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Published online by Cambridge University Press: 28 March 2017
1 E.g.: Formation of the International Institute for Unification of Private Law (UNIDROIT) in 1926, through whose efforts two conventions concerning a Uniform Law on the International Sale of Goods (ULIS) and a Uniform Law on the Formation of Contracts for the International Sale of Goods (ULFIS) were opened for signature in 1964 at the Hague; United Nations Commission on International Trade Law (UNCITRAL) established in 1966, and followed by the United Nations Conference on Trade and Development (UNCTAD); codifications for optional use by international merchants such as Uniform Customs and Practices for Documentary Credits, 1962 Revision, produced by the International Chamber of Commerce.
2 Fritz Scherk v. Alberto-Culver Company, 94 S. Ct. 2449 (1974); 13 ILM 974 (1974) [hereinafter, Scherk].
3 The arbitration clause in full read as follows:
The parties agree that if any controversy or claim shall arise out of the agreement or the breach thereof and either party shall request that the matter shall be settled by arbitration, the matter shall be settled exclusively by arbitration in accordance with the rules then obtaining of the International Chamber of Commerce, Paris, France, by a single arbitrator, if the parties shall agree upon one, or by one arbitrator appointed by each party and a third arbitrator appointed by the other arbitrators. In case of any failure of a party to make an appointment referred to above within four weeks after notice or the controversy, such appointment shall be made by said Chamber. All arbitration proceedings shall be held in Paris, France, and each party agrees to comply in all respects with any award made in any such proceeding and to the entry of a judgment in any jurisdiction upon any award rendered in such proceeding. The laws of the State of Illinois, U.S.A. shall apply to and govern this agreement, its interpretation and performance. (94 S. Ct. 2449, 2452, n. 1 (1974).)
4 15 U.S.C. §78j.
5 17 C.F.R. §240.10b-5.
6 484 F.2d 611 (1973). District Judge Myron L. Gordon delivered the opinion of the Court in which Senior District Judge Grant joined. Circuit Judge Stevens filed a dissenting opinion.
7 414 U.S. 1156, 94 S. Ct. 913, 39 L. Ed. 2d 108 (1974).
8 M/S Bremen v. Zapata Off-Shore Company, 407 U.S. 1, 32 L, Ed. 2d 513, 92 S. Ct. 1907 (1972) [hereinafter, Zapata].
9 See Carbon Black Export, Inc. v. The Monrosa, 254 F.2d 297 at 300-01 (5th Cir. 1958), cert, dismissed, 359 U.S. 180 (1959). See also the Annotations, 56 A.L.R. 2d 300,306-20 (1957).
10 Unless the selected forum is more convenient than the forum in which suit is brought. Then, however, reference to the selected forum is based on the traditional notion of forum non conveniens and not on any notion of a forum-selection clause’s inherent validity.
11 407 U.S. 1, at 8 (1972).
12 Id. at 9.
13 Ibid.
14 Id. at 10.
15 Justice Stewart delivered the opinion of the Court, in which Chief Justice Burger and Justices Blackmun, Powell, and Rehnquist joined. Justice Douglas filed an opinion in dissent, in which Justices Brennan, White, and Marshall joined.
16 9 4 S. Ct. 2449, 2457 (1974).
17 Cf. Zapata, 407 U.S. at 16, 17 (1972) with 94 S. Ct. 2449, 2462 (1974), at 4917 (per Justice Douglas).
18 407 U.S. 1, at 16, 18 (1972). The issue of forum non conveniens was not discussed in the Court’s decision in Scherk.
19 There is some reference in Zapata to fraud (407 U.S. 1, at 13, n. 14 [1972]), and because Alberto-Culver alleged certain misrepresentations and omissions, the question arises whether the fraud calling for disregard of a forum-selection clause under Zapata must relate to the clause itself, or may relate generally to the agreement of which it is a part. Zapata does not answer this question, and the issue does not appear to have been raised in Scherk.
20 407 U.S. 1, at 13, 14 (1972). There is also the interest in preserving parties’ freedom of contracting, but this seems nothing more than a secondary policy consideration, for such interest in itself is seldom decisive in the resolution of policy conflicts. Rather, it is the interest of fostering such freedom in a particular area which is of value and which provides the force in the balancing of policies.
21 Which Chief Justice Burger, delivering the opinion of the Court, characterizes as “hardly more than a vestigial legal fiction [which] . . . has little place in an era when all courts are overloaded and when businesses once essentially local now operate in world markets.” 407 U.S. 1, at 12 (1972). But this characterization fails to take into account the greater interest of which it is a manifestation. See Justice Douglas’s dissent, 407 U.S. 1, at 23 (1972).
22 Id. at 23.
23 Choice of forum clauses were decided in Zapata to be “prima facie valid,” and not “conclusively valid,” or simply “valid.” Id. at 10, et seq.
24 15 U.S.C. §78j(b).
25 17 C.F.R. §240.10b-5.
26 15 U.S.C. §78cc(a).
27 15 U.S.C. §78cc(b).
28 346 U.S. 427, 98 L. Ed. 168, 74 S. Ct. 182 (1953) [hereinafter, Wilko].
29 15 U.S.C. §77n.
30 9 U.S.C. §1, et seq.
31 346 U.S. 427, at 438 (1953).
32 Id. at 431 (footnote omitted and emphasis added).
33 There is some issue whether Section 14 of the 1933 Act and Section 29 of the 1934 Act can be distinguished in a way that would rescue the arbitration clause in Scherk, but the arguments in favor of this distinction are weak, and noted only in passing in the majority decision. See also Judge Stevens’s dissent in 484 F.2d 611, at 616, et seq. (7th Cir. 1973).
34 94 S. Ct. 2449, 2458 (1974).
35 Supra, note 9.
36 21 U.S.T. 2517, T.I.A.S. No. 6697, 9 U.S.C. §201, et seq. See especially Art. II, para. 3, of the Convention.
37 346 U.S. 427, at 438 (1953), quoted from 94 S. Ct. 2449, 2453 (1974).
38 94 S. Ct. 2449, 2455 (1974).
39 Ibid
40 Ibid. Presumably the reference here to applicable law includes forum as well as law selection.
41 Above all, it is clear that what Justice Douglas is really concerned with is that “the loss of the proper judicial forum carries with it the loss of substantial rights.” Id. at 2463. It should be noted that this is the same concern which he raised in Zapata, where he also wrote a dissenting opinion, stating that “. . . if it [the negligence and breach of contract action against Unterweser] were remitted to the English Court, its [Zapata’s] substantive rights would be adversely affected (British courts likely being willing to enforce certain exculpatory provisions in the contract that American courts would not).” 407 U.S. 1, at 23 (1972). This is arguably tantamount to asserting the traditional view that in any jurisdictional question it is supremely desirable to protect the substantive rights of forum residents, in accordance with forum law, regardless of the conflicting considerations of promoting international trade, freedom of contract, and fairness (given that consideration may be and often is paid by one party to the other in concluding choice-of-forum and choice-of-law negotiations). This is the view which Chief Justice Burger referred to as “parochial” in Zapata, and nowhere in either dissent of Justice Douglas is this charge considered straightforwardly and appropriately answered.
42 94 S. Ct. 2449, 2463, n. 10 (1974).
43 Id. at 2462 (emphasis supplied).
44 Ibid.
45 Supra, note 17.
46 9 4 S. Ct. 2499, 2462, n. 7 (1974).