Pet. at 10. The FSIA is “the sole basis for
obtaining jurisdiction over a foreign state in our courts.” Argentine Republic v. Amerada Hess
Shipping Corp., 488 U.S. 428, 434 (1989). Under the statute, “a foreign state is presumptively
immune from the jurisdiction of the United States courts[] unless a specified exception applies.”
Saudi Arabia v. Nelson, 507 U.S. 349, 355 (1993). Because “subject matter jurisdiction in any such
action depends on the existence of one of the specified exceptions . . . [a]t the threshold of every
action in a District Court against a foreign state . . . the court must satisfy itself that one of the
exceptions applies.” Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 493-94 (1983).
Notably, “the defendant bears the burden of proving that the plaintiff’s allegations do not bring its
case within a statutory exception to immunity.” Phoenix Consulting, Inc. v. Republic of Angola, 216
F.3d 36, 40 (D.C. Cir. 2000) (citing Transamerican S.S. Corp. v. Somali Democratic Republic, 767
F.2d 998, 1002 (D.C. Cir. 1985)).
8
The FSIA provides an exception to foreign sovereign immunity for actions to confirm certain
arbitration awards. See 28 U.S.C. § 1605(a)(6). Specifically, foreign sovereigns are not immune from
suits
in which the action is brought[] either to enforce an agreement made by the foreign
state with or for the benefit of a private party to submit to arbitration all or any
differences which have arisen or which may arise between the parties with respect
to a defined legal relationship . . . or to confirm an award made pursuant to such an
agreement to arbitrate, if . . . the agreement or award is or may be governed by a
treaty or other international agreement in force for the United States calling for the
recognition and enforcement of arbitral awards. Id. (emphasis added).
9
Chevron asserts that its Petition falls under this exception because the Final Award was made
pursuant to the BIT and is governed by the 1958 Convention on the Recognition and Enforcement
of Foreign Arbitral Awards, also known as the New York Convention, implemented at 9 U.S.C. §§
201 et seq. See Pet., ¶¶ 4-5. This is correct.
10
First, the Award’s own language indicates it was rendered pursuant to the BIT, an agreement that
provides for arbitration. See Interim Award at 1, 39 (referring to the Award as “under the BIT” and
describing the BIT as one of the “principal relevant legal provisions” in the dispute).
11
Second, the Award is clearly governed by the New York Convention, which controls “the
recognition and enforcement of arbitral awards made in the territory of a State other than the State
where the recognition and enforcement of such awards are sought.” Convention on the Recognition
and Enforcement of Foreign Arbitral Awards, opened for signature June 10, 1958, art. I.1, 21 U.S.T.
2517. Awards are enforceable in the courts of any signatory so long as “‘the place of the award . .
. is in the territory of a party to the Convention.’” Creighton Ltd. v. Government of the State of
Qatar, 181 F.3d 118, 121 (D.C. Cir. 1999) (quoting Restatement (Third) of Foreign Relations Law
§ 471 cmt. b (1987)). Because the arbitration in this matter was conducted at The Hague and the
Netherlands is a party to the New York Convention, the Final Award here is governed by the
Convention. See Pet., ¶ 10; U.S. Dept. of State, Treaties in Force: A List of Treaties and Other
International Agreements of the United States in Force on January 1, 2007, § 2 at 12, available at
http://www.state.gov/documents/organization/89668.pdf.
12
Under the law of this Circuit, moreover, the arbitration exception in § 1605(a)(6) “by its terms”
applies to actions to confirm arbitration awards under the New York Convention. Creighton, 181
F.3d at 123. “Indeed, it has been said with authority that the New York Convention ‘is exactly the
sort of treaty Congress intended to include in the arbitration exception.’” Id. at 123-24 (quoting
Cargill Int’l S.A. v. M/T Pavel Dybenko, 991 F.2d 1012, 1018 (2d Cir. 1993)). The Court thus finds
that Chevron has satisfied the requirements of the FSIA’s arbitration exception.
13
Ecuador nonetheless raises a novel argument in contesting the applicability of the exception here.
It contends that it never consented to arbitrate the underlying dispute in this matter, meaning the
award was not rendered “pursuant to . . . an agreement to arbitrate,” and that the Court must satisfy
itself of the arbitrability of the underlying dispute before finding subject-matter jurisdiction over this
enforcement proceeding. See Resp. Opp. to Pet. at 10-11 (citing 28 U.S.C. § 1605(a)(6)). Ecuador,
however, points to no authority – nor can the Court identify any – suggesting that the Court must
conduct such an independent, de novo determination of the arbitrability of a dispute to satisfy the
FSIA’s arbitration exception.
14
Such an argument appears to be an attempt by Ecuador to get two bites at the apple of the merits
of its dispute with Chevron, by seeking to have this Court separately determine the arbitrability of
the underlying dispute under both the FSIA and the New York Convention. The inquiry Ecuador
suggests runs counter to the clear teaching of this Circuit on the purpose and role of the FSIA. The
FSIA is a jurisdictional statute that “‘speak[s] to the power of the court rather than to the rights and
obligations of the parties.’” Creighton, 181 F.3d at 124 (quoting Landgraf v. USI Film Prods., 511
U.S. 244, 274 (1994)). Likewise, “§ 1605(a)(6) does not affect the contractual right of the parties to
arbitration but only the tribunal that may hear a dispute concerning enforcement of an arbitral
award.” Id. (citing McGee v. International Life Ins. Co., 355 U.S. 220, 224 (1957)). Inquiring into
the merits of the enforcement dispute – that is, the arbitrability of the underlying claims – would
involve an inquiry into the “contractual rights of the parties to arbitration” and would thus be beyond
the reach of the FSIA’s cabined jurisdictional inquiry.
15
In contrast to the unprecedented merits-based review Ecuador seeks, the Court’s approach here is
consistent with those of numerous other federal courts, which have engaged in only these two
jurisdictional inquiries – namely, whether the award was made pursuant to an appropriate arbitration
agreement with a foreign state and whether the award “is or may be” governed by a relevant
recognition treaty. See, e.g., Blue Ridge Investments, LLC v. Republic of Argentina, 902 F. Supp.
2d 367, 375 (S.D.N.Y. 2012) (“Here, Blue Ridge instituted the instant action ‘to confirm an award
made pursuant to [Argentina’s] agreement to arbitrate.’ The Award is governed by the ICSID
Convention, ‘a treaty or other international agreement in force for the United States calling for the
recognition and enforcement of arbitral awards. Argentina and the United States are both signatories
to the Convention. . . . Accordingly, this Court has subject matter jurisdiction under . . . Section
1605(a)(6).”) (alterations in original); Continental Casualty Co. v. Argentine Republic, 893 F. Supp.
2d 747, 751 n.11 (E.D. Va. 2012) (collecting cases); In the Matter of the Arbitration Between
Monegasque de Reassurances S.A.M. v. Nak Naftogaz of Ukraine, 311 F.3d 488, 494-95 (2d Cir.
2002) (finding jurisdiction under the FSIA in proceeding to confirm arbitration award under the New
York Convention); G.E. Transp. v. Republic of Albania, 693 F. Supp. 2d 132, 136 (D.D.C. 2010)
(same); Agrocomplect, AD v. Republic of Iraq, 524 F. Supp. 2d 16, 33-34 (D.D.C. 2007) (denying
jurisdiction because Iraq, where arbitration took place, “was not a signatory to the New York
Convention or (to the best of the Court’s knowledge) any other ‘treaty or international agreement in
force for the United States calling for the recognition and enforcement of arbitral awards’ when it
entered into the contract with the plaintiff”) (quoting 28 U.S.C. § 1605(a)(6)).
16
In any event, the Court’s analysis in Section III.B, infra, affirms – albeit under a somewhat
deferential standard of review – that Ecuador did consent to arbitration. Respondent’s FSIA
argument would thus be unlikely to prevail even if reviewed on its merits. Indeed, in any dispute
where a respondent argues under the New York Convention that the award was beyond the
arbitrator’s power, such merits inquiry will always occur. See New York Convention, art. V(1)(c)
