Summary
The Second Circuit held that a signatory to an arbitration agreement incorporating the American Arbitration Association Rules was required to arbitrate the question of arbitrability with a non-signatory successor corporation. The court found clear and unmistakable evidence that the parties intended the arbitrator to decide issues concerning the existence, scope, and validity of the arbitration agreement. The court affirmed the district court’s dismissal in favor of arbitration.
Topics
Practice areas
Questions Presented
- Whether a non-signatory successor corporation may compel a signatory to arbitrate the question of arbitrability under an agreement that incorporates the AAA Commercial Arbitration Rules.
- Whether incorporation of arbitration rules authorizing the arbitrator to determine its own jurisdiction constitutes clear and unmistakable evidence that the parties agreed to arbitrate arbitrability.
Holdings
- A signatory to an arbitration agreement that incorporates the AAA Commercial Arbitration Rules, including Rule R-7(a), is bound to arbitrate disputes concerning arbitrability when the parties have a sufficient relationship and the dispute concerns the continued existence, validity, or scope of the agreement. Contec Corporation's successor relationship to Contec L.P. and its continuing relationship with Remote Solution were sufficient to permit Contec Corporation to compel arbitration of that issue.
Key quotations
“We therefore conclude that as a signatory to a contract containing an arbitration clause and incorporating by reference the AAA Rules, Remote Solution cannot now disown its agreed-to obligation to arbitrate all disputes, including the question of arbitrability.” (¶ 23)
“Accordingly, we hold that Remote Solution is compelled under the 1999 Agreement to arbitrate the question of arbitrability with Contec Corporation.” (¶ 24)
Factual background
In 1999, Contec L.P. and Hango Electronics, later renamed Remote Solution Co., Ltd., entered into an agreement requiring arbitration of controversies arising under the agreement and incorporating the AAA Commercial Arbitration Rules. Contec L.P. later converted to Contec LLC and merged into Contec Corporation, which became the surviving entity without an alleged change in ownership, address, or business relationship. After Contec Corporation sought indemnification for patent-infringement-related costs and withheld payment on a shipment as a setoff, Remote Solution sued Contec Corporation in Korea, prompting Contec to demand arbitration and seek an order compelling arbitration.
Procedural history
Contec Corporation sought to compel arbitration under a 1999 manufacturing and purchase agreement originally executed by Contec L.P. and Remote Solution. The Northern District of New York dismissed the action, determining that the claims, including the question of arbitrability, were subject to arbitration. The Second Circuit affirmed.