## Facts

- General Electric Company (GE), a New York corporation with manufacturing operations in western Pennsylvania, contracted in 1993 with Motoren‑Werke Mannheim AG (a German corporation) for Motoren‑Werke to design and GE to manufacture high-horsepower locomotive diesel engines.
- The GE–Motoren‑Werke agreement contained an arbitration clause governing disputes under that contract.
- Deutz AG, Motoren‑Werke’s German parent, executed a guarantee of its subsidiary’s obligations but did not sign the contract as a party.
- The project encountered serious difficulties by 1997; GE sought additional funding and support and negotiations failed to resolve the dispute.
- In 1998, GE sued Deutz in the Western District of Pennsylvania for breach of the guarantee, seeking damages tied to lost sales and resource diversion allegedly caused by Motoren‑Werke’s nonperformance.
- Deutz moved to dismiss for lack of personal jurisdiction and, alternatively, to compel arbitration under the GE–Motoren‑Werke arbitration clause.
- Deutz also initiated an ICC arbitration in London and sought relief in the English High Court to restrain the U.S. litigation; the English court declined to enjoin the U.S. action.
- The U.S. district court later issued an order barring Deutz from pursuing further proceedings in English courts aimed at enforcing an asserted right to arbitrate; the arbitral tribunal subsequently concluded it lacked jurisdiction.

## Issues

1. Whether Pennsylvania courts could exercise specific personal jurisdiction over Deutz, a foreign guarantor, based on its forum-connected conduct and the guarantee’s relationship to performance in Pennsylvania.
2. Whether Deutz, as a non-signatory guarantor, could invoke and compel arbitration under the arbitration clause in the GE–Motoren‑Werke contract.
3. Whether international comity permitted a U.S. court to enjoin Deutz from seeking relief in English courts related to arbitration.

## Decision

- The Third Circuit affirmed the exercise of specific personal jurisdiction over Deutz.
- The Third Circuit affirmed the denial of Deutz’s motion to compel arbitration, upholding the jury-backed finding that the arbitration clause did not extend to Deutz as guarantor.
- The Third Circuit reversed the district court’s anti-suit injunction barring Deutz from pursuing related relief in English courts, primarily on comity grounds.

## Legal Principles

- Specific personal jurisdiction exists when a defendant purposefully directs forum-related conduct and the claims arise out of or relate to those contacts; exercising jurisdiction must be consistent with fair play and substantial justice.
- A foreign guarantor may be subject to specific jurisdiction where it deliberately involves itself in a contract centered on substantial forum performance and participates in contract-related conduct tied to the forum.
- Arbitration is a matter of agreement; a non-signatory’s ability to compel arbitration depends on contract language and applicable doctrines, and a guarantor cannot compel arbitration absent a clear basis showing the arbitration clause was intended to include it.
- Anti-suit injunctions affecting foreign proceedings are exceptional and require restraint; parallel foreign proceedings generally do not justify an injunction absent a concrete threat to the domestic court’s jurisdiction or a strong public policy.
- Comity requires respect for foreign courts’ competence and sovereignty, particularly where the foreign court has already addressed related requests and declined to interfere.

## Conclusion

The Third Circuit held that Deutz’s guarantee and related conduct created sufficient Pennsylvania-connected contacts for specific jurisdiction and that Deutz, as a guarantor and non-signatory, lacked a contractual basis to compel arbitration under the subsidiary’s agreement; however, principles of international comity required reversal of an injunction restricting Deutz’s ability to seek related relief in English courts.


Gen. Elec. Co. v. Deutz AG, 270 F.3d 144 (3d Cir. 2001)