(Court may deny confirmation where award beyond scope of submission to arbitration). There is thus
no prejudice to either party that would be incurred by a Court’s not engaging in the same analysis
twice.
B. New York Convention
17
The Federal Arbitration Act, 9 U.S.C. §§ 201-208, codifies the New York Convention. Pursuant
to the Convention, a district court “shall confirm the [arbitral] award unless it finds one of the
grounds for refusal or deferral of recognition or enforcement of the award specified in the said
Convention.” 9 U.S.C. § 207. “Consistent with the ‘emphatic federal policy in favor of arbitral
dispute resolution’ recognized by the Supreme Court . . . the FAA affords the district court little
discretion in refusing or deferring enforcement of foreign arbitral awards.” Belize Social
Development Ltd. v. Government of Belize, 668 F.3d 724, 727 (D.C. Cir. 2012) (quoting Mitsubishi
Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631 (1985)). Courts “may refuse to
enforce the award only on the grounds explicitly set forth in Article V of the Convention.” TermoRio
S.A. E.S.P. v. Electranta S.P., 487 F.3d 928, 935 (D.C. Cir. 2007) (quoting Yusuf Ahmed Alghanim
& Sons v. Toys “R” Us, Inc., 126 F.3d 15, 23 (2d Cir. 1997)) (quotation marks omitted); see also
Int’l Trading & Indus. Inv. Co. v. Dyncorp Aerospace Tech., 763 F. Supp. 2d 12, 19 (D.D.C. 2011)
(collecting cases). Because “the New York Convention provides only several narrow circumstances
when a court may deny confirmation of an arbitral award, confirmation proceedings are generally
summary in nature.” Int’l Trading, 763 F. Supp. 2d at 20 (citing Zeiler v. Deitsch, 500 F.3d 157, 167
(2d Cir. 2007)). The party resisting confirmation bears the heavy burden of establishing that one of
the grounds for denying confirmation in Article V applies. See New York Convention, art. V;
Imperial Ethiopian Gov’t v. Baruch-Foster Corp., 535 F.2d 334, 336 (5th Cir. 1976); see also Ottley
v. Schwartzberg, 819 F.2d 373, 376 (2d Cir. 1987) (“[T]he showing required to avoid summary
confirmation is high.”).
18
In contending that the Award here should not be enforced, Ecuador relies on two of the grounds
for denying confirmation set forth in Article V. See Resp. Opp. to Pet. at 23-25. First, It invokes
Article V(1)(c), which allows a court to deny confirmation where “[t]he award deals with a
difference . . . not falling within the terms of the submission to arbitration, or it contains decisions
on matters beyond the scope of the submission to arbitration.” Second, Ecuador argues that
confirmation may be denied under Article V(2)(b), which allows for denial of confirmation where
“the recognition or enforcement of the award would be contrary to the public policy” of the country
where confirmation is sought. Neither ground is availing.
1. Article V(1)(c): Arbitrability
19
Ecuador first asserts that confirmation may be denied under Article V(1)(c) because it “never
agreed – with the United States or with Chevron – to arbitrate the claims in the pending litigation
or Chevron’s Treaty claim of undue delay concerning that litigation.” See Resp. Opp. to Pet. at 9.
It contends that since the Tribunal’s decision on the arbitrability of the underlying dispute was
incorrect, the Final Award was “beyond the scope of the submission to arbitration.” See New York
Convention, art. V(1)(c). To reach such a conclusion, Ecuador suggests that this Court must engage
in an “independent determination” of the Tribunal’s jurisdiction to resolve the underlying dispute.
See Resp. Reply and Opp. at 5-8. Chevron disagrees, claiming instead that because the parties
“clearly and unmistakably” agreed that the Tribunal should decide the arbitrability of the dispute,
this Court’s review of that decision should be highly deferential, a standard the Tribunal’s reasoned
decision entirely satisfies. See Pet. Opp. and Mot. (ECF No. 20) at 15. Chevron has the better of this
debate.
20
Ecuador maintains that this Court must conduct a de novo review of the Tribunal’s decision on
jurisdiction because, in the ordinary case, “the question of arbitrability . . . is undeniably an issue for
judicial determination.” AT&T Tech., Inc. v. Commc’n Workers of Am., 475 U.S. 643, 649 (1986);
see also Resp. Opp. to Pet. at 12 (citing Granite Rock Co. v. Int’l Bhd. of Teamsters, 130 S. Ct.
2847, 2855 (2010), and First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (1995)).
Ecuador, however, mischaracterizes the holdings of these cases, none of which provides that
arbitrability is an issue for judicial determination in all circumstances. For example, while the AT&T
Technologies court noted that, ordinarily, arbitrability is an issue for judicial determination, it held
that where “the parties clearly and unmistakably provide otherwise” – e.g., where they have
submitted the arbitrability of the dispute to the arbitrators – the arbitrator determines the arbitrability
of the dispute in the first instance. See 475 U.S. at 649; see also, e.g., First Options, 514 U.S. at 943
(“We agree with First Options, therefore, that a court must defer to an arbitrator's arbitrability
decision when the parties submitted that matter to arbitration.”). Granite Rock, by contrast,
concerned a case where there was no dispute about who should determine arbitrability. See 130 S.
Ct. at 2856 (noting that on those facts, “[t]he parties agree[d] that it was proper for the District Court
to decide whether their ratification dispute was arbitrable”).
21
In cases where the parties have clearly and unmistakably delegated the question of arbitrability to
the arbitrator, a court may review that arbitrability decision, but it “should give considerable leeway
to the arbitrator, setting aside his or her decision only in certain narrow circumstances.” First
Options, 514 U.S. at 943. Indeed, at least one federal circuit has explicitly rejected the position
Ecuador takes here, holding that where the parties “clearly and unmistakably agreed to arbitrate
issues of arbitrability,” the party resisting confirmation of the award “is not entitled to an
independent judicial redetermination of that same question.” Schneider v. Kingdom of Thailand, 688
F.3d 68, 74 (2d Cir. 2012). To the extent that the parties here have “clearly and unmistakably” agreed
to arbitrate arbitrability, then, this Court must give substantial deference to that decision. In a
confirmation proceeding where arbitrability has been clearly and unmistakably delegated to the
arbitrator, “the [New York] Convention . . . does not sanction [a Court’s] second-guessing the
arbitrator’s construction of the parties’ agreement.” Parsons & Whittemore Overseas Co., Inc. v.
Societe Generale De L’Industrie Du Papier (RATKA), 508 F.2d 969, 977 (2d Cir. 1974).
22
In deciding this question, the Court first considers whether an agreement to arbitrate exists at all,
then analyzes whether such agreement intended the Tribunal to determine questions of arbitrability,
and ends with a review of the Tribunal’s decision on that issue in this case.
a. Existence of an Agreement to Arbitrate
23
To begin, Chevron asserts that the “plain language” of the U.S.-Ecuador BIT demonstrates
Ecuador’s consent to arbitrate this dispute. See Pet. Opp. and Mot. at 14. In its view, Article VI of
the BIT constitutes “a standing offer to arbitrate any ‘investment dispute’ brought by a U.S. ‘national
or company.’” See id. at 14-15 (citing U.S.-Ecuador BIT, art. VI § 4(b)). This position is bolstered
by two recent Second Circuit decisions interpreting bilateral investment treaties as creating written
agreements to arbitrate for purposes of the New York Convention on facts similar to these. In a case
involving both the U.S.-Ecuador BIT and a dispute between our same parties Chevron and Ecuador,
the Second Circuit explained:
The BIT provides that “an ‘agreement in writing’ for purposes of Article II of the .
. . New York Convention” is created when a foreign company gives notice in writing
to a BIT signatory and submits an investment dispute between the parties to binding
arbitration in accordance with Article VI of the Treaty. All that is necessary to form
an agreement to arbitrate is for one party to be a BIT signatory and the other to
consent to arbitration of an investment dispute in accordance with the Treaty’s terms.
In effect, Ecuador’s accession to the Treaty constitutes a standing offer to arbitrate

