International Litigation and Arbitration of Antitrust Disputes - Part 5 Chapter 17 - The Practice of International Litigation - 2nd Edition
Lawrence W. Newman has been a partner in the New York office of Baker & McKenzie since 1971, when, together with the late Professor Henry deVries, he founded the litigation department in that office. He is the author/editor of 4 works on international litigation/arbitration.
Michael Burrows, Formerly, Of Counsel, Baker & McKenzie, New York.
More than ten years have passed since the United States Supreme Court declared, in Mitsubishi v. Soler Chrysler-Plymouth, Inc., that there are no public policy reasons prohibiting the arbitration of international antitrust disputes. Since then, a clear trend has emerged in the case law extending the reasoning of Mitsubishi to cases involving domestic antitrust disputes as well. Although it is difficult to assess statistically the frequency with which antitrust claims have been subject to arbitration, recent cases and commentary have discussed the most effective ways in which antitrust claims may be handled in arbitration. This article discusses both the development of the law allowing arbitration of antitrust disputes and certain practical issues that can arise in such arbitrations.
Prior to Mitsubishi, the general rule was that antitrust disputes were not subject to arbitration. This principle emerged from the decision by the Second Circuit in American Safety Equip. Corp. v. J.P. Maguire & Co. The principle, referred to as the American Safety doctrine, prohibited arbitration of antitrust suits largely on public policy grounds.
In particular, the Second Circuit expressed the following concerns: (1) Since private parties play an important role in the enforcement of the antitrust laws, arbitration of antitrust disputes could reduce the effectiveness of antitrust laws in general; (2) Parties yielding monopoly power could dictate the forum for resolution of antitrust disputes through contracts of adhesion; (3) The arbitration process, the main benefits of which are simplicity and expedition, would prove unsuitable for the resolution of complex antitrust issues, which often require lengthy evidentiary submissions to fully understand and resolve and (4) Commercial arbitrators, typically lawyers who represent business concerns, would be permitted to determine issues of public import, and, in effect, regulate the very business community of which they are a part and for which, in their capacities as private attorneys, they are paid to represent. As the Second Circuit stated, “Antitrust violations can affect hundreds and thousands — perhaps millions — of people and inflict staggering damages. . . . We do not believe that Congress intended such claims to be resolved elsewhere than in the courts.”
The American Safety case proved highly influential and courts followed its analysis for nearly twenty years. In 1985, however, the American Safety doctrine was rejected by the United States Supreme Court in the Mitsubishi case, a case involving international arbitration. Mitsubishi involved a dispute between a Puerto-Rican automobile dealer (“Soler”) and a Japanese manufacturer of automobiles (“Mitsubishi”). Soler had entered into a distribution agreement with Mitsubishi (and a Swiss automobile distributor) calling for arbitration of all disputes and controversies concerning the distribution agreement. Arbitration was to be held in Japan before the Japanese General Arbitration Association.