United States / 28 June 1999 / United States, U.S. Court of Appeals, Third Circuit / Bel-Ray Co., Inc. (US) v. Chemrite (Pty) Ltd. (South Africa) / No. 98-6297
| Country | United States |
| Court | United States, U.S. Court of Appeals, Third Circuit |
| Date | 28 June 1999 |
| Parties | Bel-Ray Co., Inc. (US) v. Chemrite (Pty) Ltd. (South Africa) |
| Case number | No. 98-6297 |
| Applicable NYC Provisions | II |
| Source | online: http://www.ca3.uscourts.gov (official website of the U.S. Court of Appeals for the Third Circuit) |
| Languages | English |
| Summary | Bel-Ray Company Inc. (“Bel-Ray”), a New Jersey corporation, and Chemrite (Pty.) Ltd. (“Chemrite”), a South African corporation, entered into a series contracts. Each agreement contained a clause providing for arbitration under the American Arbitration Association Rules. Chemrite subsequently sold its lubricant business to Lubritane. A dispute arose and Bel-Ray filed an action before the United States District Court for the District of New Jersey to compel Lubritane and four directors and officers of Chemrite to arbitration under the trade agreements. The District Court found that the action to compel arbitration fell under the NYC and that both Lubritane and the four directors and officers were bound by the arbitration agreements. Lubritane and the four directors and officers appealed. The United States Court of Appeals for the Third Circuit compelled arbitration against Lubritane, but refused to compel arbitration against the individual appellants. It held that in order for arbitration to be compelled under Section 206 of the Federal Arbitration Act (which gives effect to Article II(3) NYC), Chemrite’s assignments of the trade agreements to Lubritene had to be proper. According to the parties’ agreements, Bel-Ray had to agree to the assignment in writing but had failed to do so. Applying United States conflict of laws rules to determine that New Jersey law applied, the Court of Appeals found that by operating under the agreements in the ordinary course of business, Bel-Ray had constructively agreed to the assignment. Regarding the individual applicants, however, the Court of Appeals held that it was unable to compel arbitration since they never agreed to arbitrate. The arbitration clause was not broad enough to cover the directors and officers by virtue of an agency principle. |
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Attachment (1)
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