disputes covered by the Treaty; a foreign investor’s written demand for arbitration
completes the “agreement in writing” to submit the dispute to arbitration. Republic
of Ecuador v. Chevron Corp., 638 F.3d 384, 392-93 (2d Cir. 2011) (emphasis added)
(internal citations omitted).
24
Likewise, when interpreting the Germany-Thailand BIT, the same court held that “[t]he existence
of an arbitration agreement [between the investor and Thailand] is beyond dispute. Thailand, ‘by
signing the [treaty], and [the investor] by consenting to arbitration, have created a separate binding
agreement to arbitrate.’” Schneider, 688 F.3d at 71-72 (quoting Chevron, 638 F.3d at 392). Although
these decisions are not binding on this Court, given the Second Circuit’s sound reasoning regarding
directly comparable facts, the Court sees no reason to deviate from this approach here. This is,
furthermore, a point Ecuador does not truly contest.
25
Because the BIT constitutes Ecuador’s “standing offer” to arbitrate, all Chevron must show is that
it was a U.S. “company or national” that submitted an “investment dispute” in order for the Court
to find it had a binding arbitration agreement with Ecuador. No one disputes that Chevron is a U.S.
company or national. The BIT defines an “investment dispute” to include “an alleged breach of any
right conferred or created by this Treaty with respect to an investment.” See U.S. Ecuador BIT, art.
VI § 1. Because Chevron alleged that “Ecuador breached Article II(7) of the BIT through the undue
delay of the Ecuadorian courts” in deciding Chevron’s breach-of-contract cases regarding its initial
investment in Ecuador, see Pet., ¶ 27, it properly requested arbitration of an “alleged breach of [a]
right conferred by [the BIT] with respect to an investment.” See Section III.B.1.c, infra (discussing
definition of investment). The Court thus finds it had a valid agreement to arbitrate under the BIT.
b. Who Determines Arbitrability?
26
Having determined that the parties here entered into a valid agreement to arbitrate, the Court must
now inquire whether that agreement “clearly and unmistakably” shows that they intended the
Tribunal to decide questions of arbitrability. In this case, the U.S.-Ecuador BIT, which forms the
basis of the agreement to arbitrate, provides that arbitration may be conducted “in accordance with
the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL).”
See U.S.-Ecuador BIT, art. VI § 3(a)(iii). Article 21 of the UNCITRAL rules requires that the arbitral
tribunal “shall have the power to rule on objections that it has no jurisdiction, including any
objections with respect to the existence or validity of the . . . arbitration agreement.” UNCITRAL
Arbitration Rules, art. 21, ¶ 1, G.A. Res. 31/98, U.N. Doc. A/RES/31/98 (Dec. 15, 1976). In this
Circuit, clear and binding precedent dictates that in the context of a bilateral investment treaty,
“incorporation of the UNCITRAL Rules provides clear[] and unmistakabl[e] evidence[] that the
parties intended for the arbitrator to decide questions of arbitrability.” Republic of Argentina v. BG
Group PLC, 665 F.3d 1363, 1371 (D.C. Cir. 2012) (alterations in original) (internal quotation marks
omitted). Indeed, the D.C. Circuit is not alone in this regard; the Second and Ninth Circuits have
both reached the same conclusion. See Chevron, 638 F.3d at 394; Wal-Mart Stores, Inc. v. PT
Multipolar Corp., No. 98-16952, 1999 WL 1079625, at *2 (9th Cir. Nov. 30, 1999). And, indeed,
Ecuador wisely yields to the unequivocal authority on this issue. See Resp. Reply and Opp. (ECF
No. 26) at 6. The Court, accordingly, finds that the parties here clearly and unmistakably agreed to
have the arbitrator resolve issues of arbitrability.
c. Deferential Review of Tribunal’s Decision
27
Having so found, the Court may now engage in only deferential review of the Tribunal’s decision,
granting “considerable leeway to the arbitrator.” First Options, 514 U.S. at 943. At the outset, it is
worth noting that the “beyond the scope” defense to confirmation “should be construed narrowly”
and that the party resisting confirmation on such basis “must . . . overcome a powerful presumption
that the arbitral body acted within its powers.” Parsons, 508 F.2d at 976. Indeed, such limited review
is consistent with “the basic purposes of arbitration: to resolve disputes speedily and to avoid the
expense and delay of extended court proceedings.” Fed. Commerce & Nav. Co. v. Kanematsu-
Gosho, Ltd., 457 F.2d 387, 389 (2d Cir. 1972); see also Rich v. Spartis, 516 F.3d 75, 81 (2d Cir.
2008) (arbitration awards subject to very limited review “in order to avoid undermining the twin
goals of arbitration”).
28
Unfortunately, the precise nature of the limited review contemplated by First Options is not clear
from the cases that follow. See Schneider, 688 F.3d at 74 (expressing “no opinion on the precise
standard for [deferential] review”). Ecuador, for example, contends that “the court should consider
the arbitrators’ reasoning [and i]f it does not hold up under scrutiny, it should be rejected,” see Resp.
Reply and Opp. at 8, but it offers no authority for this position.
29
The Court need not determine exactly what standard of deference to employ, as even under a very
mildly deferential standard, the Tribunal’s decision appears well reasoned and comprehensive. In
no way is it so erroneous, unjust, or unclear that this Court would be empowered to set it aside.
30
The Tribunal here consisted of three learned arbitrators, one chosen by Chevron, one chosen by
Ecuador, and one chosen by the first two arbitrators with the consent of the parties. See Interim
Award at 13. No one contends that the arbitrators were biased, inexperienced, or otherwise
inadequate. The Tribunal held eleven days of hearings, four of which were solely devoted to
jurisdiction. See id. at 25-26. It ultimately produced a 140-page opinion concerning arbitrability
alone and addressing eight potential jurisdictional issues. See id. at 63-138. Ecuador thus cannot
claim that the Award should be set aside for the Tribunal’s failure to thoroughly engage with the
issues or the parties’ arguments.
31
Looking beyond the comprehensiveness of the Tribunal’s work to its reasoning, the Court again
finds no reason for reversal. At arbitration, Ecuador contended that the underlying breach-of-contract
and unreasonable-delay disputes were nonarbitrable because they were not covered by the U.S.-
Ecuador BIT, arguing variously that the BIT did not cover investments that had “expired” prior to
its entry into force and that, in any case, the surviving breach-of-contract claims could not constitute
“investments” under the Treaty. See id., ¶¶ 59, 79. The Tribunal disagreed. It noted that the BIT
defines “investments” to include “a claim to money or a claim to performance having economic
value, and associated with an investment.” Id., ¶ 179. The Tribunal “agreed with [Chevron] that . .
. [the underlying lawsuits] concern the liquidation and settlement of claims relating to [Chevron’s
initial investment in Ecuador] and, therefore, form part of that investment.” Id., ¶ 180. It further
observed that treaty language “giv[ing] a further non-exhaustive list of forms that an investment may
take” and “provid[ing] that ‘[a]ny alteration of the form in which assets are invested or reinvested
shall not affect their character as [an] investment’” bolstered its conclusion that “once an investment
is established, it continues to exist and be protected [by the BIT] until its ultimate ‘disposal’ has been
completed – that is, until it has been wound up.” Id., ¶¶ 181, 183. It then concluded that Chevron’s
“investments have not ceased to exist: their lawsuits continued their original investment through the
entry into force of the BIT and to the date of commencement of this arbitration.” Id., ¶ 184.
32
The Court can find nothing objectionable about this conclusion, which is based on the plain text
of the BIT. Although the Tribunal discusses other jurisdictional arguments throughout the rest of the
Interim Award, this analysis is alone sufficient to survive even the more searching form of review
Ecuador contends is applicable here. Indeed, if the Court were asked the same question in the first
instance, such plain-meaning analysis would likely end the matter, as it does in the interpretation of
contracts, judgments, and statutes. See, e.g., Travelers Indem. Co. v. Bailey, 557 U.S. 137, 150
(2009) (“[W]here the plain terms of a court order unambiguously apply . . . they are entitled to their
effect.”); Connecticut Nat’l Bank v. Germain, 503 U.S. 249, 254 (1992) (“[W]hen the words of a
statute are unambiguous . . . this first canon is also the last: ‘judicial inquiry is complete.’”); In re
Fitzgerald Marine & Repair, Inc., 619 F.3d 851, 859 (8th Cir. 2010) (“Where the written instrument
is so worded that it can be given a certain definite legal meaning or interpretation, then it is not
ambiguous, and this Court will construe [it accordingly].”) (quotation and citations omitted).
33
Because the Treaty plainly states that an “investment” includes “a claim to money . . . associated
with an investment” and dictates that “an investment . . . continues to exist . . . until it has been
wound up,” the Tribunal’s reasoning that Chevron’s breach-of-contract lawsuits were unexpired
“investments” for purposes of the BIT more than “holds up under scrutiny.” As the Tribunal’s
arbitrability decision survives the deferential review required in this circumstance, the Court cannot
find that the Final Award is “beyond the scope” of the submission to arbitration and will not deny
confirmation on this basis.
2. Article V(2): Public Policy
34
Ecuador also argues that confirmation must be denied because the award contravenes the public
policy of the United States. See Resp. Opp. to Pet. at 24-25. The public-policy exception under the
New York Convention is construed extremely narrowly and applied “only where enforcement would
violate the forum state’s most basic notions of morality and justice.” Parsons, 508 F.2d at 974 (citing
Restatement (Second) of Conflict of Laws § 117, cmt. c (1971)); see also Ministry of Def. & Support
for the Armed Forces of the Islamic Republic of Iran v. Cubic Defense Systems, Inc., 665 F.3d 1091,
1097 (9th Cir. 2011); TermoRio S.A. E.S.P., 487 F.3d at 938; Admart AG v. Stephen & Mary Birch
Found., Inc., 457 F.3d 302, 308 (3d Cir. 2006); Karaha Bodas Co., L.L.C. v. Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara, 364 F.3d 274, 306 (5th Cir. 2004); Slaney v. Int’l
Amateur Athletic Fed’n, 244 F.3d 580, 593 (7th Cir. 2001); M&C Corp. v. Erwin Behr GmbH &
Co., KG, 87 F.3d 844, 851 n.2 (6th Cir. 1996). The “provision was not meant to enshrine the
vagaries of international politics under the rubric of ‘public policy,’” and it does not provide that
awards that might contravene U.S. interests may be resisted on such grounds. Parsons, 508 F.2d at
974. Likewise, “[a]lthough this defense is frequently raised, it ‘has rarely been successful.’” Cubic
Defense Systems, 665 F.3d at 1097 (quoting Andrew M. Campbell, Annotation, Refusal to Enforce
Foreign Arbitration Awards on Public Policy Grounds, 144 A.L.R. Fed. 481 (1998 & supp.)).
35
Ecuador points to no such “basic notion of morality and justice” that would be offended by the
enforcement of the Award here; in fact, its public-policy argument is primarily a rehashing of its
position that the Award was beyond the scope of the submission to arbitration. It also contends that
