Rule:
When a court is asked to decide a dispute, the court's first task is to determine whether the parties have agreed to decide the dispute. Courts must make this determination by applying the federal substantive arbitration laws that apply to all arbitration agreements governed by the federal arbitration laws.

Facts:
A Puerto Rican corporation entered into distribution and sales agreements with a Swiss corporation and a Japanese corporation that manufactured automobiles in Japan. This car manufacturer was the product of a joint venture between a Swiss corporation and another Japanese corporation. The sales contract contained a clause for arbitration by the Japan Commercial Arbitration Association in all disputes arising out of or breach of certain articles of the contract. Subsequently, disputes arose from the easing of car sales.

After attempts to resolve these disputes failed, the Japanese manufacturer filed suit against the Puerto Rico corporation in district court under the Federal Arbitration Act and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards to compel arbitration of the dispute pursuant to an arbitration clause which provided that the arbitration shall take place in Japan in accordance with the rules and regulations of the Japan Commercial Arbitration Association. Puerto Rico Corporation filed answers and counterclaims under, among other things, the Sherman Act and other statutes.

The district court held that all of the issues raised in the complaint and most of the issues raised in the counterclaims, including the federal antitrust issues, were arbitrable and that the international nature of the obligations at issue required enforcement of the arbitration clause, even with respect to the antitrust laws. The federal Court of Appeals for the First Circuit reversed its decision when the district court found that the antitrust claim had been arbitrated. An appeal was filed in this case.

Support for the Non-Arbitration of International Antitrust Claims:

The history of federal arbitration law and the purposes of the United States Convention support the dissent's view that the antitrust issue in Mitsubishi should not have been resolved by arbitration. There is a minimal legislative history of the Convention, none of which conflicts with any interpretation of the public policy considerations of Articles II and V. Neither the Court of Appeals nor the Supreme Court attempted to analyse this history in deciding the Mitsubishi case. However, the language of the Convention and its expressed purpose lead to a logical conclusion as to the intent of Congress.

If all antitrust claims arising from international treaties were found to be arbitrable, the Convention's phrase, "incapable of arbitration," would have little or no meaning. In deciding whether a matter can be resolved by arbitration, a court may apply federal law, choice-of-law rules, or, if recognition and enforcement of an award is sought, the law that would govern it under Article V of the Convention. The Supreme Court in Mitsubishi attempted to interpret Article V of the Convention.

There are two interpretations of the convention's exception clause. One is that the principles of Article V apply when determining whether an agreement is "void" or "capable of arbitration". The second is that considerations of national public policy are to be taken into account only when deciding whether to arbitrate finding done. The Supreme Court reasoned that by ordering arbitration (under Article II), the courts of the United States of America could have the power at the enforcement stage to refuse to honour the award. The court's decision is thus postponed pending a judicial review of the finding.

However, such a court decision reduces the predictability of international transactions because a party will not know whether its arbitration attempt was successful until the party tries to enforce the agreement. In some cases, of course, such an approach would avoid the problem of court hostility to arbitration because the court would never reach the issue of the overlapping doctrine.

The Supreme Court decided that when interpreting the convention, the clarification of the contract should take precedence, if the result did not contradict the intentions of the signatories.

The history of federal arbitration law and the purposes of the United States Convention support the dissent's view that the antitrust issue in Mitsubishi should not have been resolved by arbitration. There is a minimal legislative history of the Convention, none of which conflicts with any interpretation of the public policy considerations of Articles II and V. Neither the Court of Appeals nor the Supreme Court attempted to analyse this history in deciding the Mitsubishi case. However, the language of the Convention and its expressed purpose lead to a logical conclusion as to the intent of Congress.

If all antitrust claims arising from international treaties were found to be arbitrable, the Convention's phrase, "incapable of arbitration," would have little or no meaning. In deciding whether a matter can be resolved by arbitration, a court may apply federal law, choice-of-law rules, or, if recognition and enforcement of an award is sought, the law that would govern it under Article V of the Convention. The Supreme Court in Mitsubishi attempted to interpret Article V of the Convention.

There are two interpretations of the convention's exception clause. One is that the principles of Article V apply when determining whether an agreement is "void" or "capable of arbitration". The second is that considerations of national public policy are to be taken into account only when deciding whether to arbitrate finding done. The Supreme Court reasoned that by ordering arbitration (under Article II), the courts of the United States of America could have the power at the enforcement stage to refuse to honour the award. The court's decision is thus postponed pending a judicial review of the finding.

