## Facts

- Coveme (Italian distributor) and CFI (French manufacturer) entered an international distribution agreement concluded in Paris.
- The contract contained an ICC arbitration clause providing that all disputes arising from the contract would be arbitrated in Paris.
- After Coveme terminated the agreement, CFI sought to enforce a post-termination non-competition clause restricting Coveme’s competitive activity.
- Coveme sued in the Court of Bologna seeking a declaration that the non-competition clause was null or unenforceable as contrary to European Community competition rules (then EEC arts. 85–86).
- CFI requested that the court decline jurisdiction or stay the litigation in favor of ICC arbitration, contending the arbitration clause covered the dispute and disputing the relevance of Italian law to arbitrability.

## Issues

1. Whether a broadly worded ICC arbitration clause required the Court of Bologna to stay or dismiss a lawsuit challenging a contractual non-competition clause.
2. Whether alleged incompatibility of the non-competition clause with EC competition law rendered the dispute non-arbitrable or prevented enforcement of the arbitration agreement.
3. Whether mandatory competition-law objections are for the court at the jurisdictional stage or for arbitrators on the merits (subject to later public-policy review).

## Decision

- The court upheld the effectiveness of the ICC arbitration clause as covering disputes arising from the distribution agreement, including challenges to the post-termination non-competition clause.
- The court treated EC competition-law objections as capable of being examined and decided in arbitration, not as a basis to bypass the parties’ agreement to arbitrate.
- The court therefore declined to allow the judicial action to proceed on the merits and deferred the controversy to ICC arbitration (procedurally described in secondary accounts as a stay or a declination of jurisdiction).

## Legal Principles

- Broad arbitration clauses covering disputes “arising from” a contract presumptively extend to disputes concerning the legality or enforceability of contractual provisions.
- Allegations that a contractual restraint violates mandatory competition rules do not, by themselves, negate the arbitration agreement; such claims may be determined by arbitrators.
- Mandatory rules and public-policy norms operate primarily as substantive constraints to be applied in adjudicating the merits, with state-court control ordinarily occurring at set-aside or recognition/enforcement stages rather than through preemption of arbitration.

## Conclusion

The Court of Bologna enforced an ICC arbitration agreement in a distribution-contract dispute and held that EC competition-law challenges to a post-termination non-competition clause could be addressed by arbitrators, requiring the parties to proceed in the agreed arbitral forum rather than litigate the merits in court.


Coveme v. CFI, XVII Y.B. Comm. Arb. 534 (Ct. Bologna 1987)