enforcement would violate “strong public policies respecting foreign sovereignty and the autonomy
of ongoing judicial proceedings.” See Resp. Reply and Opp. at 16. Neither argument meets the
extraordinarily high threshold required by the public-policy defense.
36
As to Ecuador’s first argument – that the Award was beyond the scope – both the Tribunal and this
Court have separately found that Ecuador did consent to arbitrate this dispute. In fact, it could just
as easily be argued that enforcing the Award here furthers the strong U.S. policy of “ensur[i]ng that
private arbitration agreements are enforced according to their terms.” AT&T Mobility LLC v.
Concepcion, 131 S. Ct. 1740, 1748 (2011) (citation and quotation marks omitted); New York
Convention, art. II. Indeed, analysis of a proposed public-policy defense “begins with the strong
public policy favoring confirmation of foreign arbitration awards,” Cubic Defense Systems, 665 F.3d
at 1098, because “[t]he goal of the [New York] Convention, and the principal purpose underlying
American adoption and implementation of it, was to encourage the recognition and enforcement of
commercial arbitration agreements in international contracts and to unify the standards by which
agreements to arbitrate are observed and arbitral awards are enforced in the signatory countries.”
Scherk v. Alberto-Culver Co., 417 U.S. 506, 520 n.15 (1974).
37
Ecuador’s second contention – that enforcing the Award would flout its sovereignty – is similarly
unavailing. Ecuador argues that enforcing the Award would sanction the forcible removal of pending
litigation from Ecuadorian courts, something it suggests the U.S. would never tolerate. Such a
characterization is erroneous.
38
Ecuador and the U.S. willingly entered into the BIT, in which they agreed to “provide effective
means of asserting claims and enforcing rights with respect to investment, investment agreements,
and investment authorizations.” U.S.-Ecuador BIT, art. II(7). The present dispute found its way to
arbitration because Chevron alleged a breach of this clause – namely, that Ecuador had failed to
provide “effective means of . . . enforcing rights” in its court system by allowing Chevron’s claims
to languish there for fifteen years.
39
In such an instance, the BIT explicitly states that disputes “arising out of . . . an alleged breach of
any right conferred or created by this treaty” may be resolved through “courts or administrative
tribunals” and through “binding arbitration.” See id., art. VI(1-3). The BIT leaves the choice of
dispute-resolution method up to the national or company bringing the claim, and it provides that such
awards shall be enforceable under the New York Convention. Id. In this sense, the BIT’s provision
for the arbitration of claims that a signatory has breached its treaty obligations operates as a backstop
against the failure of the court systems of either of the signatory nations, and it has played that role
appropriately here.
40
Indeed, it strains credulity to argue that both these sovereign nations would have agreed to such
a choice of dispute-resolution processes if they had anticipated it would lead to results that would
“violate . . . [their] most basic notions of morality and justice.” Parsons, 508 F.2d at 974. Given that
the Court has found there was a valid agreement to arbitrate between the parties formed under the
BIT, the Court cannot now say that enforcing it through the precise means contemplated by the treaty
would contravene the strong public policy of the United States. As a result, confirmation may not
be denied on this basis.
41
To the extent Ecuador also claims that the Tribunal’s remedy was improper, such remedy clearly
does not violate U.S. public policy. In this case, the Tribunal found that Ecuador had breached its
obligations under the BIT, and it concluded that the appropriate damage measure for “an
international wrong is . . . the comparison of the victim’s actual situation to that which would have
prevailed had the illegal acts not been committed.” See Partial Award, ¶ 374. Applying this principle
to Ecuador’s breach of the BIT, it found that because
the Claimants’ alleged primary “loss” in this case is the chance for a judgment by the
Ecuadorian courts, the Tribunal must ask itself how a competent, fair, and impartial
Ecuadorian court would have resolved [Chevron]’s claims. The Tribunal must step
into the shoes and mindset of an Ecuadorian judge and come to a conclusion about
what the proper outcome of the cases should have been. Id., ¶ 375.
42
The Court offers no opinion on whether the Tribunal’s proposed remedy was erroneous as an
interpretation of the appropriate damages measure in an international arbitration, but even if it were,
“a mere error of law would not . . . be sufficient grounds to refuse recognition of the award.”
National Oil Corp. v. Libyan Sun Oil Co., 733 F. Supp. 800, 819 n.32 (D. Del. 1990); see also
Karaha Bodas Co., 364 F.3d at 306 (“Erroneous legal reasoning or misapplication of law is generally
not a violation of public policy within the meaning of the New York Convention.”); Brandeis Intsel
Limited v. Calabrian Chemicals Corp., 656 F. Supp. 160, 165 (S.D.N.Y. 1987) (“‘[M]anifest
disregard’ of law, whatever the phrase may mean, does not rise to the level of contravening ‘public
policy,’ as that phrase is used in Article V of the Convention.”) (emphasis in original). Based on the
limited nature of the Court’s review here, it could not conclude that the Tribunal’s proposed remedy
was so egregious that it violated U.S. public policy and should be vacated.
43
Finding that Ecuador has not carried its burden to show that any of the bases for denying
confirmation in the New York Convention applies to the Award here, the Court must grant
Chevron’s Petition and confirm the Award.
C. Ecuador’s Request for a Stay
44
Finally, Ecuador argues that “the Court should defer a final decision on the merits of Chevron’s
petition pending resolution of the ongoing set-aside proceedings in the Hague,” as permitted by
Article VI of the New York Convention. See Resp. Opp. to Pet. at 26. Under the Convention, district
courts do have discretion to stay proceedings where “a parallel proceeding is ongoing in the
originating country and there is a possibility that the award will be set aside.” Europcar Italia, S.p.A.
v. Maiellano Tours, Inc., 156 F.3d 310, 317 (2d Cir. 1998). Noting that “the adjournment of
enforcement proceedings impedes the goals of arbitration – the expeditious resolution of disputes
and the avoidance of protracted and expensive litigation,” the Europcar court found that “a stay of
confirmation should not be lightly granted,” and it identified a number of factors district courts
should consider in evaluating a request for a stay of proceedings. Id. at 317. These factors include:
(1) The general objectives of arbitration . . .;
(2) The status of the foreign proceedings and the estimated time for those
proceedings to be resolved;
(3) Whether the award sought to be enforced will receive greater scrutiny in the
foreign proceedings under a less deferential standard of review;
(4) The characteristics of the foreign proceedings including (i) whether they were
brought . . . to set the award aside (which would tend to weigh in favor of
enforcement) . . . and (iv) whether they were initiated under circumstances indicating
an intent to hinder or delay resolution of the dispute;
(5) A balance of the possible hardships to the parties . . .; and
(6) Any other circumstance that could tend to shift the balance in favor of or against
adjournment . . . . Id. at 317-318.
45
“Because the primary goal of the Convention is to facilitate the recognition and enforcement of
arbitral awards, the first and second factors on the list should weigh more heavily in the district
court’s determination.” Id. at 318. Notably, Ecuador’s initial request for a stay makes no mention of
the Europcar factors, and its Second Opposition makes only passing reference to them. The Court,
finding that the balance of factors weighs against staying the proceedings, will deny Ecuador’s
request.
46
The first factor, the general objectives of arbitration, weighs strongly in favor of confirmation. The
BIT, the UNCITRAL Rules, and the New York Convention all require immediate satisfaction of
arbitral awards. Chevron submitted its Notice of Arbitration in this matter more than six years ago,
a delay that surely does not constitute an “expeditious resolution” of the dispute, which originated
in the early 1990s. See G.E. Transport, 693 F. Supp. 2d at 139 (finding that four-year delay “plainly
weigh[ed] in favor of confirmation rather than adjournment”).
47
Likewise, the second factor, the status of the foreign proceedings, weighs in favor of immediate
confirmation: although the Dutch proceeding is ongoing, the District Court of the Hague issued a
decision denying Ecuador’s petition to set the award aside more than a year ago, and the appeal will
likely not be resolved until late 2013 or early 2014. See Pet., ¶ 34; Kehoe Decl., Exh. 6 (Certified
Judgment of the District Court of the Hague).
48
The third factor, whether the award will receive greater scrutiny in foreign proceedings, is a closer
case. According to Chevron’s expert, Jacob M.K.P. Cornegoor, who represents Chevron in the Dutch
proceeding, “[T]he [Dutch] District Court reviewed the question whether a valid arbitration
agreement was formed de novo,” but reviewed the question of whether the dispute concerned an
investment validly covered by the BIT as “one for arbitrators to consider and their answer should be
reviewed under a more restrictive standard by the court.” Declaration of Jacob M.K.P. Cornegoor,
¶ 4; Certified Judgment, ¶¶ 4.10-4.11. This standard is not so much more exacting than the one
applied here that it weighs strongly against confirmation, and, indeed, the fact that the Dutch District
Court has already denied the motion to set aside suggests that to the extent the standard is any more
searching, it has not helped Ecuador in its attempt to resist confirmation.
49
The fourth factor does not carry much force either way. Although the parties dispute whether the
vacatur proceedings are an attempt to “hinder or delay resolution of the dispute,” the Court cannot
say that they are so obviously either legitimate or vexatious that this factor should sway its analysis
here. The fact that the proceedings were initiated to vacate the Award, rather than confirm it,
however, does weigh against a stay.
50
The fifth factor, the balance of hardships, also counsels in favor of immediate confirmation. As
Chevron notes, this dispute is more than twenty years old, and the arbitration itself began more than
six years ago. Although Chevron will be entitled to prejudgment interest, which would continue to
accrue in the event of a stay, that is not enough to offset its continued inability to obtain enforcement
of its award. After such an extensive delay, the balance of hardships – and, indeed, the interests of
justice – strongly favor immediate confirmation.
51
Neither side presents any other significant circumstance that should be considered as an additional
factor. Because the balance of the Europcar factors greatly supports immediate confirmation, the
Court will deny Ecuador’s request for a stay.
III. Conclusion
52
For the aforementioned reasons, the Court will grant Chevron’s Petition and order confirmation
of the Award. A separate Order consistent with this Opinion will be issued this day.
JAMES E. BOASBERG
United States District Judge
Date: June 6, 2013
________
NOTES AND QUESTIONS

