## Facts

- Bel-Ray Company, Inc., a New Jersey lubricant manufacturer, entered multiple “Trade Agreements” with Chemrite (Pty.) Ltd., a South African company, governing blending, manufacturing, and distribution of Bel-Ray products in South Africa.
- The 1996 Trade Agreements included a Distributor Sales Agreement, a Blending Manufacturing License Agreement, and a Trade Name License Agreement.
- Each agreement required arbitration of “any and all disputes relating to the agreement or its breach” in Wall Township, New Jersey, under AAA rules, applying New Jersey law.
- Each agreement also required Bel-Ray’s written consent for any assignment.
- Lubritene (Pty.) Ltd. acquired Chemrite’s lubricant business and asserted successor rights under the Trade Agreements; Bel-Ray continued doing business with Lubritene under those agreements.
- Bel-Ray sued in the District of New Jersey for contract-related claims and sought to compel arbitration against Lubritene and several Chemrite/Lubritene officers/directors.
- Lubritene argued it could not be compelled to arbitrate because the assignment was ineffective without Bel-Ray’s written consent.
- The individual defendants argued lack of personal jurisdiction and that, as non-signatories, they could not be compelled to arbitrate.
- The district court compelled arbitration as to Lubritene and the individual defendants; Lubritene and the individuals appealed.

## Issues

1. Whether a successor (Lubritene) is bound to arbitrate when its predecessor assigned contract rights without complying with an anti-assignment clause requiring the non-assigning party’s written consent.
2. Whether corporate officers/directors who did not sign in their individual capacities can be compelled to arbitrate under the corporation’s arbitration clauses.
3. Whether the district court had personal jurisdiction over the non-resident individual officers/directors.

## Decision

- Affirmed the order compelling arbitration against Lubritene.
- Held the anti-assignment provisions did not render the assignment ineffective because they did not state that non-consensual assignments were void or invalid; at most, violation could support a damages claim.
- Concluded Lubritene, as successor, took the benefits and burdens of the Trade Agreements, including the arbitration obligation.
- Held the district court had personal jurisdiction over the individual defendants based on their purposeful contacts connected to the New Jersey-centered contractual relationship.
- Reversed the order compelling arbitration against the individual defendants because they did not personally agree to arbitrate as non-signatories.

## Legal Principles

- A contractual prohibition on assignment typically restricts the right to assign and, if breached, supports damages, but does not invalidate the assignment unless the contract clearly limits the power to assign by stating the assignment is void, invalid, or without effect.
- A successor that validly takes contractual rights also assumes the associated contractual burdens, including an arbitration clause covering disputes related to the agreement or its breach.
- Arbitration is a matter of consent; non-signatories (including corporate officers/directors) are generally not compelled to arbitrate absent an applicable doctrine (e.g., alter ego, estoppel) or a personal agreement to arbitrate.
- Personal jurisdiction may be exercised over non-resident individuals when their suit-related contacts with the forum are purposeful and sufficient to satisfy due process.

## Conclusion

The Third Circuit compelled arbitration against the corporate successor because the anti-assignment clause did not void non-consensual assignments, but it refused to compel arbitration against non-signatory officers/directors who had not personally agreed to arbitrate, while sustaining personal jurisdiction over them.


Bel-Ray Co. v. Chemrite (Pty) Ltd., 181 F.3d 435 (3d Cir. 1999)