However, such a court decision reduces the predictability of international transactions because a party will not know whether its arbitration attempt was successful until the party tries to enforce the agreement. In some cases, of course, such an approach would avoid the problem of court hostility to arbitration because the court would never reach the issue of the overlapping doctrine.

The Supreme Court decided that when interpreting the convention, the clarification of the contract should take precedence, if the result did not contradict the intentions of the signatories.

The defence of public order was originally interpreted as relatively broad. The court should therefore analyse the words of the Convention and its implementing legislation. Such an analysis should clearly lead to the result that the claim need not be decided under the Convention.

The Court held that once an arbitration agreement is entered into, a party to that agreement should be restrained unless Congress shows a different intent. However, Congress's intent to remove antitrust claims from arbitration is contained in the Convention's public policy exception. Few policies are more clearly established than the importance of antitrust to the United States economy. The court instead relied on the US security doctrine and subsequent cases.

Even under a very narrow interpretation of Article II (requiring enforcement of all arbitration agreements), the court would have to refuse to enforce the award under Article V. There is no need for the court to take another step. It can be assumed that Congress passed the Arbitration Act excluding antitrust claims because the policy against arbitrating such claims was well established by the courts. Arbitration of antitrust claims should only be allowed if Congress so declares.

The dissenting opinion reaffirms that the federal legislature has recognised the problems that arise in enforcing arbitration clauses in commercial contracts, not least the danger that courts will enforce a contract of adhesion.

Accordingly, the language of the Convention and the policy underlying the Federal Arbitration Act provide that public policy exceptions apply to antitrust claims in the Mitsubishi-Soler disputes.

Precedent and Public Policy:

The conclusion in the Mitsubishi case that the dispute resolution agreement arising out of the sales contract includes the manufacturer's claims in restraint of trade is unwarranted. The concern that was emphasised in American Safety and subsequent decisions is that unconscionable contracts should not determine the forum for antitrust litigation. An agreement to arbitrate claims arising from a contract of sale cannot be construed to include a claim that the contract itself was in restraint of trade.

The Scherk doctrine was rightly rejected by the Court of Appeals. First, the Scherk case dealt with a securities claim. Public policy is of greater concern to antitrust claims because such claims affect a larger portion of the public, not just the purchaser of stock. Furthermore, the contractual arrangement at Scherk was much more international in nature than the sales arrangement at Mitsubishi, giving rise to different political concerns.

Earlier case law also recognises the political concerns that require claims such as those in Mitsubishi will not be adjudicated. American The security doctrine embodies the political issues that apply to the international as and domestic disputes. Certainly there are some political concerns against arbitration that are even stronger in the international context.

The United States cannot abandon the regulation of its free market economy to promote "international civility." As the appeals court pointed out, other countries are aware of the primacy the United States accords to its antitrust law. Additionally, antitrust laws are ubiquitous. The signatories expect the United States to protect their economic interests. In this case, the imposition of internal policies is not limited. The Mitsubishi dispute is a rare example of a dispute in which the public policy defence should be used.

Policy Considerations:

Arbitration of antitrust claims would be politically undesirable. Antitrust claims are often frivolous and floated in an attempt to move the dispute to a more favourable forum. The parties may attempt to delay or avoid arbitration by imposing limitations on commercial claims.

Moreover, it is well known that antitrust claims often involve complex economic issues that require the type of mandatory discovery procedures afforded by litigation. Litigation would also provide the written opinion and detailed findings of fact necessary for any review. The Mitsubishi court's deference to judicial review of the award provides insufficient protection of the important interests at stake.

The interest in preserving competition is threatened when the judiciary does not retain jurisdiction over antitrust disputes. Placing power in the hands of arbitrators who are not constrained by formal legal procedures in their decision-making is inappropriate.

If antitrust claims were to be sent to arbitration, it would be essential that sophisticated, trustworthy and predictable arbitrators be found. Judicial oversight and statutory authority would be necessary to ensure such a choice. However, arbitrators are often chosen for their business expertise and are not required to be guided by the applicable laws. The competence of referees is a fundamental problem. If the antitrust lawsuit is prosecuted, the decision will have a significant impact on the general public and not just the parties involved in the case.