1)
2)
Chromalloy Aeroservices v. Egypt

In the Matter of the Arbitration of Certain Controversies Between Chromalloy Aeroservices, a
Division of Chromalloy Gas Turbine Corporation, Petitioner, and
The Arab Republic of Egypt, Respondent, Civil No. 94-2339 (JLG), 31 July 1996
United States District Court, District of Columbia. 939 F. Supp. 907 (1996) (most references
omitted)
JUNE L. GREEN, District Judge
*908 I. Introduction
1
This matter is before the Court on the Petition of Chromalloy Aeroservices, Inc., (“CAS”) to
Confirm an Arbitral Award, and a Motion to Dismiss that Petition filed by the Arab Republic of
Egypt (“Egypt”), the defendant in the arbitration. This is a case of first impression. The Court
GRANTS Chromalloy Aeroservices’ Petition to Recognize and Enforce the Arbitral Award, and
DENIES Egypt’s Motion to Dismiss, because the arbitral award in question is valid, and because
Egypt’s arguments against enforcement are insufficient to allow this Court to disturb the award.
II. Background
2
This case involves a military procurement contract between a U.S. corporation, Chromalloy
Aeroservices, Inc., and the Air Force of the Arab Republic of Egypt.
3
On June 16, 1988, Egypt and CAS entered into a contract under which CAS agreed to provide
parts, maintenance, and repair for helicopters belonging to the Egyptian Air Force. (Arbitration
Award (“Award”) at 3.) On December 2, 1991, Egypt terminated the contract by notifying CAS
representatives in Egypt. (Award at 5.) On December 4, 1991, Egypt notified CAS headquarters in
Texas of the termination. On December 15, 1991, CAS notified Egypt that it rejected the cancellation
of the contract “and commenced arbitration proceedings on the basis of the arbitration clause
contained in Article XII and Appendix E of the Contract.” Egypt then drew down CAS’ letters of
guarantee in an amount totaling some $11,475,968.
4
On February 23, 1992, the parties began appointing arbitrators, and shortly thereafter, commenced
a lengthy arbitration. On August 24, 1994, the arbitral panel ordered Egypt to pay to CAS the sums
of $272,900 plus 5 percent interest from July 15, 1991, (interest accruing until the date of payment),
and $16,940,958 plus 5 percent interest from December 15, 1991, (interest accruing until the date
of payment). The panel also ordered CAS to pay to Egypt the sum of 606,920 pounds sterling, plus
5 percent interest from December 15, 1991, (interest accruing until the date of payment).
5
On October 28, 1994, CAS applied to this Court for enforcement of the award. On November 13,
1994, Egypt filed an appeal with the Egyptian Court of Appeal, seeking nullification of the award.
On March 1, 1995, Egypt filed a motion with this Court to adjourn CAS’s Petition to enforce the
award. On April 4, 1995, the Egyptian Court of Appeal suspended the award, and on May 5, 1995,
Egypt filed a Motion in this Court to Dismiss CAS’s petition to enforce the award. On December
5, 1995, Egypt’s Court of Appeal at Cairo issued an order nullifying the award. (Decision of
Egyptian Court of Appeal (“Egypt Ct.”) at 11.) This Court held a hearing in the matter on December
12, 1995.
6
Egypt argues that this Court should deny CAS’ Petition to Recognize and Enforce the Arbitral
Award out of deference to its court. (Response to Petitioner’s Post-Hearing Brief at 2.) CAS argues
that this Court should confirm the award because Egypt “does not present any serious argument that
its court's nullification decision is consistent with the New York Convention or United States
arbitration law.” (Petitioner’s Rejoinder at 1.)
III. Discussion
A. Jurisdiction
7
This Court has original jurisdiction under the Foreign Sovereign Immunities Act, 28 U.S.C. § 1330,
et. seq. (1976), which provides in relevant part that:
The district courts shall have original jurisdiction without regard to amount in controversy
of any non-jury civil action against a foreign state as defined in section 1603(a) of this title
as to any claim for relief in personam with respect to which the foreign state is not entitled
to immunity ... under sections 1605-1607 of this title. 28 U.S.C. § 1330(a).
Both the Arab Republic of Egypt and the Egyptian Air Force are foreign states under 28 U.S.C. §
1603(a) & (b). See Republic of Argentina v. Weltover, *909 504 U.S. 607, 612, n. 1, 112 S. Ct. 2160,
2164-65, n. 1, 119 L. Ed. 2d 394 (1992).
(a) A foreign state shall not be immune from the jurisdiction of courts of the United States
... in any case
******
(6) in which the action is brought, either to enforce an agreement made by the foreign state
with or for the benefit of a private party to submit to arbitration all or any differences which
have arisen or which may arise between the parties with respect to a defined legal
relationship, whether contractual or not, concerning a subject matter capable of settlement
by arbitration under the laws of the United States, or to confirm an award made pursuant to
such an agreement, if
******
(B) the agreement or award is ... governed by a treaty or other international agreement in
force for the United States calling for the recognition and enforcement of arbitral awards.
28 U.S.C. § 1605(a) & (a) (6) & (a) (6) (B) (emphasis added).
8
CAS brings this action to confirm an arbitral award made pursuant to an agreement to arbitrate any
and all disputes arising under a contract between itself and Egypt, a foreign state, concerning a
subject matter capable of settlement by arbitration under U.S. law. See 9 U.S.C. §§ 1-14.
Enforcement of the award falls under the Convention on Recognition and Enforcement of Foreign
Arbitral Awards, (“Convention”), 9 U.S.C. § 202, which grants “[t]he district courts of the United
States ... original jurisdiction over such an action or proceeding, regardless of the amount in
controversy.” 9 U.S.C. § 203.[1]
B. Chromalloy's Petition for Enforcement
9
A party seeking enforcement of a foreign arbitral award must apply for an order confirming the
award within three years after the award is made. 9 U.S.C. § 207. The award in question was made
on August 14, 1994. CAS filed a Petition to confirm the award with this Court on October 28, 1994,
less than three months after the arbitral panel made the award. CAS’s Petition includes a “duly
certified copy” of the original award as required by Article IV(1) (a) of the Convention, translated
by a duly sworn translator, as required by Article IV(2) of the Convention, as well as a duly certified
copy of the original contract and arbitration clause, as required by Article IV(1) (b) of the
Convention. 9 U.S.C. § 201 note. CAS’s Petition is properly before this Court.
1. The Standard under the Convention
10
This Court must grant CAS’s Petition to Recognize and Enforce the arbitral “award unless it finds
one of the grounds for refusal ... of recognition or enforcement of the award specified in the ...
Convention.” 9 U.S.C. § 207. Under the Convention, “Recognition and enforcement of the award
may be refused” if Egypt furnishes to this Court “proof that ... [t]he award has ... been set aside ...
by a competent authority of the country in which, or under the law of which, that award was made.”
Convention, Article V(1) & V(1) (e) (emphasis added), 9 U.S.C. § 201 note. In the present case, the
award was made in Egypt, under the laws of Egypt, and has been nullified by the court designated
by Egypt to review arbitral awards. Thus, the Court may, at its discretion, decline to enforce the
award.[2]
11
While Article V provides a discretionary standard, Article VII of the Convention requires that,
“The provisions of the present Convention shall not ... deprive any interested party of any right he
may have to avail himself of an arbitral award in the manner and to the extent allowed by the law
... of the count[r]y where such award is sought to be relied upon.” 9 U.S.C. § 201 note (emphasis
*910 added). In other words, under the Convention, CAS maintains all rights to the enforcement of
this Arbitral Award that it would have in the absence of the Convention. Accordingly, the Court
finds that, if the Convention did not exist, the Federal Arbitration Act (“FAA”) would provide CAS
with a legitimate claim to enforcement of this arbitral award. See 9 U.S.C. §§ 1-14. Jurisdiction over
Egypt in such a suit would be available under 28 U.S.C. §§ 1330 (granting jurisdiction over foreign
states “as to any claim for relief in personam with respect to which the foreign state is not entitled
to immunity ... under sections 1605-1607 of this title”) and 1605(a) (2) (withholding immunity of
foreign states for “an act outside ... the United States in connection with a commercial activity of the
1 Having established jurisdiction under 28 U.S.C. § 1605(a) (6) (B), the Court does not consider CAS’ other
claims to jurisdiction.
2 The French language version of the Convention, (which the Court notes is not the version codified by
Congress), emphasizes the extraordinary nature of a refusal to recognize an award: “Recognition and
enforcement of the award will not be refused ... unless....” (Response to Petitioner’s Post-Hearing Brief, at
3) (emphasis in the original).
foreign state elsewhere and that act causes a direct effect in the United States”). See Weltover, 504
U.S. at 607, 112 S. Ct. at 2160. Venue for the action would lie with this Court under 28 U.S.C. §
1391(f) & (f) (4) (granting venue in civil cases against foreign governments to the United States
District Court for the District of Columbia).
2. Examination of the Award under 9 U.S.C. § 10
12
Under the laws of the United States, arbitration awards are presumed to be binding, and may only
be vacated by a court under very limited circumstances:
