George Fischer Foundry Systems, Inc. v. Adolph H. Hottinger Maschinenbau Gmbh

Citations: 55 F.3d 1206; 1995 U.S. App. LEXIS 13757; 1995 WL 335425Docket: 94-1321

Court: Court of Appeals for the Sixth Circuit; June 7, 1995; Federal Appellate Court

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The case involves George Fischer Foundry Systems, Inc. (plaintiff-appellant) appealing a district court's dismissal of its antitrust claims against Adolph H. Hottinger Maschinenbau GmbH (defendant-appellee) without prejudice. The key issues are whether the district court erred in dismissing the complaint given that arbitration proceedings in Switzerland had commenced, and whether the court should establish the standard of review for any potential future appeals regarding the arbitration's final decision.

Fischer, a Michigan corporation and subsidiary of a Swiss company, entered into a license agreement with Hottinger in 1987, which allowed Fischer to exclusively manufacture and sell Hottinger core machines in North America. After struggling to sell the machines, Fischer attempted to renegotiate the agreement but ultimately terminated it on April 16, 1992, due to Hottinger's refusal to renegotiate.

The agreement included an arbitration clause specifying that disputes would be resolved under Swiss law through the Zurich Chamber of Commerce. In response to Fischer's termination, Hottinger initiated arbitration seeking specific performance on May 26, 1992. Fischer contended that the clause requiring termination of its own machine production violated U.S. antitrust laws.

Fischer sought a preliminary ruling from the Zurich tribunal on whether U.S. antitrust law would apply, but this request was declined as the issue had not yet been addressed by the parties. Subsequently, Fischer filed an antitrust action in the U.S. District Court for the Eastern District of Michigan, arguing that the arbitration agreement was void concerning the antitrust claims. Hottinger moved to dismiss the complaint for failure to state a claim.

In a March 1993 order, the Zurich tribunal indicated that it would determine whether U.S. antitrust laws should be applied in conjunction with Swiss law, affirming that such questions would be addressed during the arbitration process. The appellate court ultimately affirmed the district court's dismissal of Fischer's claims.

U.S. antitrust issues are currently under consideration in the arbitration proceedings, and the Tribunal cannot make a premature determination regarding the applicability of U.S. antitrust laws without a full exploration of all related issues by both parties. On March 14, 1994, a district court dismissed Fischer's claim without prejudice, noting that predicting which law the Tribunal would apply to the antitrust claims would be speculative. The Tribunal has taken on the responsibility to decide this issue, making it inappropriate to claim that the arbitration clause constitutes a prospective waiver of Fischer's rights, especially since the Convention allows signatories to refuse enforcement of an award that contradicts public policy. The court acknowledges that Fischer agreed to arbitrate and must adhere to that agreement until the Tribunal chooses applicable law for the claims.

On July 7, 1994, the Zurich tribunal reaffirmed that U.S. antitrust issues are pending and should be resolved by the Tribunal without interference from U.S. courts. The tribunal also mandated the selection of a U.S. antitrust law expert to provide an opinion on Fischer's claims. Following the dismissal of his complaint, Fischer appealed, referencing a footnote from the Supreme Court case Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., which suggests that if arbitration clauses simultaneously serve as a waiver of statutory remedies, such agreements may be deemed against public policy. Fischer contends that the rules governing Zurich arbitration do not permit the awarding of treble damages, which is available under U.S. law, and therefore seeks to pursue his antitrust claims in U.S. federal courts. In response, Hottinger argues that it is uncertain whether the Zurich tribunal would deny treble damages, emphasizing that Swiss courts must adhere to Swiss public policy only when the case has significant connections to Switzerland.

The district court's dismissal of the complaint was reviewed de novo, meaning the appellate court examined the legal question without deference to the district court's decision. A motion to dismiss is appropriate when no facts could support recovery by the plaintiff, with all factual allegations accepted as true and ambiguities resolved in favor of the plaintiff. Fischer's argument is based solely on a footnote from the Supreme Court case Mitsubishi, which addressed whether antitrust claims could be arbitrated in a foreign tribunal. In Mitsubishi, the parties had a contract for international automobile distribution that included an arbitration clause designating Japan for dispute resolution. Following disputes over sales, Mitsubishi filed suit, leading to a counterclaim alleging antitrust violations. The district court mandated arbitration for all claims, but the Supreme Court reversed a lower court ruling, stating that American dealers' antitrust claims could not be arbitrated in Japan, while affirming that such claims could be arbitrated in foreign tribunals. The Court emphasized that international arbitration could adequately address disputes, provided the tribunal honors the parties' intentions regarding the applicable law. 

Footnote 19, which Fischer cited, clarifies that the Court did not opine on the implications of an arbitral tribunal disregarding statutory causes of action at that stage, nor did it evaluate the potential impact on a party's ability to pursue claims in federal court afterward. It indicated that if forum and law choices effectively waived rights to statutory remedies for antitrust violations, such an agreement would likely be deemed against public policy. The footnote references a prior case from the circuit, Gaines v. Carrollton Tobacco Board of Trade, where an agreement waiving future antitrust damages was invalidated on public policy grounds. Ultimately, the text highlighted that as long as a litigant can effectively vindicate its statutory rights in arbitration, the statutory framework will retain its remedial purpose.

National courts in the United States can address the enforcement of antitrust laws during the award-enforcement stage of arbitration. The Convention allows signatory countries to refuse enforcement if it contradicts public policy. If a contract provision waives damages for antitrust violations, it is void for public policy; however, the applicability of the law by the Zurich tribunal remains undetermined, rendering the case unripe for review. Federal courts lack jurisdiction to render advisory opinions, as established by Article III of the Constitution, which requires actual cases or controversies. Fischer's request for a new standard of review for foreign arbitration antitrust cases, specifically a de novo review, is rejected as it seeks an opinion on a hypothetical situation. Consequently, the district court's judgment is affirmed.