## Facts

- A New York textile purchaser and a Chinese trading company entered into eighteen contracts (1991–1992) for sales of dyed yarn, memorialized in “Sales Confirmation” forms.
- Each sales confirmation contained the same clause requiring disputes not resolved by negotiation to be arbitrated in Beijing before the Foreign Trade Arbitration Commission of the China Council for the Promotion of International Trade, with a final and binding award.
- Disputes developed concerning alleged quality deficiencies and payment obligations.
- The parties executed a written settlement agreement (Sept. 2, 1993) covering all eighteen contracts, providing conditional price reductions tied to Hart’s complete compliance with a new payment schedule.
- The settlement stated that if Hart failed to perform, the seller could pursue losses connected to the original contracts (including interest and price differences).
- Hart did not make all settlement payments.
- The seller commenced arbitration in Beijing pursuant to the arbitration clauses; a hearing was scheduled for February 1995.
- Hart sued in New York state court seeking damages and equitable relief for quality issues and for alleged breach and rescission of the settlement agreement; the case was removed to federal court.
- The seller moved to stay the federal action pending the Beijing arbitration under the Federal Arbitration Act and the New York Convention.

## Issues

1. Whether the arbitration clauses in the sales confirmations were valid and broad enough to cover the claims asserted in the lawsuit.
2. Whether the settlement agreement superseded or extinguished the prior arbitration clauses, such that settlement-related disputes could be litigated in court.
3. Whether the federal action should be stayed in favor of the pending foreign arbitration.

## Decision

- The court granted the motion to stay the federal action pending arbitration in Beijing.
- The arbitration clauses were valid and enforceable under the FAA and the New York Convention.
- The clauses’ language (“all disputes arising from the execution of, or in connection with” the sales confirmations) covered both contract-performance/quality disputes and disputes concerning the settlement agreement.
- The settlement agreement did not clearly waive or replace the arbitration obligation; it remained tied to rights and obligations under the original contracts.

## Legal Principles

- Under the FAA and the New York Convention, courts generally enforce international arbitration agreements and resolve doubts about arbitrability in favor of arbitration.
- Contract language requiring arbitration of disputes “arising from” or “in connection with” an agreement is construed broadly.
- A later settlement addressing disputes under earlier contracts does not nullify an existing arbitration agreement absent clear, express language terminating or waiving arbitration.
- When a valid agreement requires foreign arbitration and arbitration is already underway, a stay of domestic litigation is appropriate to prevent parallel proceedings and to enforce the parties’ chosen forum.

## Conclusion

The court enforced the parties’ broad arbitration clauses requiring arbitration in Beijing and stayed the New York action, holding that the settlement agreement—lacking any express waiver—did not displace arbitration for disputes connected to the original yarn contracts.


Hart Enters. Int'l, Inc. v. Anhui Prov. Imp. & Exp. Corp., 888 F. Supp. 587 (S.D.N.Y. 1995)