(a) In any of the following cases the United States court in and for the district wherein the
award was made may make an order vacating the award upon the application of any party to
the arbitration
(1) Where the award was procured by corruption, fraud, or undue means.
(2) Where there was evident partiality or corruption in the arbitrators, or either of them.
(3) Where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon
sufficient cause shown, or in refusing to hear evidence pertinent and material to the
controversy; or of any other misbehavior by which the rights of any party have been
prejudiced.
(4) Where the arbitrators exceeded their powers, or so imperfectly executed them that a
mutual, final, and definite award upon the subject matter submitted was not made. 9 U.S.C.
§ 10.[3]
13
An arbitral award will also be set aside if the award was made in “‘manifest disregard’ of the law.”
First Options of Chicago v. Kaplan, ___ U.S. ___, ___, 115 S. Ct. 1920, 1923, 131 L. Ed. 2d 985
(1995). “Manifest disregard of the law may be found if [the] arbitrator[s] understood and correctly
stated the law but proceeded to ignore it.” Kanuth v. Prescott, Ball, & Turben, Inc., 949 F.2d 1175,
1179 (D.C.Cir.1991).
Plainly, this non-statutory theory of vacatur cannot empower a District Court to conduct the
same de novo review of questions of law that an appellate court exercises over lower court
decisions. Indeed, we have in the past held that it is clear that [manifest disregard] means
more than error or misunderstanding with respect to the law. Al-Harbi v. Citibank, 85 F.3d
680, 683 (D.C.Cir.1996) (internal citations omitted).
14
In Al-Harbi, “The submission agreement under which the arbitrator decided the controversy
mandated that the arbitrator apply ‘the procedural and substantive laws of the Southern District of
New York, U.S.A.’” Id. at 684. The arbitrator in Al-Harbi ruled that a court applying the laws of
New York would dismiss the case on forum non conveniens grounds. Id. Appellant argued on appeal
3 The Court has reviewed the voluminous submissions of the parties and finds no evidence that corruption,
fraud, or undue means was used in procuring the award, or that the arbitrators exceeded their powers in any
way.
that the arbitrator had manifestly disregarded the substantive laws of New York by disposing of the
case on procedural grounds. Id. The D.C. Circuit emphatically rejected this argument, stating that:
Appellant's argument then depends upon the proposition that where a tribunal is to render [a]
decision based on procedural and substantive law that tribunal has not only erred, but acted
in manifest disregard of the law if it finds that procedural factors are dispositive of the case
without then *911 going on to consider substantive law rendered apparently moot by that
procedural decision. To state that proposition is to reject it. We find no basis for vacatur. Id.
15
In the present case, the language of the arbitral award that Egypt complains of reads:
The Arbitral tribunal considers that it does not need to decide the legal nature of the contract.
It appears that the Parties rely principally for their claims and defences, on the interpretation
of the contract itself and on the facts presented. Furthermore, the Arbitral tribunal holds that
the legal issues in dispute are not affected by the characterization of the contract. (Award at
30.)
16
Like the arbitrator in Al-Harbi, the arbitrators in the present case made a procedural decision that
allegedly led to a misapplication of substantive law. After considering Egypt’s arguments that
Egyptian administrative law should govern the contract, the majority of the arbitral panel held that
it did not matter which substantive law they applied civil or administrative. Id. At worst, this
decision constitutes a mistake of law, and thus is not subject to review by this Court. See Al-Harbi,
85 F.3d at 684.
17
In the United States, “[W]e are well past the time when judicial suspicion of the desirability of
arbitration and of the competence of arbitral tribunals inhibited the development of arbitration as an
alternative means of dispute resolution.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,
473 U.S. 614, 626-27, 105 S. Ct. 3346, 3354, 87 L. Ed. 2d 444 (1985). In Egypt, however, “[I]t is
established that arbitration is an exceptional means for resolving disputes, requiring departure from
the normal means of litigation before the courts, and the guarantees they afford.” (Nullification
Decision at 8.) Egypt’s complaint that, “[T]he Arbitral Award is null under Arbitration Law, ...
because it is not properly ‘grounded’ under Egyptian law,” reflects this suspicious view of
arbitration, and is precisely the type of technical argument that U.S. courts are not to entertain when
reviewing an arbitral award. See Montana Power Company v. Federal Power Commission, 445 F.2d
739, 755 (D.C.Cir.1970) (cert. den. 400 U.S. 1013, 91 S. Ct. 566, 27 L. Ed. 2d 627 (1971)) (holding
that, “Arbitrators do not have to give reasons”) (citing United Steelworkers v. Enterprise Wheel &
Car Corp., 363 U.S. 593, 598, 80 S. Ct. 1358, 1361-62, 4 L. Ed. 2d 1424 (1960)).
18
The Court’s analysis thus far has addressed the arbitral award, and, as a matter of U.S. law, the
award is proper. See Sanders v. Washington Metro. Area Transit Auth., 819 F.2d 1151, 1157
(D.C.Cir.1987) (holding that, “When the parties have had a full and fair opportunity to present their
evidence, the decisions of the arbitrator should be viewed as conclusive as to subsequent
proceedings, absent some abuse of discretion by the arbitrator”) (citing the Restatement (Second)
of Judgments § 84(3) (1982), Greenblatt v. Drexel Burnham Lambert, Inc., 763 F.2d 1352 (11th Cir.
1985)). The Court now considers the question of whether the decision of the Egyptian court should
be recognized as a valid foreign judgment.
19
As the Court stated earlier, this is a case of first impression. There are no reported cases in which
a court of the United States has faced a situation, under the Convention, in which the court of a
foreign nation has nullified an otherwise valid arbitral award. This does not mean, however, that the
Court is without guidance in this case. To the contrary, more than twenty years ago, in a case
involving the enforcement of an arbitration clause under the FAA, the Supreme Court held that:
An agreement to arbitrate before a specified tribunal is, in effect, a specialized kind of forum-
selection clause.... The invalidation of such an agreement ... would not only allow the
respondent to repudiate its solemn promise but would, as well, reflect a parochial concept
that all disputes must be resolved under our laws and in our courts. Scherk v. Alberto-Culver
Co., 417 U.S. 506, 519, 94 S. Ct. 2449, 2457, 41 L. Ed. 2d 270 (1974) (reh. den., 419 U.S.
885, 95 S. Ct. 157, 42 L. Ed. 2d 129 (1974)) (citations omitted).
20
*912 In Scherk, the Court forced a U.S. corporation to arbitrate a dispute arising under an
international contract containing an arbitration clause. Id. 417 U.S. at 518, 94 S. Ct. at 2456-57. In
so doing, the Court relied upon the FAA, but took the opportunity to comment upon the purposes
of the newly acceded-to Convention:
The delegates to the Convention voiced frequent concern that courts of signatory countries
in which an agreement to arbitrate is sought to be enforced should not be permitted to decline
enforcement of such agreements on the basis of parochial views of their desirability or in a
manner that would diminish the mutually binding nature of the agreements.... [W]e think that
this country’s adoption and ratification of the Convention and the passage of Chapter 2 of
the United States Arbitration Act provide strongly persuasive evidence of congressional
policy consistent with the decision we reach today. Id. at n. 15.
The Court finds this argument equally persuasive in the present case, where Egypt seeks to repudiate
its solemn promise to abide by the results of the arbitration.[4]
C. The Decision of Egypt’s Court of Appeal
1. The Contract
21
“The arbitration agreement is a contract and the court will not rewrite it for the parties.” Williams
v. E.F. Hutton & Co., Inc., 753 F.2d 117, 119 (D.C.Cir.1985) (citing Davis v. Chevy Chase Financial
Ltd., 667 F.2d 160, 167 (D.C.Cir.1981)). The Court “begin[s] with the ‘cardinal principle of contract
construction: that a document should be read to give effect to all its provisions and to render them
consistent with each other.’” United States v. Insurance Co. of North America, 83 F.3d 1507, 1511
(D.C.Cir.1996) (quoting Mastrobuono v. Shearson Lehman Hutton, Inc., ___ U.S. ___, ___, 115 S.
Ct. 1212, 1219, 131 L. Ed. 2d 76 (1995)). Article XII of the contract requires that the parties arbitrate
4 The fact that this case concerns the enforcement of an arbitral award, rather than the enforcement of an
agreement to arbitrate, makes no difference, because without the knowledge that judgment will be entered
upon an award, the term “binding arbitration” becomes meaningless.
all disputes that arise between them under the contract. Appendix E, which defines the terms of any
arbitration, forms an integral part of the contract. The contract is unitary. Appendix E to the contract
defines the “Applicable Law Court of Arbitration.” The clause reads, in relevant part:
It is ... understood that both parties have irrevocably agreed to apply Egypt (sic) Laws and
to choose Cairo as seat of the court of arbitration.
******
The decision of the said court shall be final and binding and cannot be made subject to any
appeal or other recourse. (Appendix E (“Appendix”) to the Contract.)
22
