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Apple & Eve, LLC v. Yantai North Andre Juice Co. Ltd.

June 20, 2007

APPLE & EVE, LLC, PLAINTIFF,
v.
YANTAI NORTH ANDRE JUICE CO. LTD., DEFENDANT.



The opinion of the court was delivered by: Joseph F. Bianco, District Judge

MEMORANDUM AND ORDER

Plaintiff Apple & Eve, LLC, brings the instant action alleging breach of contract against defendant Yantai North Andre Juice Co. Ltd. Presently before the Court is defendant's motion to compel arbitration in China pursuant to the New York Convention on the Recognition and Enforcement of foreign Arbitral Awards, June 10, 1958 ("New York Convention" or the "Convention") and to dismiss the complaint. The issue presented is whether this Court must compel arbitration in China despite the parties' failure to identify an arbitration organization in the arbitration clauses of their contracts, in light of the Arbitration Law of the People's Republic of China ("PRC").

I. BACKGROUND

A. FACTS

The following limited set of facts are derived from the complaint filed in this action.

Plaintiff, a Delaware limited liability company with its principal place of business located in Nassau County, New York, is engaged in the business of purchasing and distributing apple juice. (Compl. ¶ 1.) Defendant, a producer of apple juice concentrate and other juice products, is a corporation organized under the laws of the PRC, with its principal place of business in Yantai, Shandong Province, China. (Id. ¶¶ 2-3.) Defendant's business is a large-scale, global operation that ships its products around the world, including to the United States. (Id. ¶ 3.) In June 2004, the parties entered into two contracts, by which defendant was to supply apple juice concentrate to plaintiff (hereinafter "the Contracts"). (Id. ¶ 5.) The Contracts that are the subject of the instant dispute were negotiated in New York. (Id.) Paragraph 16 of the Contracts (hereinafter "the Arbitration Clause") provides:

Arbitration: Any controversy or claim arising out of or relating to this contract or breach thereof, shall be settled by negotiation between two parties. If no settlement can be reached, the claim in dispute shall then be submitted or [sic] arbitration in the country of defendant in accordance with the arbitration organization of the defendant country.

According to the complaint, in late 2005, defendant breached its obligations under the contracts. (Compl. ¶¶ 6-33.) Plaintiff alleges that it attempted to amicably resolve the dispute, but its efforts to negotiate were unsuccessful. (Id. ¶ 30.) Thereafter, plaintiff commenced the instant action.

B. PROCEDURAL HISTORY

Plaintiff commenced this action in the Supreme Court of the State of New York, County of Nassau, on December 5, 2006. Defendant removed the action to this Court on February 21, 2007, pursuant to 9 U.S.C. § 205 and 28 U.S.C. § 1332. Thereafter, on February 26, 2007, defendant filed the instant motion to compel arbitration. Oral argument was held on the motion on June 19, 2007.

II. DISCUSSION

"In the context of motions to compel arbitration brought under the Federal Arbitration Act . . . the court applies a standard similar to that applicable for a motion for summary judgment." Bensadoun v. Jobe-Riat, 316 F.3d 171, 175 (2d Cir. 2003) (citing Par-Knit Mills v. Stockbridge Fabrics Co., 636 F.2d 51, 54, n.9 (3d Cir. 1980)). Therefore, "[i]f there is an issue of fact as to the making of the agreement for arbitration, then a trial is necessary." Bensadoun, 316 F.3d at 175 (citing 9 U.S.C. § 4). In the instant case, there are no issues of fact as to the making of the Arbitration Clause in the Contracts; rather, the issue presented to the Court by the parties is a matter of contract interpretation.

A. The Arbitration Clause

"`The Arbitration Act establishes that, as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.'" Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth Corp., 473 U.S. 614, 626 (1985) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983)). The parties agree that this action is governed by the New York Convention, implemented by the Federal Arbitration Act ("FAA"), 9 U.S.C. ยงยง 201-208, as the transaction involves a Chinese corporation, and both the United States and China are parties to the Convention. (Pl.'s Opp. Mem. at 6; Def.'s Mem. at 7.) "The goal of the Convention, and the principal purpose underlying American adoption and implementation of it, was to encourage the recognition and enforcement of commercial arbitration agreements in international contracts and to unify the standards by which ...


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