## Facts

- Econo-Car International, Inc. (franchisor) and Antilles Car Rentals, Inc. (franchisee) entered a written franchise agreement.
- The agreement contained an arbitration clause requiring arbitration of “any disputes” in New York City under American Arbitration Association rules.
- Antilles notified Econo-Car on February 25, 1972 that it intended to terminate the franchise relationship.
- The parties asserted competing contractual “adjustments” that the other side resisted.
- Econo-Car demanded arbitration under the agreement; Antilles refused.
- Econo-Car petitioned the District Court of the Virgin Islands to compel arbitration under the Federal Arbitration Act (FAA).
- The district court ordered Antilles to arbitrate in New York City as specified in the agreement, and Antilles appealed.

## Issues

1. Whether the FAA applies to, and authorizes, the District Court of the Virgin Islands to enforce arbitration agreements.
2. Whether FAA § 4 permits the District Court of the Virgin Islands to compel arbitration in New York City when the petition to compel was filed in the Virgin Islands.

## Decision

- The Third Circuit held that the FAA applies to the District Court of the Virgin Islands and authorizes it to compel arbitration.
- The Third Circuit held that FAA § 4 limits compelled arbitration to the district where the petition to compel arbitration is filed.
- The court affirmed the order compelling arbitration but reversed the portion directing that arbitration occur in New York City.

## Legal Principles

- The FAA’s enforcement mechanism for compelling arbitration applies in the District Court of the Virgin Islands; territorial status does not remove the court from § 4’s grant of authority.
- Under FAA § 4, a court may compel arbitration only “within the district” in which the petition to compel arbitration is filed.
- When § 4’s “within the district” command conflicts with a contractual arbitration-site term, the statute controls the court’s power to compel an out-of-district arbitral forum.

## Conclusion

The Third Circuit recognized the District Court of the Virgin Islands’ authority under the FAA to compel arbitration, but held that FAA § 4 barred that court from ordering the arbitration to occur in New York City because compelled arbitration must be within the petitioning court’s district.


Econo-Car Int'l, Inc. v. Antilles Car Rentals, Inc., 499 F.2d 1391 (3d Cir. 1974)