This Court may not assume that the parties intended these two sentences to contradict one another,
and must preserve the meaning of both if possible. Insurance Co., 83 F.3d 1507, 1511
(D.C.Cir.1996). Egypt argues that the first quoted sentence supersedes the second, and allows an
appeal to an Egyptian court. Such an interpretation, however, would vitiate the second sentence, and
would ignore the plain language on the face of the contract. The Court concludes that the first
sentence defines choice of law and choice of forum for the hearings of the arbitral panel. The Court
further concludes that the second quoted sentence indicates the clear intent of the parties that any
arbitration of a dispute arising under the contract is not to be appealed to any court. This
interpretation, unlike that offered by Egypt, preserves the meaning of both sentences in a manner that
is consistent with the plain language of the contract. The position of the latter sentence as the seventh
and final paragraph, just before the signatures, lends credence to the view that this sentence is the
final word on the arbitration question. In other words, the parties agreed to apply Egyptian Law to
the arbitration, but, more important, they agreed that the arbitration ends with the decision of the
arbitral panel.
*913 2. The Decision of the Egyptian Court of Appeal
23
The Court has already found that the arbitral award is proper as a matter of U.S. law, and that the
arbitration agreement between Egypt and CAS precluded an appeal in Egyptian courts. The Egyptian
court has acted, however, and Egypt asks this Court to grant res judicata effect to that action.
24
The “requirements for enforcement of a foreign judgment ... are that there be ‘due citation’ [i.e.,
proper service of process] and that the original claim not violate U.S. public policy.” Tahan v.
Hodgson, 662 F.2d 862, 864 (D.C.Cir.1981) (citing Hilton v. Guyot, 159 U.S. 113, 202, 16 S. Ct.
139, 158, 40 L. Ed. 95 (1895)). The Court uses the term ‘public policy’ advisedly, with a full
understanding that, “[J]udges have no license to impose their own brand of justice in determining
applicable public policy.” Northwest Airlines Inc. v. Air Line Pilots Association, Int'l, 808 F.2d 76,
78 (D.C.Cir.1987). Correctly understood, “[P]ublic policy emanates [only] from clear statutory or
case law, ‘not from general considerations of supposed public interest.’” Id. (quoting American
Postal Workers Union v. United States Postal Service, 789 F.2d 1 (D.C.Cir.1986)).
25
The U.S. public policy in favor of final and binding arbitration of commercial disputes is
unmistakable, and supported by treaty, by statute, and by case law. The Federal Arbitration Act “and
the implementation of the Convention in the same year by amendment of the Federal Arbitration
Act,” demonstrate that there is an “emphatic federal policy in favor of arbitral dispute resolution,”
particularly “in the field of international commerce.” Mitsubishi v. Soler Chrysler-Plymouth, 473
U.S. 614, 631, 105 S. Ct. 3346, 3356, 87 L. Ed. 2d 444 (1985) (internal citation omitted); cf. Revere
Copper & Brass Inc., v. Overseas Private Investment Corporation, 628 F.2d 81, 82 (D.C.Cir.1980)
(holding that, “There is a strong public policy behind judicial enforcement of binding arbitration
clauses”). A decision by this Court to recognize the decision of the Egyptian court would violate this
clear U.S. public policy.
3. International Comity
26
“No nation is under an unremitting obligation to enforce foreign interests which are fundamentally
prejudicial to those of the domestic forum.” Laker Airways Ltd. v. Sabena, Belgian World Airlines,
731 F.2d 909, 937 (D.C.Cir.1984). “[C]omity never obligates a national forum to ignore ‘the rights
of its own citizens or of other persons who are under the protection of its laws.’” Id. at 942 (emphasis
added) (quoting Hilton v. Guyot, 159 U.S. 113, 164, 16 S. Ct. 139, 143-44, 40 L. Ed. 95 (1895).
Egypt alleges that, “Comity is the chief doctrine of international law requiring U.S. courts to respect
the decisions of competent foreign tribunals.” However, comity does not and may not have the
preclusive effect upon U.S. law that Egypt wishes this Court to create for it.
27
The Supreme Court’s unanimous opinion in W.S. Kirkpatrick & Co., Inc. v. Environmental
Tectonics Corp., Int'l, 493 U.S. 400, 408, 110 S. Ct. 701, 706, 107 L. Ed. 2d 816 (1990), defines the
proper limitations of the “act of state doctrine”[5] and, by implication, judicial comity as well.
Kirkpatrick arose out of a dispute between two U.S. companies over a government construction
project in Nigeria. Kirkpatrick, the losing bidder, sued Environmental Techtonics, (“ETC”), the
winning bidder, alleging that ETC acquired the contract by bribing Nigerian officials in violation of
U.S. law. Id. ETC argued that the act of state doctrine precluded U.S. courts from hearing the case
because to do so “would impugn or question the nobility of a foreign nation's motivations,” and
would “result in embarrassment to the sovereign or constitute interference in the conduct of [the]
foreign policy of the United States.” Id. at 408, 110 S. Ct. at 706. The Supreme Court rejected this
argument:
*914 The short of the matter is this: Courts in the United States have the power, and
ordinarily the obligation, to decide cases and controversies properly presented to them. The
act of state doctrine does not establish an exception for cases and controversies that may
embarrass foreign governments, but merely requires that, in the process of deciding, the acts
of foreign sovereigns taken within their own jurisdictions shall be deemed valid. That
doctrine has no application to the present case because the validity of no foreign sovereign
act is at issue. Id. at 409, 110 S. Ct. at 707 (emphasis added).
5 See Kirkpatrick, 493 U.S. at 400, 110 S. Ct. at 701-02. “The act of state doctrine ... requires that ... the acts
of foreign sovereigns taken within their own jurisdiction shall be deemed valid.” Id. at 410, 110 S. Ct. at
707. The act of state doctrine is based upon notions of “international comity, respect for the sovereignty of
foreign nations on their own territory, and the avoidance of embarrassment to the Executive Branch in its
conduct of foreign relations.” Id. at 409, 110 S. Ct. at 706.
Similarly, in the present case, the question is whether this Court should give res judicata effect to
the decision of the Egyptian Court of Appeal, not whether that court properly decided the matter
under Egyptian law.[6] Since the “act of state doctrine,” as a whole, does not require U.S. courts to
defer to a foreign sovereign on these facts, comity, which is but one of several “policies” that
underlie the act of state “doctrine,” id. at 409, 110 S. Ct. at 706-07, does not require such deference
either.
4. Choice of Law
28
Egypt argues that by choosing Egyptian law, and by choosing Cairo as the sight of the arbitration,
CAS has for all time signed away its rights under the Convention and U.S. law. This argument is
specious. When CAS agreed to the choice of law and choice of forum provisions, it waived its right
to sue Egypt for breach of contract in the courts of the United States in favor of final and binding
arbitration of such a dispute under the Convention. Having prevailed in the chosen forum, under the
chosen law, CAS comes to this Court seeking recognition and enforcement of the award. The
Convention was created for just this purpose. It is untenable to argue that by choosing arbitration
under the Convention, CAS has waived rights specifically guaranteed by that same Convention.
5. Conflict between the Convention & the FAA
29
As a final matter, Egypt argues that, “Chromalloy’s use of [A]rticle VII [to invoke the Federal
Arbitration Act] contradicts the clear language of the Convention and would create an impermissible
conflict under 9 U.S.C. § 208,” by eliminating all consideration of Article V of the Convention. See
Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, ___ U.S. ___, ___, 115 S. Ct. 2322, 2325, 132
L. Ed. 2d 462 (1995) (holding that, “[W]hen two statutes are capable of coexistence ... it is the duty
of the courts, absent a clearly expressed congressional intention to the contrary, to regard each as
effective”). As the Court has explained, however, Article V provides a permissive standard, under
which this Court may refuse to enforce an award. Article VII, on the other hand, mandates that this
Court must consider CAS’ claims under applicable U.S. law.
30
Article VII of the Convention provides that:
The provisions of the present Convention shall not ... deprive any interested party of any
right he may have to avail himself of an arbitral award in the manner and to the extent
allowed by the law ... of the count[r]y where such award is sought to be relied upon.
9 U.S.C. § 201 note. Article VII does not eliminate all consideration of Article V; it merely requires
that this Court protect any rights that CAS has under the domestic laws of the United States. There
is no conflict between CAS’ use of Article VII to invoke the FAA and the language of the
Convention.
6 Indeed, the Court assumes that the decision of the Court of Appeal at Cairo is proper under applicable
Egyptian law.
IV. Conclusion
31
The Court concludes that the award of the arbitral panel is valid as a matter of U.S. law. The Court
further concludes that it need not grant res judicata effect to the decision of the Egyptian Court of
Appeal at Cairo. Accordingly, the Court GRANTS Chromalloy Aeroservices’ Petition to Recognize
and Enforce *915 the Arbitral Award, and DENIES Egypt’s Motion to Dismiss that Petition.
________
NOTES AND QUESTIONS

