## Facts

- Apple & Eve, LLC, a U.S. juice distributor, entered two June 2004 contracts negotiated in New York for Yantai North Andre Juice Co. Ltd., a Chinese producer, to supply apple-juice concentrate.
- Each contract contained an arbitration clause requiring negotiation first and, if unresolved, arbitration “in the country of defendant in accordance with the arbitration organization of the defendant country.”
- In late 2005, Apple & Eve alleged Yantai breached the contracts and claimed negotiation efforts failed.
- Apple & Eve sued in the Eastern District of New York for breach of contract.
- Yantai moved to compel arbitration in China under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) and to dismiss the action.
- Apple & Eve argued the arbitration clause was unenforceable because it did not specify a particular arbitral institution, allegedly making it invalid under PRC arbitration law.

## Issues

1. Whether the arbitration clause satisfied the New York Convention’s requirements such that the court had to refer the parties to arbitration in China.
2. Whether a clause’s failure to name a specific arbitral institution—potentially rendering it invalid under PRC arbitration law—made the agreement “null and void, inoperative or incapable of being performed” under Article II(3) of the Convention.
3. Whether the federal action should be dismissed or stayed after compelling arbitration.

## Decision

- The court granted Yantai’s motion to compel arbitration in China pursuant to the New York Convention as implemented by FAA §§ 201–208.
- The court held the clause fell within the Convention: it was a written arbitration agreement arising from an international commercial relationship and calling for arbitration in a Convention signatory state (China) involving a foreign party.
- The court rejected Apple & Eve’s attempt to defeat referral based on PRC-law requirements regarding identification of an arbitration commission, concluding those questions should be addressed in the arbitral forum or by courts at the seat of arbitration.
- The court stayed the federal action pending arbitration rather than dismissing it.

## Legal Principles

- Under the New York Convention and FAA §§ 201–208, a court must compel arbitration when: (1) there is a written arbitration agreement; (2) arbitration is to occur in a Convention signatory territory; (3) the agreement arises from a commercial relationship; and (4) at least one party is non-U.S. or the relationship involves performance or property abroad.
- Article II(3)’s “null and void, inoperative or incapable of being performed” exception is construed narrowly and generally covers internationally recognized contract defenses, not technical objections based on foreign arbitral procedure.
- Potential invalidity or uncertainty under the arbitral seat’s local arbitration law regarding designation of an arbitral institution does not, by itself, bar referral to arbitration under the Convention; institutional-selection and local-compliance questions are typically for the arbitral forum or courts at the seat to resolve.
- Federal courts apply a strong federal policy favoring enforcement of international arbitration agreements and are expected to enforce them rigorously.

## Conclusion

The court compelled arbitration in China and stayed the case, holding that the New York Convention required referral to arbitration despite the clause’s failure to name a specific PRC arbitral institution, because that defect did not make the agreement “null and void” under Article II(3) and related forum questions belonged in China.


Apple & Eve, LLC v. Yantai N. Andre Juice Co., 499 F. Supp. 2d 245 (E.D.N.Y. 2007)