Mitsubishi's decision has wide-ranging implications. The impact on international trade and domestic arbitrage is significant.

Mitsubishi does not argue that arbitral tribunals are inherently capable of adjudicating antitrust disputes, but argues that such bodies are not inherently incapable. Arbitration of the Mitsubishi dispute and other international antitrust claims may make the laws of certain jurisdictions more predictable and thus more attractive to international business. However, allowing the arbitration of claims that are against the public policy of the United States would make the United States the most progressive nation in this regard. Such a change would threaten the existing competitive economic structure.

The Supreme Court based its decision to rule on Mitsubishi's antitrust suit on the fact that international tribunals have not yet been tested and cannot be assumed to be incapable of handling the matter. The implications for antitrust law are too important to use the case as a test case.

Most of the last words are based on the need of the international community. This goal is best achieved by rejecting arbitration proceedings with clear implications for domestic politics. The signatories of the Convention expect this treaty because it expressly reserves this right for each country.

Recommended Alternatives:
The Mitsubishi decision is a landmark in United States jurisprudence. There are several alternatives that the Court could adopt instead of applying the general rule permitting arbitration of antitrust claims.

Arbitration of antitrust claims could only be permissible if an arbitration clause is expressly included in the contract. This rule would be predictable and would help ensure the protection of public order. The provision would be accompanied by a requirement that a particular arbitrator be selected who is familiar with United States law and policy. Courts would have to guard against enforcing such clauses against parties with little bargaining power.

In addition, a different standard of judicial review and oversight could apply to arbitration awards on antitrust claims. The court could provide that, where national policy is not so strong as to give rise to a refusal to enforce under Article V of the Convention, the court may conduct extensive review of the arbitral proceedings to ensure that a substantial national policy interest is supported by the arbitrator's decision and that legal principles are followed.

If there is not a sufficient record of the arbitration to permit such a review, the court may refuse to enforce the award. This procedure could be added to the Federal Arbitration Act. This policy would ensure that important cases are heard only by qualified and competent arbitrators and that adequate records are kept. It is important to note that the language of the Convention allows for such rejection of arbitration and referral of the dispute to a special arbitration panel.

Common ground could be reached between the majority and dissenting opinions in Mitsubishi if more thorough judicial review of some arbitration awards were permitted and stricter record-keeping requirements were imposed. More effective judicial oversight will make the tribunal's findings that international arbitrators are subject to investigation more credible.

Therefore, the problem of arbitrability of international antitrust claims can be solved by reading the agreement that does not completely exclude such claims, but allows for a wider scope of arbitral awards related to strong domestic public policies.

Conclusion:
Mitsubishi Holdings sparked a trend in federal courts to allow arbitration of a wide variety of statutory claims. Numerous federal courts have held that Mitsubishi requires arbitration of statutory claims unless statute demonstrates congressional intent to exempt from arbitration. Thus, several circuits have reinterpreted the Wilco rule in light of Mitsubishi, forcing arbitration of the claims. Consequently, although Mitsubishi did not directly address the arbitrability of domestic antitrust or securities claims, the holding is far-reaching. "Until Congress expressly expresses its intent to prohibit arbitration in certain statutory disputes, the court must adhere to the Mitsubishi decision and require arbitration."

The Supreme Court's decision in Mitsubishi Motors v. Soler Chrysler-PlymouthInc, which enforces an arbitration agreement between two parties to an international commercial contract, is inconsistent with United States public policy. The United Nations Convention and established jurisprudence allow such a dispute to be held before arbitral tribunals.

The United Nations Convention, as implemented by the Federal Arbitration Act, provides for the refusal to recognise and enforce foreign arbitral awards if the subject matter of the dispute cannot be resolved by arbitration under the law of the party or recognition and enforcement of the award would be contrary to the public policy of the country. Because antitrust claims involve significant issues of public policy, the United States has a particular interest in ensuring that these claims are not arbitrated absent the assurance of a competent, impartial arbitrator or an adequate record for judicial review. The presence of international business interests in arbitration does not outweigh the importance of this basic domestic policy.

A different standard of judicial review could be applied to awards of antitrust damages. Courts could then permit arbitration of antitrust claims if the clause expressly provides for such review and the clause is not part of an unreasonable contract. Until such standards are adopted, it is not appropriate to allow arbitration of antitrust claims in the interest of the international community.