1) res judicata7
2)
15. Fees and Expenses
7 For further analysis see, in particular, Silja Schaffstein: The Doctrine of Res Judicata Before International
Commercial Arbitration Tribunals, Oxford University Press, Oxford, 2016.
III. Online Dispute Settlement

Literature: Mohamed Abdel Wahab/Ethan Katsch/Daniel Rainey (eds): Online Dispute Resolution:
Theory and Practice - a Treatise on Technology and Dispute Resolution, The Hague 2012; Alina
Bica-Huiu, The European Union’s Regulation of e-Commerce: Lessons and Theory, in
Silkenat/Aresty/Klosek (eds), The ABA Guide to International Business Negotiations, 3rd ed. 2009,
pp. 297-320; Ethan Katsch, Online Dispute Resolution: Moving Beyond Convenience and
Communication, in Silkenat/Aresty/Klosek (eds), The ABA Guide to International Business
Negotiations, 3rd ed. 2009, pp. 235-244; James Klotz, Current Issues in Negotiating International
Sales Over the Internet, in Silkenat/Aresty/Klosek (eds), The ABA Guide to International Business
Negotiations, 3rd ed. 2009, pp. 115-142 ???need newer edition of ABA Guide! = not available yet!
see also
IV. Comparing International Commercial Litigation and

International Commercial Arbitration: The Pro’s and Con’s in Typical Cases
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Frank Emmert: "International Business

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Section 1. The International Dimension and the Consequences for Dispute

Section 2. International Commercial Litigation3

5 See François Dessemontet & Walter Stoffel, Private International Law,

I. International Jurisdiction of National Courts

1. Basic Rules on Jurisdiction or Venue

Handelskwekerij G.J. Bier BV v. Mines de Potasse d’Alsace SA

NOTES AND QUESTIONS

5. Choice of Court Clauses in Contracts and the Attractiveness of a Particular Forum

However, in proceedings which have as their object tenancies of immovable property

internationally accepted principles on jurisdiction based on choice of court agreements, otherwise

25 For the most up to date information on State enactment see

(7) the judgment was rendered in circumstances that raise substantial

Plaintiff wants Defendant wants

Piper Aircraft Co. v. Reyno

would be burdensome, however, is sufficient to support dismissal on grounds of forum non

NOTES AND QUESTIONS

2 630 F.2d 876 (2d Cir. 1980), most footnotes omitted.

(1) Autonomous choice by agreement of the parties

6. Serving a Claim in a Foreign Jurisdiction

U.S. Federal Rule of Civil Procedure 4 (Weintraub p. 144, include here!)

7. Submission to the Jurisdiction of a Particular Forum

8. What to Do About Proceedings in the Wrong Forum?

Allianz SpA and Assicurazioni Generali SpA v West Tankers Inc.

NOTES AND QUESTIONS

9. Legal Representation in a Foreign Jurisdiction

6 Ibid., recitals 21 and 22.

11. Injunctions and Other Forms of Interim Relief

13. Other Procedural Issues

14. The Judgment

II. Enforcement of Foreign Judgments

Section 3. International Commercial Arbitration

10 See note ??? above.

??? explain typical problems

Filanto, S.p.A. v. Chilewich International Corp.

NOTES AND QUESTIONS

II. Step-by-Step Guide to International Commercial Arbitration

2. The Documents and Rules that Govern International Commercial Arbitration

a) Article II of the New York Convention

Ust-Kamenogorsk Hydropower Plant JSC v. AES Ust-Kamenogorsk Hydropower Plant

“1. General principles.

“Court powers exercisable in support of arbitral proceedings.

(ii) the seat of the arbitration is or will be within the jurisdiction or

in Schedule 3 or 4 provide for other presently immaterial amendments or repeals in respect of

NOTES AND QUESTIONS

d) The substantive law

3. Important Providers of (International) Arbitration Services

Singapore International Arbitration Center20 – http://www.siac.org.sg/

4. The Agreement to Arbitrate

The “Ten ½ Commandments” for a Successful Start of the Arbitration Proceedings

seriousness but the amount of

and there are no

NOTES AND QUESTIONS

– the arbitration institution may be mislabeled (example:

Pathological Arbitration Clauses, https://singaporeinternationalarbitra-

NOTES AND QUESTIONS

5. Initiation of Arbitration Proceedings

6. Establishment of the Arbitration Tribunal